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Ashton diamond projects sparkle

World-wide diamond miner Ashton Mining Ltd (ASH) has recently commenced some encouraging diamond projects which have burnished the company’s value.

The company – which produces and markets industrial and gem-quality diamonds from the Argyle diamond mine in the Kimberley district of Western Australia – has started production from the Merlin and Angolan projects, and is soon to commence production from its new Cempaka diamond mine in Indonesia.

Higher grades than anticipated at Merlin diamond mine, in the Northern Territory, and confirmation of Argyle as a long life mine are positives for the group. These are offset in part by security risks at the Cuango diamond mine in Angola.

According to Perth stockbroker DJ Carmichael & Co, the exploration results from Canada and elsewhere, while longer term, should not be underestimated. On the strength of its new projects, the stockbroker rated the company’s shares a buy.

As an added bonus, Ashton Mining also produces gold indirectly through its 34.9 per cent interest in the listed Aurora Gold, which has a 90 per cent equity in the Mt Muro gold project in Indonesia.

Ashton is an active explorer for diamonds around the world, both in its own right and via its 62 per cent interest in its Canadian listed subsidiary, Ashton Mining of Canada.

“The diamond market has improved following a period of weaker than normal demand and prices, due to the impact of the Asian economic crisis,” the stockbroker said.

Ashton produces a full range of diamonds and markets some directly and some through the Central Selling Agency.

The Merlin diamond project, 77.4 per cent owned by Ashton, commenced operations in December 1998.

Stage one of the project, lasting two and a half years, is expected to generate revenues of up to $30 million per year as higher quality ore is being mined. Initial mining has resulted in the production of substantially higher value diamonds than were expected by the group.

The stockbroker said encouraging diamond exploration results are being received from its subsidiary, Ashton Mining of Canada Inc, at the Buffalo Hills joint venture where it has a 42.5 per cent interest.

“The area is shaping up as a major discovery,” the stockbroker said.

“In addition, promising exploration results have been achieved in Mauritania, Mali and Botswana.”

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