BHR.L Regulatory News (BHR)

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Neither this announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any new securities in the Company in any jurisdiction in which any such offer or solicitation would be unlawful and the information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America, Canada, the Republic of Ireland or Japan or any jurisdiction in which such publication or distribution would be unlawful.

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

25 October 2013

Beacon Hill Resources Plc

("Beacon Hill" or "the Company")

Fundraising update

Highlights

· As announced on 3 October 2013, Beacon Hill has conditionally agreed to the issuance of unsecured convertible loan notes to raise up to approximately US$19.4 million:

o Agreement to issue approximately US$3.5 million of unsecured convertible loan notes with a subscription price of US$3.2 million to Latitude Zero Financial Investment Fund ("Latitude") and additional Company shareholders(the "Institutional Convertible Loan Notes"); and

o Beacon Hill has issued to Darwin Strategic Limited, a majority owned subsidiary of Henderson Global Investor's Volantis Capital, ("Darwin"), £2.75 million (equivalent to US$4.45 million) at a subscription price of £2.5 million (equivalent to US$4.1 million)("the Darwin Tranche 1 Notes") and subject to the agreement of both Darwin and Beacon Hill, two further tranches of up to £2.75 million and £5.5 million (an aggregate of up to £8.25 million (equivalent to US$13.4 million) in unsecured convertible loan notes (the "Further Darwin Convertible Loan Notes") with an aggregate subscription price of £7.5 million (equivalent to US$12.2 million)

· Due diligence has commenced with a mandated project finance bank to provide new secured loan facilities to re-finance Vitol senior debt facilities, refinance and replace any undrawn convertible loan notes, provide capital expenditure and general working capital and overall to substantially lower the cost of capital to the Company.

· The funding secured to date will strengthen the Company's balance sheet, enhancing its capacity to secure the senior debt funding package (project finance) required to enable the Company to progress the development of the Phase 2B and 2C Plant upgrades at Beacon Hill's Minas Moatize Project during 2014 at the lowest cost of capital and dilution to shareholders.

The Company will shortly be convening a General Meeting of its Shareholders at which resolutions will be proposed to, inter alia, approve the issue of the Institutional Convertible Loan Notes and the Further Darwin Convertible Loan Notes. A further announcement will be made when the General Meeting has been convened.

Rowan Karstel, Chief Executive Officer of Beacon Hill commented: "This is the first step in strengthening our balance sheet for the planned capital expansions. The next phase immediately focuses on progressing the senior debt re-financing facility before year end to reduce the cost of capital for the Company and to provide a solid foundation for future growth. In 2014 we will focus on the construction and commissioning of the Plant 2B and C expansions and Warehouse no 4 siding in Beira. We have a clear goal - to be a tier 1 cash cost coking coal mine on global terms."

Latitude Unsecured Convertible Loan Notes

As announced on 3 October 2013, Beacon Hill has entered into a conditional subscription letter with the Company's largest shareholder, Latitude, to secure funding of approximately US$3.0 million (approximately £2.0 million) through the placement of unsecured convertible loan notes (the "Latitude Convertible Loan Notes") with a face value of US$3.3 million. The terms of the Latitude Convertible Loan Notes were summarised in the Company's announcement on 3 October 2013, save that the Company and Latitude have subsequently agreed to amend the conversion price of the Latitude Convertible Loan Notes to 1.75 pence per share.

Additional Company shareholders have agreed to subscribe for £150,000 (equivalent to US$243,000) of convertible loan notes with a face value of £165,000 on the same terms as the Latitude Convertible Loan Notes.

The issue of the Institutional Convertible Loan Notes is conditional upon the necessary approval of the Company's shareholders, which will be sought at the General Meeting.

The Darwin Unsecured Zero Coupon Convertible Loan Notes

As announced on 3 October 2013, the Company has entered into a subscription agreement with Darwin for Darwin to subscribe up to £10.0 million (approximately $16.2 million) for convertible loan notes in three tranches as follows:

· tranche 1 is a subscription for £2.75 million zero coupon convertible loan notes for a subscription price of £2.5 million ("Tranche 1 Subscription"). The Tranche 1 Subscription was drawn down on 3 October 2013 pursuant to a loan note instrument executed by Darwin, the Company and the Company's wholly-owned subsidiary, BHR Investments Mauritius Limited ("BHRIM");

· tranche 2 is a subscription for zero coupon convertible loan notes with a face value of a minimum of £1.1 million, and up to a maximum of £2.75 million ("Tranche 2 Subscription") and a subscription price of a minimum of £1.0 million and a maximum of £2.5 million. The Tranche 2 Subscription can be drawn down in the period of 50 days starting on the date 100 days from the drawdown of the Tranche 1 Subscription. The Company and Darwin have amended the terms of this tranche to be available through mutual agreement between Darwin and the Company ; and

· in addition to tranches 1 and 2, Darwin and Beacon Hill have agreed in principle, subject to the finalisation of subscription terms, that Darwin may subscribe for a third tranche of convertible loan notes up to a maximum face value of £5,500,000 for a subscription price of a maximum of £5,000,000 ("Tranche 3 Subscription"). It is currently envisaged that any Tranche 3 subscription would be broadly on the same terms as the Tranche 2 Subscription. This tranche is available through mutual agreement between Darwin and the Company. If agreed, the Tranche 3 Subscription would be drawn down in the period of 180 days from the drawdown of the Tranche 2 Subscription, and is subject, amongst other things to the approval of Beacon Hill shareholders.

Drawdown of the Tranche 2 Subscription and the Tranche 3 Subscription is conditional, inter alia, upon the necessary approval of the Company's shareholders, which will be sought at the General Meeting. The terms of Darwin's subscription for loan notes were summarised in the Company's announcement on 3 October 2013, save that the Company and Darwin have subsequently agreed that the Tranche 2 Subscription will be subject to mutual consent and therefore there will be no penalty for the Company if such tranche is not drawn down. Additionally, the parties have agreed the flexibility that they may mutually agree an alternative conversion price than that determined under the relevant loan notes.

Bank Funding

The Company has mandated a leading project finance bank to provide new secured loan facilities subject to due diligence, internal credit approvals as well as Export Import cover related to the South African manufactured Phase 2B/C plant and equipment. The Company has previously obtained export cover and insurance for the US$21 million rolling stock financing and is therefore hopeful that it can obtain further export cover insurance and facilities to support the commercial project finance bank debt.

If agreed, these new facilities would provide additional working capital funding to the Company, refinance the existing US$10 million secured loan with Vitol Coal S.A. maturing in 2016, re-finance and or replace the second and or third tranche of the Darwin Convertible Loan Notes and other unsecured debt at a lower cost of capital to the Company with a view to minimising dilution for all existing shareholders.

Related Party Transaction

Latitude is the holder of approximately 15% of the issued share capital of the Company and is therefore a related party for the purposes of the AIM Rules for Companies.

The Directors of Beacon Hill (excluding Mr. Cristian Ramirez, who is a representative of Latitude) consider, having consulted with the Company's Nominated Adviser, Canaccord Genuity Limited, that the terms of Latitude's subscription for Placing Loan Notes are fair and reasonable insofar as Shareholders are concerned. In providing its advice to the Company, Canaccord Genuity Limited has taken into account the commercial assessments of the Directors of Beacon Hill (excluding Mr. Ramirez).

The Company will release its 3rd quarter operational update on or around 30 October 2013.

Figures used in this announcement are based on an exchange rate of 1.62 US Dollars per Pound Sterling as at 3 October 2013.

**ENDS**

IMPORTANT INFORMATION

This announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Canaccord or by any of its respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Canaccord Genuity Limited, which is authorised and regulated in the United Kingdom by the UK Financial Conduct Authority ("FCA"), is acting as nominated adviser and broker to the Company and for no-one else in connection with the transactions referred to in this announcement, and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to the Placing or any other matter referred to herein.