Leyshon Resources
www.leyshonresources.com
www.leyshonresources.com
Leyshon Resources has a proud history as one of Australia’s most financially successful gold mining companies having produced over 2.7 million ounces from its Mt Leyshon Gold Mine in Queensland and distributed over A$300 million dollars to its shareholders over its 15 year life. Today Leyshon has divested its Australian mining and exploration interests and is focused on the Zheng Guang project in Heilongjiang, northeast China. Zheng Guang has estimated the resource of 1.21 million ounces of gold, 94,000 tonnes of zinc and 3.72 million ounces of silver.
The company forecasts annual revenues of 90 mln usd from the project at current metal prices, and EBITDA of 54 mln usd on cash operating costs of some 155 usd per ounce.
Leyshon Resources slash losses but may sell Zheng Guang gold project
The half-yearly report from Leyshon Resource, published this morning, clearly demonstrates the effect of the company’s response to current adverse market conditions. The loss for the half year to December 2008 was almost half of that incurred for the previous comparable period – at AU$2,950,192 vs. AU$5,751,338 in December 2007. This has been achieved through the deferral of much major expenditure at the Zheng Guang gold project until after the Chinese winter season, and a careful pruning of all outgoings leading to a significant monthly reduction in spend. The result is a comfortable bank balance of AU$5.7 million.
During the half year under review, a 6,840 metre drilling programme was carried out at Zheng Guang, targeting extensions to the Main Ore Zone to both north and south, along with further testing of the Zheng Guang North prospect. Whilst the results were encouraging, further drilling is required to upgrade the current resource estimates. The access road was successfully completed and project earthworks begun before the company decided to shut down site-based activities for the winter, and the land acquisition programme has also been brought to a successful conclusion. The Land Acquisition Plan is presently with the Department of Land and Resources, and once it has been approved, Project Registration and the issue of the Mining Licence are expected to follow in 2009.
However, as announced earlier, the company require finance to make further progress at Zheng Guang. To make this less of a burden, a detailed review of the mine engineering design has been carried out over the winter, working with the Changchun Design Institute, to reduce the costs of bringing Zheng Guang into production.
In the meantime, Leyshon have been reviewing their options for Zheng Guang, and say that whilst interest in funding the project after all approvals have been granted remains, given the current financial climate such funding may not be forthcoming on acceptable terms, if at all. Thus they have also been pursuing other avenues for the realisation of value from Zheng Guang, which include the sale of their interest in the project, and negotiations with a number of parties are currently in progress under confidentiality agreements.
During the half year under review, a 6,840 metre drilling programme was carried out at Zheng Guang, targeting extensions to the Main Ore Zone to both north and south, along with further testing of the Zheng Guang North prospect. Whilst the results were encouraging, further drilling is required to upgrade the current resource estimates. The access road was successfully completed and project earthworks begun before the company decided to shut down site-based activities for the winter, and the land acquisition programme has also been brought to a successful conclusion. The Land Acquisition Plan is presently with the Department of Land and Resources, and once it has been approved, Project Registration and the issue of the Mining Licence are expected to follow in 2009.
However, as announced earlier, the company require finance to make further progress at Zheng Guang. To make this less of a burden, a detailed review of the mine engineering design has been carried out over the winter, working with the Changchun Design Institute, to reduce the costs of bringing Zheng Guang into production.
In the meantime, Leyshon have been reviewing their options for Zheng Guang, and say that whilst interest in funding the project after all approvals have been granted remains, given the current financial climate such funding may not be forthcoming on acceptable terms, if at all. Thus they have also been pursuing other avenues for the realisation of value from Zheng Guang, which include the sale of their interest in the project, and negotiations with a number of parties are currently in progress under confidentiality agreements.
