Ashton Mining holds around 40 per cent equity in Argyle Diamonds, De Beer's breakaway partner which moved out of the De Beers controlled Central Selling Organisation (CSO) in mid-1996. Rio Tinto holds the balance 60 per cent. According to some of the Indian diamond jewellery exporters, the De Beers move will have a considerable impact on India because Argyle Diamonds, after breaking away from the De Beers fold,gets more than 80 per cent of its rough diamonds processed in India.

This move comes within weeks after De Beers announced major policy changes in its overall operations.It is the changes in the global rough diamonds market where De Beers' witnessed sharp erosion of its supremacy which prompted it go in for such policy changes.

Currently, De Beers' share in global rough supplies is said to have declined to around 40 per cent from over 75-80 per cent earlier. According to De Beers, the all-cash offer of A$1.62 per Ashton shares represents a premium of 20 per cent of the Ashton share price at the close of the trading on the Australian Stock exchange on July 28.

Ashton's largest shareholder, Malaysia Mining Corporation Berhad (MMC) which has a 49.9 per cent holding has entered into an agreement wiht De Beers pursuant to which MMC is obliged to accept De Beers' takeover offer for 19.9 per cent of Ashton's issued capital. Ashton Mining, in its response to the De Beers' move, said that it is yet to receive De Beers' statement but has been advised of the proposed terms and conditions of the offer.

The Ashton board considers the offer inadequate and has urged shareholders not to sell their shares. Ashton has appointed financial and legal advisers to assist the board in responding to this offer. Shareholders will receive a detailed response from the Ashton board after the formal offer document has been received and will then have a reasonable period of time to decide on their shares. Further, Ashton believes, the offer is opportunistic as it has only recently announced in its quarterly report on July 25 that there is a increased likelihood of an extended mine life at Argyle until at least 2018.

The De Beers offer will be made by its Australian subsidiary. The bidder statement will be lodged shortly with the Australian Securities and Investments Commission and simultaneously served on Ashton. The offer will remain open for at least one month.

"The acquisition of Ashton will provide De Beers with addition al geographic diversity and establish Australia as an additional component of our international operations", said De Beers group finance director Paddy Kell. "we look forward to working with the joint venture partner Rio Tinto, and bringing our expertise in underground diamond mining to the development of Argyle and thereby increase the likelihood of extending the life of the mine", he adds.