The news comes after the two inked a processing deal in January.

Norton is offering 0.054 of its shares and 0.054 options exercisable at A27c before April 30, 2015, for each KMC share and 0.024 Norton options for each KMC option.

The offer implies a 55% premium over the 90-day volume weighted average price of Norton shares.

KMC directors have recommended shareholders accept the offer in the absence of a superior bid.

The companies said the transaction made strategic sense, with KMC’s Bullant mine only 28km from Norton’s flagship Paddington gold operation.

Norton chief executive Dr Dianmin Chen said the deal would boost cost efficiency.

"Norton’s vision is to be a leading, long-term gold producer in Western Australia and the proposed acquisition of Kalgoorlie Mining Company is consistent with our strategy to reduce operating costs and increase production, both from our existing assets and by exploring opportunities for consolidation,” he said.

Dr Chen said Bullant’s 431,200 ounce gold resource and 40,300oz reserve could be readily accessed through the resumption of mining with processing through Paddington.

“Bullant is in close proximity to Norton’s existing underground operations at Mt Pleasant and Kalgoorlie Mining Company’s ground is contiguous with Norton’s, providing future exploration and development potential,” he said.

“The transaction will have the added benefit of diversifying Norton’s shareholder base and improving the liquidity of Norton shares.”

Norton is 89.1%-owned by China’s Zijin Mining Group after it closed a takeover of the company last year just short of the minimum 90%.

KMC managing director James Croser said the offer provided shareholders with an attractive premium, as well as the chance to participate in the upside of the combined company.

“Norton’s experienced management team has the development and mine operation capabilities to maximise the value of Kalgoorlie Mining Company’s assets and bring them quickly and cost effectively into production,” he said.

“The offer will significantly reduce the risks shareholders face through an investment in a single mine company, with limited access to capital.”

The Bullant asset was mined by Barrick Gold from 2002 to 2009 and sold to Argent Minerals in 2010.

US Nickel, which became KMC, launched a takeover bid for Argent but scrapped it in favour of an outright buy of Bullant only months later.

Mining began in May 2011 but was suspended in February 2012 after underperforming.

KMC ran into financial trouble but was thrown a lifeline by businessman Roger Kwok, who sits on the board.

Inking a fresh processing deal with Norton for the mine in January was a step towards restarting production.

Meanwhile, Norton had made no secret it was looking for acquisition opportunities.

KMC shares remained at half a cent, while Norton last traded at 17c.