Arcon Int. Share Discussion Threads

[hypocrite] 16/2/2005 09:14

: SHORT-CHANGED
: According to Arcon itself, the
: average zinc price ran at €747
: per tonne last year and gross
: revenue should have come to
: €56m but the gross value of this
: metal only came to €45m as the
: company was short-changed by
: 23% by the European zinc cartel.
: the overall extraction rate to
: 750,000 tonnes, this means that
: Arcon should produce 105,000
: tonnes of zinc this year. On top
: of this, 30,000 tonnes of lead will
: be produced, representing a 50%
: increase in metal content
: compared with last year.

[hypocrite] 16/2/2005 09:13

: Two years ago Arcon's
: finances were totally
: restructured when O'Reilly
: bought the banks' €100m loan
: off them for €20m. At the same
: time O'Reilly underwrote a
: €25m rights issue which put the
: company back into net cash. The
: loss was such, however, that net
: debts began to mount up again
: and last September 158 million
: shares were placed at 3.6 cent to
: London institutions, to raise
: €5.7m. In the process, O'Reilly
: was actually selling off 10% of the
: company, a surprising decision
: given that it only had a €5m
: bank overdraft at the time.

[hypocrite] 16/2/2005 09:13

: According to Arcon's
: accounts, this yielded a gross
: metal value of €45m. The
: European zinc cartel imposed
: €5m. After a €4m depreciation
: charge and a €1m interest
: charge, Arcon ended up with a
: pre-tax loss last year of €10m,
: compared with €15m the
: previous year.

[hypocrite] 16/2/2005 09:12

: Last year, despite diverting
: mining resources to digging a 500
: metre tunnel to the R zone, mine
: production was still maintained
: at 659,000 tonnes. This was
: mainly extracted from the main
: G ore body as it helped to raise
: the average extracted grade to
: 11.3% zinc.

[hypocrite] 16/2/2005 09:11

: Even according to Kevin Ross
: this would "result in a reduction
: in unit cash production costs to
: sub €700 per
: tonne of zinc".
: With the zinc
: price now up to
: €800 per tonne,
: and assuming the
: mine produces at
: its planned
: maximum of
: 750,000 tonnes
: of ore pa, this
: means that the
: mine should be
: making an
: EBITDA
: (earnings before
: interest, tax,
: depreciation and
: amortisation) of
: something over
: €10m pa. But with the
: depreciation charge cut back to
: €4m pa -- due to the longer
: mine life now expected -- and
: interest charges running at €1m
: pa, this leaves Arcon now
: running at €5m profit, assuming
: Kevin Ross's production targets
: are met.

[benchmark] 16/2/2005 09:10

Given such confidence, you should certainly buy more

[hypocrite] 16/2/2005 09:09

Unfortunately,
: the zinc price has been well
: below these levels for the last
: four years. Instead of mothballing
: Galmoy, Tony O'Reilly has
: pumped his own money into the
: company to keep it going,
: allowing Arcon to lose €50m
: over the last four years during
: which period 250,000 tonnes of
: pure zinc was extracted from the
: mine.
: O'Reilly got Kevin Ross to
: maximise the plant by digging a
: 500-metre tunnel from the
: existing mine into the new R
: zone discovery and then mixing
: high-grade ore from this with the
: existing 11.3% zinc grade
: production to achieve an average
: 13.25% zinc grading in 2004 and
: 14.5% in 2005.
:

[hypocrite] 16/2/2005 09:08

It has,
: however, largely
: gone unnoticed
: that the R zone
: also contains a
: significant amount
: of lead grading
: 7.2%. With the
: current lead price
: up at $900 a
: tonne, less than
: 10% behind the
: zinc price, this
: now makes the lead content
: here really significant. The R
: zone also contains an interesting
: 2.5 ounces of silver per tonne.
: While the new R zone is a
: highly valuable resource, it is
: virtually impossible to mine zinc
: profitably at anything under
: $1,000 a tonne.

[hypocrite] 16/2/2005 09:03

: Now that the new R zone
: extension of the Galmoy Mine
: has been fully delineated, it is
: possible to get a better insight
: into its value. While the extent
: of the new ore body at 2.3
: million tonnes is actually quite
: modest and will only add three
: years to Galmoy's mining life, the
: incredible 19% zinc grading -- the
: second richest in
: the western
: world -- makes
: this such an
: interesting
: prospect.

[hypocrite] 16/2/2005 09:03

Timely reminder of what is to come......

Moneybags July 2004
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Arcon shares a
: bargain at 3.5 cent
: THE RECENT resignation of the mining engineer, Kevin Ross,
: and his replacement as chief executive by the finance
: director,
: Peter Kidney, makes sense given that Arcon is a commercial
: play and now effectively a commodity derivative, driven by
: fluctuations on the London Metal Exchange. Given recent
: increases in the zinc price and increased output from the
: mine, Arcon shares at 3.5 cent are a definite buy.

[hypocrite] 16/2/2005 08:19

Dont forget guys and dolls if you click on the top line post
you get the price of zinc....yesterday's price!!!

[hypocrite] 14/2/2005 14:34

price now 1330!!!!!!!!!!!!!
I expect Moneybags will review it now.....given the price of zinc
back to where he said he would revisit the share again.
next issue of Phoenix is on the 23rd.......
The price will zoom....mark my words......
All the old punters will be waiting for his nod!!

Caveat Emptor!!!

[rambutan2] 12/2/2005 17:39

i also remember odeys hugh hendry saying that hed bought into arcon (this about a year ago) as an option on the price of zinc. it had optionality. as is said above, price increases should be going straight to the bottom line.

[rambutan2] 12/2/2005 17:34

i read this today and then saw that it had been posted on the zinc thread by
Hectorp - 12 Feb'05 - 14:32 - 163 of 163

ZINC is featured in the FT today.
'has become the favoured metal... up 40%... outlook for zinc has changed since
China has moved from being a net exporter to importer .. China consumed 10% more zinc in 2004, which in turn increased golbal demand by 5.5%, tp 7.5M tonnes, which is 250,000 tonnes more than supplies.
Zinc was also helped this week by supply concerns, when Nippon Mining of Japan announced it would close production of its 45000 tonnes a year zinc mine (!)

[hypocrite] 12/2/2005 08:08

So!
Why are'nt the company blowing their trumpet.....
Kevin Cross said that the lead being mined would
be 18000 tons concentrate......by 980$......
that's an awful lot of lead!!!
It's probably so heavy it fell through the floor,
and re-emerged somewhere in Australia....near
the Magellan project!!!

[robinbell] 11/2/2005 20:56

assuming that the same tonages are mined in each half year then the change in the price of Zn drops straight through to the bottom line.

So profit H1 2004 was 1.0 Million Euros (based on gross metal value 34.2 Million Euros - source Interim report 2004)

Extrapolating my estimate for the Zn price in H2 is down 4% and Pb up 15%.
The implication is a lower profit for H2 2004. Anywhere between break even and another 1.0 million Euros. (Final report due april ish)

However, the price of Zn today is 19% higher than the average of H1 2004. If that is applied to the gross metal value and that drops straight through then that is an extra 6.5 Million Euros.

That is an estimated profit in H1 2005 of 7.5 Million Euros (or 15 Million Euros per annum).

The current market capitalisation is just over 50 Million Euros.

If you believe that the price of Zn (in Euros) will rise (or at least stay at the level its reached now) then this has got to be a buy.

[hypocrite] 11/2/2005 17:41

We are looking at a revised Arcon performance, IN MY OPINION, where the
trend to profitability, started by reporting a one million profit
in September against a previous year's loss of 3 million, has continued,
possibly dramatically, despite the fallen dollar, and is set to continue
into 2005 and beyond, in concert with sustained international commodity
pricing, for lead and zinc.

Caveat Emptor!!!

[hypocrite] 11/2/2005 17:32

February 12, 2005

Council fund ready to bet £50m on commodities
By Patrick Hosking, Investment Editor



AN £800 million pension fund for public sector workers could be the first in Britain to try to narrow its deficit by taking a sizeable punt on commodities.
The Bedfordshire County Council fund will decide within the next fortnight whether to sell £50 million worth of equities and invest the proceeds in commodities-linked assets.



The substantial foray into assets based on the price of oil, precious metals, base metals and farm produce would be the first by a large public sector occupational fund in Britain.

Pension funds traditionally stick to a conservative mix of equities, bonds and commercial property, with a few of the more adventurous ones dabbling in private equity and hedge funds.



Caveat Emptor!!!

[rambutan2] 04/2/2005 10:17

as i suspected hypo.
bit more waiting to do then...

[hypocrite] 04/2/2005 09:25

Just heard that the High Court application to reduce balance sheet
which should have been in last quarter of last year...has'nt
happened yet.....
caveat Emptor!!!

[spacewagon] 02/2/2005 19:23

Zinc will be part of the commodities super cycle

"The most important implication of the super cycle," states Citigroup Smith Barney, "is higher long-term prices." The report's preferred commodities are bulks (iron ore, coking coal and alumina), two base metals in aluminium and zinc, and one precious metal, in gold.

[rambutan2] 01/2/2005 13:16

yes, a zinc man i saw this morning is v confident of a strong mkt over next few years.

[hypocrite] 01/2/2005 07:47

spotrate reached 1300 yesterday!!!