McClintock explained that though most commodity prices ruled low in their business cycles, the outgoing year treated affordable diamonds more gently than most higher quality goods. This was reflected in stronger prices for such diamonds in the second half of 1998 as they moved up from the low base caused by the final phase in the sell-down of the Russian stockpile.

Demand for Argyle product remained sound and Ashton's customers in India constantly stressed the importance of Argyle product in meeting the increased market opportunities.

The Argyle mine had an important year in tworespects. Firstly, it presented levels of profit and cash flow which are a sign of a great mine given the difficult environment that prevailed during the year. Argyle's long term future was confirmed when the joint venture announced a staged expansion of the current open pit. The results of the first stage expansion have been conveyed to the shareholders through the annual report.

The second stage cutback have added 22 million tonnes of ore to the reserves. This increase takes fully scheduled operations out to atleast 2006. Beyond this second stage, further cutbacks will be compared to the benefits of an underground development. Argyle's reduction programme has, moreover, succeeded in reducing costs by 10 per cent in 1998 alone.

Productivity has materially gone up, as the workforce has been 20 per cent lower than in the earlier year. The benefits of Argyle's direct marketing have increased further in 1998. Its ability to deal direct with customers, set its own prices and decide on what volumes to sell hasenabled it to raise its prices by some 15 per cent and achieve a record turnover in 1998.

Referring to profit potential of Ashton Mining, Mc Clintock has observed that the commissioning of the Merlin project makes Ashton a diamond producer in its own right. It is encouraging to see high quality and high value diamonds coming out from there. Further development of this project is assured. The Merlin plant is operating at design specifications. Moreover, the company's Cempaka alluvial project is now at an advanced stage of development. Commissioning of this project is planned to commence soon.

Diamonds for the Cuango basin in Angola are also very high value products. When combined with the high average grade of deposits and high prospectivity of the concession area, the project remains an important investment. The deteriorating security situation in Angola is really disturbing and the management continues to monitor the situation closely, the main considerations at present being safety of the work forceand the project assets.

Exploration remains a key element in the company's growth strategy. However, the company recognises the need to keep the level of investment consistent with the level of funds and profits available to invest. Besides, greater emphasis will be placed in 1999 and future years, on sharing project risk and project funding with other explorers and investors. It would be the endeavour of the company to get the best from the company's assets and to ensure that its success is fully reflected in its share price.