Australian gold miner Ramelius Resources on Monday announced that it would buy developer Spartan Resources in a cash-and-scrip transaction that valued the smaller company at A$2.4-billion.

Ramelius is offering A$0.25 a share in cash and 0.6957 new shares for each Spartan share, implying a value of A$1.78 a share. This is a premium of 11.3% to Spartan’s closing price on Friday, and a 27.5% premium to the 30-day volume weighted average price of A$1.40 a share.

Spartan’s stock gained on Monday, trading at A$1.74 a share.

Ramelius MD Mark Zeptner pointed out that the combination would create a leading Australian gold producer with a vision of bolstering production to 500 000 oz/y by the 2030 financial year.

“Ramelius’ Mt Magnet production hub [will be] supercharged by the integration of Spartan’s high-grade Dalgaranga mineral resource. The combination will see Mt Magnet deliver higher ounces, at higher grade, with higher margins,” he said.

The combined company will have a mineral resource of 12.1-million ounces and an ore reserve of 2.5-million ounces.

The group will have a market capitalisation of A$4.2-billion.

The Spartan board recommended that shareholders support the transaction. Spartan executive chairperson Simon Lawson stated that the transaction was “highly attractive” and “a great outcome” for shareholders.

“The combined group will be positioned as a leading midtier ASX-listed gold producer with an enviable and robust growth pipeline including a significantly de-risked development pathway for Dalgaranga underpinned by Ramelius’ robust balance sheet, strong cash generation and development expertise.

“With the expected commencement of operations at Dalgaranga we expect the enlarged Mt Magnet-Dalgaranga hub to cement itself as a long-life and low-cost mining operation. Spartan shareholders will be able to benefit from continued exposure to this exciting journey, while also gaining exposure to the rest of Ramelius high-quality WA gold portfolio,” he said.

Lawson will be appointed deputy chairperson of the enlarged Ramelius.