A radical financial restructuring has seen exploration company Arcon cut first-half losses by 50 per cent on the same period last year. The company has posted pre-tax losses of €5.5 million for the six months to the end of June, down from €10.8 million in the same period of 2001.
Chief executive Mr Kevin Ross said yesterday that the performance could be attributed largely to reduced interest charges arising from a slashing of the company's debt levels through a writedown.
The writedown, which has cut Arcon's debt from €105 million to €23 million, was partly facilitated by Sir Anthony O'Reilly.
Sir Anthony has also underwritten a rights issue at the company, which is aimed at raising €28.75 million.
The latest results show that turnover in the first half increased by 3.5 per cent on the same period last year, rising to €10.5 million.
This came amid difficult conditions for zinc mining, which saw the price of the metal fall by 19 per cent to 70-year lows and led to below-budget sales at the company.
Mr Ross said these prices had largely offset benefits arising from improved production capabilities at Arcon's Galmoy mine in Co Kilkenny. He expects the mine to increase annual capacity to 750,000 tonnes over the coming year, thus reducing unit operating costs further.
Mr Ross described the period under review as a "transition", predicting that second-half numbers would be more positive. "Last year was the old Arcon and we're still in transition. By the end of this year we'll be into the new Arcon," he said.
Mr Ross added that the company was "in the final stages" of concluding its rights issue, acknowledging that the traditional slowing in business activity in August had affected uptake.
"We're still working on that," he said.
Looking forward, Mr Ross said that Arcon would be well-placed to take advantage of a rise in zinc prices if and when it came.
Company chairman Mr Tony O'Reilly jnr said in a statement that growing zinc consumption in Asia, when combined with reduced smelter charges, was likely to lead to a "significant rebound" in zinc prices over coming months.
