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Anglo digs up investment gem

THE WA mining sector looks increasingly like a garage sale.

This state of affairs is largely due to the timidity of Australian institutions that have refused to pay up for world class assets.

Only a few months ago, North shares were allowed to trade below $2.60, as index trackers piled into stocks like Newscorp and Telstra.

The jabbering classes all had a high tech story to tell.

Meanwhile, the resource industry had become as unfashionable as grandfather’s overcoat.

Stockbrokers virtually gave up researching mining stocks and sent off some of their analysts to be recycled as dot.com experts.

Despite rising base metal prices, a sterling performance by North boss Malcolm Broomhead and a share buy back on the way, the mining house was valued at a paltry $2 billion or so.

Throw in a sub 59¢ level for the Aussie dollar, and North was flashing big green ‘buy me’ signs.

Enter Rio Tinto. Australian fund managers fell over themselves in the rush to take its $3.80 offer.

Then they watched slack-jawed as the shares rocketed another dollar, when Anglo American threw its hat in the ring and finally forced Rio to go to $4.75.

Anglo will not be getting any Christmas cards from Rio executives this year.

But South Africans may not be leaving WA empty handed.

Local institutions could have bought as many shares as they wanted to in Ashton Mining for under a dollar as recently as May.

Apparently they didn’t want to.

Never mind that Ashton is expected to announce glittering profits shortly, or that its Argyle mine is selling gems as fast as it can dig them up.

So along came Anglo’s 35 per cent associate De Beers with a $1.62 per share offer. Ashton managing director Doug Bailey immediately rejected the bid as “inadequate and opportunistic”.

Whoever heard of a takeover bid that was anything other than opportunistic?

Possibly Argyle joint venture partner Rio Tinto might be examining its battered piggy bank with a view to making another knockout counter offer.

Otherwise, the price Ashton will pay for wriggling out of the De Beers diamond cartel collar in 1996 could be ownership from Johannesburg.

That would be a pity. Ashton has been exploring for diamonds since 1972 and its cleverly marketed gems account for nearly one-fifth of total world production by volume.

It is a genuine WA success story, consistently undervalued by the market here.

The stark reality is that, if Australia cannot put its hand up to provide capital for our corporate icons, somewhere else will.

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