Arcon Resources, operators of the Galmoy zinc mine in Co Tipperary, yesterday reported a fall in pre-tax losses of €5 million and announced that it had raised €5.4 million from investors.

The company revealed that it had placed 158.12 million shares at 3.6 cents each with UK institutions through Numis Securities to raise €5.7 million before expenses. Arcon said the net proceeds of €5.4 million would be used to increase production capacity, continue its exploration programme and for general working capital.

Chief executive, Mr Kevin Ross, said the company wanted to begin a capital expenditure programme in its zinc mill that would allow it to process the high grades of ore found in Galmoy's R zone. He predicted that the investment would cut production costs to less than €700 per tonne of zinc. The average zinc price during the first six months of 2003 was €716 per tonne, a 19 per cent fall on the same period last year.

Arcon's turnover rose 4.6 per cent in the six months to June 30th to €11 million from €10.5 million. Despite the fall in price, the company's loss before tax fell 9.6 per cent to €5 million from €5.5 million. A statement said this reflected higher turnover, and a fall in smelting and depreciation costs.

The fall in depreciation costs, from €3 million to €2.4 million, resulted from the fact that the directors declared the R zone commercial. This helped cut operating losses by 20 per cent from €5.5 million in the first half of 2002 to €4.4 million. Losses per share were 0.31 cents, down on last year's figure of 1.95 cents.

During the period, the R zone was confirmed as one of the richest zinc deposits in the state. The company has submitted planning and licence applications to develop the zone.

Arcon chairman, Mr Tony O'Reilly, said the outlook for the company was good. In a statement, he told shareholders the zinc market had finally started to show an increase.