Quarterly Report
July 26 2006 - 5:22AM
UK Regulatory
RNS Number:7407G
Leyshon Resources Limited
26 July 2006
For Immediate Release 26 July 2006
Leyshon Resources Limited
JUNE 2006 QUARTERLY REPORT
Rapidly Advancing Zheng Guang Gold Project to Development Status
Leyshon Resources Limited (ASX/AIM: LRL) is pleased to report that substantial
progress has been made during the quarter in advancing the Zheng Guang Gold
Project to development status.
Leyshon is pioneering the exploration and development of gold projects in the
mineral rich province of Heilongjiang in northeast China. Bordering Russia's
Amur Province, the area has produced over 20 million ounces of gold mainly from
alluvial sources.
Leyshon is targeting the untapped mesothermal and epithermal potential of the
area through the application of modern exploration techniques.
In January 2004 Leyshon created the province's first Sino Foreign Mining Joint
Venture and is earning a 70% interest in the Zheng Guang project - a greenfields
discovery in 2000. It has subsequently transformed the operating practices of
its joint venture partner through the introduction of modern exploration
practices.
In May 2006 an Inferred Resource estimate was reported of 930,000 ounces of
gold, 64,000 tonnes of zinc and 2.6 million ounces of silver. The estimate was
calculated on over 16,000 metres of diamond drilling from the highly successful
2004 and 2005 programmes.
The initial resource has been calculated within 250 metres of surface and over a
relatively short strike length of a 1.25 kilometre highly mineralised corridor.
A 30,000 metre combined diamond and reverse circulation drilling programme has
recently commenced employing over 50 people in the field operating a fleet of
rigs modified to undertake angled and near surface drilling.
The programme, one of the largest ever to be undertaken in Heilongjiang, is
designed to test the extension of the known mineralisation, delineate the
economically significant shallow oxide resources and is expected to
significantly increase the overall resource estimates.
Preliminary metallurgical testwork results have shown that approximately 93% of
the gold, 95% of the silver and 98% of the zinc can be recovered into a
flotation concentrate.
In April, a 20 year agreement was executed with partner, the Qiqihar Brigade of
the Heilongjiang Bureau of Geology and Mineral Resources. The agreement is an
important milestone for Leyshon in China as it sets out the terms under which
the joint venture company will explore, finance and develop the Zheng Guang
project.
Cash on hand at the end of the quarter was increased to A$8.3 million through a
placement of 17,713,333 ordinary shares at 15 pence to institutional clients of
Mirabaud Securities Limited in London raising approximately #2.65 million.
For further information contact:
Paul Atherley - Managing Director
Tel: +86 10 5869 9382
China Mob: +86 137 1800 1914
International: +61 417 475 038
Buchanan Communications
Nick Melson
Ph: 0207 466 5000
JUNE 2006 QUARTERLY REPORT
Zheng Guang Gold Project
Initial Resource Estimate
Independent resource consultancy Hellman and Schofield Pty Ltd of Australia made
the following inferred recoverable resource estimate on Zheng Guang:
million tonnes gold gpt zinc % silver gpt cut off grade
(gold gpt)
16 1.8 0.4 5 0.5
9 2.7 0.5 7 1.0
6 3.5 0.6 8 1.5
4 4.2 0.7 9 2.0
3 4.9 0.8 10 2.5
At the cut off grade of 0.5 gpt gold the recoverable resource contains 930,000
ounces gold, 64,000 tonnes zinc and 2.6 million ounces silver.
There is a strong correlation between the gold and zinc mineralisation. The
equivalent gold content of these two metals has been estimated at around 1.22
million ounces at a 0.5 gpt cutoff based on an assumption that 1% zinc is
equivalent to 1 gpt gold. The inferred resource and equivalent gold estimates
are highly sensitive to a few high grade samples and sample grades have not been
cut.
The resource estimate is based on the data generated from over 17,000 metres of
diamond drilling on the Main Ore Zone over a strike length of 400 metres and to
a depth of 300 metres. The Main Ore Zone is the first area to be tested along a
1.25 kilometre highly mineralised structural corridor located in the central
part of the project between two large geochemical exploration targets.
The resource estimates include oxide, transition and sulphide mineralisation. A
feature of the mineralisation is a large surface gold oxide blanket which covers
the 700 metre strike length, is approximately 150 metres wide and ranges in
depth from 5 to 20 metres from surface. The high grade sulphide mineralisation
generally occurs in steeply dipping veins.
Drill Programme
A 30,000 metre programme, designed to provide confirmation of the Main Ore Zone
initial resource estimates and to upgrade them to Measured and Indicated status,
commenced during the quarter. The programme will also test for extensions and
repetitions of the Main Ore Zone along a 1.25 kilometre highly mineralised
corridor.
The programme is the largest to be undertaken in Heilongjiang in recent years
and is expected to increase the recently reported initial inferred recoverable
resource estimate of 930,000 ounces gold, 64,000 tonnes zinc and 2.6 million
ounces silver at a 0.5 g/t Au cut off.
Page Two
Over 50 personnel and 3 diamond drill rigs have been mobilized with a reverse
circulation drill expected on site in due course. The immediate focus is to
extend the oxide zone mineralisation and the high grade gold-zinc-silver veins
discovered last year.
A feature of this year's programme is the change to the exclusive use of
modified rigs that can drill angle holes which proved so successful at
intersecting the steeply dipping high grade veins towards the end of last year's
programme.
Reverse circulation drilling will be employed to delineate and extend the
recently discovered oxide zones which appear as an extensive blanket over the
mineralised areas.
This shallow gold mineralisation, which occurs from the surface up to 20 metres
deep, has the potential to be economically very significant and is a major focus
of the programme. Previously reported intersections include:
Wide zones of low grade 13.25 metres at 1.68g/t Au
Wide zones of moderate grade 12.8 metres at 3.2g/t Au
Moderate widths of higher grade 6 metres at 9.1g/t Au
Narrow zones of high grade 2 metres at 18.18g/t Au
Metallugical Testwork
Preliminary results of the metallurgical test work being carried out on drill
core sample from Zheng Guang show that approximately 93% of the gold, 95% of the
silver and 98% of the zinc can be recovered into a flotation concentrate. The
flotation and recovery of the gold, zinc and silver is not particularly grind
sensitive and can be achieved from a relatively coarse primary grind.
The test work results have indicated that the likely treatment route for the
transition and sulphide ore will be two stage flotation and leaching. By
employing this route zinc will be recovered into a concentrate and the gold and
silver recovered into metal by leaching.
Test work is underway to evaluate the appropriate treatment route for the high
grade oxide gold ore which occurs as a surface blanket over much of the
mineralised area. This relatively high grade material appears to have the
potential to be treated via heap leach or conventional milling process routes.
The test work is being conducted by Perth based Australian Metallurgical and
Mineral Testing Consultants under the direction and supervision of resource
engineering company Ausenco Limited.
Joint Venture Agreement
A new Incorporated Joint Venture Agreement with the HLJ BGMR was executed during
the quarter. The new agreement is an important milestone for Leyshon in China as
it sets out the terms under which the Joint Venture Company Black Dragon will
explore, finance and develop Zheng Guang.
Page Three
Black Dragon was established by Leyshon in January 2004 as the first Sino
Foreign Joint Venture mining company in the mineral rich province of
Heilongjiang. Over the past two years Black Dragon has successfully explored
Zheng Guang.
As a result of the rapid progress made at Zheng Guang to date, the original
exploration focused joint venture agreement has now been updated to incorporate
agreed terms associated for its finance, development and mining.
The significant terms of the new agreement are that Leyshon will complete its
earn in obligations for a 70% interest in Black Dragon by spending on
exploration, development and by making payments of US$5.0 million to the HLJ
BGMR over a 2 year period. The Qiqihar Brigade will hold a 30% participating
interest.
Leyshon will provide financing for the Project's development on normal
commercial terms with a repayment schedule ranking ahead of any profit
distribution to the parties.
Black Dragon will complete the application for additional Exploration Licences
surrounding Zheng Guang which will increase the company's land holding to over
200 km2. The transfer of these licences to Black Dragon, some of which are held
by Qiqihar brigade will not change the respective equity holdings in the
company.
All other terms of the agreement are standard to an incorporated mining joint
venture company.
Corporate
Placement
The Company completed a placement of 17,713,333 ordinary shares at 15 pence to
institutional clients of Mirabaud Securities Limited to raise approximately
#2.65 million (before issue costs).
The funds raised will be applied towards the 30,000 metre drilling programme
which has commenced at Zheng Guang and for working capital purposes.
At quarter end the Company had cash on hand of A$8.3 million.
Joint Broker
The Company appointed Mirabaud Securities Limited as joint broker for the
purposes of the quotation of the Company's ordinary shares on the Alternative
Investment Market of the London Stock Exchange.
Board
The Company appointed Mr John Fletcher CBE as Non Executive Chairman, Mr Robert
Bigland as Non Executive Director and Ms Stacey Apostolou as Executive Director
and Company Secretary. Mr Fletcher and Mr Bigland are located in Hong Kong and
London respectively and their appointments are consistent with the Company's
strategy of seeking to gain exposure to the broader London capital market which
is increasingly supportive of resource projects in China and East Asia and to
reflect the orientation of the Company to London and China.
Page Four
Following these appointments, Messrs Ian Middlemas and Mark Pearce resigned from
the Board. Their contribution to Leyshon over the years is noted and very much
appreciated.
New Business Opportunities
The Company continues to evaluate a number of acquisition and development
opportunities both within China and its neighbouring countries, taking advantage
of its operating base in Beijing and knowledge gained from working in that
country over the past 2 years.
Geological Information
The information in this report relating to Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by Mr Malcolm Wilson,
a full time employee of the Company, who is a member of the Australasian
Institute of Mining and Metallurgy.
Mr Wilson has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Wilson consents to the inclusion in the report
of the matters based on his information in the form and context in which it
appears.
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
LEYSHON RESOURCES LIMITED
ABN Quarter ended ("current quarter")
------------------- ------------------
75 010 482 274 30 June 2006
------------------- ------------------
Consolidated statement of cash flows
------------ ------------
Cash flows related to operating activities Current quarter Year to date
$A'000 (9 months)
$A'000
------------ ------------
------------
1.1 Receipts from product sales and related - -
debtors
1.2 Payments for (a) exploration and (2,880) (5,541)
evaluation
(b) development - -
(c) production - -
(d) administration (480) (1,784)
1.3 Dividends received
1.4 Interest and other items of a similar 71 349
nature received
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Other - Business development (66) (287)
AIM listing (204) (287)
------------ ------------
Net Operating Cash Flows (3,559) (7,550)
------ ---------------------- ------------ ------------
Cash flows related to investing
activities
1.8 Payment for purchases of: - -
(a) prospects - -
(b) equity investments (2) (5)
(c) other fixed assets
1.9 Proceeds from sale of: - -
(a) prospects - -
(b) equity investments - -
(c) other fixed assets
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other 46
- Security bonds 34
------------ ------------
Net investing cash flows
32 41
------ ---------------------- ------------ ------------
1.13 Total operating and investing cash flows
(carried forward)
(3,527) (7,509)
------ ---------------------- ------------ ------------
1.13 Total operating and investing cash flows (3,527) (7,509)
------ (brought forward) ------------ ------------
----------------------
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, 6,299 6,299
etc.
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other - -
------------ ------------
Net financing cash flows 6,299 6,299
------ ---------------------- ------------ ------------
Net increase (decrease) in cash held 2,772 (1,210)
1.20 Cash at beginning of quarter/year to date 5,519 9,489
1.21 Exchange rate adjustments to item 1.20 (2) 10
------------ ------------
1.22 Cash at end of quarter 8,289 8,289
------ ---------------------- ------------ ------------
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
-------------
Current quarter
$A'000
-------------
-------------
1.23 Aggregate amount of payments to the parties included in 114
item 1.2 -------------
1.24 Aggregate amount of loans to the parties included in -
------ item 1.10 -------------
--------------------------------
1.25 Explanation necessary for an understanding of the transactions
-------------------------------------------
Payments include executive remuneration, director's fees, company
secretarial services and provision of a fully serviced office.
-------------------------------------------
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material
effect on consolidated assets and liabilities but did not involve cash
flows
--------------------------------------------
Not Applicable.
--------------------------------------------
2.2 Details of outlays made by other entities to establish or increase their
share in projects in which the reporting entity has an interest
--------------------------------------------
Not Applicable.
--------------------------------------------
Financing facilities available
Add notes as necessary for an understanding of the position.
------------- -------------
Amount Amount used
available
$A'000 $A'000
------------- -------------
3.1 Loan facilities - -
------------- -------------
3.2 Credit standby arrangements - -
----- ----------------------- ------------- -------------
Estimated cash outflows for next quarter
$A'000
------------------
4.1 Exploration and evaluation 1,000
------------------
4.2 Development -
----- ----------------------------- ------------------
Total 1,000
----- ----------------------------- ------------------
Reconciliation of cash
------------------------- ------------ -------------
Reconciliation of cash at the end of the quarter Current quarter Previous
(as shown in the consolidated statement of cash quarter
flows) to the related items in the accounts is
as follows.
$A'000 $A'000
------------------------- ------------ -------------
-------------
5.1 Cash on hand and at bank 428 941
------------ -------------
5.2 Deposits at call
7,861 4,578
------------ -------------
5.3 Bank overdraft - -
------------ -------------
5.4 Other (provide details) - -
----- ---------------------- ------------ -------------
Total: cash at end of quarter (item 1.22) 8,289 5,519
----- ---------------------- ------------ -------------
Changes in interests in mining tenements
---------------- ----------- -------- --------
Tenement Nature of Interest at Interest at end
reference interest beginning of of quarter
quarter
(note (2))
---------------- ----------- -------- --------
6.1 Interests in None - - -
mining ---------------- ----------- -------- --------
tenements
relinquished,
reduced or
lapsed
6.2 Interests in None - - -
mining ---------------- ----------- -------- --------
tenements
acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total number Number quoted Issue price per Amount paid up
-------------- ---------- ---------- security (see per security
note 3) (cents) (see note 3)
---------- (cents)
------------
------------
7.1 Preference 1,000 - Not Applicable Not Applicable
------ +securities ---------- ---------- ---------- ------------
(description)
----------
7.2 Changes
during
quarter
(a) Increases
through
issues
(b) Decreases
------ through ---------- ---------- ---------- ------------
returns of
capital,
buy-backs,
redemptions
----------
7.3 +Ordinary 149,179,891 149,179,891 Not Applicable Not Applicable
securities ---------- ---------- ---------- ------------
7.4 Changes 17,713,333 17,713,333 15 pence 15 pence
during
quarter
(a) Increases
through
issues
(b) Decreases
------ through ---------- ---------- ---------- ------------
returns of
capital,
buy-backs
----------
7.5 +Convertible
debt ---------- ---------- ---------- ------------
securities
(description)
7.6 Changes
during
quarter
(a) Increases
through
issues
(b) Decreases
------ through ---------- ---------- ---------- ------------
securities
matured,
converted
----------
7.7 Options 10,000,000 - Exercise price Expiry date
(description
and
conversion
factor)
8,500,000 - $0.20 each 30 June 2007
2,700,000 - $0.30 each 30 June 2007
$0.35 each 31 Dec 2007
---------- ---------- ---------- ------------
7.8 Issued during
quarter ---------- ---------- ---------- ------------
7.9 Exercised
during ---------- ---------- ---------- ------------
quarter
7.10 Expired
------ during ---------- ---------- ---------- ------------
quarter
----------
7.11 Debentures
(totals only)
------ ---------- ---------- ----------
7.12 Unsecured
notes (totals ---------- ----------
only)
Compliance statement
1 This statement has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act or other standards
acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: 26 July 2006
(Director/Company secretary)
Print name: STACEY APOSTOLOU
Notes
1 The quarterly report provides a basis for informing the market how the
entity's activities have been financed for the past quarter and the effect on
its cash position. An entity wanting to disclose additional information is
encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of
interests in mining tenements acquired, exercised or lapsed during the reporting
period. If the entity is involved in a joint venture agreement and there are
conditions precedent which will change its percentage interest in a mining
tenement, it should disclose the change of percentage interest and conditions
precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not
required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive
Industries and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International
Accounting Standards for foreign entities. If the standards used do not address
a topic, the Australian standard on that topic (if any) must be complied with.
== == == == ==
+ See chapter 19 for defined terms.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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