LRL Leyshon Res

RNS Number:0978M
Leyshon Resources Limited
15 November 2006


15 November, 2006

  Leyshon announces development of Heilongjiang's first ever Sino Foreign gold
                                     mine.

Leyshon Resources Limited ("Leyshon") (AIM & ASX: LRL) and its joint venture
partner the Qiqiha'er brigade of the Heilongjiang Bureau of Mineral Resources
today announced a decision to develop the Zheng Guang gold zinc project as the
first ever Sino Foreign owned gold mine in the mineral rich province of
Heilongjiang, northeast China.

It is proposed to commence production in 2007 with trial mining and heap
leaching of near surface gold ore followed by the rapid expansion of production
to over 100,000 ounces of gold and 200,000 ounces of silver within three years.

The project's current design has an estimated initial capital cost of US$27
million and an estimated production cost of US$225 per ounce. Based on a gold
price of US$600 per ounce annual revenues are estimated at over US$60 million,
EBITDA US$42 million and NPAT US$28 million.

Revenue and earnings are expected to increase with the commissioning of a zinc
flotation circuit in 2011, which is designed to lift gold recovery and allow a
zinc concentrate to be produced for sale to Chinese smelters. Optimisation
testwork is underway which on completion in early 2007 will allow zinc
production levels, operating costs and sales terms to be finalised.

This flotation circuit has an estimated capital cost of US$21 million which is
expected to be funded from project cashflow with no further call on
shareholders.

A revised resource estimate in February 2007 is expected to upgrade and
significantly increase the current JORC compliant inferred resource estimate of
930,000 ounces gold, 64,000 tonnes zinc and 2.6 million ounces silver. The
estimate will be prepared by resource specialists Hellman and Schofield of
Australia and will be based on results from this year's 30,000 metre diamond and
reverse circulation drill programme which is nearing completion.

Leyshon and Qiqiha'er brigade recently entered into a twenty year agreement for
the financing and development of the project under which Leyshon, which holds a
70% interest, will fund the project to production and will recover Qiqiha'er
brigade's share of the capital cost on commercial terms from project cashflow.

Director of Qiqiha'er brigade Chai De Sai commented "We are very pleased with
the good cooperation between Leyshon and Qiqiha'er brigade during the
exploration phase and look forward to bringing Zheng Guang rapidly into
production"

The Zheng Guang project's key advantage is its location in the Heiboashan coal
and copper mining district with its well established infrastructure, trained
workforce and readily available large scale mining equipment all contributing to
the project's low capital and operating costs.

The site has zero population, marginal agricultural land use and is located
within eight kilometres of a main railway connection to Beijing. Labour, fuel,
energy and materials costs are amongst the lowest in China and orders of
magnitude lower than a comparable location in Australia or Canada.

Leyshon has its main operating office in Beijing and is one of the very few
foreign mining companies with its Chairman, Managing Director and Chief
Operating Officer all based in China.

Managing Director Paul Atherley commenting today said "Both Qiqiha'er brigade
and our shareholders are keen to see this exciting new gold project brought
rapidly into production."

For further information contact:

Paul Atherley - Managing Director 
Tel: +86 137 1800 1914 
Mob: +61 417 475 038 
http://www.leyshonresources.com

Leesa Peters/Jos Simpson Conduit PR
Tel: +44 (0) 20 7429 6600
Mob: +44 (0) 781 215 9885

Background Information

Leyshon's partner, the Qiqiha'er brigade of the Heilongjiang Bureau of Geology
and Mineral Resources, is one of the largest organizations of its kind in China
and is providing a range of services to the joint venture from its complement of
4,000 technical staff, drill rigs, laboratory and other technical facilities.
This valuable support is enabling the project to move ahead rapidly on an
extremely cost effective basis.

Qiqiha'er brigade is currently undertaking the necessary environmental,
hydrological, geotechnical, geological testwork and reporting requirements and
has advised that the grant of a Mining Licence is expected in late 2007 at which
point the long lead time items and other major pieces of equipment will be
ordered in time for construction and commissioning in early 2008.

The design has been formulated by Gary Patrick of Metallurg Pty Ltd, an
independent process engineering consultancy, which has drawn together
preliminary mine development study work by Roche Engineering of Australia and
the results from a metallurgical testwork programme conducted by metallurgical
testwork specialists AMMTEC under the supervision of resource engineering
company Ausenco.

Metallurg has brought to bear its recent experience in the design, construction
and commissioning of the highly successful, under budget and on schedule
development of the Caijaying gold zinc project in northern China by Griffin
Mining PLC.

The design allows for trial mining and heap leaching of near surface oxide gold
ore commencing in 2007, the construction and commissioning of a one million
tonne per annum carbon in leach circuit early in 2008 and the addition of a
flotation circuit in 2011.

The flotation circuit will incorporate the latest technology in fine grinding
and intense cyanidation which will enhance the recovery of gold from the mildly
refactory gold ore and allow the production of a zinc concentrate.

Optimisation of the grind size and the number of cleaner stages required to
upgrade the zinc concentrate to meet Chinese smelter requirements is underway
and once this testwork is completed zinc concentrate production, operating costs
and sales terms can be finalised.


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.





                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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