BHR.L Regulatory News (BHR)

5 October 2012

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

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

Logistics Update

HIGHLIGHTS

·; Formal negotiations have commenced with Portos e Caminhos de Ferro de Moçambique, E.P ('CFM') with respect to finalising an allocation on the Sena rail line. These negotiations are progressing well and the Group is confident of securing an initial allocation by the end of the year

·; Entered into a Memorandum of Understanding ('MoU') with a multinational group with Mozambican coal mining operations to jointly develop multi-user coal handling infrastructure along the Sena rail line including a rail loading facility outside the town of Moatize and the development of joint facilities at the Port of Beira

·; The Group currently has approximately 18,000t of coal at the Port of Beira awaiting shipment. Global Coke, an off-take partner, has recently nominated a vessel to receive their maiden shipment of coal from Minas Moatize, which is anticipated to arrive at the Port of Beira in the last week of October 2012

Justin Lewis Chairman of Beacon Hill commented: "We continue to make progress with the development of our logistics infrastructure. Having commenced formal discussions with CFM we remain confident of formally attaining an allocation to the Sena rail line this year to transport coal from our producing Minas Moatize Coal Project. In parallel, I am very pleased to have entered into a strategic partnership to jointly develop multi-user coal handling infrastructure.

Pending using the Sena rail line the Group continues to transport coal by truck from Moatize to the Port of Beira and we continue to utilise our existing infrastructure, including a dedicated stockpile area within the port. We look forward to Global Coke, our off-take partner, taking their first shipment of coal later this month. "

SENA RAIL LINE UPDATE

The Group has commenced detailed negotiations with CFM with respect to attaining access to the Sena rail line and CFM providing transportation services on the line. Whilst these negotiations remain non-binding, the Group is seeking to reach an agreement with CFM prior to the end of the year in relation to an allocation of rail capacity. CFM is currently in the process of finalising the upgrade of the Sena line to an initial capacity of 6.5Mtpa, which is anticipated to be completed by the end of November 2012.

RAIL INFRASTRUCTURE

Minas Moatize Limitada ('MML'), a wholly owned subsidiary of Beacon Hill, has entered into a MoU with a multinational group with Mozambican coal mining operations to jointly develop multi-user infrastructure to allow coal to be transported along the Sena Rail line from Moatize to the Port of Beira. Pursuant to the agreement, the parties intend to work together to jointly develop and utilise the following facilities

·; A coal storage and rail loading facility outside the town of Moatize, utilising some of MML's existing loading infrastructure;

·; Storage facilities at the Port of Beira, with a dedicated spur line to the Sena rail line; and

·; The joint procurement and management of locomotives and rolling stock for use on the Sena rail line

Access to the Sena rail line, together with the use of this new infrastructure, will enable Minas Moatize to increase export volumes and to significantly lower operating costs.

Storage and Rail Loading Facility at Moatize

MML owns a rail loading facility and land parcel at Moatize, located 3km from Minas Moatize, and its partner has recently acquired the two adjacent sites. The parties intend to jointly develop these sites into a storage and rail loading facility to be used by both parties. The parties have commenced a feasibility study.

Storage Facilities at the Port of Beira

MML currently utilises a dedicated stockpile area within the Port of Beira, over which it has exclusive use with direct access to the quayside for loading. Pursuant to the MoU, it is exploring the development of a larger bulk facility, with direct access to the Sena rail line that will consist of rail unloading, stockpiling and ship loading infrastructure. MML will continue to utilise its dedicated stockpile area in the short term with a view to jointly using the expanded site once a dedicated spur line from the Sena rail line is built.

UPCOMING SHIPMENT

Beacon Hill currently has approximately 18,000 tonnes of coal stockpiled at the Port of Beira awaiting shipment. Global Coke, an off-take partner, has recently nominated a vessel to receive their maiden shipment of coal from Minas Moatize. The vessel is due to arrive at the Port of Beira in the last week of October for loading.

**ENDS**

NOTES

Beacon Hill Resources

Beacon Hill Resources Plc is focused on building a portfolio of near-term production projects in commodities relating to the steel production industry. Beacon Hill is dual listed on the AIM market of the London Stock Exchange (Code: BHR) and the Australian Securities Exchange (Code: BHU).

Beacon Hill has three projects:

1. Minas Moatize Project, Mozambique

2. Changara Coal Project, Mozambique

3. Arthur River Magnesite Project, Australia

Minas Moatize Project

Beacon Hill, through its subsidiary Minas Moatize Limitada, owns and operates the Minas Moatize Coal Mine, which is one of three operating coal mines producing and selling coal in the Tete Province of Mozambique.

In February 2012, Beacon Hill published the DFS for the Minas Moatize Expansion, which demonstrated strong economics for the project. Financial modelling, based on a 4Mtpa ROM operation producing on average 2.2Mtpa of saleable coking and thermal coal using a 13% discount rate, demonstrates a pre-tax NPV13 of US$662 million and a post-tax NPV13 of US$428 million.

The Minas Moatize Expansion is being undertaken in three phases:

*Rail will be used when available. Existing trucking operation will be sufficient to transport Phase II production

Changara Coal Project

Beacon Hill acquired majority ownership in a joint venture to explore and develop the Changara Coal Project in the Tete Province of Mozambique in December 2011. The Changara Coal Project covers a licence area of 184km2, which is 70 times the size of Minas Moatize. The project is located in the heart of the highly prospective coking coal basin of the Songo Area of the Tete Province.

The joint venture is a further step in Beacon Hill's wider expansion strategy in the globally significant coking coal region of Tete and will provide the Group with an opportunity to invest in a longer term development project that has the potential to considerably enhance its resource base.

Arthur River Magnesite Project

Beacon Hill has recently completed the Preliminary Scoping Study for the Arthur River Magnesite Project in Tasmania, Australia. The Study has indicated that the Project has robust financial potential and provides a strong platform to move forward towards a full Feasibility Study and securing a joint venture ('JV') and / or off-take partner to fund the development of the Project.

Financial modelling, using a discount rate of 10% (real), demonstrates a pre-tax NPV of A$42 million based on a mine life of 17 years and a 292,000dtpa ROM operation producing on average 100,000tpa of calcined magnesia.

More details on Beacon Hill can be found at www.bhrplc.com.

Competent Persons Statement

The Competent Person for reporting of coal resources, Peet Meyer of PC Meyer Consulting Pty Limited, who is a member of the Geological Society of South Africa (GSSA) and the Fossil Fuel Foundation. Peet Meyer has more than 21 years' experience in the southern African coal industry of which he has spent more than 5 years in the Mozambique Coalfields. He has the appropriate relevant qualifications and experience to be considered as a Competent Person as defined in the Standards on Mineral Resources and Reserves - Definitions and Guidelines (2004).

The Competent Person for reporting of coal reserves, Mr. Simon Griffiths, who is a Member of The Australian Institute of Mining and Metallurgy (AusIMM) and Society for Mining, Metallurgy, and Exploration, Inc. (SME) has sufficient experience which is relevant to the style and mineralisation and type of deposit under consideration and the activity to which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

The Coal Resources and Reserves are reported in compliance with the guidance as defined in Appendix 5A of the ASX Listing Rules being the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the JORC Code), 2004 Edition.

Mr Meyer and Mr Griffiths have consented to being named as the authors of the Resource and Reserve Statements respectively in this announcement.

Forward Looking Statement

Certain statements made during or in connection with the communication, including, without limitation, those concerning the economic outlook for the coal mining industry, expectations regarding coal prices, production, cash costs and other operating results, growth prospects and the outlook of Beacon Hill operations, its liquidity and the capital resources and expenditure, contain or comprise certain forward-looking statements regarding Company's development and exploration operations, economic performance and financial condition.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes is the regulatory environment and other government actions, fluctuations in coal prices and exchange rates and business and operational risk management. For a discussion of such factors, refer to the Company's most recent annual report and half year report. The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.