BHR.L Regulatory News (BHR)

8 Jan 2010 09:00

Beacon Hill Resources plc / Ticker: BHR / Index: AIM / Sector: Mining

8 January 2010

Beacon Hill Resources plc ('Beacon Hill' or 'the Group')

Exclusivity Agreement to Potentially Acquire Mozambican Coal Mine 

& Placing to Raise £1.25 million

Beacon Hill Resources Plc, the AIM listed resource company, announces that it, together with Consolidated Mining & Resources (Pty) Ltd ('CMR'), has entered into an exclusivity agreement with Borneo Mining SA (Pty) Ltd ('Borneo') with respect to the potential acquisition of Minas Moatize LDA ('Minas'), which owns and operates a coal mine in the Tete Province of Mozambique, with an estimated resource of 33 million tonnes of coal ('the Acquisition'). Minas currently operates a small underground mine producing thermal coal for domestic consumption, however it would be the Group's intention to develop the resource into a larger open pit operation in order to produce both coking and thermal coal for export markets.

Beacon Hill Executive Chairman Justin Lewis said, "The acquisition of Minas would provide the Group with a producing coal operation in one of the world's largest undeveloped coking coal regions, the Tete district of northern Mozambique. The Board see that additional value can also be achieved through continued mine development and expansion, maximising the full potential of this significant coal asset.

"In addition to the due diligence process, the Board will also be focussed on securing a joint venture partner to develop and finance the mine expansion. Discussions have already commenced with potential partners to jointly advance the asset, and I hope to update shareholders on these developments in the coming months."

Terms of the Agreement

The Group, together with CMR, has entered into an agreement with Borneo, pursuant to which Beacon Hill, for payment of an initial deposit of US$1m has been granted an exclusivity, to complete due diligence and legal agreements to acquire Minas.

The deposit is only refundable in certain circumstances and will be offset against the proposed consideration for the Acquisition should the Acquisition complete. The Group proposes to finalise the Acquisition in a joint venture, and is currently in discussions with potential partners, whom would also be expected to enter into off take agreements for the coal to be produced.

Due diligence and negotiations, including as to price, are not finalised between the parties and there can be no guarantee that the Acquisition will be completed. A further announcement will be made in due course.

The Placing

The Group is also pleased to announce that it has raised £1.25 million (before expenses) through the placing, by Astaire Securities Plc, of 416,667,000 new ordinary shares of 0.01 pence each in the capital of Beacon Hill ('the Placing Shares') at a price of 0.3 pence per Placing Share. The proceeds of the fundraising will be used to assist funding the Group's due diligence commitments with regard to the acquisition of Minas. 

Following their admission, the Placing Shares will represent 6.6 per cent. of the enlarged issued share capital of Beacon Hill, which will then comprise 6,339,667,000 ordinary shares of 0.01 pence each. 

Justin Lewis, Executive Chairman of the Company, has agreed to subscribe for 8,333,000 Placing Shares. On completion of the Placing, Mr. Lewis will hold 28,833,000 ordinary shares, representing 0.4 per cent. of the issued share capital of Beacon Hill.

The Placing is inter alia conditional on admission of the Placing Shares being admitted trading on AIM ('Admission'). It is expected that Admission will occur, and dealings in the Placing Shares will commence, on 15 January 2010. 

The Placing Shares will, when issued, rank pari passu in all respects with the existing issued shares of Beacon Hill, including the right to receive any dividends and other distributions declared following Admission. 

**ENDS**

For further information on the Company, visit: www.bhrplc.com or contact: