Arcon hopeful for future

Arcon Resources, the Dublin exploration group in which Independent News & Media executive chairman Mr Tony O'Reilly has a 71.9 per cent holding, is optimistic that the discovery of high-grade zinc at its Galmoy mine in Co Kilkenny will generate significant revenues this year, despite a worldwide slump in the market caused by the strong dollar.

Chief executive Mr Kevin Ross told the annual general meeting yesterday that the resource would double the contained metal content at Galmoy, extending the mine's life into the next decade.

Arcon is focused on bringing the find to fruition as soon as possible, he said, adding that further drilling is expected to boost production and reduce costs by the third quarter.

Operational changes have already achieved substantial increases in production with the amount of ore hoisted rising 25 per cent between 2000 and 2002, he said.

This is expected to climb a further 4 per cent in 2003 and by 9 per cent next year.

The grade of ore delivered to the mill and the recovery rate are also set to improve, resulting in a 75 per cent increase in concentrate production in 2003 compared to 2000, Mr Ross said.

"All of these positive developments will move us up the international production league and, with our focus on cost efficiencies and the predicted recovery in zinc prices, will strengthen the company's position for the years ahead," he added.

All resolutions were passed at the meeting.

The group reported a net loss of €14.7 million in 2002, an improvement on the €15.6 million loss in the previous year. During that period, 660,000 tonnes of ore and 45,000 tonnes of waste were produced.

Higher production rates triggered increased costs of €21.3 million from €18.5 million. Principal overheads included the increase in the number of staff, and higher electricity and insurance costs.

The company restructured its balance sheet to reduce its total level of indebtedness in 2002. This has resulted in a significant reduction in its debt-servicing costs, it said.

Mr O'Reilly underwrote a €28.8 million rights issue to offset mounting losses last year.