BHR.L Regulatory News (BHR)

 24 May 2013

Beacon Hill Resources Plc / AIM: BHR / ASX: BHU / Sector: Mining

Beacon Hill Resources Plc ('Beacon Hill' or 'the Company')

AGM Statement

Beacon Hill Resources Plc, the AIM and ASX listed coal producer focussed on Mozambique, is pleased to provide an update on its projects, which will be read at today's Annual General Meeting ('AGM').

In addition, the Company will make a presentation at the AGM and a copy of the presentation document can be downloaded from the Company's website at www.bhrplc.com.

Justin Farr-Jones, Chairman of Beacon Hill, will make the following statement:

"I am pleased to be in a position to further update our shareholders on the progress of our company specifically since the change in strategy in late 2012. To date, in the first 6 months since the appointment of the new management team we have achieved a number of significant milestones. This new focus, positive momentum and change of culture inside the Company has created a solid foundation and an opportunity for positive news flow over the entire H2 2013.

"I want to be clear in my assessment of why I think we have reached this current position in a short space of time. In our new Chief Executive Officer Rowan Karstel and his operational team we have a highly motivated, highly competent team who combine hard work and persistence and are driving the business forward.

"The first phase, particularly towards the end of 2012, was to identify the best way forward at Minas Moatize and to deliver an operationally sound and financially robust mine. Under the leadership of Rowan Karstel, a revised expansion strategy was adopted, which targeted a phased growth strategy to deliver a significant reduction in proposed capital expenditure but still achieve an initial plant capacity of 1.8Mpta ROM, rising to 2.8Mpta ROM by December 2013. This new approach focused on matching the Company's coking coal production targets with its rail allocation, enabled the Beacon Hill team to tailor the volume of saleable coal with the most cost efficient method of reaching its export markets. With this revised strategy and the prerequisites for a commercially viable project put in place by the new management, we were able to confirm to shareholders that we were now in a position to take the project forward into the commercial production.

"Before we could commence the ramp up, our focus in H1 of this year has been on reviewing every facet of our business. We strengthened the depth of management capability and also made necessary retrenchments, we have implemented new management information systems, motivated and aligned our key people, upgraded our JORC resource by +31%, signed a 20 year mining contract with the Government of Mozambique and in April we concluded a timely US$21 million equity fund raising. With these milestones behind us we remain on course to deliver a new senior debt facility in the coming months that will complete our funding strategy for the foreseeable future.

"The current phase of the plan has been the commissioning of our new washplant at Minas Moatize. Under the supervision of our new Chief Operating Officer, John Daly, the washplant has now been operational for just under two weeks and is currently performing in line with expectations, demonstrating hourly capacity of up to 275 tonnes per hour during test intervals. Whilst the washplant still has a long way to go to prove itself with increased throughput and must still demonstrate operation for extended operating hours at the nameplate capacity at target yields, initial indications have been highly encouraging. I can confirm that John Daly and his team have already been successful in producing our first ever batches of low volatile premium hard coking coal from the new plant in addition to the export thermal specification. The saleable product stockpiles are being monitored and verified at up to hourly intervals by our new on-site laboratory operated by Bureau Veritas. In addition, we are progressing discussions to bring in further washplant operators to ensure we meet our KPIs for operating performance going forward. We will announce those operational improvements to shareholders as soon as they are concluded.

"In tandem with this commissioning milestone at Minas Moatize, the newest members of the Beacon Hill team, Mac van der Merwe (Rail Operations) and Lynette Kruger (Marketing and Logistics) are now in place and focused on implementing our marketing and logistics plan to enable the Company to export its coking coal product in the coming months initially via truck and then towards the latter part of this year via the upgraded Sena rail line to the port of Beira.

"The first step of the logistics process was signing an operating lease agreement with Thelo Rolling Stock Leasing Proprietary Limited for the provision of rolling stock. Pursuant to this agreement, Thelo will lease to Beacon Hill's operating subsidiary five Grindrod RL30SCC-3 'as new' locomotives and ninety new Gondola-type coal wagons fitted with the patented Scheffel bogey system, both for a term of 10 years. All conditions relating to the leasing finance were in the final stages of approval at the point of our previous update, and I am pleased to announce that the last condition precedent, being the political and commercial risk insurance from ECIC, the export agency of South Africa was received and the Thelo leasing transaction has now completed.

"Thelo have released the deposit payments to the rolling stock manufacturers in South Africa, which when combined with interim stage payments to be made in the coming months will facilitate expected delivery in Q3 2013 to Minas Moatize. To this extent we remain confident that we have made substantial progress. To date we remain on schedule and this represents a US$21 million investment in new rolling stock via Thelo.

"In February 2013 Beacon Hill secured rail allocation on the Sena line, equating to 0.5 million tonnes per annum or 7.7% of the total line capacity, whichever is the greater. This was a truly transformational accomplishment for Beacon Hill as it enables the Company to significantly lower transport costs, increase margins on its coking coal and will ultimately enable the Company to move towards profitability. Since formally securing the rail allocation, the Company's priority has been on the development of the associated rail infrastructure, most notably the Carbonoc transfer station in Moatize, Tete, and the Beira transfer station. The development of both transfer stations is advancing, and we are currently on schedule to have the work completed during Q3 2013 ready to commence rail operations during that quarter. In addition management are working on initiatives to bring our offloading location closer to the port of Beira when compared to the prior offload location at Dondo (30km from Beira).

"May I take this opportunity to thank all those involved in the development of Minas Moatize since late 2012, and I congratulate them on the operational achievements they have made over the past six months. I would also like to thank our shareholders for their continued support during a difficult period for our share price and I look forward to providing further updates to the market over the coming months as we ramp up commercial coking coal production at Minas Moatize, and move towards establishing break even first and then a cash generative operation.

"I would now like to hand over to our CEO, Rowan Karstel to provide an operational update on the status of the wash plant commissioning to date, and rail transfer stations."

**ENDS**