Genesis Minerals expands Laverton presence with $449M Magnetic Resources buy

Australian gold miner Genesis Minerals (ASX: GMD) is expanding its footprint in the Laverton gold district with the acquisition of Magnetic Resources (ASX: MAU) in a cash-and-stock deal valued at approximately A$639 million ($449 million).

Earlier this week, Genesis announced it has entered into a binding scheme with respect to the acquisition. As consideration, it will pay A$1.40 in cash and issue 0.0873 new Genesis shares (about 70% cash and 30% scrip) for each Magnetic share acquired.

This gives the transaction an implied value of A$2.00 per share or A$639 million in total, representing a 25% premium over Magnetic’s last closing price and 35% above its 30-day volume-weighted average price.

“This transaction creates substantial value for both groups of shareholders, delivering genuine synergies while combining the right assets with the right people,” Genesis Minerals’ executive chair Raleigh Finlayson said in a press release.

Magnetic Resources’ managing director George Sakalidis added that the offer followed “a strategic review” that its board and advisers have been working on for years.

Shares of Magnetic Resources surged to a 52-week high of A$2.04 following the announcement. By Tuesday, the stock had steadied at around A$2.00 with a market capitalization of A$621.9 million.

Meanwhile, Genesis Minerals fell by over 2%, taking its market capitalization down to A$8.2 billion.

‘Substantial synergies’

The transaction, if approved by Magnetic shareholders, would give Genesis ownership of the Lady Julie project located in the Laverton gold district, which has a mineral resource of approximately 2.2 million oz. grading 1.8 grams per tonne gold.

The acquisition offers “a clear pathway” to supply incremental open-pit and underground ore to Genesis’ operating 3-million-tonne-per-annum Laverton mill located 20 km away, Genesis said, adding that the project borders its recently acquired Laverton gold project, meaning there is “scope for substantial synergies and cost savings by allowing Lady Julie to integrate into a much larger open-pit operation.”

The acquisition would further bolster Genesis’ presence in the Laverton area, where it holds three other projects in the early-exploration stage.

Combined with its Leonora operations, which is in production, the company’s pro forma resources are estimated at 21 million oz., including 5.2 million oz. in reserves. The assets have a combined annual production outlook of 275,000 oz.