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Arcon Int.Resources (AIN)

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Wednesday 30 April, 2003

Arcon Int.Resources

Preliminary Results

Arcon International Resources PLC
30 April 2003



                       ARCON International Resources Plc

              Preliminary Results for Year Ended 31 December 2002



   •Exploration success at R zone doubles mine's contained zinc metal and
    drilling continues

   •Mill treated 660,000 tonnes of ore to produce 102,000 tonnes of
    concentrate, containing 54,000 tonnes of zinc

   •Significant improvement in production levels to reach record milling rate
    in 4th Quarter of 735,000 tonnes per annum

   •A Rights Issue successfully raised €28.8 million and €3.6million shares
    issued to repay debt

   •Sales turnover increased to €20 million, despite the decline in zinc
    price

   •Year end loss reduced to €14.7 million

   •Access decline to R Zone under development

DUBLIN and LONDON: Wednesday, 30 April 2003 - In a very challenging environment
for all base metal miners, with zinc metal prices near record lows, ARCON
International Resources Plc today reported a reduced net loss of €14.7 million
for the year ended 31 December 2002 compared to a loss of €15.6 million in
2001.

Turnover for the year ended 31 December 2002 increased by 7% to €20.1 million
from €18.7 million in 2001, as a consequence of increased sales volumes despite
the fact that London Metal Exchange average prices declined by 16% to €827/t
($779/t) from an average price of €989/t ($886/t) in 2001.

The Galmoy mine achieved a significant improvement in operational performance
with production of 660,000 tonnes of ore and 45,000 tonnes of waste. Record
production levels were achieved in the 4th quarter reaching an annualised rate
of 735,000 tonnes per annum. As a result of these substantially higher
production rates, production costs increased to €21.3 million from €18.5
million - the main factors being an increase in the average number of people
employed and higher electricity and insurance costs.

The depreciation charge for the year of €7.2 million does not take account of
the resources located in the nearby R Zone, which has not yet been formally
declared commercial for depreciation purposes, pending its full delineation and
evaluation. It is expected that this will be completed during 2003, when the
revised depreciation charge will have a significant favourable impact on the
financial results.

An important development in 2002 was the major restructuring of ARCON's balance
sheet, which involved a reduction in the total indebtedness of the ARCON Group.
This significantly reduced the Group's debt servicing costs and facilitated the
implementation of the Group's strategy to enhance its future performance.

Shareholder funds and net assets increased from €51,000 to €14.3 million,
reflecting the impact of the successful €28.8 million 2002 Rights Issue and the
€3.6 million share issue to the banking syndicate as part of this
restructuring. Debt has since been reduced to €10.2 million in 2002 from €32.9
million in 2001 (pre refinancing), which includes an early repayment of €11.9
million of debt (to minimise interest charges), which is available for
subsequent drawdown.

The loss per share declined to €0.019 in 2002 from €0.054, primarily as a
result of an increase in the average of shares in issue in 2002 as a result of
the rights issue.

The funds raised from the Rights Issue have been partly used to fund the
exploration programme on several prospects in close proximity to the Galmoy
mine. One of these prospects, known as the R Zone, is within 125 metres of the
CW South orebody, which is part of the main operational area of the mine.

Exploration drilling commenced on the new R Zone in August. This has proven to
be ARCON's most significant discovery since the original discovery in 1986. In
March 2003, ARCON estimated an indicated resource of 2.0 million tonnes @ 20.6%
zinc, 8.1% lead and 75g/t silver. The grade and thickness of the R zone is
double that of the previously discovered Galmoy ore bodies. The area is still
open to the North-west and the discovery doubles the mine's contained metal
content and will extend the mine life into the next decade. ARCON will
investigate other similar geological anomalies close to the mine, which may also
contain further high grade resources.


Commenting on the improved results and new discoveries the Chief Executive,
Kevin Ross, said:

'Despite working in a very depressed global metals environment, I am delighted
that we have managed to increase our production rates and reduce our losses. I
am particularly pleased that our exploration team have discovered a new mineral
zone, which doubles the contained metal content of the mine. It not only has
delivered a massively rich orebody, but it has confirmed the continued
prospectivity of the Galmoy trend. In addition, the R Zone is still open and
gives hope of finding further tonnage. The gross value of the contained metal in
the R Zone resource at current prices is in the order of $400 million. This
discovery will extend the mine life into the next decade.

Furthermore, our exploration team has also identified other gravity anomalies
which will be investigated by drilling in the second and third quarters of 2003.
In addition, the Rapla zone (with inferred resources of 2.7 million tonnes at
6.9% zinc and 1.5% lead) is still open and prospective and we are confident of
adding further resources from this zone.'


Outlook

The completion of the rights issue provided the necessary funds to commence the
expansion programme designed to increase the milling capacity to 750,000 t.p.a.
and restart the exploration programme.

The Galmoy mine life will be extended into the next decade following the
company's exploration success. With the mine achieving significant operational
improvements, the mine is now well placed to benefit as the zinc price recovers
from the current very low levels and the US dollar reverts to its more usual
rate against the €.

With the current weakness of the € zinc price, the company has revised its
operating plans and has decided to fast track the mining of the R Zone. An
access decline was commenced in March using mine labour and equipment, with the
aim of being able to commence mining the R Zone ore in the latter part of 2003.
As a consequence of redeploying labour and equipment to this development, normal
ore production will be reduced during this period.

The early access to this high grade area will provide the mine with much needed
grade flexibility for mine planning and will enable the mill to be fed a
consistent high zinc grade to maximise concentrate production. During 2003, the
life of mine plans will be revised to optimise the mill capacity.

On exploration, the immediate priority in 2003 is to complete the delineation of
the R Zone. Following that the main focus will remain on other anomalies in the
Galmoy area. The discovery of the R Zone raises the geological prospectivity in
the immediate vicinity, especially to the east along the dominant G Fault.

Ends. Wednesday 30 April 2003

For further information

Kevin Ross
ARCON
+353 (56) 37100

Pauline McAlester  
Murray Consultants 
+353 (1) 498 0300

Keith Irons   
Bankside Consultants Ltd 
+44 (207) 444 4155  



Balance Sheet

at 31 December 2002


                                            2002            2001

                                            €'000           €'000

Fixed Assets

Mineral interests                           22,599          29,543

Tangible fixed assets                       11,027          13,237
                                            ______          ______

                                            33,626          42,780
                                            ______          ______

Current assets

Stocks                                      1,154             801

Debtors                                     1,172             872

Cash at bank and in hand                    1,885             215
                                            ______          ______

                                            4,211            1,888

Creditors: Amounts falling due             (10,284)          (18,149)

within one year                            _______           _______

Net Current Liabilities                    (6,073)          (16,261)

                                            ______            ______
Total Assets Less Current                  27,553             26,519

Liabilities


Creditors: Amounts falling due after

more than one year                         (8,681)            (22,484)


Provision for Liabilities                  (4,530)             (3,984)

and Charges                                _______              _______

Net Assets                                  14,342              51
                                            ______               ______
                                            ______               ______

Capital and reserves

Called up share capital                      30,189               17,251

Capital conversion reserve                   1,002                1,002

Share premium                                77,608               59,197

Profit and loss account                      (95,465)             (80,809)

Foreign currency translation reserve         1,008                3,410
                                              ______             _______
 
Equity Shareholders' Funds                   14,342               51
                                              _______             ______
                                              _______             ______


Profit & Loss Account

For the year ended 31 December 2002

                                                 2002              2001

                                                €'000             €'000


Turnover                                        20,070            18,726

Cost of Sales

Production costs                               (21,348)          (18,540)

Depreciation                                   (7,223)            (8,683)
                                                _______            ______

                                                (28,571)          (27,223)
                                                _______            _______


Gross loss                                      (8,501)           (8,497)


Operating Expenses                              (5,250)           (7,215)

Mineral exploration costs                       (346)             (168)
                                                  ______            ______


Operating loss                                  (14,097)           (15,880)

Exceptional restructuring items

- Additional depreciation of mine assets          -                (69,455)

- Forgiveness of debt and related interest       807               77,041
                                                  _____            ______


Loss on ordinary activities before interest      (13,290)          (8,294)

Interest receivable and similar income           72                230

Interest payable and similar charges            (1,438)            (7,573)
                                                   ______            ______


Loss on ordinary activities before taxation      (14,656)          (15,637)

Tax on loss on ordinary activities                 -                  -
                                                   ______           ______

Retained loss for the year                       (14,656)          (15,637)


Profit and loss account, at beginning of year    (80,809)          (65,172)
                                                    ________        ________

Profit and loss account, at end of year          (95,465)          (80,809)
                                                 ________           _______
                                                 ________           _______

Loss Per Ordinary Share                           €(0.019)         €(0.054)

- Basic and diluted                               ________          _______
                                                  ________          _______


Consolidated Cash Flow Statement

For year ended 31 December 2002

                                                       2002          2001

                                                      €'000         €'000

Net Cash Outflow from Operating Activities          (6,723)        (6,865)

Returns on Investments and Servicing of Finance      (218)         (7,395)

Taxation                                                -               -

Capital Expenditure and Financial Investment         (3,194)       (1,696)
                                                      _______      _______
      
Net Cash Outflow Before use of Liquid Resources

and Financing                                        (10,135)      (15,956)

Financing                                             12,069        10,141
                                                        ______     ______

Increase / (Decrease) in Cash at Bank and in Hand      1,934       (5,815)
                                                         _____     _____
                                                         _____     _____





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