RNS Number:8024P
Leyshon Resources Limited
11 March 2008
The complete PDF version of this half yearly report including the Auditors'
Review report and Independence Declaration can be viewed
at www.leyshonresources.com
LEYSHON RESOURCES LIMITED
ABN 75 010 482 274
INTERIM FINANCIAL REPORT
FOR THE HALF-YEAR ENDED
31 DECEMBER 2007
DIRECTORS' REPORT
The Board of Directors of Leyshon Resources Limited present their report on the
consolidated entity of Leyshon Resources Limited ("the Company" or "Leyshon
Resources") and its subsidiaries during the half-year ended 31 December 2007
("Consolidated Entity").
DIRECTORS
The names of the Directors of Leyshon Resources in office during the half-year
and until the date of this report are:
John Fletcher
Paul C Atherley
Stacey Apostolou
Richard Seville
REVIEW AND RESULTS OF OPERATIONS
Operating Results
Net operating loss after tax attributable to members of the Consolidated Entity
for the half-year ended 31 December 2007 was $5,751,338 (2006: Net operating
loss after tax of $6,709,388).
Operations
Zheng Guang
Drill Programmes
The Company completed a 43,000 meter diamond and reverse circulation drilling
programme during the half-year and work is well underway on a revised resource
estimate.
The diamond drilling programme completed 109 holes for 21,400 metres and was
focussed on infill drilling in the centre of the Main Ore Zone. The majority of
holes intersected strong mineralisation with broad cumulative widths
demonstrating good continuity both down dip and between important sections.
The 22,300 metre reverse circulation drilling successfully tested oxide ore
zones across the Main Ore Zone and potentital new deposits previously identified
at 6 geochemical anomalies across the exploration licence. It also included a
sterilization programme over the proposed area for the tailings dam.
Exploration
Three additional exploration licences were issued by the Ministry of Lands and
Resources covering a highly prospective area adjacent to Zheng Guang. The new
licences cover an area of 83 square kilometres close to and along strike from
Zheng Guang. The total area now held by the joint venture is 130 square
kilometres.
Project Design
The Company's engineering team is working closely with the Changchun Design
Institute on the Basic Engineering Design. Gary Patrick of Metallurg Pty Ltd,
Australia and Tim Hetherington of EPCM, Hong Kong are working closely with the
Changchun design team to ensure that the latest metallurgical concepts are
incorporated into the low cost Chinese design.
Gary Patrick has been responsible for the development of a process route which,
based on the metallurgical testwork undertaken by AMMTEC of Australia, allows
for a single gold/zinc sulphide ore to be mined and fed to a process plant which
produces gold and silver dore together with a high grade zinc concentrate.
This development is expected to have significant capital and operating cost
benefits for the project as it will allow broad widths of a single ore type to
be mined by open pit methods and fed to a single circuit rather than separately
mining gold and zinc ore types and feeding them to different circuits.
Long Lead Time Orders
The Company has placed orders for the manufacture and delivery of two ball mills
at a cost of US$2 million. The order was placed with Shenyang Heavy Machinery
Group.
Approvals
The approval processes are well advanced with various reports submitted and
meetings attended with a view to having all necessary approvals in place to
enable construction to commence later in the year.
Feasibility studies and other reports, completed by the joint venture in
accordance with regulatory requirements, have been submitted and approved by the
relevant authorities.
The layout of the open pit, process plant and tailings dam has also been
approved by the Department of Lands and Resources.
Negotiations for the amount and terms of payment for the Mining Licence transfer
tax and Land Compensation are well advanced and expected to be finalised ahead
of the commencement of development.
Site Works
The Qiqiha'er Institute has completed site surveys and water resource
investigations. Environmental base line studies, soil and water conservation,
health and safety and other regulatory reports are well advanced.
Corporate
The Company raised $875,000 during the half through the issue of 2,500,000
ordinary shares at 35 cents following the conversion of options.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, Deloitte Touche
Tohmatsu, to provide the directors of Leyshon Resources Limited with an
Independence Declaration in relation to the review of the half-year financial
report. This Independence Declaration is on page 16 and forms part of this
Directors' Report.
Signed in accordance with a resolution of Directors.
PAUL ATHERLEY
Director
Beijing, 11 March 2008
DIRECTORS' DECLARATION
In accordance with a resolution of the directors on 11 March 2008 of Leyshon
Resources Limited, the directors declare that:
In the opinion of the directors:
(a) the attached financial statements and notes thereto are in accordance with
the Corporations Act 2001, including:
(i) section 304 (compliance with accounting standards and Corporations
Regulations 2001); and
(ii) section 305 (true and fair view); and
(b) there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
On behalf of the Board
PAUL ATHERLEY
Director
Beijing, 11 March 2008
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2007
Note Half-year Ended Half-year Ended
31 Dec 2007 31 Dec 2006
$ $
Revenue 2 549,916 151,364
Exploration expenses (3,250,064) (5,333,249)
Administration expenses (897,463) (829,884)
Business development expenses (292,620) (313,357)
Foreign exchange losses (455,757) (207,224)
Share based payments (1,405,350) (177,038)
----------- -----------
Loss before income tax (5,751,338) (6,709,388)
Income tax expense - -
----------- -----------
Loss attributable to members of
Leyshon Resources Limited (5,751,338) (6,709,388)
=========== ===========
Loss Per Share
Basic loss per share (cents per
share) (2.66) (4.41)
Diluted loss per share (cents per
share) (2.66) (4.41)
The above Condensed Consolidated Income Statement should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
Note 31 Dec 2007 30 June 2007
$ $
ASSETS
Current Assets
Cash and cash equivalents 15,483,779 22,096,750
Trade and other receivables 31,644 103,703
Other 97,316 57,836
---------- ----------
Total Current Assets 15,612,739 22,258,289
---------- ----------
Non-Current Assets
Other financial assets at fair value
through profit and loss 1 1
Other financial assets 1,957,211 703,658
Property, plant and equipment 233,557 16,618
Development properties 14,367,126 13,031,994
---------- ----------
Total Non-Current Assets 16,557,895 13,752,271
---------- ----------
TOTAL ASSETS 32,170,634 36,010,560
---------- ----------
LIABILITIES
Current Liabilities
Trade and other payables 364,223 285,142
Provisions 70,097 63,929
---------- ----------
Total Current Liabilities 434,320 349,071
---------- ----------
Non-Current Liabilities
Deferred tax liabilities 3,604,688 3,604,688
---------- ----------
Total Non-Current Liabilities 3,604,688 3,604,688
---------- ----------
TOTAL LIABILITIES 4,039,008 3,953,759
---------- ----------
NET ASSETS 28,131,626 32,056,801
========== ==========
EQUITY
Issued capital 7 64,511,755 63,139,928
Reserves 1,279,927 825,592
Accumulated losses (37,660,056) (31,908,718)
---------- ----------
TOTAL EQUITY 28,131,626 32,056,801
========== ==========
The above Condensed Consolidated Balance Sheet should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2007
Half-year Ended Half-year Ended
31 Dec 2007 31 Dec 2006
$ $
Issued Capital
----------------
Issued and paid up capital - at the
beginning of the half-year 63,139,928 34,866,587
---------- ----------
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity less share
issue costs 872,577 12,472,767
Transfer from employee benefit reserve 499,250 -
---------- ----------
1,371,827 12,427,767
---------- ----------
Issued and paid up capital - at the end
of the half-year 64,511,755 47,294,354
========== ==========
Employee Benefit Reserve
--------------------------
Balance at the beginning of the
half-year 882,620 964,169
Employee benefit expense - Share
options 1,405,350 177,038
Exercise of options (499,250) -
---------- ----------
Employee benefit reserve at the end of
the half-year 1,788,720 1,141,207
========== ==========
Option Premium Reserve
------------------------
Option premium reserve at the beginning
of the half-year 112,841 3,837,841
Share options - -
---------- ----------
Option premium reserve at the end of
the half-year 112,841 3,837,841
========== ==========
Foreign Exchange Reserve
--------------------------
Foreign exchange reserve at the
beginning of the half-year (169,869) 4,563
Exchange differences on translation of
foreign operations attributable to
members of Leyshon Resources Limited (451,765) -
---------- ----------
Foreign exchange reserve at the end of
the half-year (621,634) 4,563
========== ==========
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 (CONTINUED)
Half-year Ended Half-year Ended
31 Dec 2007 31 Dec 2006
$ $
Accumulated Losses
--------------------
Accumulated losses at the beginning of
the half-year (31,908,718) (22,981,791)
Loss for the half-year attributable to
members of Leyshon Resources Limited (5,751,338) (6,709,388)
---------- ----------
Accumulated losses at the end of the
half-year (37,660,056) (29,691,179)
========== ==========
Net income recognised directly in equity:
Exchange differences on translation of foreign
operations
- Members of parent entity (451,765) -
---------- ----------
(451,765) -
---------- ----------
Loss for the year
- Members of parent entity (5,751,338) (6,709,388)
---------- ----------
Total recognised income and expense for
the year attributable to members of the
parent entity (6,203,103) (6,709,388)
========== ==========
The above Condensed Consolidated Statement of Changes in Equity should be read
in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2007
Half-year ended Half-year ended
31 Dec 2007 31 Dec 2006
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (4,783,314) (6,572,584)
Interest received 615,782 151,364
Interest paid - (1,725)
------------ -----------
Net cash flows used in operating
activities (4,167,532) (6,422,945)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment (215,369) (12,071)
Refunds of security bonds - 16,000
Loans to other entities (1,323,049) -
Development expenditure (1,315,030) -
------------ -----------
Net cash flows (used in)/from investing
activities (2,853,448) 3,929
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 875,000 13,081,860
Share issue expenses paid (11,234) (895,062)
------------ -----------
Net cash flows from financing activities 863,766 12,186,798
------------ -----------
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (6,157,214) 5,767,782
Cash and cash equivalents at the beginning
of the half-year 22,096,750 8,434,899
Effects of exchange rate changes on cash
and cash equivalents (455,757) (159,772)
------------ -----------
CASH AND CASH EQUIVALENTS AT THE END OF
THE HALF-YEAR 15,483,779 14,042,909
============ ===========
The above Condensed Consolidated Cash Flow Statement should be read in
conjunction with the accompanying notes.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report for the interim half-year reporting period
ended 31 December 2007 has been prepared in accordance with Accounting Standard
AASB 134 Interim Financial Reporting and the Corporations Act 2001. Compliance
with AASB 134 ensures compliance with International Financial Reporting Standard
IAS 34 Interim Financial Reporting.
This interim financial report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this report is to
be read in conjunction with the annual report of Leyshon Resources Limited for
the year ended 30 June 2007 and any public announcements made by Leyshon
Resources Limited and its subsidiaries during the interim reporting period in
accordance with the continuous disclosure requirements of the Corporations Act
2001.
(a) Basis of preparation of half-year financial report
The condensed consolidated financial statements have been prepared on the basis
of historical cost, except for the revaluation of certain non-current assets and
financial instruments. Cost is based on the fair values of the consideration
given in exchange for assets. All amounts are presented in Australian dollars.
The accounting policies and methods of computation adopted in the preparation of
the half-year financial report are consistent with those adopted and disclosed
in the company's 2007 annual financial report for the year ended 30 June 2007,
unless otherwise indicated.
Half-year Half-year
Ended Ended
31 December 31 December
2007
$ 2006
$
2. REVENUE
Interest received/receivable 549,916 151,364
========== =========
3. DIVIDENDS PAID OR PROVIDED FOR
No dividends have been paid or provided for during the half-year.
4. SEGMENT INFORMATION
The Consolidated Entity operates in one business segment, being the mining and
exploration of gold and other minerals in the resources sector, in the following
geographical segments:
Half-year 2007 Australia China Unallocated Consolidated
----------- ------- ------------- --------------
Half -Year Half -Year Half -Year Half -Year
2007 2007 2007 2007
$ $ $ $
Revenue
Total segment revenue - - - -
Unallocated revenue 546,800 3,116 - 549,916
--------- --------- ---------- -----------
Total revenue 546,800 3,116 - 549,916
--------- --------- ---------- -----------
Results
Segment result - - - -
Unallocated revenue less
unallocated expenses (2,624,301) (3,127,037) - (5,751,338)
--------- --------- ---------- -----------
Loss before income tax (2,624,301) (3,127,037) - (5,751,338)
--------- --------- ---------- -----------
Half-year 2006 Australia China Unallocated Consolidated
----------- ------- ------------- --------------
Half -Year Half -Year Half -Year Half -Year
2006 2006 2006 2006
$ $ $ $
Revenue
Total segment revenue - - - -
Unallocated revenue 150,655 709 - 151,364
--------- --------- ---------- -----------
Total revenue 150,655 709 - 151,364
--------- --------- ---------- -----------
Results
Segment result - - - -
Unallocated revenue less
unallocated expenses (1,593,795) (5,115,593) - (6,709,388)
--------- --------- ---------- -----------
Profit/(loss) before
income tax (1,593,795) (5,115,593) - (6,709,388)
--------- --------- ---------- -----------
5. SUBSEQUENT EVENTS AFTER BALANCE DATE
There were no significant events occuring after balance date requiring
disclosure in the financial statements.
6. COMMITMENTS AND CONTINGENCIES
Commitments
Black Dragon Mining Company Limited ("Black Dragon") entered into an agreement
with the Shenyang Heavy Machinery Co. Limited on 5 December 2007. The contract
relates to the purchase of two ball mills for the Zheng Guang gold project, at a
cost of RMB7.6 million each, for a total cost of RMB15.2 million. In accordance
with the terms of the contract, an amount of RMB1.46 million has already been
paid in relation to the order of the first mill.
Black Dragon is required to provide notice no later than 30 November 2008 that
the order for the second ball mill will proceed.
The Consolidated Entity has a 70% interest in Black Dragon.
Contingencies
There has been no material change in the contingent assets or liabilities of the
Consolidated Entity during the half-year.
7. ISSUANCES, REPURCHASES AND REPAYMENTS OF EQUITY SECURITIES
During the half-year reporting period, Leyshon Resources Limited issued
2,500,000 ordinary shares for a total value before issue costs of $875,000.
There were no other movements in ordinary share capital or other issued share
capital of the Company during the current or prior half-year reporting period.
Leyshon Resources Limited issued 4,000,000 options over shares to directors
during the period, with details as follows:
Grant date Number of options Exercise price ($) Expiry date Vesting date
3 Dec 07 4,000,000 0.70 30 Nov 10 3 Dec 07
The options have a total value of $1,220,000 which has been recognised at 31
December 2007. There were no other movements in share options of the Company
during the current or prior half-year reporting period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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