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From: Nigel
ArtDate: 15th November 2006
Section: (FILLYABOOTS NEWS RELEASES)
Remote Name: 87.74.94.128
Date: 01/12/06
Time: 19:07
15th November 2006
Leyshon announces development of Heilongjiang’s first ever Sino Foreign gold mine.
News Item - Conduit PR
Leyshon Resources Limited (“Leyshon”) (AIM & ASX: LRL) and its joint venture partner the Qiqiha’er brigade of the Heilongjiang Bureau of Mineral Resources today announced a decision to develop the Zheng Guang gold zinc project as the first ever Sino Foreign owned gold mine in the mineral rich province of Heilongjiang, northeast China.
It is proposed to commence production in 2007 with trial mining and heap leaching of near surface gold ore followed by the rapid expansion of production to over 100,000 ounces of gold and 200,000 ounces of silver within three years.
The project’s current design has an estimated initial capital cost of US$27 million and an estimated production cost of US$225 per ounce. Based on a gold price of US$600 per ounce annual revenues are estimated at over US$60 million, EBITDA US$42 million and NPAT US$28 million.
Revenue and earnings are expected to increase with the commissioning of a zinc flotation circuit in 2011, which is designed to lift gold recovery and allow a zinc concentrate to be produced for sale to Chinese smelters. Optimisation testwork is underway which on completion in early 2007 will allow zinc production levels, operating costs and sales terms to be finalised.
This flotation circuit has an estimated capital cost of US$21 million which is expected to be funded from project cashflow with no further call on shareholders.
A revised resource estimate in February 2007 is expected to upgrade and significantly increase the current JORC compliant inferred resource estimate of 930,000 ounces gold, 64,000 tonnes zinc and 2.6 million ounces silver. The estimate will be prepared by resource specialists Hellman and Schofield of Australia and will be based on results from this year’s 30,000 metre diamond and reverse circulation drill programme which is nearing completion.
Leyshon and Qiqiha’er brigade recently entered into a twenty year agreement for the financing and development of the project under which Leyshon, which holds a 70% interest, will fund the project to production and will recover Qiqiha’er brigade’s share of the capital cost on commercial terms from project cashflow.
Director of Qiqiha’er brigade Chai De Sai commented ”We are very pleased with the good cooperation between Leyshon and Qiqiha’er brigade during the exploration phase and look forward to bringing Zheng Guang rapidly into production”
The Zheng Guang project’s key advantage is its location in the Heiboashan coal and copper mining district with its well established infrastructure, trained workforce and readily available large scale mining equipment all contributing to the project’s low capital and operating costs.
The site has zero population, marginal agricultural land use and is located within eight kilometres of a main railway connection to Beijing. Labour, fuel, energy and materials costs are amongst the lowest in China and orders of magnitude lower than a comparable location in Australia or Canada.
Leyshon has its main operating office in Beijing and is one of the very few foreign mining companies with its Chairman, Managing Director and Chief Operating Officer all based in China.
Managing Director Paul Atherley commenting today said “Both Qiqiha’er brigade and our shareholders are keen to see this exciting new gold project brought rapidly into production.”
For further information contact:
Paul Atherley - Managing Director Leesa Peters/Jos Simson Conduit PR Tel: +86 137 1800 1914 Tel: +44 (0) 20 7429 6600 Mob: +61 417 475 038 Mob: +44 (0) 781 215 9885
http://www.leyshonresources.com
Jos Simson Conduit PR Ltd 76 Cannon St EC4N 6AE Direct: +44 (0) 20 7429 6603 Office: +44 (0) 20 7429 6666 Fax: +44 (0) 20 7429 6699 Mob: +44 (0) 789 987 0450
www.conduitpr.com
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