Quarterly Activities Report

31 July 2012

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

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

Quarterly Activities Report for the period ended 30 June 2012

HIGHLIGHTS

Minas Moatize Mine

n Commencement of mining from the Upper Chipanga Pit with an initial 98,000 tonnes of ROM coal mined in the latter half of the quarter - first shipment to Global Coke targeted for August 2012

n Acceleration of Phase II Expansion to commence in August 2012. Phase II Expansion will enable a threefold increase in plant feed capacity to 1.8Mtpa ROM coal and will support the production of hard coking coal at a higher and consistent yield

n Optimisation work continued for Phase III of Minas Moatize Expansion throughout the quarter, which is aimed at increasing production to 4Mtpa ROM coal

n Optimisation work included a drilling and sampling programme recommended in the DFS that has been completed with testing and analysis being conducted for:

- Washability, liberation and flotation testing to optimise the design of the Phase III CHPP;

- Upgrading the Minas Moatize JORC Coal Resource and Reserve;

- Geotechnical investigations to optimise the pit design and foundation design for Phase III CHPP.

Arthur River Magnesite Project

n Completion of a Preliminary Scoping Study in May 2012 - financial modelling demonstrates a Net Present Value ('NPV') of A$42M based on a 292,000 dry tonne per annum ('dtpa') ROM operation producing on average 100,000dtpa of calcined magnesite with an average grade of 95% MgO.

n Positive results of the Scoping Study provide a strong platform to move the project forward and towards securing a joint-venture partner to fund the development of the project.

Changara Coal Project

n First phase drilling programme of a planned 17 holes has commenced at Changara.

n Initial five exploratory drill holes have been completed to a shallow depth of up to 200m across the 184km2 licence area

n All drill holes have identified sandstone, believed to be the Matinde formation, which is known to typically sit above the coal zones within the Moatize Formation of the Lower Karoo, the geological formation seen within the coal bearing region of Tete Province, Mozambique

Corporate

n Listed on the Australian Securities Exchange ('ASX')

n Appointment of Non-Executive Director and Coal Processing Specialist

n Issue of £3.4m in unsecured loan notes in July 2012

Justin Lewis, Chairman of Beacon Hill, commented:

 "The Group commenced mining from the Upper Chipanga Pit this past quarter, mining at a rate of approximately 32,000 tonnes ROM coal per month, and we intend to make our first shipment to Global Coke, one of our off-take partners in August.

"In addition to the ongoing mining operation, Beacon Hill has focussed on the expansion of the Minas Moatize Mine. The completion of the drilling programme and the current test work being undertaken will facilitate and progress the optimisation and the design of the Phase III CHPP and the overall pit design. The recent commencement of Phase II of the Minas Moatize Expansion is expected to result in ROM feed capacity of the plant tripling to 1.8Mtpa.

"Completion of the Phase II expansion in 2012 will see the Minas Moatize Mine able to operate as a profitable and cash flow positive operation in 2013 utilising only a trucking transport solution and without the requirement for any further significant capital expenditure.

MINAS MOATIZE

Minas Moatize Expansion

The Minas Moatize Expansion is being undertaken in three phases:

*Rail will be used when available. Existing trucking operation will be sufficient to transport Phase II production

Throughout the quarter optimisation work continued for Phase III of the Minas Moatize Expansion, which is aimed at increasing production to 4Mtpa ROM, producing on average 2.2Mtpa of saleable coking and thermal coal for the life of mine. Optimisation work included a drilling programme that was recommended in the Definitive Feasibility Study ('DFS'). The drilling programme included 19 holes and the core samples from this drilling programme have been forwarded to laboratories for:

a) Washability, liberation and flotation testing to optimise the design of the Phase III CHPP

b) Upgrading the Minas Moatize JORC Coal Resources and Reserve

c) Geotechnical investigations to optimise the pit design and the foundation design for the Phase III CHPP.

Phase II Expansion

The Board has decided to advance the commencement of Phase II of the Minas Moatize Expansion involving the immediate upgrade and expansion of the existing wash plant. The 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. The plant upgrade will also result in the plant processing capacity increasing threefold from 600,000tpa ROM Coal to 1.8Mtpa ROM Coal.

The upgrade is estimated to cost US$5 million and is targeted to be completed by the end of 2012. Completion of Phase II Expansion should see the Minas Moatize Mine able to operate as a profitable operation from the beginning of 2013, based upon a trucking logistics solution and without any further significant capital cost expenditure.

Production

Operations during the June quarter were focused on mining from the Upper Chipanga Pit where the Group continued to expand production mining approximately 98,000 tonnes ROM coal producing approximately 15,000 tonnes of saleable coal from the mine's existing wash plant ('Phase I CHPP').

Whilst the existing Phase I CHPP will continue to operate for the balance of 2012, the capacity of the plant and the Group's existing operation will be impacted by the planned upgrade works. The Group anticipates that total coal production will be approximately 80,000 tonnes for 2012, of which 20,000 tonnes will be coking coal and 60,000 tonnes thermal coal.

Global Coke, an offtake partner of Minas Moatize, has nominated to receive their first shipment of coal from Minas Moatize in Q3 2012. The Group is well advanced in the production and transport of this coal to the port of Beira to meet this shipment.

*Prior period adjusted for high ash low grade coal

Following completion of the Phase II plant upgrade, the plant capacity will increase allowing the Group to produce approximately 400,000 tonnes of coal in 2013, of which 200,000 tonnes is estimated to be coking coal.

Coking coal production is targeted to increase to at least 300,000 tonnes out of a total production of at least 500,000 tonnes in 2014 before any rail allocation and Phase III Expansion. The Group considers that this level of production could be maintained on an ongoing basis, utilising only a trucking transport solution, and requiring only minor additional capital expenditure funded from internal resources.

Phase III Expansion

The Board remains committed to Phase III of the Minas Moatize Expansion. The commencement of Phase III is targeted for H2 2014, however Phase III will be subject to key milestones being achieved including a rail allocation, finalisation of the design of the Phase III CHPP and securing the required financing.

ARTHUR RIVER MAGNESITE PROJECT

In May 2012, Beacon Hill announced the results of the Preliminary Scoping Study for the Arthur River Magnesite Project. The Scoping Study has confirmed that the project has robust financial potential with an NPV of A$42 million based on a 292,000 dtpa ROM operation producing on average 100,000dtpa of calcined magnesia with an average grade of 95% MgO. The Scoping Study results provide a strong platform to move the project forward and towards and securing a joint venture ('JV') and / or off-take partner to fund the development of the Project. The Group has commenced discussions with potential off-take and JV partners and these discussions are progressing well.

CHANGARA COAL PROJECT

The first phase drilling programme of a planned 17 holes has commenced at Changara. An initial 5 exploratory drill holes have been completed using an air flush percussion method to a shallow depth of up to 200 m across the 184 km2 licence area. All the holes were completed by the 25th of July. All drill holes have identified sandstone, believed to be the Matinde formation, which is known to typically sit above the coal zones within the Moatize Formation of the Lower Karoo, the geological formation seen within the coal bearing region of Tete Province, Mozambique. These initial shallow holes, whilst very widely spaced across a large area give early guidance as to the geological structure present in the area and provide the basis for further drilling below the sandstone. The next stage is for further holes to be drilled deeper using a larger PCD-enabled drill rig, able to drill to up to 750m, to determine the presence and depth of coal below the sandstone identified, in the Lower Karoo Formation.

CORPORATE

Board & Management Appointment

In July 2012, the Board appointed Justin Farr-Jones, a Director of Renaissance Partners Limited, as a Non-Executive Director. Mr Farr-Jones' appointment reflects Renaissance Partners' ongoing support and long term commitment as a shareholder of the Company.

Nathan Culkin was additionally appointed in July 2012 as General Manager Coal Processing and Quality at Minas Moatize to oversee the day to day operations and development of the mine processing and coal quality functions at the Minas Moatize Coal Mine and at the Group's coal loading facility at the port of Beira.

ASX Listing

Beacon Hill commenced official quotation on the ASX in April 2012. CDIs currently trade on the ASX under the code 'BHU' and each CDI represents two fully paid ordinary shares in the capital of the Group.

Share Capital

Beacon Hill has 1,051,442,137 ordinary shares, 19,770,000 warrants, 59,337,084 options.

Cash Position

Beacon Hill's cash position as at 30 June 2012 was approximately £3.2m.

**ENDS**

GLOSSARY

NOTES

Beacon Hill Resources

Beacon Hill Resources Plc is focused on building a portfolio of near-term production projects in commodities relating to the steel production industry. Beacon Hill is dual listed on the AIM market of the London Stock Exchange (Code: BHR) and the Australian Securities Exchange (Code: BHU).

Beacon Hill has three projects:

1. Minas Moatize Project, Mozambique

2. Changara Coal Project, Mozambique

3. Arthur River Magnesite Project, Australia

Minas Moatize Project

Beacon Hill, through its subsidiary Minas Moatize Limitada, owns and operates the Minas Moatize Coal Mine, which is one of three operating coal mines producing and selling coal in the Tete Province of Mozambique.

In February 2012, Beacon Hill published the DFS for the Minas Moatize Expansion, which demonstrated strong economics for the project. Financial modelling, based on a 4Mtpa ROM operation producing on average 2.2Mtpa of saleable coking and thermal coal using a 13% discount rate, demonstrates a pre-tax NPV13 of US$662 million and a post-tax NPV13 of US$428 million.

The Minas Moatize Expansion is being undertaken in three phases:

*Rail will be used when available. Existing trucking operation will be sufficient to transport Phase II production

Changara Coal Project

Beacon Hill acquired majority ownership in a joint venture to explore and develop the Changara Coal Project in the Tete Province of Mozambique in December 2011. The Changara Coal Project covers a licence area of 184km2, which is 70 times the size of Minas Moatize. The project is located in the heart of the highly prospective coking coal basin of the Songo Area of the Tete Province.

The joint venture is a further step in Beacon Hill's wider expansion strategy in the globally significant coking coal region of Tete and will provide the Group with an opportunity to invest in a longer term development project that has the potential to considerably enhance its resource base.

Arthur River Magnesite Project

Beacon Hill has recently completed the Preliminary Scoping Study for the Arthur River Magnesite Project in Tasmania, Australia. The Study has indicated that the Project has robust financial potential and provides a strong platform to move forward towards a full Feasibility Study and securing a joint venture ('JV') and / or off-take partner to fund the development of the Project.

Financial modelling, using a discount rate of 10% (real), demonstrates a pre-tax NPV of A$42 million based on a mine life of 17 years and a 292,000dtpa ROM operation producing on average 100,000tpa of calcined magnesia.

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

Competent Persons Statement

The Competent Person for reporting of coal resources, Peet Meyer of PC Meyer Consulting Pty Limited, who is a member of the Geological Society of South Africa (GSSA) and the Fossil Fuel Foundation. Peet Meyer has more than 21 years' experience in the southern African coal industry of which he has spent more than 5 years in the Mozambique Coalfields. He has the appropriate relevant qualifications and experience to be considered as a Competent Person as defined in the Standards on Mineral Resources and Reserves - Definitions and Guidelines (2004).

The Competent Person for reporting of coal reserves, Mr. Simon Griffiths, who is a Member of The Australian Institute of Mining and Metallurgy (AusIMM) and Society for Mining, Metallurgy, and Exploration, Inc. (SME) has sufficient experience which is relevant to the style and mineralisation and type of deposit under consideration and the activity to which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

The Coal Resources and Reserves are reported in compliance with the guidance as defined in Appendix 5A of the ASX Listing Rules being the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the JORC Code), 2004 Edition.

Mr Meyer and Mr Griffiths have consented to being named as the authors of the Resource and Reserve Statements respectively in this announcement.

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.