SNRP.L Regulatory News (SNRP)

18 November 2010

STRATEGIC NATURAL RESOURCES PLC.

Unaudited Interim Results for the 6 months ended

31 August 2010

Strategic Natural Resources (AIM:SNRP), 74 per cent owner of coal exploration and production assets located near Indwe in the Eastern Cape province of South Africa, today announcesits unaudited interim results for the six months ended 31st August 2010.

Highlights:

·; Competent Persons Report (CPR) from Golder Associates confirmed an increase in Elitheni's resources from 97.2 million tonnes to 150.3 million tonnes. The area drilled to date represents less than 3 per cent of the total area available for drilling

·; CPR highlighted 31.4 million tonnes of coal that washes to economic yields and is capable of servicing a variety of markets

·; Washability and market applications studies confirmed that SNR coal can be used for different applications in South Africa and abroad. Locally it can be used for power generation whilst examples of uses internationally include the domestic heating market in Turkey and power generation in India

·; SNR received a logistics study on the transportation of coal which included an assessment of road, rail and port infrastructure confirming the feasibility of exporting coal from Elitheni's mines in the Eastern Cape

·; SNR restructured and consolidated the Black Economic Empowerment (BEE) shareholding by introducing new partner Rapitrade Ltd, which will make available extra funds for the Bankable Feasibility Study, further exploration and for the development of technology in the boiler market

·; Edward Cox appointed as Finance Director and Company Secretary.

Richard Latham, Chairman, said, "The Company has made significant progress in the last six months towards becoming a producing and exporting coal company. SNR has received positive assessments from all parties who have undertaken studies and we expect to publish a Bankable Feasibility Study in the near future."

For further information, please contact:

Strategic Natural Resources plc

David Nel, Chief Executive Officer

+27 (0) 41 374 0842

Jeremy Metcalfe, Communications Director

+44 (0)7785 346 718

Nominated Adviser and Joint Broker - Allenby Capital Limited

Nick Naylor / Alex Price / James Reeve

+44 (0) 20 3328 5656

Joint Broker - SP Angel Corporate Finance Limited

Emin Eyi / Tercel Moore

+44 (0) 207 647 9646

Financial PR/IR - Blythe Weigh Communications

+44 (0) 207 138 3204

Ana Ribeiro / Tim Blythe / Matthew Neal

For further information about Strategic Natural Resources plc please visit www.snrplc.co.uk

Chairman's Statement

I have pleasure in presenting the interim results of Strategic Natural Resources PLC ("SNR") for the half year to 31st August 2010. This statement reviews the Company's operational and financial performance for the 6 months ended 31 August 2010, together with developments after 31 August 2010 and provides an update on the Company's future prospects.

Operational update

In my report accompanying SNR's full year results to 28 February 2010, dated 7 July 2010, I wrote that "Elitheni have commissioned an export feasibility study" and that "running concurrently with the export feasibility study, the Company has commissioned the update of its Competent Person Report (the "CPR")". In addition the Company had commissioned "a detailed bulk sample washability assessment on the coal to assess the metallurgical and other properties inherent within the coal".

I am delighted to report that our investment in drilling and mine development has continued during the period and the results of the collective studies referred to above have now been announced. On 21 July we were able to announce a 55% increase in the coal resource of our 74% owned subsidiary, Elitheni Coal (Pty) Ltd ("Elitheni"). This represented an increase in Elitheni's resources from 97.2 million tonnes to 150.3 million tonnes, comprising: 45.6 million tonnes measured resource; 45.5 million tonnes indicated resource; and 59.2 million tonnes inferred resource. The additional drilling undertaken in relation to the updated CPR spanned an area of circa 3,000 ha. which, when combined with the prospecting and mining rights areas the Company has in hand, represents less than 3% of the total area available for drilling. This leaves approximately 179,000ha of Elitheni's total rights area available for further assessment.

In addition, the study highlighted an area of just under 1,300ha within Elitheni's mining rights area which contains 31.4 million tonnes of coal that washes to economical yields to deliver an exportable quality coal capable of servicing a variety of markets.

On 30 September 2010 the Company was able to announce that it has received the logistics study on the transporting of coal from Elitheni's mine to the port infrastructure in the Eastern Cape. This logistics study, which has been prepared by Ports of Africa ("PoA"), represented a further step towards completing the bankable feasibility study into the export of coal from Elitheni's mine. The logistics study comprised an assessment of the road, rail and port infrastructure in the Eastern Cape, including simulation modelling of the entire system and proposals regarding technical solutions for materials handling at the mine and the port. PoA confirmed in the logistics study that it is feasible to export coal from Elitheni's mine through the Port of East London in the Eastern Cape.

On 21 October 2010 the Company announced it had received the washability and market application studies which represented the third and final stage of the feasibility study into the export of coal from Elitheni's mine. Having reviewed these studies the Board was able to report on their preliminary findings and Professor Rosemary Falcon, well known for her assessment of South African Coal, had confirmed the suitability of the Elitheni coal for various major markets, both in South Africa and abroad. The suitable markets for Elitheni's coal have now been identified as follows:

·; the PCI (Pulversised Combustion Injection) market, where coal is used in blast furnaces as a pre-reductant in the preparation of iron and steel;

·; export or local use for high value products in the metallurgical industries. The washed finer material from Elitheni can be used as a possible replacement for coke, char and petcoke;

·; export to countries such as Turkey, where coal is used in the domestic heating market;

·; export to countries such as India where coal is often used for power generation or blended with other coals other than coke; and

·; local use for power and/or heat generation.

The washability and market application studies did however show that the Elitheni's coal is precluded from coke blending and would not be suitable for existing Eskom boilers. However they did show that Elitheni's coal would be suitable for fluidised bed boilers.

Black Economic Empowerment ("BEE")

Recently we were very pleased to announce the conclusion of our BEE deal in South Africa. Elitheni has concluded the consolidation of the BEE arrangements through contracting with Mr. Stone Sizani (who is currently a Member of Parliament in the South African Government) and Rapitrade 644 (Pty) Ltd ("Rapitrade"). Under the terms of a share purchase agreement, the Company will re-sell the remaining 22% formerly held by Mr Msutu and Vuwa to Rapitrade who will therefore acquire 22% of Elitheni for the sum of ZAR 22,000,000 (approximately £2m) which will substantially repay the loan outstanding at 31 August 2010. As part of the terms of Rapitrade's involvement as a BEE partner in Elitheni, Rapitrade has agreed to purchase 10,000,000 new ordinary shares of 1 pence each in SNR at a price of 13p per share resulting in a further £1.3m being raised by the Company

.

This transaction with Rapitrade and Mr Sizani introduces additional funds into the Company which will be used to further the export bankable feasibility study, undertake exploratory drilling on Phase 5 at Elitheni and allow progress in supply of steam to the local industrial boiler market. In addition, through the collaborative efforts of Mr. Msutu (Director of Elitheni for Stakeholder Management and Sustainable Development) and Mr. Sizani, the Company believes it is well positioned to engage with various levels of Government in support of the enormous socio-economic potential this project will offer to an impoverished part of South Africa.

Summary of results for the six months to 31 August 2010

The Company made a loss of £470,000 during the six months, compared with a loss of £137,000 for the six months ended 31 August 2009. The increase in the Company's loss can be attributed to three main factors: (i) the continued strengthening of the Rand, which has resulted in the Company recording exchange gains which have however been lower than in the comparable period last year; (ii) operational expenses increasing in South Africa, primarily due to the extra drilling done in 2010 in order to serve as a key input to the export feasibility study; and (iii) actual feasibility costs have increased with a number of key new appointments in our operating subsidiary for management of the Elitheni mine as it enters into production. In additional, interest income has fallen due to lower interest rates.

Changes to the Board

On 21 October 2010, due to an increasing conflict of interest between SNR and IPSA Group PLC ("IPSA"), a company of which Peter Earl is CEO, Peter Earl, a non-executive director of the Company, left the Board. On 1 November, Elizabeth Shaw resigned as the Company's Finance Director and left the Board.

I would like to thank Peter Earl and Elizabeth Shaw for all their support for the Company during their time as directors of the Company.

On 2 November 2010 Edward Cox succeeded Elizabeth Shaw as the Company's Finance Director and was also appointed SNR's Company Secretary.

Outlook and prospects

In my report accompanying the final results for the year to 28 February 2010, I commented on the "delays in developing the Independent Power Producer ("IPP") market" in South Africa and we believe this continues to be the case, as indicated by the release of the Integrated Resource Plan 2010 ("IRP") in South Africa. However, SNR remains confident in the advantages that the Eastern Cape coalfield represents for power generation in the Eastern and Western Cape, specifically given the instability of the grid and transmission losses Eskom experiences in transmitting power into these areas. The Company does not believe that an IPP developer will be able to implement a mine mouth IPP at Elitheni in the short term, given delays in introducing IPP power to the country. As such, the Company remains committed to the replacement of shorter term coal production to the local and export markets.

In addition to the results of the Company's recent export feasibility work, the Company remains committed to the supply of coal to the local industrial steam market in South Africa. During the period SNR acquired a 26% stake in a local engineering special purpose vehicle, Allied Coal Engineering (Pty) Ltd ("ACE"), with no obligation to invest any capital. ACE had developed burners which are suitable for smaller industrial boilers, capable of producing less than four tonnes of steam per hour. Given the current interest in this type of boiler in South Africa and our ability to supply far larger industrial boilers, the Company, through its association with Thermax, is pursuing larger industrial steam users for whom larger fluidised bed boilers prove economically viable.

A major focus during the second half of the year will be to undertake a review of the alternative transport proposals in relation to exporting Elitheni's coal, through further discussion with Transnet Freight Rail ("TFR") and Transnet National Port Authority ("TNPA") to define access rights and design of the rail system and tenure at the Port of East London. Completion of the full bankable export feasibility study is contingent on the delivery of these reports and the conclusion of agreements with both TFR and TNPA regarding pricing and delivery of the necessary rail and port upgrades. I look forward to reporting on progress with regard to the logistics chain, in particular, since this is the challenge to unlocking the significant export potential.

We have received numerous enquiries from prospective purchasers of Elitheni's coal and the Company is in advanced discussion with several international traders, power developers and coal brokering companies. We will be looking to secure future commitments in the form of coal offtake agreements, investment at the Elitheni mine and investment in the Port of East London. In this regard, the Company will be entering into key marketing relationships for the off-take of this coal and will announce progress in due course.

We therefore believe that we can look forward to a very exciting second half of the financial year and beyond.

R. H. R. Latham

Chairman

Date: 17 November 2010

STRATEGIC NATURAL RESOURCES PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

for the half year ended 31 August 2010

(expressed in thousands of pounds)

STRATEGIC NATURAL RESOURCES PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)

at 31 August 2010

(expressed in thousands of pounds)

STRATEGIC NATURAL RESOURCES PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

for the half year ended 31 August 2010

(expressed in thousands of pounds)

STRATEGIC NATURAL RESOURCES PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (unaudited)

for the half year ended 31 August 2010

(expressed in thousands of pounds)

STRATEGIC NATURAL RESOURCES PLC

NOTES TO THE INTERIM STATEMENT

for the half year ended 31 August 2010

1. Basis of preparation

These un-audited condensed consolidated interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the year ended 28 February 2010 were derived from the Statutory Accounts for that year and were approved on the 7 July 2010. These accounts which contained an unqualified audit under section 495 of the Companies Act 2006 and which did not make any statements under section 498 (2) or (3) of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006. The financial information contained in this interim statement has been prepared in accordance with all relevant International Financial Reporting Standards ('IFRS') in force and is expected to apply to the Group's results for the year ending 28 February 2011 and on interpretations of those Standards released to date.

2. Accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies set out in the Group's financial statements for the year ended 28 February 2010.

As set out in the 28 February 2010 Statutory Accounts, Revenue is recognised upon the performance of services and delivery of goods or transfer of risk to the customer. The coal extracted to date has been used for test marketing. In the interim financial statements to 31 August 2009, the income from test marketing was credited to Revenues in the income statement. It was subsequently decided that it would be more appropriate, given that the income arose from test marketing, that the income be credited to the Intangible Asset. Accordingly, no Revenues have been recognised in the income statement in the year to 28 February 2010 or in these interim financial statements.

3. Loss per share

The basic and diluted Loss per share has been calculated by dividing the result for the respective period attributable to shareholders by the weighted average number of shares in issue during the relevant period.

5. Loan note

The loan note represents the instrument under which the deferred consideration arising on the sale of the Group's 26% interest in Elitheni Coal (Pty.) Ltd is secured. The loan note comprises two loan notes:

a) Payable on demand (initially payable by 12 December 2008) - £3.3m. Interest is payable at 6 month LIBOR plus 2.25%. This loan note is secured on 21% of the share capital of Elitheni.

b) Payable on demand - £0.9m. Interest is payable at 12 month LIBOR plus 2.25%. This loan note is secured on 5% of the share capital of Elitheni.

The balance owing at 31 August 2010 in respect of accrued interest amounts to £466,000.

As explained in the Statutory Accounts for the year ended 28 February 2010, the directors have made a 50% provision against the amount owing on the loan notes and the accrued interest. The directors consider this level of provision remains appropriate.

In 16 March 2010, the Company issued 19,165,000 ordinary 1p shares for cash at 15p per share.

7. Investment

The investment represents Elitheni's 26% interest in Allied Coal Engineering (Pty.) Ltd (ACE), a company incorporated in South Africa. The investment is stated at cost of £nil. The shares were allotted to Elitheni in recognition of the Company granting ACE exclusivity for the supply of boilers for smaller installations. Unquoted investments are initially recognised using cost as the best evidence of fair value. In the absence of an active market for these securities the Directors have considered the value of this investment in respect of the exclusivity it provides. As at the date of this interim statement the Directors do not consider there to be a material change in the fair value of the investment given that the investee company is at an early stage of development.

8. Reconciliation of profit before tax to cash generated from operations

9. The Board of directors approved this interim statement on 17 November 2010. This interim statement has not been audited.

10. Copies of this statement are being sent to all shareholders. Otherwise, shareholders will be able to download a copy of the interim report from the Group's website www.snrplc.co.uk

Copies may also be obtained from the Company's registered office - Suite 4, Claridge House, 32 Davies Street, London WIK 4ND.