Issue of Convertible Loan Notes

7 November 2012

Beacon Hill Resources Plc / AIM: BHR / ASX: BHU / Sector: Mining

Beacon Hill Resources Plc ("Beacon Hill" or "the Company")

Issue of Unsecured Convertible Loan Notes

Highlights

·; Issue of approximately £3m in unsecured convertible loan notes.

·; This financing, along with the recent issue of equity to contractors, strengthens the Company's balance sheet and results in the Company being funded through to the completion of the Phase II wash plant upgrade.

·; Formal discussions with mandated lending bank to provide new secured loan facilities ongoing.

·; The Phase II wash plant upgrade remains on schedule for completion in December 2012. The plant is currently undergoing cold commissioning at the fabrication plant in Witbank, South Africa, during which all major components of the plant are being tested.

·; Formal negotiations with respect to attaining an allocation on the Sena Line are progressing well and the Board remains confident of obtaining a formal allocation on the line towards the end of 2012.

Rowan Karstel, Managing Director of Beacon Hill comment, "We continue to progress discussions with lenders in order to support our working capital and future funding requirements. In the meantime, I am pleased to announce the issue of convertible loan notes, which together with the recent issue of equity to our contractors, means that Beacon Hill is funded through to the completion of the wash plant upgrade, which remains on schedule for completion in December 2012."

Unsecured Convertible Loan Notes

The Board is pleased to announce that it has entered into subscription letters ("Subscription Letters") with two lenders, the Latitude Zero Financial Investment Fund ("Latitude") and Global Au Mining Pte Ltd ("Global") (together the "Lenders"), to secure funding of approximately £3m (approximately US$4.8m) through the placement of unsecured convertible loan notes (the "Loan Notes"). This financing, along with the recent issue of equity to contractors, as announced on 18 October 2012, strengthens the Company's balance sheet through to the completion of the Phase II washplant upgrade.

Pursuant to the Subscription Letters, the Lenders have each irrevocably undertaken to enter into a Loan Note Instrument setting out the terms of the Loan Notes, with the Company and its wholly owned subsidiary, BHR Investments Mauritius Limited("BHRIM") (the "Loan Note Instrument").

1. Lender 1 - Latitude: Pursuant to its Loan Note Instrument, Latitude will provide BHRIM with a maximum amount of US$4m in two tranches of US$2m ("First Tranche" and "Second Tranche" respectively). The First Tranche will be provided to BHRIM on entering into the Loan Note Instrument (and therefore the Loan Notes in this amount would be issued then) with the Second Tranche being provided on or after 1 December 2012 at BHRIM's request (and therefore the Loan Notes in this amount would be issued then).

2. Lender 2 - Global: Upon entering into the Loan Note Instrument, Global will provide BHRIM with £500,000 prior to 31 December 2012 (and therefore the Loan Notes in this amount would be issued then).

The Loan Notes are convertible into ordinary shares of Beacon Hill at 4.0 pence per share, mature on 30 June 2015 and pay a coupon of 10% + LIBOR per annum on a quarterly basis. Further details of the Loan Notes are provided in the Appendix to this announcement.

In conjunction with the issue of the Loan Notes, the Company has granted warrants to the lenders:

1. Latitude: The Company will grant Latitude 1,500,000 warrants at an exercise price of 4.0 pence exercisable at any time before 30 June 2015, upon the First Tranche being provided. A further 1,500,000 warrants will be granted to Latitude if and when the Second Tranche is provided and on the same terms as the first set of warrants.

2. Global: The Company will grant Global 625,000 warrants to Global at an exercise price of 4.0 pence exercisable any time before 30 June 2015, upon Global providing the £500,000 pursuant to its Loan Note Instrument.

Bank Funding

As announced on 18 October 2012, the Company continues to have formal discussions with a leading bank that has been mandated to provide new secured loan facilities on the basis of an agreed term sheet. Once agreed, these new facilities will provide additional working capital funding to the Company and will also be used to repay in advance the existing secured loan with Vitol Coal S.A. The funding provided pursuant to the Loan Notes results in the Company not being reliant on these bank facilities this year through to the completion of the Phase II wash plant upgrade.

Minas Moatize Project Update

Wash Plant Upgrade

The Phase II wash plant upgrade is on schedule and remains on track to be completed in December 2012. The plant is currently undergoing cold commissioning at the fabrication plant in Witbank, South Africa, whereby all the major components of the plant are being tested. Following cold commissioning, the plant will be dismantled and transported to site in Tete, where it will be constructed and fully commissioned prior to full production.

The wash plant upgrade is designed to increase the recovery of coking coal by further liberating the coking coal fraction and to enhance recovery of the high coking quality fines. In addition, the plant upgrade will result in the plant processing capacity increasing threefold from 600,000tpa ROM Coal to 1.8Mtpa ROM Coal.

The current wash plant operations at site have now been suspended in order to allow the contractors to progress the ground work, civil engineering and other preparation work for the new wash plant components.

Beacon Hill plans to commence operations from the upgraded Phase II wash plant in late December and to ramp up plant feed throughout the first quarter of 2013. An initial coking coal shipment is currently targeted to take place towards the end of Q1 2013.

Logistics

Beacon Hill continues to have formal negotiations with respect to obtaining an allocation on the Sena Line. These negotiations are progressing well and the Board remains confident of obtaining a formal allocation on the line towards the end of 2012.

Port of Beira

As previously announced, Beacon Hill currently has approximately 20,000 tonnes of coal stockpiled at the Port of Beira in readiness for a shipment. The specific details of this shipment are being finalised and the Board will issue an announcement to the market once this shipment takes place.

**ENDS**

Appendix

Key Terms of the Unsecured Convertible Loan Notes