A recovery in world zinc prices would produce a rise in Arcon's share price, shareholders were assured at the mining company's annual general meeting yesterday. Shareholders heard presentations from three board members who sought to assure them of the company's fundamental value and its strong positioning if world zinc prices increase.

The company also issued test results from its exploration programme at is Galmoy mine in Co Kilkenny, its joint venture with Noranda, the Canadian mining company, in Co Offaly, and its joint venture with Ennex near Galmoy.

One of the Co Offaly results show a 30.25 metre length of ore with a 3.2 per cent zinc equivalent - a measure of how much zinc is present - of which 13.85 metres has a 5.48 per cent zinc equivalent.

Arcon's chairman, Mr Brendan Gilmore, said it was probably the best strain of zinc every recorded in the country. The other Co Offaly result showed a 4.58 metre ore length with a 6.56 per cent zinc equivalent. Among the Ennex results is one which showed a 6.08 metre length with a 3.97 zinc equivalent of which 3.53 metres has a 4.81 per cent zinc equivalent.

Mr Gilmore said that two years ago, Arcon's share price was 50p, last year it was 27p and now it was 17p having hit a 10p low. That and the pre-tax loss of £8.2 million in 1998 were no comfort to any shareholder but last year's 14-week strike accounted for just over half of last year's loss.

Arcon's production cost was in the lowest quartile of world zince production companies.

"We only have one problem and that is the price of zinc," he said.

He said that there were "rumours" about the qualifications of the management team to run a zinc mine, the level of impurities in the zinc and that the company was selling its ore at cheap prices.

"All of that is a nonsense. It is continuously repeated. The very fact that our competitors have such a high cost base and we have control over ours so well is an indication that we have a good management team. When the zinc price recovers, our share price will recover the fastest," he said.

The throughput for 1999 was 625,000 tonnes which was short of Arcon's optimum level, he added.

Mr Tony O'Reilly jnr, the chief executive, said Arcon's profit and loss break even point was to produce zinc at $1,015 a tonne. Current prices are at about $1,000 a tonne of zinc metal. Every $50 increase on $1,015 would add £1.5 million of additional cash flow. But customers were reporting healthy demand. "At the end of the day we are generating surplus cash requirements," he said.