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Arcon Int.Resources (AIN)

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Wednesday 21 August, 2002

Arcon Int.Resources

Interim Results

Arcon International Resources PLC
20 August 2002


20th August 2002

            ARCON INTERNATIONAL RESOURCES P.l.c. (ARCON or Company)

          Interim Results for period six months ending 30th June 2002


ARCON announces its interim results for the six months ending 30th June 2002,
where:

  • The company successfully concluded the restructuring of its long term debt
    and announced an underwritten rights issue of €28.75 million.

  • Turnover increased by 3.5% to €10.5 million for the period
    compared to the corresponding period last year despite a 19% fall in average
    zinc price.

  • The average LME zinc price for the period was US$789/tonne versus US$977/
    tonne in the first half of 2001, a fall of 19%.

  • The loss before tax decreased by 50% to €5.5million in the period
    compared to last year.

  • The milling rate over the last nine months has reached the design capacity
    of 650,000 tonnes per annum. A programme has commenced to raise the
    annualised milling rate to 750,000 tonnes.

  • An extensive drilling programme has now re-commenced. The exploration
    programme has focussed on extending the gravity survey from Rapla to the
    mine site and this has helped to identify the local fault structures and
    three gravity anomalies.


Speaking following today's results Kevin Ross, CEO, said: 'The company has
recorded a significant improvement in operating performance, which coupled with
the successful debt restructuring and rights issue, will enable the Company to
successfully operate in this period of low prices. The expansion of the mill
will significantly reduce operating costs and enable the mine to benefit from
the rise in prices forecast by market analysts. The zinc market is undergoing a
major structural change; due to a reduction in mine capacity, concentrate
production is insufficient to meet the smelter demand and forecast consumer
growth, which will result in falling metal inventory and give rise to a
sustained period of higher prices.'

Ends. Tuesday, 20th August 2002


For reference:

ARCON International Resources P.l.c.                    Murray Consultants
Mr. Kevin Ross                                          Ms. Pauline McAlester
Tel: + 353 1 667 3063                                   Tel: + 353 1 498 0300


ARCON International Resources P.l.c.

Interim Report and Financial Statements

For the 6 months ended 30th June 2002

Chairman's Statement

  • The company successfully concluded the restructuring of its long term debt
    and announced an underwritten rights issue of €28.75 million.

  • Turnover increased by 3.5% to €10.5 million for the period
    compared to the corresponding period last year despite a 19% fall in average
    zinc price. Smelter charges will fall further in second half due to the
    continuing shortage of zinc concentrates.

  • Continuing difficult global trading conditions for commodities resulted in
    the lowest real zinc prices recorded in 70 years. The average LME zinc price
    for the period was US$789/tonne versus US$977/tonne in the first half of
    2001, a fall of 19%.

  • The loss before tax decreased by 50% to €5.5million in the period
    compared to last year due to reduced foreign exchange losses and reduced
    finance charges following the financial restructuring.

  • The milling rate improved 23% to an annualised rate of 634,000tonnes in
    the first six months of 2002. A programme has commenced to raise the
    annualised milling rate to 750,000 tonnes.

  • An extensive drilling programme has now re-commenced. The exploration
    programme has focussed on extending the gravity survey from Rapla to the
    mine site and has helped to identify the local fault structures and three
    gravity anomalies.



Dear Shareholder,

The successful debt restructuring and the €28.75 million rights issue
has secured the future of the Company allowing the production expansion
programme to proceed which will result in a significant lowering of unit
production costs and the re-commencement of the exploration drilling programme
to extend the mine life.

ARCON, in common with all base metal mines, has continued to operate in a very
difficult market for the first six months of this year with real zinc prices
dropping to 70 year lows. Over the last nine months the mill has operated at its
designed throughput rate and an expansion programme has commenced to expand the
annualised milling capacity to 750,000 tonnes over the next 12 months. This will
reduce the unit operating costs.

Mining

During the period under review, ARCON processed 317,000 tonnes of ore and
shipments of 48,576 tonnes of zinc concentrate were sold to our European
customers. Sales for the period were below budget due to a combination of
factors, including lower grades whilst mining the periphery of the CW and GNE
orebodies and the low zinc prices.

Mining at present is moving into the G and K orebodies, which will give us
access to our next two high grade ore zones and we are expecting to receive the
State Mine Licence for the CW South area shortly. Once mining commences in these
areas, it is forecast that concentrate production will improve significantly.

Exploration

The exploration programme has focussed on extending the gravity survey from
Rapla to the mine site and has helped to identify the local fault structures and
three gravity anomalies. The diamond drilling programme re-commenced in August
focussing on the area around the mine site and Rapla.

Finance

The financial results for the first 6 months of 2002 show an increase in
turnover despite the lower zinc prices following an increase in sales volume.
The overall loss of €5.5 million includes a gain of €697,000 on
the settlement of debt in 2002. Although production costs have increased as a
result of inflation and increased manpower in the mine, unit operating costs
have reduced by 5% compared to the first half of 2001.

Outlook

The current zinc price remains below US$750/tonne compared to the 2001 average
price of US$886/tonne. However a significant shortfall of concentrates is
leading to smelter cutbacks (China has announced smelter reductions of 210,000
tonnes). The shortfall of concentrates continues to underpin significantly
reduced smelter treatment charges to ARCON's benefit. The ongoing weakness in
prices is likely to lead to a further reduction in mine supply, which is
expected to lead to further smelter cutbacks due to the shortage of
concentrates. Underlying consumption for zinc in Asia continues to grow which
combined with smelter cutbacks is likely to lead to a substantial rebound in
prices in the forthcoming months.

Until the anticipated strengthening of commodity prices occurs, ARCON will
reduce unit operating costs through the expansion of the milling capacity, which
will result in ARCON being well positioned to capitalise on higher zinc prices.

Due to the success of a gravity survey and prospectivity of the area, the
exploration potential, around the mine site and at the Rapla Prospect, will be
fully investigated over the following eighteen months through a drilling
programme.

T. O'Reilly Jnr.

Chairman

20th August 2002


ARCON International Resources P.l.c.
Consolidated Profit and Loss Account
For the 6 months ended 30th June 2002



  
                                                                                 Group
                                                                                             
                                                                       2002                  2001
                                                                      €'000                 €'000

Gross Value Metal Sold                                               22,654                22,503
Smelting Charges & Deductions                                      (12,176)              (12,387)
Turnover                                                             10,478                10,116

Cost of Sales
Production costs                                                   (10,137)              ( 8,700)
Depreciation                                                       ( 3,021)              ( 4,252)
                                                                   (13,158)              (12,952)

Gross (Loss) Profit                                                ( 2,680)              ( 2,836)

Other Operating Costs
Other Operating & General Administration                           ( 1,258)               (1,256)
Selling & Distribution                                             ( 1,177)               (1,050)
Foreign Exchange Gain/(Loss)                                         ( 177)               (1,851)
                                                                   ( 2,612)               (4,157)

Operating Profit/(Loss)                                            ( 5,292)               (6,993)
Mineral Exploration Costs Written Off                                ( 244)                ( 155)

Profit/(Loss) on
Ordinary Activities Before Interest                                ( 5,536)               (7,148)
Interest Receivable & Similar Income                                     21                   141
Interest Payable & Similar Charges                                   ( 663)               (3,855)
Gain on Settlement of Debt                                              697                     -

Loss on Ordinary Activities Before Taxation                        ( 5,481)              (10,862)
Tax on Loss on Ordinary activities                                        -                     -

Retained profit(loss) for the period                               ( 5,481)             ( 10,862)

Profit & Loss Account, Beginning of the Period                    ( 80,809)              (65,175)
Retained profit/(loss) for the Period                              ( 5,481)             ( 10,862)

Profit & Loss Account, End of Period                              ( 86,290)             ( 76,037)

Loss per Ordinary Share - Euro                                   ( €0.0195)            ( €0.0378)






ARCON International Resources P.l.c.
Consolidated Cash Flow Statement
For the 6 months ended 30th June 2002

                                                                 Group

                                                               2002            2001
                                                              €'000           €'000

Net Cashflow from Operating Activities                      (2,695)          ( 555)

Returns on Investments and Servicing of Finance              ( 950)         (4,093)
Capital Expenditure and Financial Investment                (1,525)          ( 778)
                                                             ______         _______

Net Cash Outflow before use of liquid resources and         (5,170)         (5,426)
Financing

Management of liquid resources                                   65          ( 103)

Financing                                                     4,455           4,419
                                                             ______          ______

Decrease in Cash                                             ( 650)        ( 1,110)


Reconciliation of net Cash flow to movement in Net
Funds/(Debt)
(Decrease) in cash flow for period                           ( 650)         (1,110)
Cash (inflow)/outflow from drawdown/repayment of            (4,455)         (4,419)
bank loans, net

Cash (inflow)/outflow from movement in liquid                 ( 65)             103
resources

Change in net debt arising from cash flows                  (5,170)         (5,426)

Gain on settlement of debt                                      846               -

Foreign Exchange Translation                                  3,383        (10,204)

Net Debt at beginning of period                            (33,001)        (87,992)
                                                             ______         _______
Net Debt at end of period                                  (33,942)       (103,622)






Arcon International Resources P.l.c.
Balance Sheets - 30th June 2002
                                                                              Group

                                                        2002                  2001
                                                        €'000                €'000
Fixed Assets
Mineral interests                                       25,906                88,977
Other Tangible Assets                                   11,186                32,675
                                                        37,092                121,652
Current Assets
Stocks                                                  1,049                 794
Debtors                                                 1,432                 131
Investments                                             1                     43
Cash at bank and on hand                                11                    4,695
                                                        2,493                 5,663



Current Liabilities
Bank Loans & Overdrafts                                   (12,972)          -
Trade Creditors                                           (3,835)           (4,148)
Accruals                                                  (4,422)           (5,473)
Amounts Falling due within one year                       (21,229)          (9,621)
Net Current Liabilities                                   (18,736)          (3,958)

Total Assets Less Current Liabilities                     18,356            117,694

Creditors Falling Due after More Than One Year
Loans                                                     (20,891)          (108,318)
Provision for Liabilities & Charges                       (3,999)           (3,278)
Net Assets                                                (6,534)           6,098

Capital And Reserves
Called up share capital                                   17,251            17,251
Capital Conversion Reserve Fund                           1,002             1,002
Share Premium Account                                     59,197            59,197
Profit & Loss Account                                     (86,290)          (76,037)
Foreign currency translation reserve                      2,306             4,685
                                                          (6,534)           6,098



Notes to the Financial Statements - 30th June 2002

 1. On 19th June 2002, ARCON announced a fully underwritten rights issue to raise
    €28.75 million (before expenses) which will be accounted for after
    the 30th June 2002 balance sheet date. Part of the rights issue proceeds
    will be used to repay debt of €7.6 million and a further €3.6 million of 
    debt will be satisfied by the issue of shares to a banking
    consortium, both of which are included in current liabilities as bank loans.

 2. The financial statements for the six month periods ended 30th June 2002 and
    30th June 2001 which were approved by the Directors on 20th August are
    neither audited or reviewed by our auditors. There have been no changes to
    existing accounting policies, which have been consistently applied
    throughout the period.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                             

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