Loan agreement update

20 December 2010

Strategic Natural Resources PLC

("Strategic Natural Resources" or the "Company")

Loan agreement update

The Board of Strategic Natural Resources is today updating shareholders with a recent development relating to the loan agreement (the "Loan Agreement") with Ulitorque (Pty) Limited, a company incorporated in South Africa ("Ulitorque").

Background

As disclosed in the Company's 2010 Annual Report and the 31 August 2009 Interim Statements, on 17 June 2009 Elitheni Coal (Pty) Limited, the Company's 74% subsidiary ("Elitheni") entered into a loan agreement with Ulitorque (the "Ulitorque Loan Agreement"). Pursuant to the Ulitorque Loan Agreement, Ulitorque advanced Elitheni ZAR4.5 million (approximately £402,300) for working capital purposes in 2009. Under the terms of the Ulitorque Loan Agreement, Ulitorque were able convert the principal of the loan and accrued interest into a shareholding of 10% in Elitheni (a "Conversion") which could, through an independent valuation, be converted into new shares in the Company. Ulitorque, however, requested repayment of this loan, plus accrued interest, in September 2009 and the Company agreed to make this repayment.

The Company entered into a short term loan agreement with SP Angel Limited ("SP Angel"), pursuant to which SP Angel loaned £300,000 to the Company on 15 March 2010. The Company used this loan from SP Angel, together with its own existing cash resources, to effect repayment of both the principal and accrued interest of the Ulitorque Loan, totalling approximately ZAR4.9 million (approximately £440,000), on 16 March 2010. The Company subsequently repaid the loan from SP Angel from the proceeds of a placing by the Company which was announced on 17 March 2010. At the time of this placing the Company stated that, if for any reason, the Ulitorque Loan repayment was not completed, Conversion may still occur.

Subsequent action by Ulitorque

Subsequently the Company received notice from Ulitorque that, in Ulitorque's opinion, the repayment of all of the outstanding capital and accrued interest did not satisfy the repayment conditions set out in the Ulitorque Loan Agreement and that they wished to convert the principal of the Ulitorque loan and accrued interest into a shareholding of 10% in Elitheni. The Directors of Strategic Natural Resources were advised by legal counsel in South Africa that Ulitorque had limited basis for making such a claim because repayment had been made in accordance with their request for repayment and the Directors believed the claim form Ulitorque to be without foundation.

The matter was subsequently put to arbitration in South Africa on 5 October 2010. The Company has now been informed by the arbitrator that he has upheld Ulitorque's claims under the Ulitorque Loan Agreement.

The Company is currently studying the arbitrator's ruling. Without prejudicing its position the Company is discussing a possible settlement with Ulitorque and further announcements will be made in due course.

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