Magnetic Resources (ASX:MAU) has seen its share price climb nearly +25% higher in Monday morning trades after receiving a takeover offer from Genesis Minerals (ASX:GMD).
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Genesis, for its part, wants Magnetic’s 2Moz+ mineral resource estimate (MRE) portfolio and it’s willing to pay Magnetic shareholders $1.40/sh in cash and 0.087 GMD shares for each ordinary share in MAU – an implied value of $2.00/sh for the latter, which is the level to which the price climbed on Monday.
Genesis inked a 2.24Moz MRE at its Lady Julie project in WA just last month.
The big thing to watch now will be whether the company receives a superior proposal from elsewhere, given that’s the one condition Magnetic MD George Sakalidis noted in otherwise happy-to-concede messaging to shareholders.
The 70/30 cash-scrip deal can be varied by shareholders if they wish to choose full scrip or full cash. At any rate, Genesis intends to acquire 100% of all MAU’s shares, and on Thursday, became a shareholder of 19.65% of the company.
(Given that Sakalidis spoke of ‘several years’ work’ in finding a collaborative partner, that a superior proposal could come out of left-field might be fair to call not-terribly-likely. Both companies also had a joint letterhead to announce the proposition on Monday, which perhaps tells one enough.)
“This proposal provides an opportunity for shareholders to realise an attractive premium, with the flexibility to accept cash or shares in Genesis,” Sakalidis said.
“Exchanging Magnetic shares for Genesis shares will enable Magnetic shareholders to retain exposure to Lady Julie with the benefit of Genesis’ best-in-class project development team, diversified operating cash flow and robust balance sheet.”
“Magnetic’s Lady Julie Gold Project will add more than 2Moz at an attractive high grade to Genesis’ Laverton inventory, further bolstering the mine life and production outlook,” GMD EC Raeleigh Finlayson said.
MAU last traded at $1.98/sh.
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