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A copy of the Audit Review Report and Audit Independence Declaration have been lodged with this report as PDF documents.   Please follow the links below to view these documents;

http://www.rns-pdf.londonstockexchange.com/rns/8780O_-2009-3-16.pdf

http://www.rns-pdf.londonstockexchange.com/rns/8780O_1-2009-3-16.pdf

 

A complete copy of the report can be viewed at the Company's website: www.leyshonresources.com

LEYSHON RESOURCES LIMITED
ABN 75 010 482 274

INTERIM FINANCIAL REPORT

FOR THE HALF-YEAR ENDED

31 DECEMBER 2008

CORPORATE DIRECTORY

        

Directors John Fletcher - Non-Executive Chairman Paul C Atherley - Managing Director Andrew Berry  - Non-Executive Director Richard Seville - Non-Executive Director Company Secretary Stacey Apostolou Registered and Principal Offices Australia 36 Outram Street West Perth WA  6005 Telephone:    (61 8) 9321 0077 Facsimile:     (61 8) 9322 4073 China Suite 2502, Tower D China International Trade Centre 6A Jianguomenwai Avenue Chaoyang District Beijing 100022 Telephone:    (86 10) 8567 9405 Facsimile:     (86 10) 8567 9410

Share Register Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth  WA  6000 Australia Telephone:    1300 557 010 International:    (61 8) 9323 2000 Facsimile:      (61 8) 9323 2033 Solicitors Jun He Law Offices - Beijing  Hardy Bowen - Australia  Auditor Deloitte Touche Tohmatsu Bankers Bank of China - Beijing Bank of New Zealand  Stock Exchange Listing Alternative Investment Market London Stock Exchange  10 Paternoster Square London EC4M 7LS Australian Stock Exchange Home Branch - Perth 2 The Esplanade Perth WA  6000 AIM and ASX Code - LRL

  DIRECTORS' REPORT

The Board of Directors of Leyshon Resources Limited present their report on the consolidated entity of Leyshon Resources Limited ('the Company' or 'Leyshon Resources') and its subsidiaries during the half-year ended 31 December 2008 ('Consolidated Entity'). 

DIRECTORS

The names of the Directors of Leyshon Resources in office during the half-year and until the date of this report are:

John Fletcher

Paul C Atherley

Richard Seville 

Andrew Berry (Appointed 10 October 2008)

Stacey Apostolou (Resigned 10 October 2008)

REVIEW AND RESULTS OF OPERATIONS

Operating Results

Net operating loss after tax attributable to members of the Consolidated Entity for the half-year ended 31 December 2008 was $2,950,192 (2007: Net operating loss after tax of $5,751,338). 

Operations

Zheng Guang Gold Project

The Company completed a 6,840 metre diamond drilling programme during the half-year. The 31 hole programme targeted shallow extensions to the Main Ore Zone to the South, deeper extensions to the North and further testing of the Zheng Guang North prospect. 

Whilst a number of significant intersections were made in each of these target areas further drilling is required before the existing resource estimates can be expected to be increased.

During the half-year, the 8.6km access road was completed and site predevelopment earthworks commenced. The Company's engineering team has worked closely with the Changchun Design Institute on a review of the detailed engineering design aimed at substantially reducing the capital costs of bringing the project into cash flow. As previously reported, the Company has deferred all major expenditure on the project until after the Chinese winter. Planned resumption of site-based activities in April 2009 is subject to receiving the necessary approvals and funding arrangements.

The Company's policy of full engagement with the local community has facilitated the completion of negotiations with local farmers and other affected parties for land acquisition. The Land Acquisition Plan is now awaiting approval from the Department of Land and Resources. This is the final approval required before Project Registration and the issue of the Mining Licence, both of which are expected in 2009.

  

Corporate

The Company is considering various options to fund the development of the Zheng Guang Gold Project. Whilst there remains interest to fund the Project once all necessary approvals have been completed, there can be no guarantee in the current environment that financing can be finalised on terms that would be attractive to the Company. Accordingly the Company is investigating other avenues to realise value from the Project.

The Company has received a number of approaches regarding the potential sale of its interest in the Project and has progressed discussions with these parties under confidentiality agreements.

In addition to the deferment of all project expenditure, the Company has undertaken a review of all expenditure resulting in a considerable reduction in its monthly outgoings.

Auditor's Independence Declaration

Section 307C of the Corporations Act 2001 requires our auditors, Deloitte Touche Tohmatsu, to provide the Directors of Leyshon Resources Limited with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is on page 15 and forms part of this Directors' Report.

Signed in accordance with a resolution of Directors.

PAUL ATHERLEY

Director

Beijing, 14 March 2009

  DIRECTORS' DECLARATION

In accordance with a resolution of the directors on 13 March 2009 of Leyshon Resources Limited, the Directors declare that:

In the opinion of the Directors:

(a)    the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:

(i)    section 304 (compliance with accounting standards and Corporations Regulations 2001); and

(ii)    section 305 (true and fair view); and

(b)    there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

PAUL ATHERLEY

Director

Beijing, 14 March 2009

  

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

	Note	Half-year Ended 31 Dec 2008 $	Half-year Ended 31 Dec 2007 $
Revenue	2	293,581	549,916
Other income		4,092	7,172
Exploration expenses		(2,196,488)	(3,250,064)
Administration expenses		(980,532)	(904,635)
Business development expenses		(172,743)	(292,620)
Foreign exchange gains/(losses)		148,234	(455,757)
Share based payments		(46,336)	(1,405,350)
Loss before income tax		(2,950,192)	(5,751,338)
Income tax expense		-	-
Loss attributable to members of Leyshon Resources Limited		(2,950,192)	(5,751,338)
Loss Per Share
Basic loss per share (cents per share)		(1.35)	(2.66)
Diluted loss per share (cents per share)		(1.35)	(2.66)

The above Condensed Consolidated Income Statement should be read in conjunction with the accompanying notes.

  

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2008

	Note	31 Dec 2008 $		30 June 2008 $
ASSETS
Current Assets
Cash and cash equivalents		5,734,057		9,399,324
Trade and other receivables		53,234		116,140
Other		95,357		65,127
Total Current Assets		5,882,648		9,580,591
Non-Current Assets
Other financial assets at fair value through profit and loss		1		1
Other financial assets		4,274,771		2,613,103
Property, plant and equipment		22,228		26,352
Development properties	3	21,144,643		16,324,326
Total Non-Current Assets		25,441,643		18,963,782
TOTAL ASSETS		31,324,291		28,544,373
LIABILITIES
Current Liabilities
Trade and other payables		4,631,125		1,074,585
Provisions		54,755		120,947
Total Current Liabilities		4,685,880		1,195,532
Non-Current Liabilities
Deferred tax liabilities		3,604,688		3,604,688
Total Non-Current Liabilities		3,604,688		3,604,688
TOTAL LIABILITIES		8,290,568		4,800,220
NET ASSETS		23,033,723		23,744,153
EQUITY
Issued capital		64,552,218		64,507,082
Reserves		3,751,592		1,556,966
Accumulated losses		(45,270,087)		(42,319,895)
TOTAL EQUITY		23,033,723		23,744,153

The above Condensed Consolidated Balance Sheet should be read in conjunction with the accompanying notes.  

CONDENSED CONSOLIDATED STATEMENT OF 
CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

		Half-year Ended 31 Dec 2008 $	Half-year Ended 31 Dec 2007 $
Issued Capital
Issued and paid up capital - at the beginning of the half-year		64,507,082	63,139,928
Transactions with equity holders in their capacity as equity holders:
Issue of shares as part of employee benefits		46,336	-
Contributions of equity		-	875,000
Less share issue costs		(1,200)	(2,423)
Transfer from employee benefit reserve		-	499,250
		45,136	1,371,827
Issued and paid up capital - at the end of the half-year		64,552,218	64,511,755
Employee Benefit Reserve
Balance at the beginning of the half-year		1,941,893	882,620
Employee benefit expense - Share options		-	1,405,350
Exercise of options		-	(499,250)
Employee benefit reserve at the end of the half-year		1,941,893	1,788,720
Option Premium Reserve
Option premium reserve at the beginning of the half-year		112,841	112,841
Share options		-	-
Option premium reserve at the end of the half-year		112,841	112,841
Foreign Exchange Reserve
Foreign exchange reserve at the beginning of the half-year		(497,768)	(169,869)
Exchange differences on translation of foreign operations attributable to members of Leyshon Resources Limited		2,194,626	(451,765)
Foreign exchange reserve at the end of the half-year		1,696,858	(621,634)
Total reserves at the end of the half-year		3,751,592	1,279,927

  CONDENSED CONSOLIDATED STATEMENT OF 
CHANGES IN EQUITY 

FOR THE HALF-YEAR ENDED 31 DECEMBER 2008 (CONTINUED)

		Half-year Ended 31 Dec 2008 $	Half-year Ended 31 Dec 2007 $
Accumulated Losses
Accumulated losses at the beginning of the half-year		(42,319,895)	(31,908,718)
Loss for the half-year attributable to members of Leyshon Resources Limited		(2,950,192)	(5,751,338)
Accumulated losses at the end of the half-year		(45,270,087)	(37,660,056)
Net income recognised directly in equity:
Exchange differences on translation of foreign operations
- Members of parent entity		2,194,626	(451,765)
		2,194,626	(451,765)
Loss for the half-year
- Members of parent entity		(2,950,192)	(5,751,338)
Total recognised income and expense for the year attributable to members of the parent entity		(755,556)	(6,203,103)

The above Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

   

CONDENSED CONSOLIDATED CASH FLOW STATEMENT 

FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

		Half-year ended 31 Dec 2008 $		Half-year ended 31 Dec 2007 $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees		(2,808,542)		(4,783,314)
Interest received		194,716		615,782
Net cash flows used in operating activities		(2,613,826)		(4,167,532)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment		(2,580)		(215,369)
Loans to other entities		(475,549)		(1,323,049)
Development expenditure		(721,546)		(1,315,030)
Net cash flows used in investing activities		(1,199,675)		(2,853,448)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		-		875,000
Share issue expenses paid		-		(11,234)
Net cash flows from financing activities		-		863,766
NET DECREASE IN CASH AND CASH EQUIVALENTS		(3,813,501)		(6,157,214)
Cash and cash equivalents at the beginning of the half-year		9,399,324		22,096,750
Effects of exchange rate changes on cash and cash equivalents		148,234		(455,757)
CASH AND CASH EQUIVALENTS AT THE END OF THE HALF-YEAR		5,734,057		15,483,779

The above Condensed Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This general purpose financial report for the interim half-year reporting period ended 31 December 2008 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.  Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Leyshon Resources Limited for the year ended 30 June 2008 and any public announcements made by Leyshon Resources Limited and its subsidiaries during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

(a) Basis of preparation of half-year financial report

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company's 2008 annual financial report for the year ended 30 June 2008, unless otherwise indicated.

The financial statements have been prepared on the basis that the entity is a going concern, which contemplates the continuity of normal business activity, realisation of assets and the settlement of liabilities in the normal course of business. The Consolidated Entity is currently in a positive net current asset position.

 

The Directors believe the going concern assumption is appropriate for the following reasons:

 

• The Consolidated Entity has been able to significantly reduce its monthly fixed expenditures.

• The Consolidated Entity has been able to defer approximately $2 million of creditors which are owed by Black Dragon Mining Co. Ltd to JV partner Qiqiha'er Brigade.   These amounts are to be netted off against outstanding contributions owed by Qiqiha'er Brigade and or future proceeds from the potential sale of the project.

• The Consolidated Entity has received an indicative offer of finance from a finance provider.

• Several parties have identified their interest in acquiring the Consolidated Entity's interest in the project.  The Directors are currently pursuing these opportunities and are confident that a favourable outcome will be negotiated for the Consolidated Entity. 

  

The Directors have reviewed the business outlook and cash flow forecasts and are of the opinion that the use of the going concern basis of accounting is appropriate.

 

Should the Consolidated Entity at anytime be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report.

 

The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Consolidated Entity be unable to continue as a going concern.

				Half-year Ended 31 December 2008 $		Half-year Ended 31 December 2007 $
2.	REVENUE
	Interest received/receivable			293,581		549,916

3.    DEVELOPMENT PROPERTIES

    The value of the development properties is dependent upon the successful development or alternatively sale, of the respective tenements.  

4.    DIVIDENDS PAID OR PROVIDED FOR                

                    

    No dividends have been paid or provided for during the half-year.

                    

5.    SEGMENT INFORMATION

The Consolidated Entity operates in one business segment, being the exploration of gold and other minerals, in the following geographical segments: 

Geographical Segment	Australia		China		Consolidated
	Half-year	Half-year	Half-year	Half-year	Half-year	Half-year
	2008	2007	2008	2007	2008	2007
	$	$	$	$	$	$
Revenue
Other revenue/income	4,060	6,169	32	1,003	4,092	7,172
Total segment revenue/income	4,060	6,169	32	1,003	4,092	7,172
Unallocated revenue					293,581	549,916
Total consolidated revenue/income					297,673	557,088
Results
Segment result	(1,151,920)	(2,077,501)	(2,091,853)	(4,223,753)	(3,243,773)	(6,301,254)
Unallocated expenses					-	-
Unallocated interest revenue					293,581	549,916
Loss before income tax					(2,950,192)	(5,751,338)
Income tax (expense)/benefit					-	-
Net loss					(2,950,192)	(5,751,338)

Assets
Segment assets	5,652,048	15,453,916	25,672,243	16,716,718	31,324,291	32,170,634
Unallocated assets					-	-
Total assets					31,324,291	32,170,634
Liabilities
Segment liabilities	241,329	210,967	8,049,239	3,828,041	8,290,568	4,039,008
Unallocated liabilities					-	-
Total liabilities					8,290,568	4,039,008

Other
Acquisition of non-current assets	375	-	2,205	19,921	2,580	19,921
Development properties	-	-	21,144,643	14,367,126	21,144,643	14,367,126
Depreciation of segment assets	1,573	1,403	5,131	6,482	6,704	7,885
Share based payments	46,336	1,405,350	-	-	46,336	1,405,350

6.    SUBSEQUENT EVENTS AFTER BALANCE DATE

                    

    There were no significant events occurring after balance date requiring disclosure in the financial statements.

7.    COMMITMENTS AND CONTINGENCIES 

Commitments

COMMITMENTS FOR EXPENDITURE		Half-year Ended 31 December 2008	Half-year Ended 31 December 2007
		$	$
Development Expenditure
Not longer than 1 year		2,197,980	-
Longer than 1 year and not longer than 5 years		-	-
Longer than 5 years		-	-
Total Commitments		2,197,980	-

There were no changes to the operating leases commitment during the half-year reporting period.

Contingencies

There has been no material change in the contingent assets or liabilities of the Consolidated Entity during the half-year.

8.    ISSUANCES, REPURCHASES AND REPAYMENTS OF EQUITY SECURITIES 

During the half-year reporting period, Leyshon Resources Limited issued 144,801 ordinary shares for a total value before issue costs of $46,336. There were no other movements in ordinary share capital or other issued share capital of the Company during the current or prior half-year reporting period.

There were no movements in share options of the Company during the current half-year reporting period (2007: Grant of 4,000,000 options over ordinary shares).

ENDIR ZQLBFKXBZBBE