Malaysia Mining Corp, which held about 49% of Ashton, aided the bid by selling a 19.9% share block to De Beers.
Ashton called the bid - 20% above Ashton’s closing price on Friday and 42% above its average price for the previous 30 days - “inadequate and opportunistic”
It said De Beers is getting its bid in before the market has absorbed plans to send the Argyle mine underground.
The bid was a symptom of the times, according to J B Were & Son resource analyst, Mike Brook.
“We are still working on evaluating the increased mine-life of Argyle, but we are estimating it will be worth slightly more than De Beers is offering,” he said.
“However, the takeover bid makes a fair degree of sense, a diamond company bidding for a company within the diamond industry.
“There has been a new lease of life at Argyle with plans for an underground mine, which De Beers has a lot of experience in.”
Plans for an underground operation at the Western Australian diamond mine, revealed recently, will target reserves sufficient to sustain a huge 8 million tonnes per year block cave underground mine for 11 years, pushing the operation's life out to 2018.
Brook said the question remains whether Malaysia will sell its remaining 30% shares in Ashton.
“We are telling people to hold-off for a bit, these shares are likely to prove attractive to shareholders,” he said.
The fastest growing sector of the diamond market is for stones of the type produced at the Argyle mine near Kununurra. De Beers has not had access to this type of product since Ashton walked away from a deal with the cartel in 1996 and set up its own marketing program.
Brooks said the rumour BHP or Rio Tinto could be interested in Ashton was unlikely.
“There could be other bidders out there but it is least likely Rio Tinto or BHP would be interested,” he said.
“Rio Tinto has had ample opportunity but have not launched a take over of Ashton yet.”
The move by De Beers is just the latest in a concerted South African push into the Australian mining industry. Anglo American last week made a $3.1 billion bid for iron ore miner North, topping a hostile takeover attempt by Rio Tinto.
A large part of Australia’s coal industry, as well as gold producer Acacia Resources, have already fallen prey to Anglo American, its subsidiary AngloGold, and compatriots Billiton and Harmony, which have also bid for large chunks of the aluminium industry.
But putting the boot on the other foot, BHP has $3 billion in its corporate pockets and is scouring the horizon for a major acquisition.
Rumours have been rife that the Big Australian is after Queensland coal producer QCT Resources, but at a cost of only about $1 billion it falls into what BHP chief executive Paul Anderson calls “bolt-ons”. BHP is after a bigger prize.
There are plenty of smaller fish in the local mining waters attracting the attention of foreign predators - Newcrest, Pasminco, Normandy, MIM – but with BHP angling for a big fish, the list narrows to WMC and Woodside.
If it fails to woo WMC – capitalised at $9 billion, BHP is likely to prefer a friendly merger rather than a hostile approach – it will have to turn its attention offshore, where there are more listed opportunities.
TOMORROW: An exclusive report on the blue chips’ jostling for position in Australia’s mining industry.
