Arcon retained losses exceed €100m

ARCON INTERNATIONAL’S retained losses broke the €100 million barrier after the company reported a €5 million loss for the first six months of the year yesterday.

However, Arcon also raised an extra €5.7 million by issuing 158 million new ordinary shares, with British institutions representing approximately 10% of the issued share capital.

Arcon shares fell by just one cent, 2.33%, on the news to close at 42 cent.

Arcon’s chief executive officer, Kevin Ross, said: “Today’s announcement of the placing of new shares is an important endorsement of the company’s strategy and recent progress. The placement price of €0.036 represents a gain of 44% on the July, 2002, rights issue price.

“The funds raised will be used for additional capital expenditure and the continuation of the exploration programme. This should result in a reduction in unit cash production costs to sub-700/t of zinc.”

Mr Ross said the company’s twin strategies have been to focus on extending the mine life and increase production.

“Our exploration programme led to the discovery of the high grade R Zone.

"A capital expenditure programme in the mill to treat these higher grades has commenced and will result in increased production and enable lead and silver by-product sales. This should result in a reduction in unit cash production costs to sub-700/t of zinc.”

The average zinc price for the first six months was €716 per tonne, down 19%.

Company chairman Tony O’Reilly Jnr said the current zinc market has finally started to show an increase from the very low US dollar prices for base metals which, coupled with the strengthening of the US dollar, has resulted in higher euro zinc prices.

While the company continues to trade at a loss, the loss before tax decreased 9.6% to €5.0 million compared to same period last year due to higher turnover, reduced smelter charges and lower depreciation.

However, retained losses have gone from €80.9m a year ago to €100.4m at the end of June.

The company announced, with immediate effect, it appointed Numis Securities Limited as British broker and Davy Stockbrokers its Irish broker.