Leyshon Resources : Half Year Financial Report June 2016

LEYSHON RESOURCES LIMITED ABN 75 010 482 274 INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2016 CORPORATE DIRECTORY

Directors

Paul Atherley- Non-Executive Chairman Corey Nolan - Non-Executive Director Richard Seville - Non-Executive Director

Company Secretary

Murray Wylie

Principal and Registered Office Australia

Suite 3, Level 3

1292 Hay Street

West Perth WA 6005 Telephone: [phone]

Facsimile: [phone]

Auditor

RSM Australia Partners

Bankers

National Australia Bank

Share Register

Computershare Investor Services Pty Ltd Level 11

172 St Georges Terrace Perth WA 6000 Australia

Telephone: [phone]

International: [phone]

Facsimile: [phone]

Solicitors

Hopgood Ganim Lawyers - Brisbane DLA Piper - Perth

Stock Exchange Listing Australian Stock Exchange Home Branch - Perth

2 The Esplanade

Perth WA 6000

ASX Code

LRL

Index

Directors' report 3

Auditor's independence declaration 6

Statement of profit or loss and other comprehensive income 7

Statement of financial position 8

Statement of changes in equity 9

Statement of cash flows 10

Notes to the financial statements 11

Directors' declaration 16

Independent auditor's review report 17

DIRECTORS' REPORT

The Directors of Leyshon Resources Limited present their report on the Group consisting of Leyshon Resources Limited (the "Company" or "Leyshon") and the entities it controlled at the end of, or during, the half-year ended 30 June 2016. All amounts presented in the annual report including the Directors' Report are presented in United States Dollars (US$) unless otherwise indicated.

DIRECTORS

The following persons were directors of Leyshon Resources Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Paul C Atherley Corey Nolan Richard P Seville

PRINCIPAL ACTIVITY

During the financial half-year the principal continuing activity of the consolidated entity consisted of mineral exploration.

REVIEW AND RESULTS OF OPERATIONS

Operating Results

The loss for the consolidated entity after providing for income tax, for the financial half year, amounted to US$152,620 (30 June 2015: US$489,366).

Review of operations

Following the demerger of Leyshon Energy Limited in January 2014, the primary activities of the Company have been the identification and evaluation of suitable investment opportunities and concentrating on a strategic review and restructure of its legacy Mt Leyshon gold project in Queensland, Australia. The Company has also maintained its focus on minimising expenditure.

Shares of the Company remain listed on the Australian Securities Exchange ("ASX"). However in accordance with ASX policy, the securities of the Company were suspended from quotation on the ASX on 14 July 2014 following the disposal of its main undertaking through the demerger of Leyshon Energy Limited. The Company envisages that its shares will remain suspended on the ASX until such time as the Company completes a transaction and seeks re-compliance for listing on the ASX.

Mt Leyshon Settlement with Newmont

Over the last two years, Leyshon has been engaging with the key stakeholders in the Mt Leyshon mine site as part of a strategic review to reduce the long-term costs of holding this legacy asset. The Directors resolved that a restructure of the Mt Leyshon asset was a priority focus for Leyshon to be a viable entity able to undergo a recapitalisation and stock exchange listing process. At Mt Leyshon, the Company holds five Mining Licenses ("ML's"), an Environmental Authority ("EA") and land covering the historical mining operations which are now subject to long-term rehabilitation. Newmont Australia Pty Ltd ("Newmont") performed management services related to the site closure (including rehabilitation) in 2002-2003. Leyshon and Newmont have been in dispute since 2006 as to the validity and status of the ongoing obligations with respect to management of the site.

The Company has been incurring significant and growing costs associated with holding Mt Leyshon including, ML and EA fees, council rates, land taxes and other administration costs, totalling more than A$300,000 per year. The ML's and EA cannot be relinquished until the rehabilitation is completed and the ML's are cancelled by the Queensland Department of Mines and Natural Resources, and the EA by the Queensland Department of Environment and Heritage Protection.

On 6 May 2016, the Company announced that it had entered a Deed of Settlement with Newmont whereby the parties agreed to:

• Resolve the dispute with respect of the management agreement;

• Transfer the Mt Leyshon ML's and EA, and Leyshon's land holdings at Mt Leyshon to Newmont;