Coal Production Update

Beacon Hill Resources plc / Ticker: BHR / Index: AIM / Sector: Mining

25 February 2011

Beacon Hill Resources Plc ('Beacon Hill' or 'the Group')

Update on Operations at Minas Moatize Coal Mine, Mozambique

Beacon Hill Resources Plc (AIM: BHR), the AIM listed resource company, is pleased to announce an update on progress at the Minas Moatize coal mine in the Tete Province of Mozambique. 

Overview

·; Completion of exploration programme to expand and further define the current 33Mt resource, facilitate mine design and enable finalisation of the coal handling and preparation plant ('CHPP') design:

o Drilling campaign now completed and testing of coal substantially finalised

o Initial results confirmed and a revised resource to be announced shortly

o Finalisation of mine design to commence and contractors to be appointed shortly

·; Production continues from underground mine for sale into domestic markets and stockpiling ahead of first export shipments. Pre-stripping of the initial open pit is nearing completion with coal production planned to commence in March. Production from the open pit will average at 15,000 tonnes ROM per month

·; Expansion of open pit mine continues as planned with expanded production of up to 4Mtpa Run on Mine ('ROM') commencing in Q1 2012

·; Strong progress continues to be made regarding logistics - facilities secured at the Port of Beira, negotiations progressing for rail tariff and access agreement on Sena rail line, and the Group remains on course to make its maiden export of coal this year

Beacon Hill Executive Chairman Justin Lewis said, "We continue to make excellent progress with the development and expansion of the Minas Moatize coal mine. The results from our drilling and testing programme continue to demonstrate the potential to significantly increase the current resource, and as such, we look forward to announcing an updated SAMREC resource in the coming weeks.

"In conjunction with the exploration programme, the Group remain focussed on establishing a large open pit mine capable of producing 2.35Mtpa of saleable coal, of which circa 30% will be coking coal. With the continued strength in coal prices, the economics of the overall project continue to strengthen and we look forward to significantly increasing our revenues on the back of our expanded production.

"Our first export sales are now within sight and we continue to make strong progress in regard to securing a solid logistics chain for continued export from the Port of Beira. We have a first mover advantage in Mozambique, being the only group to currently produce coal from the Tete Province, and this has provided us with ready access to this logistics framework."

Exploration Programme

Minas Moatize Limitada, the Group's wholly owned operating subsidiary has completed the drilling programme of over 32 holes across the licence area. The objective of this drilling programme was to expand and further define the current 33 million tonne resource, in addition to enabling mine design and the finalisation of the CHPP design.

Testing of all the core samples produced by the drilling programme has now been substantially completed by ALS Limited in South Africa. Further tests are currently being undertaken before additional coking tests are undertaken in Australia over the next few months. The Group is in the final stages of analysing the results which remain in line with, or better, that the preliminary results announced in November 2010.

Following the drilling and testing of the cores the Group is currently finalising an upgrade to its geological models which will lead to a new SAMREC resource being finalised in the next few weeks.

Current Production and development

Production continues from the underground mine, and stripping of the initial open pit has taken place in anticipation of the commissioning of the temporary washplant. Commissioning of the washplant and stripping of the initial open pit has been slightly delayed by the severe wet season over Christmas, but the Group anticipates commissioning taking place in the next few weeks. Once in production, the washplant will be able to produce small quantities of both coking and thermal coal for export, as well as domestic coal for sale at the mine gate. Production from the initial open pit is planned to commence in March producing and additional average 15,000 tonnes ROM per month.

Minas Moatize continues to work towards the commencement of production from the main open pit mine from January 2012, ramping production up to ROM 4Mtpa by early 2013. The Group is in the final stages of appointing contractors to undertake the mine design and CHPP design and will make a further announcement shortly.

Logistics

With assistance from both the government and other stakeholders, the Group has been continuing to develop it options to get its coal to export markets. In the last few months good progress has been made on all areas of the logistics chain, in particular at the Port of Beira where the Group has secured covered warehouse space to stockpile its coal and intends to enter into a partnership with a local logistics partner. In addition, Minas Moatize is finalising a rail tariff and access agreement with CCFB, the concessionaire of the Sena railway line. These developments give the Group confidence that the first export shipment of coal will be made by the end of the first half of this calendar year.

**ENDS**

For further information on the Group, visit www.bhrplc.com or contact:

Notes

Beacon Hill Resources Plc (AIM: BHR) is an AIM listed resource company focussed on the acquisition and development of assets in commodities relating to the steel production industry. The Group currently has two primary assets - the Minas Moatize Coal Mine in Tete, Mozambique and Tasmania Magnesite NL in Tasmania.