SNRP.L Regulatory News (SNRP)

Strategic Natural Resources Plc

("SNR" or the "Company")

Potential short-term funding facility and operational update

Potential short term funding facility

SNR, the AIM listed natural resources developer operating in South Africa, today announces that it has been informed by the board of its 74% owned subsidiary, Elitheni Coal (Pty) Limited ("Elitheni"), that Elitheni has been offered a short term funding facility.

Elitheni has agreed a term sheet with its existing black economic empowerment ("BEE") partner and 20% shareholder, Rapidtrade 644 (Pty) Ltd, ("Rapidtrade"), whereby Rapidtrade has agreed to lend Elitheni ZAR15,000,000 (approximately £915,000) (the "Loan"). Details of the Loan are to be finalised but it will bear interest at 1% per month, will be repayable by 12th December 2013 and may be converted by Rapidtrade into a 10% shareholding in Elitheni, to be taken from SNR's 74% equity interest in Elitheni.

The Loan will be subject to Elitheni and SNR entering into an appropriate loan agreement with Rapidtrade. Ahead of such an agreement being entered into Rapidtrade has agreed to advance the funds under the Loan to Elitheni immediately to assist Elitheni's short term funding needs (the "Advance").

The Directors believe that it is encouraging that Rapidtrade, as Elitheni's existing BEE partner has demonstrated its confidence in the business by agreeing to provide a short-term loan facility (subject to contract) which may be converted into an increased equity stake for Rapidtrade in Elitheni.

The board of SNR understands that Stone Sizani, who is a director of Elitheni, also controls Rapidtrade. As a result the Advance constitutes a related party transaction under the AIM Rules for Companies. The directors of SNR, having consulted with the Company's nominated adviser, Allenby Capital Limited, consider the terms of the Advance to be fair and reasonable insofar as the Company's shareholders are concerned.

Entry into the loan agreement by SNR will constitute a related party transaction and a further announcement will be made at the appropriate time.

Operational update

Following the comprehensive operational review announced in March 2013 and a review of options for the development of the coal mine owned and operated by Elitheni (the "Elitheni Mine"), the board of Elitheni has informed SNR that it has decided to cease temporarily its mining operations until long term funding for Elitheni can be secured. As a result, Elitheni has stopped operating the continuous miner at the Elitheni Mine, which has been both problematic and expensive. In line with advice from appropriate mining experts and as soon as suitable long term funding for Elitheni has been secured, the board of Elitheni proposes to recommence mining at the Elitheni Mine, using a less expensive drill and blast mining methodology.

With regard to securing long term funding, the board of SNR has been informed that a South African BEE company with mining expertise is in the midst of undertaking its due diligence process with a view to potentially acquiring an equity stake in Elitheni. In addition, the Board of SNR understands discussions are ongoing with other potential South African investors. In parallel with this, Elitheni is in the process of trying to secure grant funding from a South African government agency.

The Board of Elitheni has informed SNR that it intends to use the period of the cessation of mining operations to source an experienced mining CEO and a new management team for Elitheni and pursue legal action against the washplant manufacturer and other associated parties with regard to their underperformance. When mining operations recommence, it will be with a new mining contractor and different associated mine site service providers and, as referred to above, the mining methodology will be changed to drill and blast.

The Boards of SNR and Elitheni remain confident that the right long term funding solutions will be found that will help facilitate accessing the significant strategic value potential inherent in the Elitheni Mine. They are pleased to have demonstrated that the logistics at the Port of East London and the rail infrastructure were a success for the Company's first shipment and believe that the Company is well positioned logistically when mining operations recommence.

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