Marketing Partnership with Vitol Coal

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

19 March 2012

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

Marketing Partnership with Vitol Coal

Beacon Hill Resources Plc, the Mozambican coal producer, is pleased to announce that it has entered into a strategic marketing partnership with Vitol Coal S.A. ('Vitol'), part of the Vitol Group, the world's largest energy trading company. 

Highlights

·; The parties have entered into a Coal Marketing Agreement whereby Vitol will act as agent to market export coal produced by Beacon Hill's Minas Moatize Mine

·; Beacon Hill will utilise Vitol's global coal marketing network - the Vitol Group trades worldwide in excess of 25 million tonnes of coking and thermal coal and had turnover of US$297 billion in 2011

·; Beacon Hill will continue to market and sell export coal to Global Coke, which will continue to be offered up to 600,000 tonnes per annum of coking coal for the life of the Minas Moatize Mine

·; Vitol will advance to Beacon Hill a secured debt facility of up to US$20 million. Beacon Hill will be able to utilise the funds for capital expenditure, general corporate and working capital purposes

Justin Lewis, Chairman of Beacon Hill commented, "This strategic marketing partnership with Vitol provides Beacon Hill with direct access to one of the largest coal marketing and trading networks globally which is an important development for the Group. Importantly, this milestone relationship provides Beacon Hill with an optimum route to market for our coal products, as well as enabling us to meet our existing commitments under our off-take agreement with Global Coke. 

"In addition to benefitting from Vitol's global coal marketing expertise, we also have the advantage of an injection of funding which will assist the Company with current and future funding requirements as we increase our presence in the globally significant coking coal region of Tete."

Bob Finch, Head of Coal at Vitol added, "We are delighted to have entered into this partnership with Beacon Hill, which has allowed us to have a presence in the Moatize Basin of Mozambique, which we consider to be one of the world's most significant undeveloped coking coal regions. Coal trading has become an increasingly important part of the Vitol Group's trading portfolio and this partnership makes an important contribution to our growth."

Coal Marketing Agreement and US$20 Million Debt Facility

BHR Coal Mauritius Limited ('BHRC'), a wholly owned subsidiary of Beacon Hill, has entered into a Coal Marketing Agreement with Vitol. Pursuant to the agreement, BHRC will appoint Vitol as its exclusive agent to manage the marketing and sale of the export coal produced from the Minas Moatize mine. 

The initial term of the agreement is for four years, with Vitol having an option to extend the agreement for a further four years. Beacon Hill will continue to market and sell coal produced by the Minas Moatize directly to the African domestic (non-seaborne) market. Global Minerals & Metals Limited, a subsidiary of Global Coke Limited, will continue to be offered up to 600,000 tonnes per annum of coking coal for the life of the mine.

A change of control clause has been included in the agreement, which will provide either party with the right to terminate the agreement in the event of a change of control of Beacon Hill or the Minas Moatize Mine, subject to a termination payment being paid by BHRC.

In connection with the Coal Marketing Agreement, Vitol will advance to BHRC and BHR Mining Mauritius Ltd (a wholly owned subsidiary of Beacon Hill), a secured debt facility of up to US$20M in two tranches of US$10M. The first tranche will be available upon finalisation of security documentation, which is expected shortly, and the second tranche is available upon satisfaction of certain conditions to the lenders satisfaction. The facility may be utilised for capital expenditure, general corporate and working capital purposes. The facility will be repayable by 31 December 2016 and the facility is subject to minimum amortization milestones. Vitol may require repayment of the loan if there is a change of control of Beacon Hill or the Minas Moatize Mine or if the Coal Marketing Agreement is terminated. 

**ENDS**

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Notes

Beacon Hill Resources Plc is an AIM-listed resource company that is focused on building a portfolio of near-term production projects in commodities relating to the steel production industry. 

Beacon Hill owns and operates one of only two operating coal mines producing, selling and exporting coal in the Moatize Coal Basin of Mozambique. In addition, the Group has entered into a JV to develop a further coal tenement in Mozambique and holds licences over a significant magnesite deposit in Australia.

More details on Beacon Hill can be found at www.bhrplc.com.

About Vitol

The Vitol Group was founded in 1966 in Rotterdam, the Netherlands. Since then the company has grown significantly to become a major participant in world energy markets and is now the world's largest independent energy trader. Its trading portfolio includes crude oil, oil products, lpg, LNG, natural gas, coal, power, metals and carbon emissions. The Vitol Group trades with all the major national oil companies, the integrated oil majors and the independent refiners and traders. Globally the Vitol Group trades over 5.5 million barrels of crude oil and products per day and revenues in 2011 were $297 billion.

In addition to its trading business and its 50% share in the terminals business, VTTI, with 13 terminals on five continents, the Vitol Group has an exploration and production business that includes interests in Ghana, Cameroon, Kazakhstan, Russia and Azerbaijan. It also currently owns and operates over 100kbd in refining assets and owns a thermal coal mine in British Columbia, Canada.

More details on Vitol can be found on www.vitol.com

Forward Looking Statement

Certain statements made during or in connection with the communication, including, without limitation, those concerning the economic outlook for the coal mining industry, expectations regarding coal prices, production, cash costs and other operating results, growth prospects and the outlook of Beacon Hill operations, its liquidity and the capital resources and expenditure, contain or comprise certain forward-looking statements regarding Company's development and exploration operations, economic performance and financial condition.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes is the regulatory environment and other government actions, fluctuations in coal prices and exchange rates and business and operational risk management. For a discussion of such factors, refer to the Company's most recent annual report and half year report. The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.