BHR.L Regulatory News (BHR)

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

23 June 2014

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

Operational Update and Conditional Placement of GBP 1.5 million in Ordinary Shares for Working Capital and Repayment of Darwin Convertible Loan

The Board of the Company provides the following update on operations and announces that it has entered into conditional subscription agreements to place up to 600,000,000 ordinary shares in the Company (the "Placing Shares") at a price of 0.25 pence per Placing Share to raise approximately £1.5 million (the "Placing") to certain institutional investors arranged by and including Novum Securities Limited ("Novum") (together the "Investors") .

Highlights

· £745,000 of the total funds raised to be used to refinance final settlement of all amounts outstanding from the Company to Darwin Strategic Limited ("Darwin") with the balance to be used for working capital purposes;

· Cash position bolstered through the Placing and the expected receipt of US$1.1m in VAT refunds ahead of completion of expansion project funding;

· Solid progress made to conclude the financial due diligence for the expansion project debt funding;

· A number of strategic investors have expressed an interest in potentially acquiring a stake in the Company or the Minas Moatize Coking Coal Project; and

· Legal documentation for the sub-lease of five locomotives and 67 wagons is completed, pending final approvals from Mozambique customs officials.

Rowan Karstel, CEO of BHR commented:

"We are making good progress on the sub-lease of our rolling stock and the funding required for the expansion project at Minas Moatize. We expect to complete our debt financial due diligence within a month and to seek final relevant approvals shortly thereafter. We remain focused on starting construction of the Minas Moatize expansion project by the end of the third quarter 2014 and look forward to providing further updates regarding our progress.

"The proceeds of this Placing will provide us with additional working capital for the third quarter as we focus on completing the expansion project funding. With our current cash balance of c. $2.5 million, we expect this to increase by c. $1.2 million through the receipt of the placing proceeds and are also waiting for some $1.1 million in VAT refunds to flow through into treasury in Mozambique."

Purpose of the Placing

The Placing proceeds are to be utilised by the Company for general working capital purposes and to refinance GBP 745,000 in full and final settlement of all amounts outstanding from the Company to Darwin under the Loan Note instrument dated 3 October 2013, after which no further amounts will remain outstanding or available under the Darwin Loan Note.

The net proceeds of $1.1m in addition to c.$2.5m of existing cash, and $1.1m of VAT due for refund to the Company, is required to provide adequate working capital to the end of the third quarter of this calendar year, being the targeted completion date for the expansion project financing.

Further Terms of the Institutional Placement

The Company has conditionally raised GBP1.5 million gross at 0.25p per share for the allotment of 600,000,000 new ordinary shares to the Investors, subject, inter alia, to shareholder approvals at the Annual General Meeting scheduled for 23 June 2014 and at a General Meeting to be held by 21 July 2014.

The Investors will also be granted for each share subscribed, 1 warrant exercisable at 0.5 pence per share for a period of up to 3 years (the "Warrants"). The Warrants will only be exercisable once shareholders have approved the relevant authorities to allot shares for cash at the General Meeting. The exercise price of the Warrants may be reduced if the Company issues shares or other securities at a price lower than 0.5 pence per share within 180 days of their respective dates of grant. In addition, the Investors may be granted additional warrants exercisable at par value to protect them from dilution if the Company issues any further shares or securities for cash at a price of less than 0.25p per ordinary share within 180 days of the settlement of Tranche 1. In addition, the Investors have agreed not to exercise the Warrants if their resultant shareholding was to exceed 29.9% of the issued share capital of the Company.

Admission of an initial 242,247,052 shares to be issued under existing authorities is expected to occur on 26 June 2014 and following admission of such shares, the Company's enlarged issued share capital will comprise 2,129,191,009 ordinary shares with voting rights. At such time, this figure of 2,129,191,009 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules. The remaining 357,752,948 shares and the Warrants will be issued in two tranches with the first tranche being conditional upon the passing of resolutions at the Annual General Meeting on 23rd June 2014 and the second tranche conditional on the passing of the resolutions at the General Meeting to be held before 21st July 2014.

Operational Update

Expansion Project Funding

Further progress has been made to conclude the financial due diligence for the expansion project debt funding. The updated open cut environmental management plan ("EMP") has also been translated into Portuguese and submitted to the Dept. of Environment ("MICOA") and the EPC contract for the expansion of the wash plant has been further progressed into final form. Discussions are ongoing with the Company's off-taker to update the offtake contract entered into in early 2011 to the satisfaction of the senior debt lender.

Based on the continued progress above, debt financial due diligence is expected to be imminently completed and the final approval process including legal documentation to commence shortly thereafter. If successfully completed, drawdown remains targeted for the end of the third quarter, 2014.

In addition a number of strategic investors have expressed interest in the possibility of acquiring a stake in the Company or the Minas Moatize Coking Coal project. The Company is working with its adviser Investec to assess its strategic options however discussions remain at an early stage and there can be no certainty that those discussions will lead to an agreement on valuation or indeed a transaction.

Sub Lease of Rolling Stock

The legal documentation for the sub-lease of five locomotives and 67 wagons is completed and the transaction pending final execution by the Company and the sub-lessee. Prior to signing of definitive documentation the Company is seeking the approval of Mozambique customs officials to undertake the sub-lease of its rolling stock. In addition, the Company is seeking customs relief from import tariffs based on its interpretation of the mining contract entered into with the Government of Mozambique on or about 4 April 2013, which zero rates capital equipment used in relation to the mining project.

**ENDS**