Leyshon Resources (ASX: LRL) 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 enters agreement to sell Zheng Guang Project
Leyshon Resources (AIM: LRL, ASX:LRL) has announced the conditional agreement on the long awaited divestment of its Chinese Zheng Guang Project. Trading in Leyshon resumed today following the update, this morning’s trading in London saw Leyshon Resources surge over 60% immediately after the news with its shares reaching 9 pence.
Today’s deal sees Leyshon’s Joint Venture company ‘Black Dragon Mining’ sell its total interest in the Zheng Guang project to the Heilongjiang Heilong Mining Company Limited (Heilong). Heilong Mining is the wholly owned subsidiary of China Metals Pty Limited.
Under the agreement, the joint venture will receive US$34 million in return for Black Dragon’s 70% stake in Zheng Guang, Heilong Mining will also assume Black Dragon's liabilities currently estimated to be US$1.5m. Heilong Mining is also obligated to make further royalty payments to the joint venture in the future which are estimated to be US$3m. All liabilities between the Company and related entities have been settled as part of the transaction.
The proceeds from the sale have been placed in escrow pending the timely completion of transaction related approvals. Transfer of ownership by the Company of its 70% interest in Black Dragon will only take place once all funds have been received.
The transaction is subject to Leyshon shareholder approval. A ‘notice of meeting’ is currently being prepared by the board which will include full details of the proposed transaction and the Company's proposed investing policy following the disposal.
Following completion of the proposed transaction, Leyshon will have no liabilities, cash and receivables of $47 million (Which equates to £29m and A$54m) equivalent to 13 pence per share or 24 cents per share.
In his accompanying statement Leyshon Managing Director, Paul Atherley commented on the company’s future development in Asia once its divestments are complete, Mr Atrherley stated;
“Following completion of the proposed sale we will have cash reserves in excess of US$44 million which will enable us to draw on our six years' experience in China and focus on acquiring and developing projects located in those countries and commodities which are of interest to Chinese groups for either offtake, partnership or sale.”
