Irish mines are currently producing about 330,000 tonnes of zinc a year or about 3pc of global demand with a value of $850m.

Following decades of despair, the trio now mining zinc in Ireland have just enjoyed two very profitable years. The huge run-up in the price of zinc, which started in 2005, is still under way. Granted, it hit a peak in October 2006, but the average trajectory is still rising, and with demand being fuelled by emerging powers such as China and India, the future has never looked better.

A perennial optimist with the patience of Job and bottomless pockets are just some of the qualities you should have in spades if you want to get a slice of the action in the Irish zinc-mining business.

As recently as 2005 the price of zinc had barely shifted in decades, occasionally climbing above the $1,000 a tonne mark but frequently dipping below $800 a tonne. This led to lean profits but also imposed a discipline on the industry that made it very attractive to anyone willing to take a long-term view and wait for an upturn in the price of zinc.

At the end of 2005, the price of zinc started to climb. This was two years after ownership of the giant Tara mine in Co Meath had changed hands and just months after Lundin took control of Arcon and its Galmoy mine in Co Kilkenny.

But the deal which best illustrates the need to take a long-term view must be the Anglo American buy-out of its junior partner in the Lisheen mine, Ivernia. The small exploration company had discovered Lisheen just a decade earlier and when Anglo bought out Ivernia's half-share of the mine in 2003, it was taking on a barely profitable venture.

Valuable

While Lisheen was a valuable mine, even with zinc trading at under $800 a tonne, the operation was beset with problems which regularly interrupted production. With its deep pockets, this may not have been a huge problem for Anglo, but for Ivernia it was another matter and when the chance came to sell out, the offer was taken up.

For a paltry €2m Anglo secured 100pc of the mine and even though it assumed debts of some $78m when it did so, the effective cost must make the acquisition one of the best mining deals ever struck.

The years that followed saw a steady improvement in the price of base metals, with zinc coming into demand as both the construction and motor industries enjoyed a pick-up in fortunes. As zinc pushed on towards $1,500 a tonne, the economics of Lisheen, and indeed the other Irish zinc mines, improved beyond recognition. But this was nothing compared to what lay around the corner. In 2006, zinc prices surged on the back of soaring demand from China, which by then had become something of a black hole for commodities of every variety.

Hitting a record of $4,580 a tonne late in 2006, the surge in price helped Lisheen to its best ever quarterly profit -- well-placed sources claim the mine generated an operating profit of $400m in the final quarter of that year, enough to pay for the 50pc stake it had acquired eight years earlier more than four times over.

The biggest mine in the country, Tara, was also the subject of recent corporate activity. In September 2003 Tara's owner, the Finnish company Outokumpu, sold its mining interests in a deal valued at €739m, although as it ended up with a 49pc stake in the Swedish firm, it still has a stake in the assets.

The deal turned Boliden into one of the world's leading smelters and the fourth largest zinc mining company in the world. When it bought Tara, Boliden was effectively buying a new mine.

Litigation

Two years prior to the deal, Outokumpu, with the Tara mine mothballed because of the poor zinc price, had finally nailed ownership of the Bula orebody at Navan, an asset which had been the subject of over 30 years of litigation.

When it was discovered in 1970 it emerged that part of the orebody, the shallower, higher grade portion, lay on land in which the mineral rights had never been vested to the state. Local vet Michael Wymes, together with the super wealthy Tom Roche and Michael Woods, secured the land for themselves and set about opening their own mine.

It was never to happen, and some would argue that even if they had managed to get permission for a second mine at the site, they would have found it difficult to sell the ore. Mounting costs and legal actions led in 1985 to Bula being placed in receivership under Laurence Crowley.

Almost 20 years later the saga was brought to a climax when Tara Mines petitioned for the bankruptcy of Richard Wood and Michael Wymes. Subsequent to this, Tara completed the purchase of the Bula orebody in July 2002 and the mine reopened a few months later, its future secure for at least another decade.

The mine supplies part of its zinc concentrates to the smelters in Kokkola, Finland, and Odda, Norway, although the majority of Tara's production is sold to third parties in Europe. Some 2.6m tonnes of ore are mined annually, which yield zinc and lead concentrates containing 200,000 tonnes of zinc and 40,000 tonnes of lead metal. At today's prices Tara's annual output of zinc is valued at about $550m.

Boliden has taken advantage of the huge rise in base metal prices to undertake a further investment in the facilities at Tara, with the board recently approving the spend of some €28m on a new grinding circuit at the mine's concentrator. The project is scheduled for completion at the end of 2009, with the payoff coming in the form of a cut in operating costs.

A few years ago such an investment would have been hard to justify. Poor prices meant that even profitable mines like Tara were finding it impossible to justify the cost of remaining open.

And but for the deep pockets of its major shareholder, it is likely Galmoy would have closed around the same time. In 2002, the then owners of the Galmoy mine, Arcon, went to the banks and shareholders with a proposal involving a major financial restructure backed up with a rights issue.

Funding

The banks agreed to write off a huge slice of the company's $60m debt, but shareholders balked at the prospect of funding the rights issue, which was an integral part of the deal.

The failure of shareholders to support the issue meant Arcon's major shareholder, Sir Anthony O'Reilly, had to pick up the tab. He had agreed to underwrite the issue, a decision which caused a few raised eyebrows in Dublin's tight-knit financial community, with the result that his stake shot up from 43.7pc to 72pc. The banks got another 9.9pc, while the other shareholders saw their stakes heavily diluted.

Few tears were shed -- at least at the time -- and the general consensus was that Arcon would have a hard time justifying the pouring of another €20m in fresh capital down an already pricey shaft.

But mining is a cyclical industry and to thrive you first of all have to survive. For the small investor the attraction in exploration stocks is the huge capital gains which come when a new discovery, be it a zinc orebody or offshore oil, comes along.

The Galmoy mine was discovered by Conroy Petroleum in the mid-1980s, a company which was later merged with Atlantic Resources.

When the rights issue circular came calling back in 2002 the future looked far from rosey.

The post 9/11 downturn was still in train and zinc prices were still on the floor. In the circumstances only an optimist willing to take a long-term view could even begin to contemplate taking up their rights.

Subsequently Arcon was acquired in a €94m deal by Swedish firm Lundin, a company which in barely five years has become one of the major players in the European zinc industry.

By doubling his stake in Arcon during the rights issue of 2002, O'Reilly was at least put in a position to call the shots himself on Arcon's merger with Swedish firm Lundin, a fast-growing concern in which he now has a 10pc stake -- a smaller slice of a much bigger pie.