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Arcon Int.Resources (AIN)

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Wednesday 19 June, 2002

Arcon Int.Resources

Restructuring&Prelim Results

Arcon International Resources PLC
19 June 2002


Not for release, publication or distribution in or into the United States,
Canada, Australia or Japan


19 June, 2002


        ARCON International Resources P.l.c. ('ARCON' or 'the Company')


PART I:     FINANCIAL RESTRUCTURING SECURES ARCON'S FUTURE

UNDERWRITTEN 4 FOR 1 RIGHTS ISSUE TO RAISE €28.75 MILLION


PART II:     Preliminary results for the year ended 31 December 2001


PART I: KEY POINTS


  • The Board has today announced a major restructuring of its financial
    position which will on completion, involve a reduction in the indebtedness
    of the ARCON Group from approximately US$100 million (€105.50 million) prior
    to the effect of the restructuring, to approximately US$22 million (€23.21
    million). This significantly reduces the Group's debt servicing costs,
    maintains employment at the Galmoy Mine, and facilitates implementation of
    the Group's strategy to enhance its future performance;


  • Shareholders will be offered, (conditional inter alia, upon the approval
    of requisite Resolutions at an Extraordinary General Meeting) an entitlement
    to participate in a 4 for 1 Rights Issue of 1,150,009,328 New Ordinary
    Shares at a price of €0.025 per New Ordinary Share, to raise in aggregate
    €28.75 million prior to expenses. The Rights Issue Price represents a
    discount of approximately 16.7% relative to the closing market price per
    Existing Ordinary Share on the Irish Stock Exchange on 30 April, 2002 (being
    the date on which trading in the Existing Ordinary Shares was suspended) of
    €0.03. The New Ordinary Shares (each having a nominal value of €0.01
    following a Share Split) deemed held for the purposes of Rights Issue
    entitlements will be the number of Existing Ordinary Shares actually held on
    the Record Date.


  • As a result of the financial restructuring and Rights Issue, Equity
    Shareholders' Funds will increase, on a pro forma basis, from €51,000 as per
    the consolidated balance sheet at 31 December, 2001, to €31.4 million. A pro
    forma balance sheet for the ARCON Group as at 31 December, 2001, which has
    been prepared to show the effect of the Share Split, Rights Issue, issue of
    Conversion Shares in satisfaction of bank debt and application of the net
    proceeds of the Rights Issue to settle all current bank obligations, is
    contained at the Appendix to Part I of this announcement.


  • Sir Anthony O'Reilly has given an irrevocable undertaking to take up the
    Rights associated with the New Ordinary Shares in which he is beneficially
    interested, being 123,873,231 New Ordinary Shares representing approximately
    43.1% of the Existing Issued Ordinary Share Capital, with a pro rata
    entitlement to 495,492,924 Rights Issue Shares. Sir Anthony O'Reilly and
    Indexia Holdings Limited, a Cypriot company owned and controlled by Sir
    Anthony O'Reilly, has agreed to underwrite the balance of the Rights Issue;


  • Planned capital expenditure programme of €5.7 million to increase the
    capacity at the Company's wholly owned Galmoy Mine to 720,000 t.p.a. in
    order to derive maximum benefit from any recovery in zinc prices;


  • The Directors have estimated that for every US$100/tonne increase in the
    price of zinc, turnover of the ARCON Group would increase by approximately
    US$60 per metric tonne of contained zinc metal sold, assuming maintenance of
    current contract terms and of a zinc concentrate grade of 53.5%;


  • Intense exploration programme, with the objective of discovering and
    proving of additional reserves in order to extend the life of the Galmoy
    Mine, by:


 1. focussing on drilling areas in the vicinity of the Galmoy Mine where the
    mineralisation remains open and at anomalies recently identified by gravity
    survey;


 2. prioritising an extension of gravity surveying over other areas in the Galmoy
    exploration licence area in order to identify further drilling targets;


 3. drilling at the prospective Rapla area; and


 4. continued exploration of the area extending from Rapla towards the Lisheen
    mine which is held by ARCON under exclusive prospecting licence;


  • Restoration of listing in the Company's Existing Ordinary Shares on the
    Official Lists and of trading on the Irish Stock Exchange and the London
    Stock Exchange following issue of this announcement;


  • Expected publication and posting to Shareholders today of the Group's
    Annual Report and Accounts, 2001 and of a Prospectus containing details
    inter alia of the financial restructuring and the Rights Issue and convening
    respectively the Annual General Meeting and an Extraordinary General Meeting
    of the Company for 12 July, 2002.



PART II: KEY POINTS

Summary of preliminary results for each of the two years ended 31 December,
2001:
                                                                                       2001                  2000
                                                                                      €'000                 €'000

Turnover                                                                             18,726                27,185
Operating loss - continuing operations (pre exceptional items)
                                                                                   (15,712)               (1,484)
Loss after tax for the financial year                                              (15,637)              (10,478)
Loss per share (basic) - cents                                                        (5.4)                 (3.6)


  • The fall in turnover for the year relative to 2000 reflects the
    substantial fall in zinc prices over the period while production in the
    first nine months of the period was limited due to very difficult mining
    conditions in the CW orebody. Ore mining and processing volumes improved
    substantially in the last quarter, 2001 and this trend has continued into
    2002, with a 17% and 20% increase in milled tonnage and concentrate produced
    respectively in the first quarter 2002 relative to the same period last
    year;


  • The loss for the year includes a net gain of €7.6 million pursuant to the
    financial restructuring referred to herein. Additionally, as a result of
    amended forecasts of zinc prices over the life of the Galmoy Mine and
    revision of reserve estimates as at 31 December, 2001, the carrying value of
    the Group's investment in the mine and mine assets has been written down to
    €42.8 million, resulting in an exceptional depreciation charge of €69.5
    million.

Commenting on the proposals, Tony O'Reilly Jnr, Chairman of ARCON said:


'While the Company has focussed in 2001 on reversing the decline in zinc yields
and productivity at the Galmoy Mine experienced in 2000, the continued weakness
in the zinc price has impacted on the performance of the ARCON Group.
Negotiations with the members of the Banking Syndicate in relation to the
Group's obligations under its syndicated debt facility has also been a priority
for management over the last year.


Today's announcement of the financial restructuring, which is being executed
with the assistance of our largest shareholder, Sir Anthony O'Reilly, together
with the Rights Issue, is a vital step in restoring ARCON to financial health,
maintaining employment at the Galmoy Mine, and ensuring it will be well
positioned to capitalise on a rebounding zinc price. Moreover the Group's
intended commencement of an intense exploration programme in the vicinity of the
Galmoy Mine site and at Rapla, which will be financed from the net proceeds of
the Rights Issue, will be of fundamental importance in achieving the objective
of extending the mine life of the ARCON Group.'



For reference:


Mr. Kevin Ross                                          Mr. Jim Milton / Ms. Pauline McAlester
ARCON International Resources P.l.c.                    Murray Consultants Ltd
Telephone: + 353 1 667 3063                             Telephone: + 353 1 632 6400



Davy Stockbrokers and Davy Corporate Finance Limited, each of which are
regulated in Ireland by the Central Bank of Ireland, are acting for ARCON
International Resources P.l.c. and are not acting for any person other than
ARCON and will not be responsible to any person other than ARCON for providing
the protections afforded to their customers or for providing advice in
connection with the Rights Issue or any of the Proposals referred to herein.


This summary should be read in conjunction with the full text of the following
announcement. Part I of the announcement contains further details on the
proposed financial restructuring and proposed Rights Issue and the Appendix to
Part I contains a pro forma balance sheet for the ARCON Group as at 31 December,
2001 in connection with the proposals. Part II contains the Preliminary Results
of the ARCON Group for the year ended 31 December, 2001. Definitions of certain
expressions used in this summary and the following announcement are set out at
the end of the announcement.


                      ARCON International Resources P.l.c.


                                     PART I


 FINANCIAL RESTRUCTURING AND UNDERWRITTEN 4 FOR 1 RIGHTS ISSUE TO RAISE €28.75
                                    MILLION




Introduction

Further to the announcement on 30 April, 2002, the Board of ARCON International
Resources P.l.c. is pleased to announce the details of a very significant
restructuring of the ARCON Group's balance sheet and finances comprising a
reduction in outstanding debt by US$78 million (approximately €82.30 million)
and an equity fundraising to raise €28.75 million to ensure the ongoing
viability of the Group. While the Group's future profitability will continue to
be primarily influenced by the zinc price, the repositioning resulting from the
refinancing announced today will, by enabling implementation of plans to
increase production at Galmoy, maximise benefit to be derived by ARCON from any
recovery in zinc prices. Moreover, the Directors are confident that a
substantial discovery and proving of additional reserves pursuant to the Group's
scheduled exploration programme, would materially extend the mine life of the
ARCON Group.




Financial Restructuring


In an environment of a decline in the last year in, and ongoing volatility of,
the zinc price, the ARCON Group has experienced a reduction in its cashflow and
consequently has been unable to meet its obligations under its Banking Syndicate
debt facility. Negotiations in relation to the Group's obligations under this
facility, (under which in aggregate US$85 million was outstanding as at 31
March, 2002), and the timing of repayment, have been ongoing over the last year.


As a result of negotiations with the Banking Syndicate and following agreement
by Sir Anthony O'Reilly to continue to support the Company, Fairfield Holdings
Limited, a Cypriot company, owned and controlled by Sir Anthony O'Reilly, has
acquired US$82 million of the debt owed to the Banking Syndicate and has written
down this outstanding debt to US$20 million. Interest on the debt is charged at
a variable rate, currently 8% per annum, and the debt falls due for minimum
repayment instalments commencing on 30 June, 2003 and ending in June, 2006. The
security on the debt remains in place.


In addition, conditional on approval of the Resolutions, ARCON has reached
agreement with the Banking Syndicate, to issue in aggregate 143,751,165 New
Ordinary Shares at a price of €0.025 (the Rights Issue Price), representing in
aggregate 9.99% of the issued ordinary share capital of the Company following
the Rights Issue, in satisfaction of all remaining obligations to the Banking
Syndicate, including €3.59 million in debt. In the event that the Rights Issue
does not proceed, the number of Ordinary Shares to be so allotted would
(conditional on the Directors having been granted appropriate allotment
authorities), be 28,750,232, representing 9.99% of the Existing Issued Ordinary
Share Capital.


Over the two years up to 31 March, 2002 Indexia has provided funds by way of
loan to the Group totalling US$12.25 million (€12.92 million) for general
working capital purposes. The loans were unsecured and interest thereon of in
aggregate US$550,000 (€580,000) to 31 March, 2002 was capitalised in full. Since
31 March, 2002 Indexia has advanced a further US$1.75 million (€1.85 million) to
ARCON and has committed to advance an additional US$0.75 million (€0.79 million)
pending completion of the Rights Issue, being a total of US$15.3 million (€16.14
million). Pursuant to an agreement dated 19 June, 2002, Indexia has agreed to
transfer to ARCON Zinc Ltd. (a wholly owned subsidiary of the Company) US$9
million (€9.55 million) of debt owed by ARCON to Indexia in consideration of €1
and ARCON has agreed to repay to Indexia US$4.4 million (€4.64 million) (which
will include all funds advanced subsequent to 31 March, 2002) from the net
proceeds of the Rights Issue. The balance of debt, which is unsecured, due to
Indexia as at 31 March, 2002 of US$1.89 million and US$168,000 accrued interest
(€2 million and €178,000 respectively) incurs interest at a variable rate,
currently 8% per annum and falls due for repayment from production cashflows of
the ARCON Group.


Sir Anthony O'Reilly and Indexia Holdings Limited also provided guarantees in
2001 of €6.5 million (index linked) to Bank of Scotland (ICC Bank) as additional
security to that bank in respect of (1) the Galmoy Mine closure bond
(established in accordance with the requirements of the planning permission
issued to the Company in respect of the Galmoy Mine); and (2) the Galmoy Mine
licence bond (established in accordance with the State Mining Licence) issued by
ICC Bank and as a result of which ICC Bank released to ARCON Mines Limited €4.8
million which has been utilised by ARCON Mines Limited for general working
capital purposes.




Rights Issue

As part of its financial restructuring and in order to finance a capital
expenditure programme to increase capacity at the Galmoy Mine and to continue
the commercial exploitation of its assets, Shareholders in ARCON are being
invited to apply under a Rights Issue for the Rights Issue Shares at an Issue
Price of €0.025 (payable in full on application and free of all expenses), on
the following basis:


              4 Rights Issue Shares for every 1 New Ordinary Share


deemed to be held by them at the close of business on 9 July, 2002 ('the Record
Date'), and so on in proportion for any other number of New Ordinary Shares
deemed to be held, and otherwise on the terms and conditions to be set out in
the Prospectus and in the Provisional Allotment Letter. The number of New
Ordinary Shares deemed held on the Record Date for the purposes of calculating
the Rights entitlement of Qualifying Shareholders (which assumes the Share Split
referred to be below is approved and becomes effective), will be the number of
Existing Ordinary Shares held.


Share Split


Because the Rights Issue Price represents a discount to the nominal value of the
Existing Ordinary Shares of €0.06 and section 27 of the 1983 Act prevents a
company from issuing shares at a price less than their nominal value, it is
proposed that each Existing Ordinary Share be split into one New Ordinary Share
of nominal value €0.01 and one Deferred Share of nominal value €0.05. Each
resulting New Ordinary Share will have the same rights (including voting,
dividend rights and rights on a return of capital) as each Existing Ordinary
Share. Share certificates for the Existing Ordinary Shares will remain valid for
the same number of New Ordinary Shares arising. The rights attaching to the
Deferred Shares, which will not be listed, will render them effectively
valueless. It is not intended to issue certificates in respect of the Deferred
Shares.


The Share Split, and accordingly the Rights Issue, is conditional on Shareholder
approval which is intended to be sought at the Extraordinary General Meeting.


Irrevocable Commitments and Underwriting


Sir Anthony O'Reilly has given an irrevocable undertaking to take up the Rights
associated with the New Ordinary Shares in which he is beneficially interested,
being 123,873,231 New Ordinary Shares representing 43.1% of the Existing Issued
Ordinary Share Capital, with a pro rata entitlement to 495,492,924 Rights Issue
Shares. The balance of the Rights Issue is being underwritten by Sir Anthony
O'Reilly and Indexia.


The irrevocable and underwriting commitments given by Sir Anthony O'Reilly, and
accordingly the Rights Issue, are conditional, inter alia, on Shareholder
approval of the Waiver Resolution, further detail in relation to which is set
out under the section entitled 'Waiver of Obligation to Make a General Offer
under Rule 9' below.




Directors' Participation


The Directors, whose shareholdings comprise in total 1,965,032 Existing Ordinary
Shares, amounting to 0.68% of the Existing Issued Ordinary Share Capital of the
Company, intend to participate in the Rights Issue.


The Rights Issue Shares will be in registered form and will, when issued and
fully paid, rank pari passu in all respects with the New Ordinary Shares,
including the right to receive all dividends and other distributions thereafter
declared, paid or made. Further details of the Rights Issue, and the terms under
which it is being made, including the procedure for acceptance and payment, will
be contained in a Prospectus expected to be published by the Company today. The
Directors expect that Provisional Allotment Letters relating to the Rights Issue
will be posted to Shareholders on the day of the EGM.


The proposed Rights Issue will be conditional on:


 a. approval of Resolutions No. 1 to No. 7 (inclusive) to be proposed at the EGM;


 b. Admission becoming effective by no later than 8.00 a.m. on 15 July, 2002 (or
    such later time and date as the Company and the Underwriters may agree); and


 c. the Underwriting Agreement becoming unconditional in all respects and not
    having been terminated in accordance with its terms.


It is expected that these conditions will be satisfied and that dealings in the
Rights Issue Shares, nil paid, will commence on 15 July, 2002. The latest time
and date for payment under the Rights Issue is expected to be 3.00 p.m. on 2
August, 2002.


Use of Proceeds of the Rights Issue


The proceeds of the Rights Issue will be used to fund a capital expenditure
programme over the forthcoming year at the Galmoy Mine which, through to the end
of 2003 comprises three main elements: expansion of the mine water treatment
plant and access development and infrastructure installation in the mine, which
are necessary for the continued operation and upkeep of the Galmoy Mine, and a
mill expansion programme to increase the milling capacity up to 720,000 t.p.a..
The total expected cost of this programme during 2002 and 2003 is €5.7 million.
Further details in relation to the plans to increase capacity are set out in the
section entitled 'Strategy of the ARCON Group' below.


The balance of the net proceeds of the Rights Issue will be used to repay
creditors, including banking debt (other than to the Banking Syndicate) of
US$3.3 (approximately €3.48 million) and including Indexia which will receive
US$4.4 million (approximately €4.64 million), to fund an exploration programme
primarily focussed around the Galmoy Mine and at Rapla at a budgeted initial
cost of €3.0 million, and for general corporate and working capital purposes.




Strategy of the ARCON Group

Prior to the effect of the financial restructuring detailed herein, total
indebtedness of the ARCON Group was US$100 million (€105.50 million). This level
of debt, combined with reduced Group cash flows, has exposed the ARCON Group to
considerable uncertainty with regard to the Group's survival over the past year.
Assuming completion of the debt restructuring arrangements, and the application
of the Rights Issue proceeds, the ARCON Group will have outstanding loans of
approximately US$22 million (€23.21 million). Interest due under these debt
facilities will therefore be significantly reduced. This will leave ARCON in a
substantially improved debt position and will, the Directors believe, ensure
that the Shareholders will be better placed to benefit from an anticipated
improvement in ARCON's performance.


Following this financial restructuring, and the consequent reduction in the cost
of debt servicing, ARCON's strategy (the execution of which will rely on the
proceeds of the Rights Issue) to enhance its future performance is two fold:
firstly, to achieve greater production efficiency at the Galmoy Mine, and
secondly, to carry out further exploration drilling on a number of targets in
proximity to the Galmoy Mine and the prospective Rapla area.


(a)     Production

ARCON intends to lower its cash operating unit cost of production at the Galmoy
Mine by further increasing the volume of ore milled to levels in excess of
650,000 t.p.a., (the equivalent of which has been milled over the six months
ending 31 March, 2002).


During the aforesaid period the mining rate has been 720,000 t.p.a. (ore and
waste) and following the completion of a waste development programme associated
with the development of underground infrastructure during the second quarter
2002, the Directors expect the waste rock production to decrease significantly
in the second half of 2002.


A number of planned modifications to the mill circuit will enable the milling
rate to increase from 650,000 t.p.a. to 720,000 t.p.a. and, in addition, is
expected to improve recoveries and concentrate grade. These modifications
include uprating the mainline pumps, increasing the instrumentation levels,
installation of forced air flotation mechanisms in the zinc flotation circuit
and increasing the leach circuit capacity.


The expected increase in throughput will reduce the unit cost as a large
proportion of the operating costs are fixed costs. In addition, the Company is
carrying out a review of its major production costs, particularly explosives
(using lower cost alternatives), power (reducing unit consumption through energy
efficiency programmes) and reagents (reducing unit consumption).


        (b)     Exploration

ARCON carried out a detailed gravity survey in 2001 covering an area of 25 kms2
from an area adjacent to the Galmoy Mine site to the Rapla area, 6 km from the
Galmoy Mine. Drill hole information and this gravity survey have been
interpreted as identifying a geological fault linking the source 'G' fault at
the Galmoy Mine to the Rapla area. As a consequence, the Company has identified
three gravity anomalies, which, the Directors believe, justify further drilling.
In addition, this interpretation also indicates a large area of potential
between Galmoy and Rapla. It is ARCON's intention to further extend this style
of gravity survey over other areas on its Galmoy exploration licence area and
around the Galmoy Mine area to identify additional drilling targets. The
objectives of this exploration programme are:


 i. to increase the mineral resources in the vicinity of the Galmoy Mine by
    drilling areas where the mineralisation remains open and drilling of
    recently identified gravity anomalies;


ii. to further explore the potential identified at Rapla through drilling.
    Drilling to date has outlined a contiguous zone, containing an inferred
    resource of circa 2.7 million tonnes at 6.9% Zn, 1.5% Pb. A fault, thought
    to be the source of the mineralising fluids, has been identified. The zone
    is open to the east along the strike of the fault and sulphur isotope
    evidence indicates an eastward source to the mineralisation. This will be
    tested through the drilling programme;


iii. to continue exploring the prospective geological area stretching 13km from
    Rapla in the northeast, through Galmoy, towards the Lisheen mine in the
    southwest, which is held by ARCON under exclusive prospecting licence,
    through drilling and geophysical methods; and


iv. to continue work on all its other prospecting licences by data collection,
    geophysical methods and drilling programmes as required.


The exploration programme is estimated to cost an initial €3.0 million and will
be funded from the proceeds of the Rights Issue and production cashflow, with
further expenditure to be determined depending on results.


ARCON will also continue to examine other exploration, development and
production mineral opportunities with particular attention to those mining
opportunities with a low cost of production where the ARCON Group's mining and
exploration experience can be utilised.




Working Capital


The Directors are of the opinion that, having regard to existing cash resources
and available bank and other facilities, and taking into account the net
proceeds of the Rights Issue, the working capital available to the Group is
sufficient for its present requirements, that is, for at least the next 12
months from today.


If the Rights Issue does not become unconditional in all respects, ARCON will
have insufficient working capital to continue trading for any period of time. In
these circumstances, alternatives available to the Board would be extremely
limited and may involve cessation of trading and/or liquidation. In the event
thereof, the Board considers that, after payments have been made to creditors,
there would be no surplus remaining for distribution to Shareholders.




Current Trading and Prospects



In the first quarter of 2002 ARCON Mines Limited milled 162,650 tonnes of ore at
an average grade of 10.0%, producing 26,232 tonnes of zinc concentrate,
representing a 17% and 20% increase in milled tonnage and concentrate produced
respectively in the period, relative to the same period last year. Sales for the
period were 26,828 tonnes of zinc concentrate at an average zinc price of US$798
/tonne resulting in turnover of €5.6 million.


The Group's future profitability will be primarily influenced by the zinc price.
Industry forecasters have suggested that zinc prices will average US$960/tonne
in the second half of 2002 and US$1,036/tonne in 2003. The Directors have
estimated that for every US$100/tonne increase in the price of zinc, turnover of
the ARCON Group would increase by US$59.77 per metric tonne of contained zinc
metal sold, assuming maintenance of current contract terms and of a zinc
concentrate grade of 53.5%;


The Directors believe that the financial restructuring of the Group, as
summarised herein, and the Rights Issue will enable the Group to focus on its
plans to increase production at the Galmoy Mine and thereby derive maximum
benefit from any recovery in zinc prices. In addition, the Directors believe
that a substantial discovery and proving of additional reserves near the Galmoy
Mine and at Rapla would materially extend the mine life of the ARCON Group. On
this basis, the Directors believe that the ARCON Group will be well positioned
for growth.




Waiver of Obligation to Make a General Offer under Rule 9

Sir Anthony O'Reilly, who, with his wife, Lady O'Reilly owns or controls (within
the meaning of the Takeover Panel Act, 1997) 126,839,506 Existing Ordinary
Shares in ARCON, has given an irrevocable undertaking to participate in the
Rights Issue to the full extent of his pro rata entitlement (being the
entitlement associated with those New Ordinary Shares in which he, but not his
wife, is beneficially interested, i.e. 123,873,231 New Ordinary Shares with a
pro rata entitlement to 495,492,924 Rights Issue Shares). In addition, Sir
Anthony O'Reilly, with Indexia, has agreed to underwrite the balance of the
Rights Issue.


Under Rule 3.3 of Part A of the Takeover Rules, Sir Anthony O'Reilly and his
family are presumed to be acting in concert ('the Concert Party'). Sir Anthony
O'Reilly's children hold in aggregate 1,549,333 Existing Ordinary Shares. In
total therefore, Sir Anthony O'Reilly and his family owns or controls 44.66% of
the Existing Issued Ordinary Share Capital (being 128,388,839 Existing Ordinary
Shares, which shareholding would attract a pro rata entitlement to subscribe for
513,555,356 Rights Issue Shares). Of this amount, Tony O'Reilly Jnr. owns
1,359,079 Ordinary Shares, which shareholding would attract a pro rata
entitlement to subscribe for 5,436,316 Rights Issue Shares.


Consequent to the irrevocable undertaking and underwriting commitment given by
Sir Anthony O'Reilly and, in particular, in the event of Sir Anthony O'Reilly
being called upon to fulfil all of his underwriting commitment, the shareholding
owned or controlled by Sir Anthony O'Reilly and/or that owned or controlled by
any other member of the Concert Party, may be increased by more than 0.05% of
the then issued share capital of the Company. Such a percentage increase would
trigger an obligation under the Takeover Rules on such one or more members of
the Concert Party as the Panel shall direct to make a general offer for the
balance of the issued ordinary share capital of the Company, unless such
obligation was waived by the Panel.


The Panel has agreed, subject inter alia to the passing by a majority of the
Independent Shareholders, on a poll at the EGM of a resolution approving the
potential increase in the Concert Party's interest in the Company up to a
maximum of 80.7% of the Enlarged Issued Ordinary Share Capital of the Company,
to waive the obligation on the Concert Party to make a general offer under Rule
9 of the Takeover Rules which might otherwise arise pursuant to participation in
the Rights Issue and the Underwriting Agreement.


It is intended that a Resolution will be to be proposed for consideration at the
EGM in relation to this matter and independent advice to the Independent
Directors (being all of the Directors other than Tony O'Reilly Jnr.) and the
Independent Shareholders will be provided thereon by Davy Corporate Finance
Limited in the Prospectus.


Pursuant to the approval of this Resolution and, in circumstances where the
number of New Ordinary Shares in which members of the Concert Party are, in
aggregate, interested following the Rights Issue, represents more than 50% of
the issued share capital of the Company, there will be no restrictions under the
Takeover Rules on Sir Anthony O'Reilly and/or any other member of the Concert
Party acquiring additional Ordinary Shares in the future.




Results for the year ended 31 December 2001


The Company's preliminary results for the year ended 31 December, 2001 are set
out in Part II of this announcement and the Company's annual report and accounts
for the year ended 31 December, 2001 are expected to be posted today.




Shareholder Documentation


The Company also expects to post to Shareholders today the following
documentation containing further details on the proposals:


        -     Prospectus containing full details on inter alia the debt
        restructuring, the Rights Issue (including procedure for acceptance and
        payment thereunder), the prospects and strategy of the ARCON Group and
        including Notice of the Extraordinary General Meeting and a Form of
        Proxy for use at that meeting; and


        -     Annual Report and Accounts, 2001 including Notice of the Annual
        General Meeting and a Form of Proxy for use at that meeting.




Annual General Meeting


The Company intends to convene its Annual General Meeting to be held at The
Westbury Hotel, Grafton Street, Dublin 2, Ireland at 10.00 a.m. on 12 July,
2002, at which resolutions will be proposed in respect of:


  • the receipt of the accounts for the Company and the Group for the year
    ended 31 December, 2001 and the reports of the Directors and the auditors
    thereon;


  • the re-election of Mr. Tony O' Reilly Jnr. and Mr. J. McCarthy, both of
    whom are retiring by rotation, as Directors;


        -     the giving of authority to the Directors to determine the
        remuneration of the auditors; and


        -     the transaction of any other ordinary business.




Extraordinary General Meeting


The Company intends to convene an Extraordinary General Meeting to be held at
The Westbury Hotel, Grafton Street, Dublin 2, Ireland at 10.15 a.m. on 12 July,
2002 (or as soon as possible thereafter as the Annual General Meeting convened
for the same date and at the same place shall have been concluded or adjourned).
At this meeting, it is intended that a number of resolutions will be proposed,
relating to the Share Split and the resultant creation of Deferred Shares and
associated matters. Shareholder approval is also intended to be sought for an
increase in the authorised share capital of the Company, a grant of allotment
authority to the Directors in respect inter alia of the Rights Issue Shares and
the Conversion Shares and a dis-application of pre-emption rights. A Resolution
is also intended to be proposed to facilitate the issue and allotment of
28,750,232 Ordinary Shares to the Banking Syndicate in the event that the other
Resolutions, on which the Rights Issue is inter alia conditional, are not
approved and the Rights Issue does not proceed. The Waiver Resolution will also
be considered and voted on at the EGM.




Directors' Recommendations


The Prospectus will contain recommendations to Shareholders from all of the
Directors in the case of the Resolutions other than the Waiver Resolution, and
in the case of that Resolution only, from the Independent Directors, to vote in
favour of each of the Resolutions. The Directors, intend to vote accordingly in
respect of their own beneficial holdings, which, in the case of all of the
Directors, amount to in aggregate 1,965,032 Existing Ordinary Shares,
representing approximately 0.68% of the Existing Issued Ordinary Share Capital
of the Company, and in the case of the Independent Directors only, amount to in
aggregate 605,953 Existing Ordinary Shares, representing approximately 0.21% of
the Existing Issued Ordinary Share Capital of the Company.






Expected Timetable of Principal Events


The following are the expected dates in relation to the timing of the EGM and
AGM and under the Rights Issue. Such dates may be adjusted by ARCON, in which
event details of new dates will be notified to the Irish Stock Exchange, the UK
Listing Authority and the London Stock Exchange and, where appropriate, to
Shareholders.



Event                                                                                                        Date
Readmission of the Existing Ordinary Shares                                                         19 June, 2002

(following publication of this announcement)

Publication of the Prospectus and of the Annual Report                                              19 June, 2002

Record Date for the Rights Issue                                                close of business on 9 July, 2002

Latest time and date for receipt of completed Forms of Proxy for                      10.00 a.m. on 10 July, 2002
the Annual General Meeting

Latest time and date for receipt of completed Forms of Proxy for                      10.15 a.m. on 10 July, 2002
the Extraordinary General Meeting

Time and date of Annual General Meeting                                               10.00 a.m. on 12 July, 2002

Time and date of Extraordinary General Meeting                                        10.15 a.m. on 12 July, 2002

Share Split effective                                                                               12 July, 2002

Provisional Allotment Letters despatched                                                            12 July, 2002

Commencement of dealing in the New Ordinary Shares following                           8.00 a.m. on 15 July, 2002
Admission

Commencement of dealing in the Rights Issue Shares (nil paid)                          8.00 a.m. on 15 July, 2002
following Admission

Latest time and date for splitting Provisional Allotment Letters                       3.00 p.m. on 31 July, 2002
(nil paid)

Latest time and date for acceptance and payment in full                               3.00 p.m. on 2 August, 2002

Latest time and date for splitting Provisional Allotment                             3.00 p.m. on 21 August, 2002

Letters (fully paid)

Latest time and date for registration of renunciation                                3.00 p.m. on 23 August, 2002

CREST Stock Accounts credited for Rights Issue Shares in                                          27 August, 2002
uncertificated form

Definitive share certificates in respect of Rights Issue Shares                      on or before 30 August, 2002
despatched



19 June, 2002


                               APPENDIX TO PART I


      PRO FORMA BALANCE SHEET FOR THE ARCON GROUP AS AT 31 DECEMBER, 2001



The following is an unaudited pro forma balance sheet of ARCON as at 31
December, 2001, which has been prepared as stated below and which will also be
contained in the Prospectus expected to be published today, together with a
report by Andersen thereon.



        1.     Basis of Preparation

Set out below is an unaudited pro forma balance sheet of ARCON which has been
prepared on the basis set out below to show the effect of the following matters
(collectively, the 'Transaction') on the balance sheet of ARCON as at 31
December, 2001 on the basis that the Transaction took place on 31 December,
2001.


 i. the Share Split of each Existing Ordinary Share into one New Ordinary Share
    and one Deferred Share;


ii. the receipt of €28,750,000 from the underwritten Rights Issue;


iii. the issue of New Ordinary Shares in satisfaction of €3,588,000 of bank
    debt; and


iv. the application of the proceeds of the Rights Issue to settle all current
    bank obligations and costs arising from the Rights Issue.


It has been prepared for illustrative purposes only and, because of its nature,
may not give a true picture of the financi al position of ARCON International
Resources P.l.c. following the Transaction.


        2.     Pro Forma Balance Sheet


                                                 Adjustments

                                  ARCON                                     Share                      Pro Forma 
                                                                                                         Balance
                       31 December 2001       Share        Rights        Issue to        Proceeds          Sheet
                                              Split         Issue           Banks     Application          €'000
                                (Note 1)      €'000         €'000           €'000           €'000  
                                  €'000      

                        
Fixed Assets                     29,543                                                                   29,543
Mineral
Interests

Tangible Fixed                   13,237                                                                   13,237
Assets
                                 42,780           -             -              -               -          42,780

Current Assets                      801                                                                      801
Stocks
Debtors                             872                                                                      872
Cash at bank                        215                    27,750              b)         (7,166)     d), 20,799
                                                                                                           e), f)

                                  1,888          -         27,750              -          (7,166)         22,472
Current
Liabilities                     (7,186)                                    3,588           3,598            d) -

Short term loans
Loan stock                      (3,239)                                                    3,239            e) -
Creditors due
before one year                 (7,724)                                                      329       f) (7,395)

                               (18,149)          -             -          3,588            7,166          (7,395)
Net Current
Assets/                        (16,261)                   27,750          3,588                           15,077
(Liabilities)

Creditors due
after one year                 (22,484)                                                                  (22,484)
Provisions for
Liabilities and
Charges
                                (3,984)                                                                   (3,984)
Net Assets                           51          -        27,750          3,588                -          31,389

Capital &
Reserves
Called up share
capital -                                   14,376            a)                                          14,376
deferred
Called up share                  17,251    (14,376)   a) 11,500        b) 1,438                c)         15,813
capital
Capital
conversion                        1,002                                                                   1,002
reserve
Share premium                    59,197                  16,250        b) 2,150                c)        77,597
Profit & loss                  (80,809)                                                                 (80,809)
account
Foreign currency
reserve account                   3,410                                                                   3,410

Equity
Shareholder's                        51           -      27,750           3,588                -         31,389
Funds



Notes:


 1. The consolidated balance sheet of the ARCON Group has been extracted, without
    material adjustment, from the audited consolidated financial statements for
    the year ended 31 December, 2001.


 2. The following adjustments have been made:


 a. Adjustment to record the Share Split of each nominal value €0.06 Ordinary
    Share into one New Ordinary Share with a nominal value of €0.01 and one
    Deferred Share with a nominal value of €0.05.


 b. Adjustment to record the net proceeds of approximately €27,750,000 from the
    Rights Issue of 1,150,009,328 New Ordinary Shares at a Rights Issue Price of
    €0.025 per share (after deducting estimated expenses of €1,000,000).


 c. Adjustment to record the issuance of 143,751,165 New Ordinary Shares at a
    Rights Issue Price of €0.025 per share in satisfaction of all obligations
    owed to the Banking Syndicate, including €3,588,000 of debt.


 d. Adjustment to record the repayment of other bank debt of €3,598,000 from
    proceeds of the Rights Issue.


 e. Adjustment to record the repayment of the 2000 and 2001 working capital
    advances from Indexia Holdings Limited of €3,239,000 from proceeds of the
    Rights Issue.


 f. Adjustment to record the repayment of the bank overdraft from proceeds of the
    Rights Issue.


 1. The pro forma balance sheet does not reflect trading or any other
    transactions of ARCON since 31 December, 2001.


 2. Euro amounts contained in the pro forma balance sheet have, where relevant,
    been translated from US dollars at a rate of €1:US$0.8904, being the
    exchange rate prevailing on 31 December, 2001.




                      ARCON International Resources P.l.c.


                                    Part II


                              Preliminary results

                      for the year ended 31 December 2001


ARCON International Resources P.l.c., today announces its preliminary results
for the year ended 31 December, 2001.



                 'ARCON Announces Year 2001 Preliminary Results

                    Financial Restructuring and Rights Issue

                         Exploration Results and Plans


ARCON International Resources P.l.c. ('ARCON') today reports a net loss of €15.6
million for the year ended December 31, 2001, compared to a loss of €10.5
million for 2000. Turnover for the year was €18.7 million compared to €27.2
million for the previous year and reflects the substantial fall in zinc prices
in 2001.


In year 2001, ARCON milled 548,217 mt of ore and produced 88,423 tonnes of
concentrate. Production was limited for the first nine months due to very
difficult mining conditions in the CW orebody though a substantial improvement
in ore mining and processing volumes in the 4th quarter of 2001 to an annual
equivalent rate of 666,000 tonnes has been achieved. This improvement has
continued in 2002 with a 17% and 20% increase in milled tonnage and concentrate
produced respectively in the first quarter 2002 relative to the same period last
year.


The loss for the year includes a net gain of €7.6 million arising from the
restructuring of Group assets and liabilities, as announced today. As a
consequence of this restructuring, loans have been reduced from the equivalent
of €93.9 million at 31 December, 2000 to the equivalent of €32.9 million at 31
December, 2001. Additionally, as a result of amended forecasts of zinc prices
over the life of the Galmoy Mine and revision of reserve estimates as at 31
December, 2001, the carrying value of the Group's investment in the mine and
mine's assets has been written down to €42.8 million, resulting in an
exceptional depreciation charge of €69.5 million.


ARCON has today announced that an underwritten rights issue to raise €28.75
million before expenses will be proposed to shareholders together with a
proposal to reduce debt further by the issue of 143.8 million shares to the
banking syndicate in satisfaction of €3.59 million of loans outstanding under
the syndicated finance facility at 31 December, 2001. The rights issue will be
in the proportion of 4 new ordinary shares of €1 cent each for every 1 new
ordinary share of €1 cent held, at a price of €2.5 cent per share. In addition,
€6.8 million of the rights issue proceeds will be used to further reduce loans
outstanding at 31 December, 2001.


Further investment will be made at the Galmoy Mine to improve the production
volume and processing capabilities necessary to deal with a low zinc
environment.


Exploration drilling continued on the Rapla prospect to the northeast of Galmoy
and encountered further mineralisation in the area. A gravity survey was
completed during the year which has identified an extension of the source 'G'
fault at the Galmoy mine to the Rapla prospect area some 6 km to the north. A
number of geophysical and geological targets have been identified for drilling
and will commence on receipt of the rights issue proceeds.


Commenting on the results the Chairman, Mr. Tony O'Reilly Jnr., stated 'The
substantial reduction in the zinc price has caused considerable difficulty for
the Group. However, as a consequence of the large reduction in debt and a
further improvement in production in 2002, shareholders will be well placed to
benefit from any improvement in zinc prices and further exploration success'.


Mr. Tony O'Reilly Jnr. further commented 'I would also like to express the
sincere thanks of the board, employees and shareholders of ARCON to Sir Anthony
O'Reilly for his unique level of support to the Company over this difficult
period. Few individuals have shown such support to and faith in a company but
thanks to his involvement in the financial restructuring and support of the
rights issue, the future of ARCON is very much brighter'.


Tony O'Reilly Jnr.
Chairman

19 June, 2002


                      Consolidated Profit and Loss Account

                      For the Year ended 31 December 2001


                                                                                      2001                2000
                                                                                     €'000               €'000

Turnover                                                                            18,726              27,185

Cost of Sales
Production costs                                                                  (18,540)            (17,371)
Depreciation                                                                       (8,683)             (6,416)
                                                                                  (27,223)            (23,787)
Gross (Loss)/Profit                                                                (8,497)               3,398
Operating expenses                                                                 (7,215)             (4,882)
Operating Loss                                                                    (15,712)             (1,484)
Exceptional Restructuring Items
- Additional depreciation of mine assets                                          (69,455)             (1,369)
- Forgiveness of debt and related interest                                          77,041                   -
                                                                                     7,586             (1,369)
Mineral exploration costs                                                            (168)               (315)
Loss on Ordinary Activities Before Interest                                        (8,294)             (3,168)
Interest receivable and similar income                                                 230                 275
Interest payable and similar charges                                               (7,573)             (7,585)
Loss on Ordinary Activities Before Taxation                                       (15,637)            (10,478)
Tax on loss on ordinary activities                                                       -                   -
Retained Loss for the Year                                                        (15,637)            (10,478)
Profit and Loss Account, at beginning of year                                     (65,172)            (54,694)
Profit and Loss Account, at end of year                                           (80,809)            (65,172)
Loss Per Ordinary Share
- Basis and fully diluted                                                       € ( 0.054)          € ( 0.036)



                       Balance Sheets - 31 December 2001
                                                            Group                               Company
                                                       2001               2000               2001              2000
                                                      €'000              €'000              €'000             €'000
Fixed Assets
Mineral interests                                    29,543             83,933                396               254
Tangible fixed assets                                13,237             30,687                 37                44
Financial fixed assets                                    -                  -             34,000            51,094
                                                     42,780            114,620             34,433            51,392
Current Assets
Stocks                                                  801                614                  -                 -
Debtors                                                 872                171                 53                72
Investments                                               -                 43                  -                43
Cash at bank and in hand                                215              5,701                  -                36
                                                      1,888              6,529                 53               151
Creditors: Amounts falling due within              (18,149)           (13,294)            (4,361)             (570)
one year
Net Current Liabilities                            (16,261)            (6,765)            (4,308)             (419)
Total Assets Less Current Liabilities                26,519            107,855             30,125            50,973
Creditors: Amounts falling due after               (22,484)           (88,572)           (12,502)           (6,088)
more than one year
Provision for Liabilities and Charges               (3,984)            (3,263)                  -                 -
Net Assets                                               51             16,020             17,623            44,885
Capital And Reserves
Called up share capital                              17,251             18,253             17,251            18,253
Capital conversion reserve                            1,002                  -              1,002                 -
Share premium                                        59,197             59,197             59,070            59,070
Profit and loss account                            (80,809)           (65,172)           (59,700)          (32,438)
Foreign currency translation reserve                  3,410              3,742                  -                 -
Equity Shareholders' Funds                               51             16,020             17,623            44,885






                        Consolidated Cash Flow Statement

                      For the Year ended 31 December 2001

                                                                                      2001                2000

                                                                                     €'000               €'000
Net Cash (Outflow) Inflow from Operating Activities                                (6,661)               9,905
Returns on Investments and Servicing of Finance                                    (7,395)             (6,970)
Taxation                                                                                 -                   -
Capital Expenditure and Financial Investment                                       (1,900)             (6,836)
Net Cash Outflow before use of liquid resources and Financing                     (15,956)             (3,901)
Management of liquid resources                                                           -               (303)
Financing                                                                           10,141               3,078
Decrease in Cash at Bank and in Hand                                               (5,815)             (1,126)

              Notes to the Financial Statements - 31 December 2001

1.     Exceptional Restructuring Items and Going Concern


        The Group has for the past number of years been primarily engaged in the
        financing, construction, commissioning and operation of a zinc mine in
        Galmoy Co. Kilkenny. Since commencement of operations in 1995 the Group
        has incurred significant operating losses. The Group had fully drawn
        down its syndicated finance facility of US$85 million in 2001. In
        addition advances of US$11.9 million were made to the Group by Indexia
        Holdings Limited ('Indexia') a company connected with Sir Anthony
        O'Reilly who controls approximately 44% of the issued share capital of
        the Company. During 2001, due primarily to a continuing depressed zinc
        price environment, the Directors engaged the Group's bankers with a view
        to re-negotiating the terms of the syndicated finance facility to ensure
        the ongoing viability of the Group. These negotiations, together with
        parallel negotiations with companies connected with Sir Anthony
        O'Reilly, have now been completed and amended agreements put in place.
        The principal terms of these agreements are as follows:



  • Fairfield Holdings Limited ('Fairfield'), a company connected with Sir
    Anthony O'Reilly, has purchased all of the debt outstanding under the
    syndicated finance facility from the Groups bankers, with the exception of
    €3.6 million which is still owed by the Group under the facility and will be
    settled with the proceeds of a proposed share issue in 2002. The €3.6
    million will be converted into approximately 143.8 million shares.


  • Fairfield forgave all of the syndicated finance facility debt except for
    US$20 million which is now to be repaid between 2003 and 2006.


  • Indexia Holdings Limited, another company connected with Sir Anthony
    O'Reilly, forgave US$9.0 million of the US$11.9 million working capital
    advances made by Indexia Holdings Limited during 2000 and 2001.


  • The total gain from debt forgiveness is calculated as follows:


                                                                                              €'000
Fairfield Holdings Limited                                                                   66,033
Indexia Holdings Limited                                                                     10,108
Accrued interest and other                                                                      900
Total                                                                                        77,041



  • The Group have announced the terms of an underwritten rights issue which
    is expected to raise €28.75 million to refinance the Group's short and long
    term working capital requirements and to provide for future capital and
    exploration programmes.


        As a result of amended forecasts of zinc prices over the life of the
        mine, and revision of reserve estimates as at 31 December 2001 to 3.9
        million tonnes at an average grade of 11.4% Zn and 2.2% Pb at a cut off
        of 6% Zn equivalent, the Directors have reassessed the carrying value of
        the Group's investment in the mine and mine assets and have concluded
        that these assets have suffered a permanent diminution in value.
        Accordingly the assets have been written down to the Directors best
        estimate of their recoverable amounts resulting in an exceptional
        depreciation charge of €69.5 million.


        While the final details of the restructuring transaction were not
        finalised until 2002, the transaction is reflected in the financial
        statements at 31 December 2001 as it is considered to be an adjusting
        post balance sheet event.


        The gains arising on the forgiveness of the debt by Fairfield Holdings
        Limited and by Indexia Holdings Limited, together with the impairment
        charge relating to the mine assets have been recorded as exceptional
        items in the profit and loss account as follows:




                                                                                              €'000
Forgiveness of debt and related interest                                                     77,041
Additional depreciation of mineral interests                                               (51,777)
Additional depreciation of mine assets                                                     (17,678)
Net gain on restructuring                                                                     7,586





        The Directors have reviewed cash flow forecasts for the twelve months
        from the date of approval of these financial statements, particularly
        having regard to the expected receipt of €28.75 million from the
        underwritten rights issue and are satisfied, on this basis, that it is
        appropriate to continue to prepare the financial statements on a going
        concern basis.






19 June, 2002
















                                  Definitions


The following definitions apply throughout this announcement unless the context
otherwise requires or unless it is otherwise specifically provided:

'Act'                                              the Companies Act, 1963 of Ireland (as amended);
'Admission'                                        where the context requires, admission of the New Ordinary Shares
                                                   and/or of the Rights Issue Shares, either nil or fully paid, to
                                                   the Official Lists and to trading on the Irish Stock Exchange's
                                                   and the London Stock Exchange's respective main markets for
                                                   listed securities;
'Annual General Meeting' or 'AGM'                  the Annual General Meeting of the Company intended to be
                                                   convened for The Westbury Hotel, Grafton Street, Dublin 2 on 12
                                                   July, 2002 at 10.00 a.m.;
'Annual Report'                                    the 2001 annual report of ARCON International Resources P.l.c.;
'Articles'                                         the Articles of Association of the Company;
'Australia'                                        the Commonwealth of Australia, its states, territories and
                                                   possessions;
'Banking Syndicate'                                a syndicate of eight banks, administered by National Westminster
                                                   Bank Plc;
'Board'                                            the board of Directors of the Company;
'Business Day'                                     any day (other than a Saturday or Sunday) on which lending banks
                                                   in Dublin and London are open for business;
'Canada'                                           Canada, its provinces and territories and all areas subject to
                                                   its jurisdiction and any political subdivision thereof;
'Company', 'ARCON' or 'ARCON International         ARCON International Resources P.l.c.;
Resources'
'Concert Party'                                    Sir Anthony O'Reilly and members of his family;
'Conversion Shares'                                143,751,165 new Ordinary Shares proposed to be issued to the
                                                   Syndicate Banks as part of the arrangements relating to the debt
                                                   restructuring;
'cut off'                                          ore of lower grade is excluded from statement;
'Davy Stockbrokers'                                J&E Davy, trading under its registered business name Davy
                                                   Stockbrokers, registered in Ireland with number 106680, whose
                                                   office is at Davy House, 49 Dawson Street, Dublin 2, Ireland;
'Deferred Shares'                                  the deferred shares of €0.05 each in the capital of the Company,
                                                   which will arise on the split of the Ordinary Shares, and which
                                                   will be non-voting and carry no dividend rights;
'Directors'                                        the directors of the Company;
'Enlarged Issued Ordinary Share Capital'           the issued share capital, as adjusted for the Share Split
                                                   together with the Rights Issue Shares and the Conversion Shares;
'Existing Ordinary Shares' or 'Existing Shares' or the 287,502,332 Ordinary Shares of €0.06 each in the capital of
' Existing Issued Ordinary Share Capital'          the Company in issue as of 18 June, 2002 (being the latest
                                                   practicable date prior to the issue of this announcement);
'Existing Shareholders'                            holders of Existing Ordinary Shares;
'exploration drilling'                             diamond drilling to explore the geological formations for ore;
'Extraordinary General Meeting' or 'EGM'           the Extraordinary General Meeting of the Company intended to be
                                                   convened for The Westbury Hotel, Grafton Street, Dublin 2,
                                                   Ireland on 12 July, 2002 at 10.15 a.m. (or as soon as possible
                                                   thereafter as the AGM shall have been concluded or adjourned);
'fault'                                            a fracture in the earth, one side of which is displaced with
                                                   respect to the other;
'Fairfield'                                        Fairfield Holdings Limited, a private company incorporated in
                                                   Cyprus and wholly owned and controlled by Sir Anthony O'Reilly;
'FSMA'                                             the Financial Services and Markets Act 2000 of the United
                                                   Kingdom;
'Galmoy Mine'                                      the area for which planning permission has been obtained;
'Galmoy Trend'                                     the prospective geological area stretching 13 km from Rapla in
                                                   the north east through the Galmoy Mine to the Lisheen mine in
                                                   the south west;
'Group' or 'ARCON Group'                           the Company and its subsidiary undertakings;
'Independent Directors'                            for the purpose of the Waiver only, the Directors other than
                                                   Tony O'Reilly Jnr.;
'Independent Shareholders'                         for the purpose of the Waiver only, the Shareholders other than
                                                   members of the Concert Party;
'Indexia'                                          Indexia Holdings Limited, a private company incorporated in
                                                   Cyprus and wholly owned and controlled by Sir Anthony O'Reilly;
'Ireland'                                          the island of Ireland, excluding Northern Ireland and the word
                                                   Irish shall be construed accordingly;
'Irish Stock Exchange'                             The Irish Stock Exchange Limited;
'Issue Price' or 'Rights Issue Price'              €0.025 per Rights Issue Share;
'Japan'                                            Japan, its possessions and territories and all areas subject to
                                                   the jurisdiction or any political sub-division thereof;
'km'                                               kilometre;
'London Stock Exchange'                            London Stock Exchange plc;
'mineralisation'                                   the concentration of minerals and their chemical compounds
                                                   within a body of rock;
'New Ordinary Shares' or 'New Shares'              New Ordinary Shares of nominal value €0.01 each to be issued in
                                                   substitution for the Existing Ordinary Shares pursuant to the
                                                   proposed Share Split which will, on issue and when fully paid,
                                                   rank pari passu in all respects with each other with regard to
                                                   dividend entitlements, interests and all other obligations and/
                                                   or as the context requires, the Rights Issue Shares and the
                                                   Conversion Shares;
'Official Lists'                                   the Official List of the Irish Stock Exchange and/or, as
                                                   appropriate, the Official List of the UK Listing Authority;
'Ordinary Shares' or 'Existing Shares'             ordinary shares of €0.06 each in the capital of the Company;
'orebody'                                          the part of the geological structure that carries the ore;
'Overseas Shareholders'                            Shareholders who are resident in, or who are citizens of, or who
                                                   have registered address in, territories other than Ireland or
                                                   the United Kingdom;
'Panel'                                            The Irish Takeover Panel, established under the Irish Takeover
                                                   Panel Act, 1997;
'Pb'                                               the chemical symbol for lead;
'Preliminary Results'                              the preliminary results of the Company for the year ended 31
                                                   December, 2002 dated 19 June, 2002;
'Prospectus'                                       the document which is expected to be dated 19 June, 2002 to be
                                                   issued by the Company to its Shareholders in connection inter
                                                   alia with the Rights Issue;
'Provisional Allotment Letter(s)' or 'PAL'         the renounceable provisional allotment letter(s) to be
                                                   despatched to Qualifying Shareholders (other than certain
                                                   overseas Shareholders) pursuant to the Rights Issue;
'Qualifying Shareholders'                          holders of Existing Ordinary Shares on the Company's register of
                                                   Shareholders at the Record Date (save as otherwise to be
                                                   provided in the Prospectus);
'Rapla'                                            the prospective area lying 6km northeast of the Galmoy Mine;
'Readmission'                                      the restoration of listing and trading of the Existing Ordinary
                                                   Shares on the Irish Stock Exchange, the UK Listing Authority and
                                                   the London Stock Exchange;
'Record Date'                                      the close of business on 9 July, 2002;
'Registrars'                                       Capita Corporate Registrars Plc;
'Resolutions'                                      the resolutions to be proposed at the EGM;
'Rights'                                           rights to acquire Rights Issue Shares in the Rights Issue;
'Rights Issue'                                     the proposed underwritten, issue to Qualifying Shareholders of
                                                   Rights Shares by way of rights of 4 Rights Issue Shares for
                                                   every 1 New Ordinary Share held on the Record Date assuming the
                                                   Share Split had been effective as of that date, on the terms and
                                                   subject to the conditions to be contained or referred to in the
                                                   Prospectus and the Provisional Allotment Letter;
'Rights Issue Shares'                              the new Ordinary Shares to be issued pursuant to the Rights
                                                   Issue;
'Securities Act'                                   United States Securities Act of 1933, as amended;
'Share Split'                                      the proposed split of each Existing Ordinary Share of nominal
                                                   value €0.06 each into 1 New Ordinary Share of nominal value €
                                                   0.01 each and 1 Deferred Share of nominal value €0.05 each;
'sq km' or 'km2'                                   square kilometres;
'Stock Exchanges'                                  the Irish Stock Exchange and the London Stock Exchange;
'Takeover Rules'                                   the Irish Takeover Panel Act, 1997, Takeover Rules, 2001;
't.p.a.'                                           tonnes per annum;
'United Kingdom' or 'UK'                           the United Kingdom of Great Britain and Northern Ireland;
'UK Listing Authority' or 'UKLA'                   the Financial Services Authority acting in its capacity as the
                                                   competent authority for the purposes of Part VI of the Financial
                                                   Services & Markets Act, 2000 of the United Kingdom;
'United States' or 'US'                            United States of America, its territories and possessions, any
                                                   state of the United States, the District of Columbia and all
                                                   other areas subject to the jurisdiction of the United States of
                                                   America;
'Waiver Resolution'                                an ordinary Resolution intended to be proposed at the EGM,
                                                   which, would in compliance with the conditions imposed by the
                                                   Panel, provide for the approval by Independent Shareholders of
                                                   the increase in Ordinary Shares held and percentage represented
                                                   by the holding of the Concert Party arising in the event of Sir
                                                   Anthony O'Reilly and Indexia being called upon to fulfil all
                                                   their underwriting commitments as would trigger a general offer
                                                   for the balance of the Ordinary Shares under the Takeover Rules;
'Zn'                                               the chemical symbol for zinc; and
'ZnEq'                                             Zinc equivalent (=%Zn grade + 1/2 %Pb grade)





                                        Notes:

        (i)     Unless other stated in this announcement, all reference to
        statutes or other forms of legislation shall refer to statutes or forms
        of legislation of Ireland. Any reference to any provision of any
        legislation shall include any amendment, modification, re-enactment or
        extension thereof.


        (ii)     The symbols '€' and 'c' refer to euro and euro cent
        respectively, the lawful currency of Ireland pursuant to the provisions
        of the Economic & Monetary Unit Act, 1998. The symbols US$ or $ refer to
        US dollars. Save for in Part II and unless otherwise stated, all euro
        amounts referred to herein have been converted to US$ at the following
        exchange rates, being the reference rates issued by the European Central
        Bank on 14 June, 2002 :€1 : US$0.9478.


        (iii)     Words importing the singular shall include the plural and vice
        versa and words importing the masculine gender shall include the
        feminine or neutral gender.






ENDS



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