TIDMLRL
RNS Number : 9174F
Leyshon Resources Limited
30 April 2014
LEYSHON RESOURCES
30 April 2014
Quarterly Report March 2014
Leyshon Resources Limited (AIM/ASX: LRL) ("Leyshon" or the
"Company") primary activities during the quarter were the
completion of the Leyshon Energy demerger, identifying new project
opportunities and undertaking a strategic review of the Mt Leyshon
gold project in Queensland, Australia.
Completion of the Demerger
The demerger of Leyshon Energy was approved by Shareholders in
January 2014. The demerger was effected by way of a pro-rata
in-specie distribution of all the shares in Leyshon Energy to the
Shareholders of Leyshon Resources on a one-for-one basis. To learn
more about Leyshon Energy, please visit their website at
www.leyshonenergy.com
Leyshon Resources remains listed on the Australian Securities
and London Alternative Investment Market Exchanges. At the
completion of the demerger, Leyshon had 249 million ordinary shares
on issue and US$3 million cash. A number of board changes have
occurred, including the appointment of a new Managing Director.
New Project Opportunities
Leyshon Resources' strategy is to identify investment
opportunities in the resources sector which are in line with the
Company's stated investing policy.
The Company's strategic objective is to identify mineral
resource projects that have a clear pathway to production or
monetisation and can generate high returns to shareholders. This
will be achieved by leveraging the in-house expertise and
track-record in identifying, acquiring, financing, developing and
operating resource projects, and un-locking value. The Company's
plan is to identify advanced or brown-field assets which have a
stronger chance of being re-rated in the listed market.
The investment climate in the resources sector continues to be
very difficult. Resource equity and asset valuations are currently
substantially discounted which we believe will provide an
attractive buying opportunity for the Company at the bottom of the
investment cycle.
The Company has a strong cash position with working capital of
approximately US$2.7 million (unaudited). Major shareholders remain
very supportive of the Company's acquisition strategy.
Since the completion of the demerger, the Company has commenced
preliminary discussions with prospective debt and equity financiers
in regard to a number of investment opportunities, and has been
encouraged by the response regarding the level and types of funding
that could be available.
Mt Leyshon Strategic Review
The Mt Leyshon Project is currently on care and maintenance. The
Company is going to undertake a strategic review to assess its
options in relation to the project. A number of potential
opportunities to create value from the project have been
identified, including:
1) The potential to recover the gold from the ball mill scat
stockpiles. A previous economic study demonstrated only modest
returns at a gold price of US$780 per ounce, compared to the
current price of US$1300 per ounce;
2) Utilising the existing pit and other infrastructure for
small-scale hydro power generation; and
3) Reassessing the exploration potential of the ground in the vicinity of the old mine.
A number of potential opportunities have been identified that
could create value for shareholders, including:
1. Recovery of Gold from Mill Scats
In June 2012, the Company completed a drilling program and
economic study on the potential recovery of gold from a large stock
pile of between 12 and 15 million tonnes of ball mill scats from
the historical operations. The study considered a number of
different process routes to recover between 100,000 and 175,000
ounces of gold through the retreatment of the highly mineralised
material. The material was stockpiled at a time when gold prices
averaged around US$300 per ounce, and the 2012 study was based on a
gold price of US$780 per ounce.
The results of the program indicated that the project was viable
but required significant capital expenditure for a relatively
modest return, and the project was put on hold. Given the recent
increase in the gold price to US$1300 per ounce, the Directors have
decided to revisit the economics of the project.
2. Hydro Power Generation
The Company has commenced a desktop concept study to examine the
commercial viability of utilising the flooded mine pit and water
reservoir at Mt Leyshon to develop a pumped storage hydro
project.
The site has a number of key attributes that make it amenable to
pumped storage hydro power generation, including:
-- an upper water reservoir of approximately 1,250ML capacity;
-- a lower reservoir (the flooded mine pit) of approximately 138,000ML capacity;
-- average head between the upper and lower reservoirs of approximately 315 metres;
-- access to an existing 66kV transmission line and substation
inside the project site and an existing 132kV transmission line
within 24 kilometres of the site at Charters Towers;
-- access to roads and other infrastructure such as water from the Burdekin Dam system; and
-- a number of projections indicating a future shortage of
peaking power availability in northern Queensland.
3. Further Exploration
The historical focus of the Leyshon mining operations was the Mt
Leyshon Breccia, the main ore host, comprising a large pipe-like
breccia, approximately 400 x 300 metres in plan, with a minimum
vertical extent of 650 metres. A number of areas of brecciation and
porphyry intrusion extend outside the main pit area. Historical
surface sampling has identified areas of anomalous grades of gold,
silver, lead and zinc. The Company will study the historical data
to assess whether a new re-interpretation should be undertaken
using modern day exploration methodologies including sampling and
geophysics.
Board Changes
During the quarter, a number of Board changes occurred including
the appointment of Mr Corey Nolan as Managing Director, replacing
Mr Paul Atherley, who will remain as a Non-Executive Director, and
the retirement of Andrew Berry as a Non-Executive Director.
For further information please contact:
Leyshon Resources Limited
Corey Nolan - Managing Director
Tel: +61 7 3221 7770
admin@leyshonresources.com
Cantor Fitzgerald Europe
David Porter/Rick Thompson (Nominated Adviser)
Richard Redmayne (Corporate broking)
Tel: +44 (0)207 894 7000
http://www.leyshonresources.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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