LRL Leyshon Res

RNS Number:4246Q
Leyshon Resources Limited
31 January 2007



                         DECEMBER 2006 QUARTERLY REPORT

          Developing Heilongjiang's first ever Sino Foreign Gold Mine

Leyshon Resources Limited (ASX/AIM: LRL) is pleased to report that during the
quarter it announced its intention, in conjunction with joint venture partner,
the Qiqiha'er brigade of the Heilongjiang Bureau of Mineral Resources, 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 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/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 upon completion in early 2007 will allow zinc
production, operating costs and sales terms to be finalised.

Final design studies are underway and are being undertaken by Australian and
Chinese consultants.

Following on from this year's drill programme, a revised resource is currently
being prepared and will be reported in February 2007. It is expected that this
resource estimate will 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.

This year's programme comprised 16,100 metres of reverse circulation drilling
and 13,006 metres of diamond drilling and was one of the largest drilling
programmes undertaken in Heilongjiang in recent years.

The reverse circulation programme comprised 588 thirty metre deep holes designed
to extend and upgradet eh inferred resource estimate of the oxide mineralisation
to a higher level of confidence and test the exploration targets.
Results to date from the diamond drill programme have reported extensions of the
Main Ore Zone to the North West and to the South and a thickening of the
mineralisation as it extends down dip.

Leyshon's partner, the Qiqiha'er Brigade of the Heilongjiang Bureau of Geology
and Mineral Resources, one of the largest organizations of its kind in China, 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 rapidly move ahead on an extremely
cost effective basis.

Leyshon created the province's first Sino Foreign Mining Joint Venture in
January 2004 and has earned a 70% interest in the project which was a
greenfields discovery in 2000. In April, a 20 year agreement was entered into
with Qiqiha'er Brigade which sets out the terms under which the joint venture
company will explore, finance and develop the project.

Leyshon raised #8.3 million during the quarter through the issue of 37,731,000
ordinary shares at 22 pence per share (before issue costs). The placement
occurred in two tranches with shareholder approval being received for the second
tranche earlier this month.

Leyshon is continuing to evaluate gold project acquisition opportunities
elsewhere in China and its neighbouring countries. It has its main operating
office in Beijing and remains one of the very few foreign mining companies with
its Chairman, Managing Director and Chief Operating Officer all based in China .


                        For further information contact:


                       Paul Atherley - Managing Director

                             Tel: +86 137 1800 1914
                              Mob: +61 417 475 038

                            www.leyshonresources.com



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.










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

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