Intelligent Investor

Ashton comes into play

By · 11 Aug 2000
By ·
11 Aug 2000
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Recommendation

Ashley Services Group Limited - ASH
Current price
$0.27 at 16:35 (19 April 2024)

Price at review
$1.69 at (11 August 2000)
All Prices are in AUD ($)
The South African diamond giant, De Beers, which, besides running the world diamond monopoly and a few diamond mining interests of its own, has launched a takeover bid for Ashton. The bid values the company at $1.62 a share, a far cry from our previous recommendation in issue 52 (Speculative Buy - $0.74).

That unlocks a fair bit of value we have long felt was locked away in Ashton's 40% of the Argyle Diamond Mine in Western Australia. This is an important mine in the diamond world because it produces 12 million carats of industrial diamonds annually, around 10% by volume of annual world diamond production.

The funny thing is that Ashton thinks it is worth more and has rejected the offer - even though its largest shareholder, Malaysia Mining, is accepting the bid for its 19.9%. The stock used to trade well above $2.00, but has not seen those levels since mid-1997. Now that the world diamond market has come back to life, we expect Ashton will put up a fight to see $2.00 again. The stock remains a SPECULATIVE BUY.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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