SYDNEY—A mining company that traces its roots to one man's hunt for wreckage from a NASA space station in the Outback has become the focus of one of Australia's biggest resources deals so far this year.

Sirius Resources NL, which is building a vast nickel mine in Western Australia state, on Monday agreed to a cash-and-shares takeover offer worth 1.8 billion Australian dollars (US$1.4 billion) by larger rival Independence Group NL. If approved at shareholder meetings in late August, the deal will create a midtier mining company producing commodities ranging from gold to nickel and zinc.

Modern-day mining companies typically owe their success to the drillbit, but Sirius's story is a throwback to the days when Australian prospectors headed into the Outback with little more than a shovel, a compass and a map.

In 1979, Mark Creasy drove deep into Australia's red center to search for debris from the Skylab space station, which was partly strewn across Western Australia instead of falling entirely into the Indian Ocean as the National Aeronautics and Space Administration had hoped.

Skylab–first launched into Earth's orbit on a rocket six years earlier–had played a central role in proving that humans could work in space for extended periods. Three-man crews had occupied the Skylab workshop for more than 170 days while in orbit.

Mr. Creasy hoped to sell any Skylab debris that he could find to space enthusiasts. But he only found two nitrogen tanks, for which he couldn't find a buyer.

Still, the mission into the Outback unearthed something far more valuable.

While studying detailed maps of the debris track, Mr. Creasy noticed that U.S. resources giant Newmont Mining Corp. had struck nickel and copper in the area years earlier. He staked out a position around two decades later, when nickel prices soared.

Perth-based Sirius Resources was worth just A$8 million when it announced a major nickel discovery at the prospect, called Nova, in late July 2012. Construction of the mine has already begun, with executives targeting first production of the commodity in 2017.

Terms of the takeover offer from Independence will see Mr. Creasy own nearly 19% of the enlarged company, assuming that another company doesn't make a higher bid.

Independence is offering 0.66 of its own shares in exchange for each Sirius share, as well as A$0.52 per share in cash. Sirius investors will also receive roughly one share in S2–a new company that will hold Sirius's Western Australia Polar Bear project and Scandinavian exploration assets–for every 2.5 shares held in the company.

"The combination of current and future cash flows and diversification of commodities will create a substantial producer that will better be able to manage any increase in volatility in capital and commodity markets," Mr. Creasy, who doesn't have an executive role, said in a statement.

Independence owns 30% of the active Tropicana gold mine in Western Australia, one of the country's largest, with the remaining interest held by South Africa-listed AngloGold Ashanti Ltd. It also produces small amounts of zinc and copper.

Write to Rhiannon Hoyle at

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