Quarterly Report (3705W)

TIDMLRL

RNS Number : 3705W

Leyshon Resources Limited

30 January 2012

DECEMBER 2011 QUARTERLY REPORT

Leyshon Resources Limited (AIM/ASX: LRL) (the "Company") announces that during the quarter it continued to review, and is continuing to undertake due diligence on, a number of project investment opportunities, some of which have the potential to meet the Company's investment criteria.

As previously advised, the Company has completed a preliminary technical and legal due diligence review on a PRC entity that holds an exploration licence over a thermal coalproject in the Western Chinese province of Xinjiang. More detailed review of the technical data collated during the June quarter has confirmed that the asset has the potential tomeet the Company's investment criteria.

The Company's main focus during the quarter has been on advancing the commercial negotiations in the relation to the proposed transaction. These discussions are ongoing.

In addition, the Company and its advisors have continued discussions and negotiations with a large state owned enterprise on joint venture arrangements which, in theevent of a successful completion of the transaction, would become the Company's joint venture partner on the project.

Whilst the Company believes that the asset is attractive in that it has the potential to meetits demanding internal investment criteria, it can give no assurance that these due diligence investigations, approval processes and/or discussions will lead to the successful completion of the transaction.

The Board is aware that the process is taking some time to reach a conclusion. It notes that in the current competitive environment the acquisition of high quality assets can be expected to take time to complete.

Management is firmly of the view that, notwithstanding the current slowing of the growth in China's economy, the demand for energy minerals and metals will continue to be underpinned bythe urbanization of over 400 million people in the coming decade. China's latest Five Year Plan emphasizes "Inclusive Growth" which entails the planned urbanization of a large number of Western China's rural population into second and third

tier cities.

This is resulting in significant increases in coal fired power consumption andinfrastructure spending such as railways and new city development in these regions. Thermal coal prices have remained strong despite the recent falls in prices for other commodities.

The Company remains of the view that in light of the forecast expanding demand for all types of coal within China over the next ten years, high quality coal assets located close to infrastructure and within transport distance to market will become increasingly valuable overtime.

The Company remains diligent in its assessment of project investment opportunities at alltimes and is therefore prepared to commit significanttime and expenditure to due diligence and approvals and other studies before committing to a transaction.

Management continues to review investment proposals from many locations around the world and it actively considers each one in light of its competitive advantage of being located in Beijing and able to access the Chinese end user market.

Whilst ensuring that adequate resources are applied at all times in search of a positive outcome, the Board is mindful of preserving cash reserves. At quarter end the Company hadA$52.2 million in cash, and is due A$0.5 million in term deposit interest for a total of A$52.7 million (GPB 35.6 million) This is equivalent to A$ 21.4 cents per share (14.4pence per share).

The Company has not purchased any shares under the previously announced on-market share buy-back.

Whilst the main focus during the year will be to progress the approvals for the proposed Xinjiang coal acquisition, the Company will remain very active in evaluating other investment opportunities both in China and elsewhere that have the potential to meet its investment criteria.

For further information contact:

Leyshon Resources Limited

Paul Atherley - Managing Director Tel: +86 137 1800 1914 patherley@leyshonresources.com

Seymour Pierce

Jonathan Wright (Nominated adviser)

Richard Redmayne (Corporate broking)

Tel: +44 (0)207 107 8000

http://www.leyshonresources.com

Background

Leyshon was on the ground in 2003when China opened its mining sector to foreign investment. It has been fully engaged in China since then and has its main operating office located in Beijing.

China's latest Five Year Plan emphasizes Inclusive Growth which entails the planned urbanization of a large number of Western China's rural population into second and third tier cities. This will result in significant increases in power consumption and infrastructure spending.

The Company is planning to invest in high quality coal assets in Xinjiang which will sell into the

escalating demand for thermal and metallurgical coal across China over the next ten years.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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