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Arcon Int.Resources (AIN)

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Friday 28 September, 2001

Arcon Int.Resources

Interim Results

Arcon International Resources PLC
28 September 2001


ARCON International Resources P.l.c. Half Year Results

CHAIRMAN'S STATEMENT

  * Very difficult global conditions for commodities results in lowest zinc
    prices recorded in 15 years. As a result, the value of metal sold
    decreased by 19% from £21.9m.

  * The average LME zinc price per tonne for the period was US$977 versus
    US$1,131 in the first half of 2000.

  * This lower zinc price, allied to lower than budgeted production, leads
    to a loss after tax of £8.5m in the first half compared to a loss after
    tax of £2.3m for the first six months of last year.

  * Previously announced plans to substantially increase production
    throughput at the Galmoy Mine now being implemented.

  * Exploration programme continues to excite and add to resources, thereby
    increasing mine life.

  * Further exciting intersections at Rapla. Rapla Prospect could have
    potential to extend to 4km2.

Dear Shareholder,

ARCON, in common with all base metal mines, has been operating in a very
difficult market for the first six months of this year with zinc prices
dropping to 15 year lows and little short term sentiment for an immediate
strengthening of commodity prices. Allied to these historically low prices,
was the failure to achieve budgeted targets for mining underground due mainly
to the short-term effect of adverse ground conditions in the CW zone.
Accordingly, the results for the half-year ended 30th June, 2001 are very
disappointing to both the board and you the shareholders. It is, however,
expected that better underground conditions will be encountered in the second
half of the year as we expand our mining operations in to new ore zones and
this, allied to our expansion plans, points to a future recovery for your
Company.

Mining

During the period under review ARCON processed 258,000 tonnes of ore and
shipments totalling 41,650 tonnes of zinc concentrate were sold to our
European customers. Production and sales for the period were below budget due
to the combination of a number of factors, including lower than planned
production (down 28%) and low zinc prices (down 13%), all of which had a
negative impact on cashflow.

By world standards, ARCON is a low cost operator. However, the present
economic environment has meant that ARCON continues to face a challenging
future until its expansion plans are complete and/or the zinc price rebounds.
We continue to strive to identify cost savings and efficiencies in tandem with
increasing production rates. Changes to the grinding and flotation circuits to
enable the upgrade in processing by over 20%, are being effected. Mining at
present is in the peripheries of the CW orebody and we are progressing the
access decline to the G and K orebodies, which will give us access to our next
two high grade ore zones.




Exploration

ARCON's exploration programme continues to yield positive results and add to
the resources in and around the mine area, thereby extending the mine life.
Drilling has recommenced following the foot and mouth restrictions and
recently at the Rapla prospect, some 5km east of the Galmoy mine, drilling
encountered significant zinc mineralisation grading at over 15% zinc over

0.8 metres. This intersection, allied to previous drill results, confirms the
view that Rapla is one of the most exciting prospective areas in Ireland for
base metals. Based on the review of data obtained to date, including the 15
mineralised intersections encountered to date, it is postulated that the
spatial area now extends well beyond the original quoted estimates of 2km2 and
it is possible that the area could represent a potential prospect of some 4
km2. To put this in context, this represents a spatial area twice the size of
the Galmoy Mine and encouragingly, the Rapla prospect remains open ended.
Drilling will continue for the remainder of the year and beyond.

Elsewhere in Ireland, we continue to explore our other licence areas in a cost
efficient manner using modern exploration techniques as well as working with
our JV partners. In Limerick, in our joint venture with Noranda, significant
mineralisation has been intersected in four drill holes and a programme of
follow up drilling has recently been agreed.

Finance

The financial results for the first 6 months of 2001 show a decrease in
turnover due to lower zinc prices and lower volumes of concentrate produced.
The overall loss of £8.5 million includes an unrealised foreign exchange
translation loss on certain US$ borrowings totalling £0.6 million. Smelting
charges were very competitive reflecting the quality of our product whilst
production costs have increased as a result of inflation and increased
maintenance costs. The company is continuing its discussions concerning the
variation in its loan repayment terms (note 1).

Outlook

The current international zinc price remains very depressed at below US$800
per tonne compared to the year 2000 average of US$1,128 per tonne and these
low prices impact severely on cashflow. In the short term, there are few
commentators who will offer price forecasts until there is better visibility
as to the future world-wide economic environment. As a consequence, we must
continue to manage our operating costs and focus on obtaining better yields
and productivity.

Looking further out, the key focus for ARCON in Q4 2001 and early 2002 is the
upgrading of the processing facilities to allow for an increase in output.
This, combined with the accessing of the new higher grade orebodies, means
that ARCON will be well positioned to capitalise on a rebounding zinc price.

On the exploration front, we are very committed to the Rapla Prospect which
remains the most prospective exploration area in Ireland since the discovery
of the Lisheen Mine. The focus over the next year is to further delineate the
resource to ascertain its true resource potential and if this is established,
work will then commence on economic and development feasibility studies.



Tony O' Reilly Jnr

28th September 2001





Balance Sheet at 30 June 2001
                                                         Group            Group
                                                  30 June 2001     30 June 2000

                                                       IR£'000          IR£'000
Fixed Assets
Mineral Interests                                       70,075           66,272
Other Tangible Assets                                   25,734           23,803
                                                        ______           ______
                                                        95,809           90,075

                                                        ______           ______
Current Assets
Stock                                                      625              920
Debtors                                                    103              875
Investments                                                 34            1,096
Cash at bank & on hand                                   3,698            3,899
                                                        ______           ______
                                                         4,460            6,790
                                                        ______          _______
Current Liabilities
Bank Loans & Overdrafts                                      -          (3,866)

Trade Creditors                                        (3,267)          (2,591)

Accruals                                               (4,310)          (4,209)
                                                        ______          _______
Amounts Falling due within one year                    (7,577)         (10,666)
                                                        ______          _______
Net Current Liabilities                                (3,117)          (3,876)
                                                        ______          _______
Total Assets Less Current Liabilities                   92,692           86,199
Creditors

Falling Due After More Than One Year
Loans                                                 (85,307)         (65,274)
Provision for Liabilities & Charges                   ( 2,582)          (2,558)
                                                        ______          _______
Net Assets                                               4,803           18,367
                                                        ======          =======
Capital & Reserves
Called Up Share Capital                                 13,585           14,375
Capital Conversion Reserve Fund                            790        -
Share Premium Account                                   46,621           46,621
Profit & Loss Account                                 (59,884)         (45,379)
Foreign Currency Translation Reserve                     3,691            2,750
                                                       _______           ______
                                                         4,803           18,367
                                                       =======           ======

Consolidated Profit and Loss Account for the six months ended 30 June 2001

                                                               2001        2000

                                                            IR£'000     IR£'000

Gross Value Metal Sold                                       17,723      21,920
Smelting Charges & Deductions                               (9,756)    (11,306)
                                                             ______     _______

Turnover                                                      7,967      10,614
Cost of Sales
Production Costs                                            (6,852)     (6,183)
Depreciation                                                (3,349)     (2,054)
                                                             ______      ______
                                                           (10,201)     (8,237)
                                                             ______      ______
Gross (Loss) /Profit                                        (2,234)       2,377

Other Operating Costs
Other Operating & General Administration                      (989)       (778)
Selling & Distribution                                        (827)       (778)
Foreign Exchange Gain/(Loss)                                (1,458)       (326)
                                                             ______      ______

                                                            (3,274)     (1,882)
                                                             ______      ______

Operating Profit/(Loss)                                     (5,508)         495
Mineral Exploration Costs Written Off                         (122)       (120)
                                                             ______      ______
Profit/(Loss) on
Ordinary Activities Before Interest                         (5,630)         375

Interest Receivable & Similar Income                            111          99
Interest Payable & Similar Charges                          (3,036)     (2,778)
                                                             ______     _______
(Loss) on Ordinary Activities before Taxation               (8,555)     (2,304)
Tax on Loss on Ordinary Activities                           -           -
                                                            _______     _______
Retained profit/(loss) for the period                       (8,555)     (2,304)
                                                            =======      ======
Profit & Loss Account, Beginning of the Period
                                                           (51,329)    (43,075)
Retained profit/(loss) for the Period                       (8,555)     (2,304)
                                                            _______     _______
Profit & Loss Account, End of Period                       (59,884)      45,379

                                                            =======     =======
Loss per Ordinary Share - pence                               2.98p       0.80p



Consolidated Cashflow Statement for the six months ended 30 June 2001

                                                                  2001     2000
                                                               IR£'000  IR£'000

Net Cashflow from Operating Activities                           (437)    4,886


Returns on Investment and Servicing of Finance                 (3,223)  (2,499)
Capital Expenditure and Financial Investment                     (613)  (2,716)
                                                                ______   ______
Net Cash Outflow before use of Liquid Resources and Financing  (4,273)    (329)

Management of Liquid Resources                                    (81)    (153)

Financing                                                        3,480    (910)
                                                                ______   ______
Decrease in Cash                                                 (874)  (1,392)
                                                                ______   ______

Reconciliation of net Cashflow to movement in Net Funds/
(Debt)
(Decrease) in cash flow for period                               (874)  (1,392)
Cash (inflow)/outflow from drawdown/repayment of bank loans,
net                                                            (3,480)      910

Cash outflow from movement in liquid resources                      81      153
                                                                ______   ______

Change in net debt arising from cashflows                      (4,273)    (329)

Foreign Exchange Translation                                   (8,037)  (3,271)
Net Debt at beginning of period                               (69,299) (61,641)
                                                               _______  _______

Net Debt at end of period                                     (81,609) (65,241)
                                                               _______  _______


 1. At 30 June 2001 a total of US$82.0m was outstanding under the Group's
    project finance facility of which US$11.1m falls due for repayment by 30
    June 2002.

    Due to the effects of difficult mining conditions, proposed modifications
    to increase production capabilities and the current low zinc price
    environment, the Directors are currently engaged in negotiations with
    their bankers with a view to varying certain of the repayment terms. Under
    the proposed arrangements, there would be no minimum repayment due by 30
    June 2002.

    Based on the status of these discussions, the Directors are confident that
    the facility will be amended as outlined above and accordingly consider it
    appropriate to prepare the financial statements on a going concern basis.

    The classification of the maturity of debt at 30 June 2001 reflects the
    anticipated repayment schedule rather than that set out in the original
    facility.

 2. The financial statements for the six month periods ended 30th June, 2001
    and 30th June 2000, which were approved by the Directors on 28th September
    2001, are neither audited or reviewed. There have been no changes to
    existing accounting policies which have been consistently applied
    throughout the period.

 3. At the Annual General Meeting of the Company held in June 2001, the share
    capital of the company was redenominated from Irish pounds to Euros which
    has resulted in the creation of the Capital Conversion Reserve Fund.



                          

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