Finnish group pulls out of Arcon and Ivernia West

THE Finnish mining group Outokumpu has sold its entire share holdings in Arcon International and Ivernia West, the two Irish mining companies developing the Galmoy and Lisheen lead zinc mines in the midlands, market sources have told The Irish Times.

Outokumpu's 12.4 million shares in Arcon and 12.3 million shares in Ivernia West were placed with institutional investors yesterday by Riada Stockbrokers, raising over £12.5 million for the Finnish group. Before yesterday's sale, Outokumpu had a 24.5 per cent stake in Ivernia and 4.4 per cent of Arcon, and the sale of the shares late in the afternoon before a bank holiday weekend took the market by surprise.

Market sources expressed surprise at the price at which the Arcon shares had been sold to institutional investors. These 12.4 million shares' were sold at 27p each 6p below the market price while in Ivernia's case, the 12.3 million shares were sold at 75p a more modest discount of 3p below the market price.

There was no statement on the share sales from Outokumpu, Arcon, Ivernia or Riada, but market sources believe that Outokumpu which operates the Tara lead zinc mine at Navan has taken a decision to sell share holdings in the two companies because it does have not an operational involvement in the development of either the Galmoy or Lisheen orebodies.

Ivernia's Lisheen orebody is being developed by the British mining group Minorco, which has both a direct 50 per cent stake in the orebody and a 24.5 per cent stake in Ivernia itself.

The sale of the Ivernia share holding, in particular caused ripples he market as until yesterday's there had been no indication the Finnish group was with its investment.

Outokumpu first invested Ivernia in 1990 when it acquired shares owned by Tuskar Resources and built its interest up to 29.9 per cent before being diluted when Minorco acquired 17 per cent of Ivernia in 1991.

Both companies ended up with separate 24.5 per cent share holdings in Ivernia, but Minorco gained operational control of the key Lisheen orebody when a separate company Minroco Lisheen was formed to develop the orebody.

Arcon is effectively controlled by Dr Tony O'Reilly, who holds a 44 per cent share holding in the company after a rights issue last year that he personally underwrote. Until that rights issue, Outokumpu owned 22 per cent of Arcon but was diluted down to 4.4 per cent after it declined to contribute to the rights issue.

In 1992, Outokumpu had virtual control of Conroy Petroleum (as Arcon was then known) in an alliance with the Canadian group, Dundee Bancorp, but lost control and board representation after the Canadians sold their Conroy shares to Dr O'Reilly. Earlier, Outokumpu and Dundec Bancorp had gained control of Conroy after an e.g.m. voted Conroy founder Prof Richard Conroy and his associates out of office.

Calculating how much Outokumpu has lost from its investments in the two Irish mining companies is difficult to gauge, given that the Finns bought their shares at different times and at different prices. But in Arcon's case, market sources believe that the Finns are nursing sizeable losses.