Western Australian gold miner Genesis on Monday announced a recommended offer for Magnetic Resources in a transaction that will bolster its Laverton inventory and production outlook by bringing the Lady Julie gold project into its portfolio.

Lady Julie has a mineral resource of about 2.2-million ounces, grading 1.8 g/t gold, offering a pathway to supply incremental openpit and underground ore to Genesis’ operating three-million-tonne-a-year Laverton mill, located about 20 km away.

The project also shares a boundary with ground Genesis acquired through its recent acquisition of Focus Minerals’ Laverton project, creating scope for synergies and cost savings by integrating Lady Julie into a larger openpit operation.

“This transaction creates substantial value for both groups of shareholders, delivering genuine synergies while combining the right assets with the right people,” said Genesis executive chairperson Raleigh Finlayson.

Magnetic MD George Sakalidis added that the offer followed a strategic review. “The board and its advisers have been working on for several years to explore potential options to collaborate with other operators which have the existing skill set or combination synergies to develop Magnetic’s discoveries and unlock value for our shareholders.”

Under the terms of the scheme, Genesis will acquire 100% of the issued fully paid ordinary shares in Magnetic for A$1.40 in cash and 0.0873 new Genesis shares for each Magnetic share (about 70% cash and 30% scrip) as the default consideration.

The transaction has an implied value of A$639-million.

The offer represents a 25% premium to Magnetic’s last closing price of A$1.60 a share and a 35% premium to the 30-day volume-weighted average price of A$1.49 a share.

The combination provides Magnetic shareholders with exposure to a larger company with improved access to capital markets and enhanced market positioning.

Genesis’ Leonora and Laverton operations have a combined production outlook of 275 000 oz.