LRL Leyshon Res

 

TIDMLRL 
 
RNS Number : 6580B 
Leyshon Resources Limited 
30 October 2009 
 

LEYSHON RESOURCES LIMITED 
 
 
 
30 October 2009 
 
 
SEPTEMBER 2009 QUARTERLY REPORT 
 
 
Leyshon Resources Limited (AIM/ASX: LRL) ("Leyshon" or "the Company") reports 
that during the quarter it entered into a conditional agreement to sell its 
interest in the Zheng Guang Project (Project) following a competitive divestment 
process involving a number of Chinese and international companies. 
 
 
The Company and its joint venture partner, the Qiqiha'er Brigade of the 
Heilongjiang BGMR, have reached agreement to sell their respective interests in 
the Sino Foreign Joint Venture company Black Dragon Mining Company Limited 
(Black Dragon), which owns the Project, to Heilongjiang Heilong Mining Company 
Limited (Heilong). 
 
 
Under the agreements that Heilong has entered into with the Company's wholly 
owned subsidiary China Metals Pty Limited (China Metals) it will: 
 
 
  *  pay RMB230 million (US$34 million) for China Metals Limited's 70% interest (Sale 
  Proceeds); and 
 
  *  assume Black Dragon's liabilities currently estimated at RMB 10 million (US$1.5 
  million); and 
 
  *  be responsible for royalty payments estimated at RMB 20 million (US$3 million). 
 
 
 
In addition Heilong has paid RMB75 million (US$11 million) to Black Dragon to 
enable it to repay a loan to China Metals which had previously been advanced for 
the development of the project (Shareholder Loan). 
 
 
Subsequent to quarter end, this amount has been paid to China Metals in 
Australia.  In addition the escrow account for the Sale Proceeds has been 
established and RMB 115 million has been paid into this account by Heilong. 
 
 
Following completion of the proposed transaction, the Company will have no 
liabilities, cash and receivables of US$47 million (ie GBP29 million and A$ 
54 million)(based on the exchange rate prevailing at the time that the 
transaction was announced) equivalent to 13 pence (A$0.23) per share. 
 
 
A notice of meeting has been sent to shareholders for consideration prior to the 
Annual General Meeting to be held on 30 November, which includes full details of 
the proposed transaction and the Company's proposed investing policy to be 
adopted following the disposal. 
 
 
Pending the investment of the Company's available cash pursuant to the proposed 
investing policy and relevant regulations, the Company may embark on an 
on-market share buyback programme on AIM and ASX, if the Company's shares trade 
at a discount to net tangible assets. 
 
 
The Board is of the view that this comparatively high valuation was achieved for 
a pre production resource due to the fact that Leyshon is based in China and was 
able to bring in Australian metallurgical and geological expertise to work side 
by side with the Chinese engineers inside the Changchun Gold Design Institute. 
The Project design met all the relevant Chinese standards and yet incorporated 
the latest Australian thinking on process route and geological interpretation. 
 
 
Since its involvement in China, the Company has completed three raisings, one on 
ASX in December 2004 for A$7 million and two on AIM in  2006 for GBP2.65 million 
(A$6.6 million) and GBP8.3 million (A$16.25 million)  for a total of A$29.6 
million. 
 
 
Following the sale and repayment of shareholder loans, in accordance with sale 
agreements, the Company will have no liabilities and cash of approximately A$52 
million after taxes and fees. In addition the Company will have a receivable in 
the form of a tax credit equal to the holding tax withheld of A$3.4 million for 
a total of A$55.3 million (these A$ amounts are based on the prevailing exchange 
rates at the time the transaction was announced). 
 
 
The Company is firmly of the view that China's strong demand for minerals and 
metals will continue to grow due largely to the planned urbanisation of over 400 
million people in the coming decade. In the Company's view, based on its 
experience dealing with private and state owned resource groups, China's rapid 
growth metal and mineral production has to a large extent been based on known 
discoveries. 
 
The challenge is going to be to fill the pipeline with new projects through 
generative exploration, which doesn't appear to be taking place now that state 
funding has been redirected away from the provincial geological bureau. 
 
 
As a result, Chinese companies are seeking to acquire and develop known 
resources elsewhere in the world. 
 
 
The Company proposes to draw on its 6 years experience in China and focus on 
acquiring and developing projects in those commodities and located in those 
countries which it believes will be of interest to Chinese mining and other 
groups for either offtake, partnership or sale. 
 
 
Since announcing the proposed sale, the Company has received an increasing 
number of project investment proposals and is currently evaluating a number of 
these projects which meet its proposed investment criteria. 
 
 
The Company plans to continue to operate from Beijing, taking advantage of the 
strong technical base it has established with the local design institutes, and 
is confident that it will be able to identify a project to which it can apply 
its technical, financial and development skills. 
 
 
The Company had A$3.0 million cash on hand at the end of the quarter and in 
addition has subsequently received repayment of the Shareholder Loan of RMB75 
million (A$12.0 million). 
 
For further information contact: 
 
 
Leyshon Resources Limited 
Paul Atherley - Managing Director 
Tel: +86 137 1800 1914 
patherley@leyshonresources.com 
 
 
Seymour Pierce 
Jonathan Wright 
Tel: +44 (0)207 107 8000 
 
http://www.leyshonresources.com 
Background 
Leyshon Resources Limited (AIM & ASX:LRL) was on the ground in 2003 when China 
opened its gold sector to foreign investment and is developing the Zheng Guang 
gold zinc project as one of the first Sino Foreign owned gold mines in the 
mineral rich province of Heilongjiang, north east China. 
The joint venture has established a 135 km² strategic ground position on a major 
unexplored gold and copper belt and has delineated an initial  JORC compliant 
Measured Resource of 361,400 ounces gold, 1.3 million ounces silver and 33,650 
tonnes zinc and an Indicated Resource of 378,000 ounces gold, 1.3 million ounces 
silver and 36,500 tonnes zinc. 
A ground breaking ceremony on 2nd August 2008 saw commencement of civil 
engineering, site clearing and bulk earthworks works at the mine site. Work 
completed included an 8.6 kilometre access road that connects the project with 
the residential town of Heibaoshan and the national rail network. 
 
 
In addition the necessary approvals and land compensation arrangements were put 
in place for the 16 kilometre 35 Kv power line which will connect the project to 
the state grid. 
An engineering design by the Changchun Design Institute is currently being 
reviewed by international mining consultants Minarco-Mineconsult with a view to 
reducing the upfront capital requirements and optimising the pit design and 
operating parameters. 
The project has received its formal Environmental approval, the necessary Land 
acquisition agreements have been finalised and the Project Registration 
documentation lodged. The final Mining Licence approval is currently being 
prepared and is expected to be lodged shortly. 
The Company is fully engaged in China with its main operating office in Beijing 
and is jointly developing the project with the Qiqiha'er Brigade of the 
Heilongjiang BGMR, one of the largest geological bureaus in China. 
Geological Information 
 
 
The information in this report relating to Mineral Resources is based on 
information compiled by Richard Seville, a Director of the Company, who is a 
member of the Australasian Institute of Mining and Metallurgy. 
 
 
Richard Seville 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' and as a Qualified Person as defined in the AIM 
Rules. Richard Seville 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 
 
 MSCWUGWGUUPBUBU 
 

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