BHR.L Regulatory News (BHR)

Minas Moatize Mine

· Updated Reserve Statement for the Minas Moatize Coking Coal Project confirming that Minas Moatize has a mine life of up to 15 years and a Total Proven and Probable saleable Reserve of 16.16Mt, of which at least 8.3Mt is coking coal

· The Phase 2B and 2C plant long lead items to commence and scheduled for completion in January 2015 subject to finalised funding arrangements

· Environmental Impact Assessment approved for the rail offload site adjacent to the port of Beira

· Co-ordinated arrival of rolling stock from two suppliers in Beira, Mozambique during Q1 2014 and non-binding heads of terms entered into for the rolling stock to sub-leased for an interim period - discussions are progressing well and will be finalised during Q1 2014

· Non-binding financing proposal received for export finance senior debt to project finance the capex for Phase 2B and Phase 2C expansion and due diligence and internal approvals underway to obtain a binding and definitive financing proposal

· Following the completion of these initiatives, the Company expects move into a Tier 1 FOB cash cost position which is key to sustainable cash flow generation in a majority of price scenarios

· Vertical integration strategy initiated through identification and staged acquisition of pig iron opportunity in Tete, Mozambique

· Cash balance at 31 December of $8.6m

Rowan Karstel, Chief Executive Officer of Beacon Hill Resources commented:

"Our strategy to establish an economically robust coking coal project at the Minas Moatize Mine continued to advance during the period. A key milestone for us was the successful commissioning of the Phase 2A Expansion and wash plant upgrade, and the production of good quality hard coking coal. In line with the coking coal prices being at record lows, and to reduce the effect of negative cash burn, it was decided to suspend operations in the middle of November 2013 and focus on the development of the Phase 2B and 2C wash plant. With this in mind, the primary focus for 2014 will be to secure a senior debt facility in order to progress the Phase 2B and 2C wash plant expansion. We expect that the result of this expansion will be that Minas Moatize will move from a tier 2/3 to a tier 1 asset in cost terms and will be able to compete, and deliver attractive financial returns, during downturns in the commodity cycle and generate considerable further upside as coking coal prices recover."

MINAS MOATIZE MINE

Health, Safety and Environment

Safety Achievements

• Fatality free man shifts at 31 December 2013: 742,235

• Reportable free man shifts as at end of December 2013: 413,023

• Lost time injury free days stands at 518 days as at 31 December 2013

Environmental

Golder was appointed during Q4 2013 to review the November 2011 Environmental Management Programme which will be submitted to the Mozambique Government for approval. An application for the issue of a new Environmental Licence, for the next five years, was submitted to the Government Authorities during Q4 2013. The updated environmental licensing and management is a condition precedent for the financing and is progressing well.

 Occupational Health and Hygiene

No occupational illness was reported during the year.

HIV and Aids remains a major concern and continuous education and awareness programmes are run on the mine during monthly meetings and as part of the education programme.

Minas Moatize Expansion

JORC Reserve Statement

Beacon Hill Resources announced the publication of the JORC Coal Reserve Statement for the Minas Moatize Coking Coal Mine in Tete, Mozambique. The JORC Coal Reserve Statement highlighted the following:

· Significant economically viable mineable Reserve demonstrated at Minas Moatize despite current depressed coking and thermal coal prices - establishes project as economically robust during downturns in the resources cycle

· Total Run of Mine Proven and Probable Reserve (Air Dried Basis) of 39.38Mt

· Total Proven and Probable saleable Reserve of 16.16Mt, of which at least 8.3Mt is coking coal

· Confirmation that Minas Moatize has a mine life of up to 15 years

Production

Operations during Q4 2013 remained focused on mining the lower Upper Chipanga Pit where the Group continued to expand production, mining approximately 18,855 tonnes ROM coal producing approximately 11,555 tonnes of saleable coal from the mine's existing wash plant ('Phase I CHPP'). The Board decided to suspend operations in mid-November 2013 due to the record low coking coal prices. MML is currently a "tier 2/3" asset and by upgrading the wash plant (Phases 2B and 2C) the mine should become a "tier 1" cost producer. The Company is currently busy negotiating a senior debt facility with a view to upgrading the wash plant in 2014.

Process Plant

The overall plant performance for Phase 2A was below expectations due to the following:

· Power Supply

The supply of power from the local utility during H2 2013 was poor. A number of unplanned maintenance outages occurred, at times the supply voltage was irregular or a voltage phase was absent.

· Triple Roll Crusher

The triple roll crusher proved to be problematic. The breaking plate and tensioning bolt was damaged by tramp metal after the first week of start-up, rendering the top roller ineffective. Spares had to be ordered and the delivery was in excess of six weeks.

High wear was experienced on the triple roll crusher and spares availability from the supplier was limited as all spares were held in USA and not South Africa. Thus, it was decided that the best course of action was to replace the triple roll crusher with a more robust, new primary double roll crusher from Schumar. This crusher was ordered and delivered to site during the latter part of November 2013.

· Plant feed size distribution

Samples taken periodically of the friable feed stock indicated that the -1.0mm fraction was temporarily in the order of 40% due to the feedstock being exclusively middle chipanga. The fine coal circuit was designed to handle in the order of 25% -1.0mm. This resulted in a temporary but significant loss of product to the slimes dam which would otherwise be recoverable with the Phase 2B and 2C additional plant circuits (i.e. flotation). The feedstock will revert to normal operating parameters now that the middle chipanga stockpile has been depleted.

Phases 2B and 2C are required to be completed to ensure that the plant can operate optimally. However, Phase 2A did prove that a good coking coal product can be produced in tandem with an export grade thermal coal product.

LOGISTICS

Rail

The Sena Line is currently being upgraded to handle 20Mtpa of coal exports. In terms of the Interim Rail Access entered into with CFM, MML has received a capacity allocation on the Sena Line based on the greater of 0.5Mtpa or 7,7% of the rail line capacity. On completion of the Sena Line upgrade, MML's contractual allocation will be 1.54Mtpa.

Carbomoc Siding

MML approached JPSL Mozambique Minerais Limitada (JPSL) to jointly develop the Carbonoc Coal Loading Site (CCLS) in the province of Moatize. The key terms of the Co-Development Agreement for the CCLS include:

- Land jointly owned by MML and JPSL;

- JPSL to oversee and carry out construction of works;

- Development to allow for storing, loading and transporting of coal,

- Three storage sites - JPSL sites 1 and 2, MML site; and

- Facility can handle 42 wagon consist with dead ends for not-to-go rolling stock.

The CCLS is functional and JPSL is taking loaded coal trains from the CCLS to Beira.

Warehouse No. 4 Siding in Beira

MML has made good progress to comply with all the conditions laid down by CFM for the development of its own coal off-loading facility in the Port of Beira. The key conditions for the development of the Warehouse No 4 development included:

- A MOU with the Beira Municipality to undertake the upgrading of the port community road (Kruss Gomes Road);

- Environmental approvals for the off-loading facility and the port community road; and

- Approval by CFM of the layout of the rail siding including the provision of new materials for the construction of the rail siding.

All of these conditions have now been met and it is foreseen that CFM will issue the licence for the Warehouse No 4 development to MML during Q1 2014. The construction period for the Warehouse No 4 development is expected to take 16 weeks.

Rolling Stock

In terms of the Lease Agreement that was entered into with Thelo Rolling Stock in January 2013 the five Grindrod RL30SCC-3 diesel locomotives and the ninety Gondola-type rail wagons have been completed during the current financial year.

In accordance with the Services Agreement that was entered into between MML and RRL Grindrod all the train crews and other personnel are already on the ground in Mozambique. All train crews have been passed out by CFM after undergoing the necessary theoretical and practical training.

Post period end the Company entered into a non-binding heads of terms to sub-lease the rolling stock for an interim period. The transaction will mitigate the lease expenses and substantially upgrade the Company's logistics capabilities in country. This is an important milestone to achieving the desired senior debt funding for the Company and further demonstrates the Company's long term commitment to its Mozambique operations.

PIG IRON PROJECT

The Company entered into an agreement in December 2013 to acquire, in stages, up to a 70% interest in the pig iron opportunity, known as Licence 3788L, located in the Tete Province of Mozambique. The agreement is between BHR Investments Mauritius Ltd ('BHRIM'), a wholly owned group subsidiary, and Acácia Mineração, Lda ('Acacia').

Initial due diligence conducted by Beacon Hill, based on several exploration studies completed between 1960 and 1980 over Licence 3788L, indicates the potential suitability for a pig iron project. The farm-in transaction provides a low cost opportunity to implement the Company's strategy to vertically integrate its operations, thus reducing costs and providing a platform for Beacon Hill to expand in steel related commodities around its critical infrastructure at the Minas Moatize Coking Coal Mine.

Licence 3788L also has the potential to be a source of magnetite, which is used by Beacon Hill in its coal washing process. The Company is ideally positioned to implement a low cost work programme to develop the project which would benefit from; (i) Minas Moatize's existing infrastructure; (ii) reduced power costs provided by Beacon Hill's proposed greenfield metallurgical coke plant and co-generation project currently under review; and (iii) existing Sena railway access to Beira port.

ARTHUR RIVER MAGNESITE PROJECT

2013 was primarily a year of consolidating market and metallurgy data to allow the Tasmania Magnesite Board to plan the next stage of the development of the project after a detailed Scoping Study indicated a commercially viable mining operation could be developed based on the ore situated in the approved mining lease.

The Board approved further metallurgy and chemical reactivity testing focused on caustic calcined magnesia ('CCM') after taking into account:

· A detailed market report commissioned by the Company where demand is driven by the industrial sector by the increasing role of CCM in water, waste and flue gas environmental treatment. CCM is also an important additive in animal feed and in Asian palm oil production. High value speciality CCM is increasing used in hydrometallurgy in the production of nickel/cobalt. There is also a growing market for Sorrels (magnesia based) cement.

· Discussions held with potential investors at the 2013 MagMin conference who advised the need for more detailed metallurgy data as a platform for further negotiations. The advice from key market players was to focus on CCM rather than dead burnt magnesia (DBM) with its higher cost of production and current market saturation for DBM products.

CHANGARA COAL PROJECT

No further exploration work has been undertaken at Changara since the completion of the initial drill holes. The Group is continuing to assess the results from these holes with a view to undertaking some further drilling following the end of the rainy season in Q1 2014.

CORPORATE

Bank Funding

The Group has received a non-binding proposal for export finance backed financing on the basis of an agreed term sheet. This new facility will be used to refinance the existing secured loan with Vitol Coal SA as well as provide capital financing for Phase 2B and 2C expansion. Progress was made during Q4 2013 on technical and legal due diligence reports which are largely complete.

Further confirmatory work is ongoing and the revised guidance is to receive a definitive offer for funding during Q1 2014. Funding would therefore likely take place in Q2 2014. The delay from Q4 2013 can be attributed to increased concerns around the current coal market resulting in a much higher diligence threshold to achieve senior debt where only the most financially robust projects are capable of achieving funding. The Board remains confident that a facility will be obtained as the independent due diligence completed to date clearly confirms Minas Moatize is a very high quality project that has reached a bankable standard.

Cash Position

Beacon Hill's cash position as at 31 December 2013 was approximately US$8.6 million.

The Company currently has no plans to utilise the undrawn Darwin standby facilities at the current share price. Therefore the focus remains on the new loan facilities currently under review to fund the capital requirement for constructing Phase 2B and 2C of the wash plant in Mozambique.

**ENDS**

Notes

JORC Compliance

This Coal Reserve Statement has been prepared in accordance with the following:

This CPR has been prepared in accordance with the JORC Code, 2012 Edition, prepared by the Joint

Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council of Australia and herein referred to as "JORC" or "JORC Code". Where reference is made to the term "JORC" it shall also mean and include:-

· The 2009 South African Code for Reporting of Mineral Resources and Mineral Reserves known as the SAMREC Code ("SAMREC") Code;

· The 2009 Mineral Asset Valuation Committee ("SAMVAL") Code published under the Joint Auspices of the Southern African Institute of Mining and Metallurgy and the Geological Society of South Africa;

This Opencast Coal Reserve Statement has been prepared under the direction of the Competent Persons (the "CPs") and/or the Competent Valuator ("CV") who assume overall professional responsibility for the document. The Opencast Reserve Statement however is published by EMPR, the commissioned entity, and accordingly EMPR assumes responsibility for the views expressed herein. Consequently with respect to all references to the CP and/or CV and EMPR: all references to EMPR mean the CP and/or CV and vice-versa

This Reserve Statement has been prepared in order to satisfy the disclosure requirements of the ESMA update of the CESR recommendations for the consistent implementation of Commission Regulation (EC) No 809/2004 implementing the Prospectus Directive issued by the European Securities and Markets Authority on 23 March 2011, specifically clauses 131 to133.