Magnetic Resources (ASX:MAU) managing director George Sakalidis used a conference presentation to outline a newly announced takeover proposal from Genesis, describing it as the culmination of extensive behind-the-scenes work over the past year and a transaction the company’s board has unanimously recommended.
Takeover terms and process
Sakalidis said the offer was announced on Monday and is priced at AUD 2.00 per share, valuing Magnetic at a total capitalization of AUD 639 million. The consideration is structured as 70% cash and 30% Genesis shares, based on a Genesis share price of about AUD 6.70. He added that the effective value could move above AUD 2.00 if Genesis’ share price rises above that reference level.
According to Sakalidis, a group of shareholders representing 19.6% of the register had signed up to support the transaction. He said the merger process is expected to take around three months and will include a shareholder meeting and court approval. Jefferies served as Magnetic’s corporate adviser, while Canaccord and Sternship advised Genesis.
Strategic rationale: consolidation along the Chatterbox Shear
Sakalidis emphasized the geographic and operational logic of the deal, pointing to the way Magnetic’s tenure fits between Genesis’ ground along the Chatterbox Shear structure. He said the shear appears to run from the northern end of the Beasley Creek deposit down toward Apollo before entering Magnetic’s ground at Lady Julie North 4, continuing south through Lady Julie Central and toward Wallaby.
He said Genesis has “wrapped up” the northern portion of the structure, and noted Genesis previously acquired additional land from Focus. In his view, combining Genesis’ holdings with Magnetic’s augments control across the region and creates a clearer pathway for ongoing development.
He also referenced Genesis’ newly announced growth strategy targeting 500,000 ounces, and framed the acquisition as attractive to Magnetic shareholders. Sakalidis said Magnetic had opened a data room to other companies, but the outcome ultimately aligned with what shareholders wanted.
Lady Julie North 4: resource scale, grade, and potential mine design synergies
A major focus of the presentation was Lady Julie North 4, which Sakalidis described as a “pretty amazing deposit.” He said it stands at two million ounces at 1.8 grams and is expected to be “mostly” open pit. Magnetic announced a 100,000-ounce upgrade roughly a month earlier, he added.
Sakalidis highlighted the potential mine design benefits from aligning Magnetic and Genesis tenure at the boundary near Lady Julie North 4. With the land package consolidated, he said Genesis could potentially pursue a larger open pit rather than an underground approach, which he said could allow for a higher cutoff grade and create opportunities to increase reserves.
He also pointed to existing Genesis infrastructure, saying Genesis has a processing plant about 20 kilometers to the southwest, and that ore could be trucked to that facility.
Exploration progress and drilling plans
Sakalidis reviewed Magnetic’s rapid resource growth, saying that in June 2022 Lady Julie North 4 was roughly 0.08 million ounces and has since increased to two million ounces. He noted that two other deposits—HN9 and Lady Julie Central—are within about two kilometers of Lady Julie North 4.
He said Magnetic has drilled up to the Genesis boundary and believes there is potential for mineralization to continue to the north, but emphasized that would need to be demonstrated by additional drilling and would likely be pursued by Genesis following completion of the transaction.
Despite the pending deal, Sakalidis said Magnetic was continuing “business as usual” and planning extensive drilling programs, including targets to test mineralization at depth—particularly around silica-pyrite alteration on the southern end of the system.
Feasibility work cited, but expected to evolve under Genesis
Sakalidis referenced a feasibility study announced in August of the prior year, describing it as “kind of out of date.” The plan at that time contemplated production of around 140,000 ounces per year, with an updated view suggesting around 150,000 ounces per year over 9–10 years. He said the company has discovered more ounces since that work was completed.
He cited previously disclosed life-of-mine free cash flow of AUD 1.75 billion, noting those figures were based on a lower gold price assumption of around AUD 4,000. He also discussed an NPV figure of AUD 1.6 billion under that base case and said higher gold prices had improved the economics versus earlier calculations. However, he added that much of the earlier mine plan framework may not be relevant given Genesis already has a processing plant and would be expected to reshape development decisions.
Closing his remarks, Sakalidis said Magnetic’s market capitalization increased to around AUD 650 million following the announcement, and that two of the company’s top three shareholders had signed up in support. He said the coming months would be significant as the transaction moves through required approvals.
About Magnetic Resources (ASX:MAU)
Magnetic Resources NL engages in the exploration of mineral tenements in Western Australia. It primarily explores for gold, nickel, copper, platinum group element, and iron deposits. The company holds 100% interests in the Lady Julie Central Project; Lady Julie North 4; and The Hawks Nest 9 Project. It also holds interest in various projects and tenements, such as Julimar Lookalike; and Chatterbox Shear Zone. Magnetic Resources NL was incorporated in 2006 and is based in West Perth, Australia.
