Quarterly Report

30 April 2013

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

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

Quarterly Activities Report for the period ended 31 March 2013

and Post Quarter Update

Highlights

·; Successful development of an economically attractive end-to-end logistics solution to transport coking coal produced at the Minas Moatize mine to export markets via the port of Beira:

o Rail: Receipt of 0.5Mtpa capacity allocation on the Sena Line

o Rolling Stock: Lease agreement with Thelo Rolling Stock Leasing Proprietary Limited ('Thelo') for the provision of rolling stock on the Sena Line

·; Commissioning for Phase 2A of the Minas Moatize Coking Coal Plant progressing well with first coking coal production due in Q2 2013

·; Mining Contract signed between the Company and the Government of Mozambique to enhance the stability of the fiscal and regulatory environment for a period of 25 years

·; 31% increase in JORC Resource at Minas Moatize - upgraded to 86.8 Mt (Measured and Indicated of 76.3 Mt) from 66.4 Mt Measured and Indicated

·; Successful placing raising US$21 million from new and existing shareholders to strengthen the Company's balance sheet, upgrade rail infrastructure including rail sidings, commence Phase 2B and 2C wash plant upgrades and for rail rolling stock related and general working capital purposes

·; Strengthening of the Beacon Hill and Minas Moatize executive management team

Rowan Karstel, Chief Executive Officer of Beacon Hill commented, "We are fast approaching first production of coking coal at the Minas Moatize Project and the range of significant achievements made during the period have been instrumental in reaching this exciting milestone. These activities include the receipt of a rail allocation on the Sena Line and the associated leasing finance, the commencement of commissioning for Phase 2A Wash Plant, and the upgrade of our resource at Minas Moatize. These accomplishments, alongside the signing of the Mining Contract with the Government of Mozambique, demonstrate the significant progress we have made over the quarter and having completed a fundraising in excess of US$20m, we are well funded and ideally positioned to build value for shareholders in the future"

Minas Moatize Coking Coal Project

Mining Contract

Following the end of the quarter, on 3 April 2013, Minas Moatize Limitada ('MML'), represented by Chief Executive Officer ('CEO') Rowan Karstel, and the Mozambican Government, represented by Her Excellency the Minister for Mineral Resources, Dra Esperanca Bias, signed a mining contract in Maputo. The initial phase of the mining contract allows the Government a 5% equity stake in MML which aligns the Government's interests with that of the Company. In addition, Mozambiquian national interests can acquire a further 10% stake in MML at fair market price, of which: i.) 5% can be acquired at fair market price by the Mozambique Sovereign Fund, EMEM; and ii.) the Mozambique Government can exercise its option to acquire a 5% stake in MML at fair market price for the purposes of listing on the Mozambique Stock Exchange.

The signing represents a significant milestone in the process of stabilising the fiscal and legal framework of MML by providing the following advantages:

·; Security of tenure through this 25 year contract and a predictable long term legal framework of investment;

·; The ability to transfer the attained contractual position to third parties;

·; The granting of fiscal incentives and exemption from custom duties; and

·; The ability to employ sufficient skilled foreign professionals required to implement planned development and, if required, hire international contractors for the term of the contract.

Production

Mining and processing operations were suspended throughout the quarter to accommodate the access and preparation required to commence the Phase 2A 1.8 Mt ROM wash plant upgrade.

Wash Plant Upgrade

The Minas Moatize Phase 2A wash plant upgrade continued through the quarter and commissioning of the plant recently commenced. The plant, which was fabricated and designed in South Africa and transported to Tete in Mozambique, was re-designed in November 2012 to be more capital efficient which resulted in capital expenditure savings of 80%. This meant construction was phased in order to coincide with the arrival of the rolling stock and assist with the spreading of the risk and the impact on the Company's cash flow and the balance sheet. In particular, the plant design took into account the consultants' collective experience from Vale and Rio Tinto's wash plants with regards to maximising the coke fraction in the fine coal. Procurement of the Reflux Classifier and later of the Flotation cells (Phase 2B and 2C) will ensure that the coking coal yield is fully optimised.

The electrical commissioning of the wash plant has recently commenced and will be followed by the water and medium circuit commissioning and hot commissioning. The expected plant feed will be c.30-40,000 tons during the initial phase. The design and procurement of the process plant Phase 2B and 2C is still on track and commissioning of 2B will start during Q4 of 2013.

Logistics:

Rail

In February 2013, Minas Moatize entered into an Interim Rail Access Agreement with Portos e Caminhos de Ferro de Moçambique E.P. ('CFM') in which MML has received a capacity allocation of 0.5Mtpa on the Sena Line commencing in April 2013. The key terms of the arrangement include:

·; MML is granted line access by CFM for a capacity of 0.5Mtpa;

·; In conjunction with the line access MML will pay CFM a monthly line access fee;

·; The Interim Rail Access Agreement will automatically renew itself each year until MML and CFM enter into a long term take or pay agreement;

·; MML shall initially operate two train sets each consisting of two locomotives with 42 wagons (each wagon of up to 63 tonnes load capacity)

Rolling Stock

In conjunction with the rail allocation, MML signed a lease agreement with Thelo in January 2013, for the provision of rolling stock on the Sena Line in Mozambique. The key terms of the agreement include:

·; Thelo will lease to MML five Grindrod RL30SCC-3 'as new' locomotives for a term of 10 years;

·; Thelo will also lease to MML ninety new Gondola-type coal wagons fitted with the patented Sheffield bogey system for a term of 10 years;

·; MML's appointment of RRL Grindrod Locomotives Proprietary Limited ('RRL Grindrod') as its rail services operator. RRL Grindrod will assume day-to-day responsibility for MML's train operations on the Sena Line. RRL Grindrod will shortly commence its implementation plan, including the mobilisation of rail operating staff.

The condition precedents associated with this leasing finance are progressing well, with rail access and general insurance conditions being fulfilled by MML. The final outstanding condition precedent is political and commercial risk insurance from ECIC, the export agency of South Africa. This cover is expected to be completed shortly. The extended ECIC approval process is not expected to impact the delivery of rolling stock to MML by Thelo in Q3 2013.

The Company may continue to make use of trucks to transport coal to the Port of Beira as an interim solution until the expected commencement of rail operations in Q3 2013.

Resource Upgrade

In January 2013, the Company announced that the results of the infill drilling programme undertaken in 2012 resulted in Minas Moatize's JORC Resource being upgraded to 86.8Mt (Measured and Indicated of 76.3Mt) compared to the previous Resource statement of 66.4Mt all of which was Measured and Indicated. This represents an increase of 31% on the previous JORC resource statement.

An updated JORC compliant mineable reserve statement is in the final stages of being produced and is expected to be published and announced during May 2013.

Corporate

Funding

The Company raised approximately US$21 million (approximately £14.1 million) in March through a placing of 464,122,967 new ordinary shares in the capital of the Company. The funds raised are being used to upgrade rail infrastructure including rail sidings, to commence the Phase 2B and 2C wash plant upgrades and for rail rolling stock related and general working capital purposes. Following the capital raising the Company now has 1,578,593,484 Ordinary Shares in issue, all of which are voting shares.

In addition to the recent equity raising, the Company remains in discussions with a number of leading financial institutions with respect to arranging a secured debt facility for capital expenditure (as described above), on-going working capital funding and to refinance the senior secured US$10 million debt facility with Vitol Coal S.A. The key milestone to closing this facility includes the upcoming demonstration of the upgraded wash plant.

Expansion of Management Team

The Company has recently appointed John Daley as Chief Operating Officer, Stefanie Cronje as Chief Financial Officer for MML, Lynette Kruger as Marketing and Logistics Manager and Mac Van Der Merwe as Operations Manager Rail in order to facilitate its growth strategy and ramp up production.

**ENDS**

**NOTES**

Statement of Resource

The Coal Resources 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.

The Golder Associates (NZ) Limited nominated JORC Compliant Person responsible for supervising the preparation of the Statement of Resource is Adam Bonham-Carter. Adam has a background of 25 years in coal including extensive resource modelling and mine planning experience on coal projects in New Zealand, Africa, and Canada with geology ranging from simple to extremely complex. Adam is a Registered Professional Engineer with the Association of Professional Engineers and Geoscientists of British Columbia and a Chartered Professional with the Australasian Institute of Mining and Metallurgy.

The supervising geologist contributing to the Statement of Resource is Petrus Cornelius Meyer ('Peet Meyer') of PC Meyer Consulting Pty Limited. Peet Meyer is a registered natural scientist with the South African Council for Natural Scientific Professions (SACNSP) and with the South African Council for Geosciences (SACG), both of which are Recognised Overseas Professional Organisations (ROPO) under the JORC 2004 Code. In addition, he is a registered professional with the Department of Mines and the Geological Society of Mozambique.

PC Meyer has more than 21 years' experience in the South African Coal Industry. He holds B.Sc. Hons (geology) and M.Sc. (Earth Science Practice and Management) degrees from the University of Pretoria and is an active member of the Geological Society of South Africa (GSSA) and the Fossil Fuel Foundation. 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).