BHR.L Regulatory News (BHR)

19 August 2014

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

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

Funding Update

Highlights

· Conclusion of financial due diligence by the proposed senior debt lender.

· Discussions with parties interested in providing a proposal for an equity investment continue.

· Minas Moatize Limitada ('MML'), Beacon Hill's wholly owned subsidiary, expects to complete the conditions precedent to enter the rolling stock sub-lease shortly.

· Further Amendment Agreement with Vitol SA related to the US$10 million senior debt facility to further defer all principal amortization and accrue interest until 30 September 2014.

· Amendments to the Coal Offtake Agreement with respect to price discounts and to subordinate the repayment of the GM US$5 million coal prepayment to any new senior debt.

· The senior debt approval decision delayed, but is still expected within Q3 2014, with final credit approval expected during this period.

· MML has received a VAT refund payment totaling 43 million meticas (approximately US$1.4million).

· Beacon Hill retains US$1.8 million in cash net of recent fundraising (GBP 1.5 million).

· Board of Beacon Hill remains confident that it will achieve the required funding to complete the wash plant upgrades.

Strategic Equity Partner Process

As previously announced, Beacon Hill together with its appointed financial adviser has entered into discussions with interested parties with a view to obtaining a proposal for an equity investment in Beacon Hill and the terms thereon. A limited number of parties have been granted access to due diligence which remains ongoing. Due to the material impact of any new senior debt on the strategic equity discussions, and to obtain the best terms for the Company and its shareholders, the Board is prioritizing the final approvals for senior debt (as detailed below) ahead of the strategic discussions which will likely remain at an early stage until the final senior debt approvals are obtained. Shareholders are advised there can be no certainty that any indicative proposal will lead to a transaction or an offer for investment satisfactory to the Board of Beacon Hill.

Rolling Stock Commissioning and Customs Clearance

Beacon Hill is pleased to announce that MML has commenced wet commissioning operations on the Sena railway line with its proposed rail sub-lessee and, subject to the timely release of the remaining rail wagons from Mozambique customs and accompanying documentation from the Government of Mozambique, MML expects to complete the conditions precedent to enter the rolling stock sub-lease shortly. As previously announced the sub-lease will have a minimum term of 12 months compromising MML's entire rail fleet (5 locomotives and 89 wagons) to be operated by the sub-lessee on the Sena Railway line between the Tete coal basin and the port of Beira.

MML will seek to achieve the technical requirements to obtain a recovery of 94% of the US$1.313 million of customs tariffs paid to date which the Company believes can be refunded if certain conditions can be met pursuant to the Mining Contract dated 4 April 2013.

Amendment to Senior Debt Agreement

Beacon Hill is pleased to announce its wholly owned subsidiaries; BHR Mining Mauritius and BHR Coal Limited (together "the Borrowers") have agreed a further Amendment Agreement with Vitol SA related to the US$10 million senior debt facility. Under the terms of the Amendment Agreement dated 12 August 2014, Vitol SA has agreed to further defer all principal amortization and accrue interest until 30 September 2014. The amendments are supportive to maintaining Beacon Hill's liquidity and cash flow and the Board of Beacon Hill is optimistic that this will permit sufficient time for the new senior debt to be arranged and any restructuring of existing debt to take place, however shareholders should note there is no certainty that such debt shall be forthcoming or any re-financing will be successful.

Amended Offtake Agreement

To facilitate approval of the new US$20 million senior debt facility, Beacon Hill entered into successful negotiations with its coal off-taker, Global Minerals ('GM'), to make certain amendments to the Coal Offtake Agreement with respect to price discounts and to subordinate the repayment of the GM US$5 million coal prepayment to any new senior debt. In return Beacon Hill has provided a performance guarantee for its wholly owned subsidiary BHR Coal (Mauritius) Limited, whereby the GM deposit of US$5 million paid by GM in 2011, if not repaid via six coal shipments prior to 31 December 2016, shall be repaid by Beacon Hill in cash or a corresponding value in Beacon Hill shares at that time. Additionally, Beacon Hill has the right, but not the obligation to re-purchase the offtake agreement at any time for US$5 million (the prepayment paid by GM) plus accrued interest since the date of the coal prepayment. The Board is pleased to announce the amended Offtake Agreement has been now been executed and submitted in support of the proposed US$20 million senior debt facility.

Senior Debt Approval Process

As previously announced, Beacon Hill is working towards completion of a US$20 million senior debt capital expenditure facility for the expansion of the MML wash plant to 3.2 MTPA (from an existing 1.8 MTPA). Whilst significant progress has been made with conditions precedent, including the EPC contract, amended Offtake Agreement, financial due diligence, rolling stock sub lease and legal due diligence, due to certain circumstances beyond the control of Beacon Hill the senior debt approval decision has been delayed but is still expected within Q3 2014, with final credit approval expected during this period subject to implementation of the rolling stock sub-lease and any other final conditions imposed by the new senior lender. The Board of Beacon Hill remains committed to achieve drawdown of the facility during Q4 2014 however shareholders should note there is no certainty that such debt shall be forthcoming or any re-financing will be successful.

Cash Position and Balance Sheet

Beacon Hill is pleased to announce that MML has received a VAT refund payment totaling 43 million meticas (approximately US$1.4million) from the Government of Mozambique. After payment of unbudgeted customs tariffs and penalties, Beacon Hill retains US$1.8 million in cash net of recent fundraising (GBP 1.5 million). The Board of Beacon Hill may seek to raise additional working capital to ensure it remains adequately capitalised and this will likely be a condition precedent of any new senior debt financing approval.

Corporate Calendar

The Company intends to release it half year results for first half of 2014 during September 2014 including an update on the status of the proposed senior debt facility, current debt restructuring and strategic process, which is still targeted for completion in Q4 2014. Any further updates on rolling stock sub-lease and senior debt will be communicated to shareholders if they arise prior to the half year results announcement.

**ENDS**