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 rhiannon.hoyle@wsj.com
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