2 Mar 2010 07:00
Beacon Hill Resources plc / Ticker: BHR / Index: AIM / Sector: Mining
2 March 2010
Beacon Hill Resources plc ('Beacon Hill' or 'the Group')
Update on Progress Made Towards Acquisition of Minas Moatize LDA
Beacon Hill Resources Plc, the AIM listed resource company, is pleased to announce an update on the significant progress made towards its proposed acquisition of Minas Moatize LDA ('Minas') ('the Acquisition') in partnership with Consolidated Resources & Mining (Pty) Ltd, as previously announced on 8 January 2010. Minas owns an operating coal mine in the Tete Province of Mozambique, which has a proven and measured resource of 33 million tonnes of thermal coal and its acquisition would be in line with Beacon Hill's strategy of acquiring and developing resource assets relating to the steel production industry.
Overview
·; Excellent progress made towards satisfying the due diligence and legal documentation requirements relating to the Acquisition;
·; Appointment of key consultants, including Peter Wilson of Mineral Management Pty Limited - facilitating the rapid development programme of the asset following the Acquisition;
·; Finalisation of feasibility study to create a large open pit mine producing 4 million tonnes per annum of run of mine ('ROM') coal (c. 0.7-1mtpa of coking coal and 1mtpa of thermal coal);
·; Receipt of tests of the coal which demonstrate that the mine can produce a high quality coking coal; and
·; Discussions with a view to entering into long term off-take agreements.
Beacon Hill Executive Chairman Justin Lewis said, "We have made excellent progress towards formally acquiring Minas, which is, I believe, a transformational deal for the Group. Minas would provide Beacon Hill with exposure to one of the world's largest undeveloped coking coal regions and has the potential to be a highly profitable project for Beacon Hill - particularly when considering the current coal price.
"Once the Acquisition has been completed, Beacon Hill will, together with our partners, initiate a defined development plan in order to maximise the full potential of this significant coal asset and generate significant near-term cash flow from the current operating mine. With a positive conclusion of this transaction in mind, we are already in discussions with potential off-take partners, which I hope to be able to update shareholders in the near future."
Development Plan
Positive progress is being made with the potential acquisition of a 33 million tonne coal asset (proven and measured status) in a globally significant coking coal region, the Tete province of northern Mozambique; other companies operating in the area include Vale, Riversdale and CAMEC. Minas currently operates the only operational coal mine the region, with a small underground mine producing thermal coal for domestic consumption.
The Group intends to develop the resource into a larger open pit operation, for which Government and environmental approval has already been granted, to produce both coking and thermal coal for export markets. The Group has developed a plan which will see the mining 4mtpa ROM coal, producing between 0.75 and 1.0mtpa of coking coal and in excess of 1mtpa of thermal coal for both export and domestic markets. Further to this, tests conducted on the coal by ARCIL Limited for the Group have shown very attractive coking coal properties and the Group is currently in advanced discussions with potential customers, with a view to entering into long term off-take agreements.
The Group, with its partners, are in discussions regarding logistics and confident of securing access to the recently refurbished railway and use of a new port facility, which is a key factor in the successful development of this project.
Due Diligence
SRK Consulting in South Africa has been appointed to report on the resource and development plan, focussing on upgrading the resource in tandem with the development of the mine in order to maximise the value of the asset.
Peter Wilson of Mineral Management Pty Limited has been working with the Group in a consultancy capacity. He brings with him 30 years of coal mining experience and has most recently worked for a major Indian steel and power group.
Timetable
The Acquisition is expected to be completed prior to the end of June 2010, subject to execution of purchase agreements, the completion of due diligence requirements and necessary financing arrangements, all of which are now well advanced. The Group will keep shareholders updated to developments of the Acquisition in due course.
**ENDS**
For further information on the Company, visit: www.bhrplc.com or contact:
Justin Lewis | Chairman, Beacon Hill Resources Plc | +61 (0) 3 8637 1540 +61 439 162369 |
William Vandyk | Astaire Securities Plc | +44 (0) 20 7448 4400 |
Hugo de Salis | St Brides Media & Finance Ltd | +44 (0) 20 7236 1177 |
Susie Callear | St Brides Media & Finance Ltd | +44 (0) 20 7236 1177 |