TIDMLRL
RNS Number : 9198V
Leyshon Resources Limited
03 November 2014
LEYSHON RESOURCES LIMITED
31 October 2014
Quarterly Report September 2014
Leyshon Resources Limited (AIM/ASX: LRL) ("Leyshon" or the
"Company") primary activities during the quarter included
identifying new project opportunities and continuing the strategic
review of the Mt Leyshon gold project in Queensland, Australia.
New Project Opportunities
During the quarter, the Company has been actively pursuing and
studying potential investment opportunities in the resources sector
which are in line with the Company's stated investing policy. The
Company has a short list of potential investment opportunities and
has been undertaking technical due diligence, site visits and
negotiating terms with vendors. There is no indication whether
these discussions will lead to a commercially binding
transaction.
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 with existing
cashflows or the potential for cashflows at relatively low capital
expenditures.
The investment climate in the resources sector continues to be
difficult. Resource equity and asset valuations are currently
substantially discounted which we believe will provide an
attractive entry opportunity for the Company at the bottom of the
investment cycle.
The Company has a strong cash position with working capital of
A$2.8 million. Major shareholders are 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 Company is continuing its strategic review of the Mt Leyshon
project and a number of potential opportunities to create value
from the project have been identified, including:
1) Utilising the existing pit and other infrastructure for small-scale hydro power generation;
2) Reassessing the exploration potential of the ground in the vicinity of the old mine; and
3) 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 higher
prices today.
1. Charters Towers Energy Project
The Company has continued with its strategy examining the
feasibility of developing a pumped storage hydro ("PSH") power
project at Mt Leyshon.
During the quarter, the Australian Energy Market Operator (AEMO)
published the Electricity Statement of Opportunities for 2014.
AEMO's market forecasts follow Powerlink's significant downward
revision of forecast Queensland electricity demand from earlier
this year. The forecast requirement for new capacity has now moved
out beyond the AEMO ten year planning window. This is later than
contemplated in the May 2014 Charters Towers PSH Concept Study
which envisaged new demand by 2020. In this context, the Company
believes the best prospects for the Leyshon PSH concept is as a
network support project. The Company believes the project is a very
suitable form of generation network support and the 20-40MW sizing
fits well within the scale of the network limitations.
2. 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. A study is currently underway to examine all
the historical data to assess whether a new re-interpretation
should be undertaken using modern day exploration methodologies
including sampling and geophysics.
3. Recovery of Gold from the 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. In light of the
higher gold prices today, the directors are revisiting the project
economics to test some of the original assumptions and whether a
case to reprocess the scats can be established.
During the quarter, a private group completed a bulk sample of
scats to test through a trial processing plant. The results of the
trial should be available during the December 2014 quarter.
ASX Suspension Update
Australian Securities Exchange ("ASX") policy, in accordance
with Chapter 12 of the Listing Rules, is to allow companies that
have disposed of their main undertakings a six-month period within
which to satisfy ASX that the company has a sufficient level of
operations to justify continued quotation of the Company's
securities on the ASX. With funds available for investment and the
volume of opportunities being presented to Leyshon for
consideration, the Board had expected to be in a position to
implement a programme to create value from its existing Mt Leyshon
assets or a suitable project acquisition in time to satisfy the
ASX's continued operations policy.
Since the demerger and subsequent appointment of a new Managing
Director in February 2014, the Company has been actively reviewing
a number of project opportunities, including appropriate due
diligence enquiries, and entered into negotiations with several
parties. Whilst the Company is currently evaluating a number of
opportunities, there can be no certainty that a transaction will be
concluded.
However, the Company was not able to satisfy the ASX that it was
in compliance with Chapter 12 and was suspended from trading on 14
July 2014. Leyshon remains an ASX listed entity and provided it is
able to recommence operations of a level that, in the opinion of
the ASX, is sufficient to justify quotation of Leyshon securities
in the future, the suspension of trading in the Company's shares
will be lifted.
With our available cash reserves, Leyshon is well positioned to
pursue quality projects in accordance with our investment strategy.
Every effort will be made to ensure we secure assets that are most
likely to achieve the corporate objectives and strategic aims of
the Company.
In the interim, the Company will continue to evaluate suitable
investment opportunities and will keep the market informed of any
material developments as they occur.
The Company confirms that its securities continue to trade on
the AIM Market and the Company remains subject to Rule 15 of the
AIM Rules for Companies ("AIM Rules") whereby the Company will have
to make an acquisition(s) which constitute a reverse takeover under
AIM Rule 14 or otherwise implement its investing policy to the
satisfaction of the London Stock Exchange within twelve months of
the demerger of Leyshon Energy.
For further information please contact:
Leyshon Resources Limited
Corey Nolan - Managing Director
Tel: +61 7 3221 7770
admin@leyshonresources.com
RFC Ambrian Limited
Samantha Harrison (Nominated Adviser)
Kim Eckhof (Corporate broking)
Tel: +44 (0)203 440 6800
http://www.leyshonresources.com
Tenement Interests
Leyshon Resources Limited held the following interests in
exploration tenements at the end of the quarter. There were no
tenements acquired or disposed of during the quarter and no changes
in the beneficial interests held by the Company.
PROJECT BENEFICIAL INTEREST TENEMENT NAME
MOUNT LEYSHON 100% ML 1546 Golden Star
100% ML 10144 Mt Leyshon
100% ML 10148 Puddler Creek
100% ML 10149 Water Dam Gap Creek
100% ML 10172 Eastern Star
100% ML 10173 Southern Star
Leyshon Resources Limited ABN 75 010 482 274
Level 3 / Suite 3, 1292 Hay Street, West Perth 6005, Western
Australia
Tel: + 61 8 9321 0077 Fax: + 61 8 9322 4073
This information is provided by RNS
The company news service from the London Stock Exchange
END
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