Leyshon Resources Limited Commenced Drilling Well ZJS7 (9040J)

TIDMLRL

RNS Number : 9040J

Leyshon Resources Limited

23 July 2013

Leyshon Resources Limited

Commenced Drilling Well ZJS7

Leyshon Resources Limited (AIM/ASX:LRL) ("Leyshon" or the "Company") provides the following update from its Zijinshan Gas Project, located on the eastern fringe of the prolific Ordos Gas Basin in Central China.

Its wholly owned subsidiary Pacific Asia Petroleum Limited (PAPL) has commenced drilling well ZJS7 at a location approximately three kilometres to the northeast of well ZJS5, in the central part of the 380 square kilometre central depression area.

Torrential rain has delayed the mobilization of the rig for over two weeks. The storms have resulted in the deaths of four people, affected 840,000 others, of which 28,000 have been evacuated. The Ministry of Civil Affairs has dispatched relief teams to the most affected areas of Shanxi Province.

Now that the rig has been mobilized the extreme weather conditions are not expected to have any further significant impact on the drilling operations which are expected to take approximately 4-5 weeks.

The well has a design depth of 2,300 metres and is targeting the same potential pay zones as those intersected in well ZJS5.

The recently completed formation pressure test in well ZJS5, after a three week shut-in period, recorded 16.5MPa/2425psi on a single zone, significantly higher than that recorded in nearby wells in the same strata.

Well ZJS7 is the first of three wells to be drilled as part of this year's accelerated exploration and appraisal programme. A further three wells are planned to be drilled based on favourable results from both drilling and testing, and on partner approval. All wells are expected to be flow tested in the event they intersect zones that warrant testing.

It should be noted that the programme remains at an early stage in the exploration and appraisal phase of de-risking the project and accordingly each well will be fully evaluated before proceeding with the subsequent well.

Managing Director Paul Atherley commented:

"Well ZJS7 is the third well in the overall eight well programme and has been located based on the interpretation of the recently acquired 318 kilometres seismic data and the results from well ZJS5.

The focus remains on the outcome at the end of the exploration and appraisal programme with a view to generating a resource by the end of the calendar year."

The Company is well placed to carry out its 2013 exploration and appraisal programme with a cash position of US$40 million (unaudited). The majority of the cash is held in US dollars. With 249 million ordinary shares on issue this represents approximately A$17 cents per share and 10 pence per share. The cash position does not take into account interest due nor all of the liabilities for the first two wells.

For further information please contact:

Leyshon Resources Limited

Paul Atherley - Managing Director

Tel: +86 137 1800 1914

admin@leyshonresources.com

Cantor Fitzgerald Europe

David Porter/Rick Thompson (Nominated adviser)

Richard Redmayne (Corporate broking)

Tel: +44 (0)207 107 8000

Pelham Bell Pottinger

Charles Vivian /James MacFarlane

Tel: +44 (0)20 7861 3232

Background

http://www.leyshonresources.com

Leyshon was on the ground in 2003 when 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 overtook the United States as the world's largest energy consumer in 2010, however on a per capita basis it still only consumes about 25% of the energy of the most developed nations. The government has recently described the country's increasing dependence on foreign energy sources as one of the "Grave challenges to energy security".

Its main policy response to this challenge is the rapid development of domestic unconventional gas resources, with a particularly focus on the Eastern Flank of the Ordos Basin. The aim is to rapidly increase the output of unconventional gas from the currently very low levels to an annual production of 6.5 billion cubic metres by 2015.

Leyshon, along with its partner CNPC, is one of small number of companies exploring for and looking to develop unconventional gas production in the Eastern Flank of the Ordos Basin. Managing Director Paul Atherley is the Vice Chairman of the China Britain Business Council and serves on the European Union Chamber Energy Working Group.

The qualified person, Frank Fu, who has reviewed this update, has 21 years' experience in the oil and gas industry and is a member of the Society of Petroleum Engineers. He holds a Bachelor of Science in Geology and Exploration from Shanxi Mining College in Taiyuan, Shanxi. Frank is currently the Chief Operations Officer for the PAPL and is based in the Beijing office. He joined Company in 2012, prior to this he spent the majority of his career with ConocoPhillips in China and located at overseas gas and oil projects.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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