Leyshon Resources
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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."
Other Leyshon Resources news
- Leyshon shares suspended on forthcoming announcement about Zheng Guang project
2009-09-18 - Leyshon Resources reduces costs at Zheng Guang by almost 20%
2009-05-01 - Low-cost gold stock well placed to sit out the winter
2008-11-27
