Magnetic is keen to develop Laverton, which includes the HN9, Lady Julie Central, Lady Julie North 4, Mount Jumbo East and Homeward Bound South deposits, into a viable gold mine given the robust gold price, which is currently sitting around $2494 per ounce.
The project is surrounded by regional infrastructure, including three nearby processing plants.
Laverton has mineral resources of 13.1 million tonnes grading at 1.22 grams per tonne for 511,000oz of gold.
Nearly half the resources are within 50m of the surface, while 38% is 50-100m from surface.
Choosing Blue Cap was a strategic move, with Magnetic believed to have been impressed with the contractor's recent work in gold in and around the Laverton and Kalgoorlie areas.
Magnetic has more than $5 million in the bank, after a placement of 3.82 million shares at 90c each netted about $3.44 million. Those funds are earmarked for early works and development.
Under the scope of the early works agreement Blue Cap will carry out mining proposal studies, resource definition work, further metallurgical recovery tests, environmental studies and other regulatory approvals.
The early works must be done by September 2023.
Magnetic Resources managing director George Sakalidis said engaging Blue Cap's experienced team provided the ability to fast-track work at Hawks Nest 9 and Lady Julie.
"With Laverton's resources shaping up there is potential for large-scale shallow deposits," he said.
"The exceptionally shallow nature of the resources and location of the deposits in the heart of the Laverton and Leonora regions augurs well for strong economics from future development."
