Gold prospector Leyshon Resources intends to build a 120,000 oz-a-year mine in China's mineral-rich Heilongjiang province.

AIM-quoted Leyshon, headed by former Murchison United boss Paul Atherley, says drilling to date at the company's Zheng Guang project suggests a possible resource of 941,000 oz of gold, 65,000 tonnes of zinc, together equivalent in value to 1.25 million oz of gold at a low grade of 1.8 grammes a tonne, as well as 2.7 million oz of silver. Atherley argues there is much more land to be explored around the present targets, with grades ranging from 1.7 to 18 grammes a tonne and says the company will initially target the cheaper-to-extract material in the near-surface 'oxide blanket' covering the deeper deposits.

According to Atherley, Leyshon hopes to build a mine at Zheng Guang next year and then go into production. The company, which can earn a 70 per cent interest in the project from local partner Black Dragon Mining by taking it to cash flow generation, claims it can start producing 120,000 oz of gold equivalent a year.

Leyshon has embarked on a �900,000 feasibility study. Atherley is already talking about a �15 million capital cost yielding more than �40 million revenues and cash flows of more than �22 million for ten years.

He suggests likely cash extraction costs of less than $353 an ounce, still high by historic project standards, against a present (falling) gold price of $643 an ounce. The company also has opportunities to investigate adjacent areas in a region noted for its minerals and close to the border with one of Russia's equally mineral-rich zones, where Peter Hambro Mining has its Pioneer and Pokrovskiiy projects.

Analysts reckon Leyshon, where mining giant Newmont holds a 7.1 per cent stake, will have to raise more funds to its plans. Recommended as a 'flutter' by Growth Company Investor in January at 12.5p, the shares hit 25p earlier this month, but have since eased back to 16.75p, but retain longer term speculative scope.

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Leyshon Resources	AIM	�51.63m	25.75p	0.00p
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