Blumont Group has made a general offer for Australia's third largest diamond producer, Sydney-listed Merlin Diamonds.

Singapore-listed Blumont already owns 10.92 per cent of Merlin and now wants the rest of it.

It is offering 5.7 new Blumont shares for every two Merlin Diamond shares held by existing investors. The bid for 358.455 million Merlin Diamond shares values each unit of the Australian firm at 15.18 Australian cents.

The takeover offer is conditional on Blumont acquiring an interest of at least 50.1 per cent Merlin Diamonds.

Merlin Diamonds is developing its flagship Merlin Diamond Mine Project, which is located about 100 km south of the settlement of Borroloola in the Northern Territory in Australia.

"After evaluating the potential of the Merlin Diamond Mine project, we think that current valuations are very attractive, and since the opportunity arose for us to acquire it fully, we decided to take it," said Mr Alex Molyneux, Blumont's chairman-designate.

"This will give us full access to the second largest combined diamond resource and reserve in Australia, which fits in well with our strategy to build Blumont into a multiple mineral and energy resources company," he added in a statement.