Bellzone Mining Regulatory News (BZM)

23 July 2012

Bellzone Mining plc

("Bellzone" or "the Company")

Kalia Mine Definitive Feasibility Study and Development Plan

Kalia project is viable and provides fast positive cash flow from initial production to fund expansion of capacity to a 46mtpa operation in 2020

·; DFS Results

o Accelerated Ramp Up Scenario:

o Phase 1: Oxide programme to commence production in 2015 at a rate of 5.9mtpa ramping up to a rate of 25.9mtpa in 2018 (date linked to infrastructure operations)

o Phase 2: Magnetite programme to commence production Q4 2017, ramping up to 19.2mtpa in 2019

o Maximum funding facility of US$1.7 billion required to achieve a sustainable development platform that will provide sufficient cash flow for expansion

o Project delivers an IRR of 53.1%

o Net Present Value After Tax (20 years): US$7billion at 12%

o Deferred Ramp Up Scenario:

o Phase 1: Oxide programme to commence production in 2015 at a rate of 5.9mtpa ramping up to a rate of 25.9mtpa in 2020 (date linked to infrastructure operations)

o Phase 2: Magnetite programme to commence production Q4 2019, ramping up to 19.2mtpa in 2021

o Maximum funding facility of US$570 million required to achieve a sustainable development platform that will provide sufficient cash flow for expansion

o Project delivers an IRR of 57.1%

o Net Present Value After Tax (20 years): US$5.5billion at 12%

·; Project becomes cash flow positive after three years of operations with further optimisation possible

·; Average full production operating cost of US$41.57 per tonne

·; Rail and port detailed feasibility study ("DFS") publication expected Q4 2012

·; Project finance negotiations will start with China International Fund Limited ("CIF") and third parties on delivery of the rail and port DFS

·; A copy of the detailed overview of the DFS is available on Bellzone's website www.bellzone.co.au

Nik Zuks, Chief Executive Officer of Bellzone, commented: "The definitive feasibility study proves that Kalia will be a significant source of quality iron ore for the market and will yield good investment returns. The sensitivity analysis of the model indicates that the price of iron ore has the most impact and that the project is still viable at iron ore prices at the US$60 per tonne level. The Board has approved the DFS results and commenced an optimisation programme which is expected to add further value. Subject to financing, the ordering of identified long lead items will commence. Project finance discussions will commence with our partner China International Fund as well as with third parties following completion of their rail and port DFS with the objective of achieving first production and sales from Kalia in 2015."

Conference call

Bellzone Mining plc will be holding a conference call today for analysts and investors at 09.30am (BST).

The dial-in details are as follows:

UK Access Number: 0800 3681 950

International Access Number: +44 (0)20 3140 0668

The Conference ID in all cases will be: 497751#

Bellzone Mining plc (AIM:BZM) is pleased to announce the outcome of the detailed technical and economic definitive feasibility study ("DFS") of the Company's 100% owned Kalia Mine Project in the Republic of Guinea, West Africa ("Kalia" or the "Project").

The DFS has been project managed by the Company, with all material components undertaken by independent external consultants including;

·; TWP Australia

·; TWP Projects (South Africa)

·; TWP Environmental (South Africa)

·; Ausenco

·; Coffey Geotechnics (UK)

·; Coffey Mining

·; SGS Environmental (Ghana)

·; SiM Mining Consultants (Pty) Ltd (South Africa)

·; CSA GLOBAL

·; Fugro

·; Fichtner GmbH & Co (post DFS)

Kalia Mine Development Plan

The DFS achieved the objective of defining an implementation plan that supported a production start date in Q4, 2014 and reaching a fully installed capacity of 46mtpa in 2018.

The production development plan is focused around an open pit mining and modular process plant development strategy with equipment and services selected and designed for staged expansion and modification to be able to process the variable ore types at Kalia as these come into production.

Initial production and associated cash flow generation, will be derived from targeting the high grade oxide zones of approximately 27mt identified at Kalia. Lower grade oxide beneficiation modules, supplemented by a supergene processing facility, will be constructed commence operations in 2015 to ramp the oxide product output up to the target 27mtpa capacity. On depletion of the high grade oxide ore zone the high grade plant will be modified, while in operation, to upgrade the low grade oxide ore, maintaining the production capacity target.

The development of the magnetite concentrators have been deferred to after the completion of the oxide and supergene plant installations. This has a positive effect on cash flow, the project funding requirements and the NPV.

Project Milestones

* Anticipated date moved to mid 2015 due to delays in the completion of the infrastructure studies

Delays in completing the rail and port feasibility studies caused by logistical issues involved with completing the marine geotechnical surveys, which are critical to completing the wharf design and port estimates, are expected to delay Kalia Mine production start to mid 2015.

Subject to obtaining all relevant approvals from the Government of Guinea, the currently outstanding results of the rail and port feasibility studies and securing appropriate project financing, Bellzone plans to commence construction in 2012 and target commencement of shipping of iron ore in 2015.

Kalia Mine Product

Metallurgical testwork, conducted during the DFS, confirmed the suitability of standard gravity upgrade process, including dense media separation on the +1mm fraction and spirals gravity separation on the -1mm fraction, and supergene processing solutions, which includes grinding and magnetic recovery. The anticipated product specification is provided in table 1, with current oxide and supergene JORC resources providing approximately 151mt of product. The ongoing RC drilling programme is expected to increase this resource over the course of 2012 and 2013 to in excess of 200mt of product.

Table 1 - Oxide Product Blend Specification

Based on recent offtake discussions it is anticipated this product should attract a premium to the Platts 58% base price.

Two magnetite processing facilities are scheduled for production 2017 and 2018 to complete the production ramp up. Bulk testwork and process simulation produces magnetite concentrate as shown in table 2. The large magnetite JORC resource of 6.16bnt supports a +35 year magnetite life of mine operation, with additional drilling planned through 2013 it is expected this resource will continue to be increased to the targeted 10bn tonne potential.

Table 2 - Magnetite Concentrate Grade

Kalia Mine Production Profile

The start-up production ramp up is predicated on targeting the high grade oxide component at Kalia. This will generate initial cash flow, which will finance the ongoing development. The DFS ramp up strategy is based on the high grade plant producing first ore in Q4 2014, with exports in early 2015. The first low grade beneficiation and SBIF processing facilities is planned to be brought online in Q4, 2015, with the second low grade beneficiation facility being brought online in Q4, 2016. In 2017 the high grade plant will be retrofitted to a low grade beneficiation plant. The first magnetite concentrator is scheduled to be brought online in Q4, 2017, with the second plant in Q4, 2018

Table 3 - Ramp up and first 10 year production profile

Kalia Mine Power

The 360MW power requirement will be developed in line with the process plant requirements. An initial staged development of 140MW, starting at 20MW for the initial high grade plant, will be installed. The 140MW will be sufficient power to meet the needs of the pre-magnetite plants. The modular approach to the heavy fuel oil ("HFO") generation power plant will facilitate the staged approach and will also provide redundancy to ensure maintenance and operational utilisation are maintained. Although it is envisaged that the power requirements of the magnetite plants will be met by third party off site power developments or an off site Bellzone power development, the project capital and operating estimate has allowed for the more expensive life of mine HFO power generation solution, which provides future upside to increase profitability when lower cost hydro power options come on line.

Kalia Mine Financials

The total project capital cost estimate is $4.3 billion(1). This estimate includes $495 million for power development and a project contingency of $382 million. The modular production development profile has been structured to minimise funding requirements and maximise return. The DFS development plan requires a maximum draw down funding facility of $1.7 billion to achieve the ramp up outlined in the DFS (above) and achieves an IRR of 53.1%. An implementation strategy, which defers the low grade oxide and SBIF plant construction for two years, until after the initial high grade plant installation, results in a maximum initial capital requirement of $571 million, providing an IRR of 57%, with a post tax NPV of $5.5bn at 12%. Optimisation work aimed at reducing the maximum funding draw down facility required while achieving the same production capacity is being undertaken.

Table 4 - Capital Costs by Module ($m)

Note: Rail and Port will be funded by China International Fund Ltd, as per signed Definitive Agreements

With operating costs(2) (include power, transport, working capital and exploration costs) of $29.95/t for the oxide blend and $54.59/t for the magnetite concentrate, providing and average full production operating cost of $41.57/t, the financial analysis of the project indicates that under a range of sensitivities applied to the key impact criteria the project is robust and viable and will provide a fast path to positive cash flow, sufficient revenue to fund expansions and meet any funding criteria in place.

(1) Table 5 - Operating Costs All amounts are expressed in United States Dollars

(2) Rail and port costs are estimates based on adjusted benchmarks because the studies for these are not yet completed. Rail and port development timeline may affect the production start date at Kalia Mine

This DFS development plan provides an IRR of 53.1%, based on an average FOB sales price of $106/t for oxide product and $123.72/t for magnetite concentrate over the initial 20 year life of mine. All Opex costs above exclude a mining royalty of 3.5% of the FOB price, as defined in the Kalia mining convention.

Next steps

With the DFS completed, the Company is in a position to progress the project. The DFS identified a number of optimisation and cost reduction opportunities that will be investigated. These include;

·; Phasing of production streams to minimise funding requirements

·; Modelling the impact of the Forecariah operations revenue streams on the economic model and funding requirements for the Kalia Mine Project

·; Optimising the mine plan against the recent JORC results to reduce the operating costs;

·; Capex reduction studies including;

o Contract mining versus owner operate mining

o Build, own operate power solutions

o Build, own operate fuel solutions

In parallel to these value add opportunities, Bellzone will continue to work with CIF on the completion of the rail and port feasibility studies, funding arrangements for the Kalia Mine and the offtake and transport tariff agreements for the Kalia product.

Enquiries:

Bellzone Mining plc

Terry Larkan/Graham Fyfe +61 (0) 8 9420 8900

Canaccord Genuity Limited

Nominated Adviser and Joint Broker to Bellzone +44 (0)20 7523 8000

Andrew Chubb/Tarica Mpinga

Renaissance Capital Limited

Joint Broker to Bellzone +44 (0)20 7367 7777

Rob Edwards

Tavistock (UK)

Jos Simson/Mike Bartlett/Emily Fenton +44 (0)20 7920 3150 / +44 (0)7899 870 450

PPR (Australia)

David Ikin

+61 (0) 8 9388 0944 / +61 (0) 408 438 772

CSA Global Pty Ltd, the independent geologists have estimated the Company's JORC reportable Mineral Resources for the Oxide, Supergene BIF and Magnetite material at Kalia.

The information in this announcement that relates to in-situ Oxide and Supergene BIF Mineral Resources is based on information compiled by Grant Louw of CSA Global. Grant Louw takes overall responsibility for the Oxide and Supergene BIF Mineral Resource estimates. Mr Louw is a member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a competent Person in terms of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 Edition). Grant Louw consents to the inclusion of such information in this announcement in the form and context in which it appears.

The information in this announcement that relates to in-situ Magnetite Mineral Resources is based on information compiled by Galen White of CSA Global. Galen White takes overall responsibility for the Magnetite Mineral Resource estimates. Mr White is a Fellow of the Australian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a competent Person in terms of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC Code 2004 Edition). Galen White consents to the inclusion of such information in this announcement in the form and context in which it appears.

About Bellzone Mining Plc

Bellzone Mining plc is an operating iron company with Joint Venture iron ore operations, exploration and resource development company with iron ore and nickel / copper permits in the Republic of Guinea, West Africa.

Kalia Mine

The Company's flagship project, the Kalia Mine Project, is planned to commence production in 2015 and be producing iron ore and iron ore concentrate at a rate of 46 million tonnes per annum in 2019. The Kalia Mine Project has a 6.16 billion tonnes magnetite JORC resource, an oxide JORC resource of 315.3 million tonnes and a Supergene BIF JORC resource of 98.6 million tonnes. The oxide and Supergene BIF resources have been established from just 10.5% of the 55km2 of the mapped surface oxides on the Kalia permit and will produce 151 million tonnes of +59% product. Drilling results and internal estimates indicate that the Kalia Mine Project has the potential to host more than 10 billion tonnes of magnetite and 2 billion tonnes of oxide.

CIF - Project, Financing & Infrastructure Partner

Bellzone has a Definitive Agreement ("Agreement") with China International Fund Limited ("CIF"). The Agreement gives CIF right of first refusal to purchase the Kalia Mine Project's production at market rates and CIF commits to providing Bellzone commercially related funding for the development of the Kalia Mine Project.

The Agreement contains CIF's commitment to fund and build commercially operated rail and port infrastructure that will enable Bellzone to export production from the Kalia Mine Project. The infrastructure is being developed by Kalia Horizon Minerals Pte Limited, an entity that is 90% owned by CIF with Bellzone having a 10% carried interest. The Agreement provides for Bellzone to be the lowest cost user with permanent priority access.

Forécariah JV

Bellzone and CIF have fully funded a joint venture to undertake the accelerated exploration and development programme at CIF's Forécariah iron permits that lie between 30 and 80 kilometres from the Guinea coast. The Forécariah permits are held in a CIF subsidiary, Guinea Development Corporation ("GDC") and will be transferred to the JV operations company, Forécariah Guinea Mining SA as per the terms of the definitive and JV shareholder agreements. Commercial production commenced in May 2012 and production will be ramped up through 2013 to a rate of 3‐4 mtpa.

Other activities

Bellzone has completed a mapping and surface sampling programme identifying highly prospective targets at its Sadeka Nickel/Copper Project. The VTEM aerial survey has been completed and highly prospective targets have been identified and will form the basis of the 2012 drilling programme.