BHR.L Regulatory News (BHR)

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

21 December 2011

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

Joint Venture to develop significant new coal licence in the Tete Province of Mozambique

Beacon Hill Resources Plc (AIM: BHR), the AIM listed coking coal producer, has entered into joint venture to explore and develop Coal Tenement 2001L in the Tete Province of Mozambique ('the Licence'). The Licence covers an area of 184km² and is located in the heart of the highly prospective coking coal basin of the Songo Area of the Tete Province, Mozambique which is in close proximity to significant existing coal projects.

Highlights

·; Beacon Hill has entered into a Joint Venture ('JV') with Midwest Africa Limited ('MAL'), the holder of the Licence, to fund the exploration and development of tenement, in consideration of the issue of 60 million ordinary shares in Beacon Hill 

·; The Licence covers a significant area of 184km² in the heart of the Songo Area of the Tete Province - an area with proven coal reserves located close to Jindal Steel & Power's Chingodzi Coal Project, which they estimate resource of approximately 720 million tonnes of coking and thermal coal

·; The JV is a further step in the Group's wider expansion strategy in the globally significant coking coal region of Tete, Mozambique where the Group produces and exports coal from the Minas Moatize Coal Project ('Minas Moatize')

·; Provides a significant opportunity to considerably enhance the Group's resource base which currently stands at 80 million gross tonnes in situ at Minas Moatize

·; Beacon Hill's intention is that all future contributions to the JV will be funded by the Group's existing cash resources and future cash flows generated from Minas Moatize

Justin Lewis, Chairman of Beacon Hill commented, "This Licence allows Beacon Hill to significantly expand its resource base and in turn strengthen its foothold in Tete, one of the most exciting coking coal regions in the world. Our existing Minas Moatize Mine, which is already producing and exporting thermal coal and is due to commence hard coking coal production imminently, provides an excellent platform around which further coal projects in Mozambique can easily be accommodated. In this context, today's announcement is a major step forward for the Group in achieving its goals, as the new licence covers a highly prospective area 70 times the size of Minas Moatize, and represents an opportunity for the Group to invest in a longer term development project that will further enhance the Group's value accretion potential."

Tenement Details

MAL is the holder of the Licence, which was issued on 8 July 2008 and is valid until 8 July 2013. The Licence covers the exploration of coal, within an area of 184km² located in the Songo Area of Changara District in the Province of Tete, Mozambique. A location map of the Licence can be found at www.bhrplc.com.

The Licence is located directly to the south of licences held by Eurasian Natural Resources Corporation Plc ('ENRC') and in close proximity to Jindal Steel & Power Ltd Chingodzi Coal Project, which has an estimated resource of 724 million tonnes of coking and thermal coal.

To date, MAL has undertaken remote sensing and GIS studies of the tenement area, which have indicated that approximately 100km² of the tenement is covered with coal bearing Karoo sediments in the north-east and the east of the Licence area. This is highly encouraging as it is similar to the coal bearing Karoo sediments found in the Moatize Coal Basin where Minas Moatize is situated.

Whilst minimal exploratory work has been undertaken within the Licence area, exploratory drilling conducted by Jindal and ENRC within close proximity to the site have yielded positive results and the Group is confident that the acquisition of this Licence will enhance the Group's overall coal resource base.

Details of the Joint Venture

Pursuant to an agreement dated 21 December 2011, BHR Ventures Mauritius Limited ('BHRVM'), a subsidiary of Beacon Hill, has acquired 99% of Nongo, Limitada ("the JV Company"), with MAL holding the balance. Beacon Hill has undertaken to pay the consideration due, which will satisfied by the issue by Beacon Hill of 60,000,000 new Ordinary Shares to the vendor, Midwest (2001) Pte Limited. Pursuant to the terms of a joint venture agreement between BHRVM, MAL and the JV Company, MAL has agreed to transfer the Licence to the JV Company, whereupon MAL will earn an additional 19% interest in the JV Company, which will be free carried, with BHRVM retaining the remaining 80%. The majority of the board of the JV Company will be appointed by BHRVM. The JV Company will be responsible for funding and conducting exploration activities in relation to the Licence and shall be entitled to the economic benefit arising from the exploration and development of the Licence. The JV Company has no material assets other than the contractual right to acquire the Licence, subject to the approval of the Minister, in the future.

Following this acquisition, the enlarged issued share capital of the Beacon Hill will comprise 1,031,442,137 Ordinary Shares. The Group has made application for the new Ordinary Shares to be admitted to AIM, which is expected to occur with dealings in the Ordinary Shares to commence, on 30 December 2011 ('Admission'). The new Ordinary Shares when issued will rank pari passu in all respects with the existing Ordinary Shares, 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:

Notes

Beacon Hill Resources Plc is an AIM-listed resource company focused on building a portfolio of near-term production projects in commodities relating to the steel production industry. Beacon Hill has two key assets: the producing Minas Moatize Coal Mine in the globally significant coking coal region of the Moatize Coal Basin in Mozambique and the Arthur River Magnesite Project in Tasmania, Australia.