Leyshon Resources Limited Quarterly Activities Report (9174F)

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

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