Scoping Study Results for Arthur River Project

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2 May 2012

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

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

Positive Preliminary Scoping Study Results for Arthur River Magnesite Project

HIGHLIGHTS

·; Positive results of the Preliminary Scoping Study ('the Study') indicate that the Arthur River Magnesite Project ('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

·; Net Present Value ('NPV') of A$42 million1 based on a 292,000 dry tonnes per annum ('dtpa') run-of-mine ('ROM') operation producing on average 100,000dtpa of calcined magnesia with an average grade of 95% MgO

·; The Study has been prepared by the Company in conjunction with independent consultants and is based on an Inferred JORC Resource estimate of the Project area of 25Mt at 42.4% MgO2

·; An average life of mine operating cost, including both mining and processing costs, of approximately A$250/t FOB

·; Total Project initial capital estimate of A$155 million - incorporates the construction of a calcining plant which accounts for a large proportion of the total initial capital estimate

1 Based on a real, before-tax discount rate of 10% and a mine life of 17 years

2 MgO = Magnesium Oxide

Justin Lewis, Chairman of Beacon Hill commented, "We are extremely pleased to publish the results of the Study for the Arthur River Magnesite Project which indicates that the Project will support an economically viable magnesite mine and calcination processing operation with a mine life of 17 years. The economics of the Project are positive and will provide the basis for moving forward to full feasibility and will assist the Company in securing a joint venture partner and or off-take partner to fund the development of the project.

PROJECT DESCRIPTION

Beacon Hill, through its subsidiary Tasmania Magnesite NL ('Tasmania Magnesite'), holds mineral tenure over two large, high-grade magnesite deposits at Arthur River and Lyons River in north-western Tasmania, Australia. The tenure is in the form of a Mining Lease (Arthur River Site) and two Retention Licences (Arthur River and Lyons River Site).

Figure 1: Mining Sequence: Project Location

(please see PDF link at top of page)

The focus of the Company and this Study has been on the Arthur River Deposit, the deposit over which Tasmania Magnesite holds a mining lease.

Figure 2: Arthur River and Lyons River Deposits

(please see PDF link at top of page)

MAGNESIA

Magnesia is produced from magnesite by calcination (heating to high temperatures in a kiln) to remove carbon dioxide. Magnesia is an alkali with one of the highest melting points of all minerals (2,800˚C) and is non-reactive at high temperatures.

There are three main types of magnesia:

·; Caustic calcined magnesia ('CCM'), produced at 1,000˚C

·; Deadburned magnesia ('DBM'), produced at 2,000˚C

·; Electrofused magnesia ('EFM'), produced at 3,000˚C

CCM is used as a chemical in a number of markets including agriculture (fertiliser and feedstock), nickel, copper and cobalt, pulp and paper and water treatment. DBM and EFM are used mainly in the refractory industry to line furnaces and are therefore an essential raw material for the production of steel, cement and glass.

This Study has modelled the production of CCM. The Study has been based on the extraction of approximately 292,000dtpa of ROM magnesite producing on average 100,000tpa of calcined magnesia with an average grade of 95% MgO. Future operations would take a market based approach to the production of magnesia products.

PROJECT RESOURCE ESTIMATE

The Study has been based on a resource estimate for the Project prepared by Derwent Geoscience Pty Ltd. The estimate is restricted to the south western portion of the magnesite body (figure 3).

At a cut off of 40% MgO, an Inferred Resource has been estimated which totals 25Mt of fresh magnesite grading 42.4% MgO, 4.8%SiO2, 1.4% Fe2O3 and 2.6% CaO to a maximum depth of 100m below the surface. This estimate assumes that fresh magnesite can be easily separated from zones of internal weathering.

The resource estimate at a series of cut offs is summarised in the table below.

Table 1: Resource Estimate

Whilst it is the Company's intention to undertake further drilling to upgrade this Inferred Resource into an Indicated Resource, there is currently no direct link from this Inferred Resource to any category of Ore Reserve as defined under the JORC Code.

PROJECT VALUATION

Subject to confirmation of assumptions and inputs by a future Definitive Feasibility Study, the Study demonstrates the potential financial viability of the Arthur River Magnesite Project and provides a strong platform to move forward towards securing a JV 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. As this study has been based on an Inferred JORC Resource caution should be exercised when considering this economic model.

Figure 3: Mining Lease, limits of resource estimate and magnesite

(please see PDF link at top of page)

PRODUCTION SCENARIO

The Study has assumed that 292,000dtpa of magnesite ore will be mined, crushed and screened producing a high quality (>40%MgO) calcine plant feed. After crushing and removing the fines, it is anticipated that around 246,000dtpa of calcine plant feed will be produced. Subject to confirmatory resource delineation and metallurgical testwork, it is anticipated that approximately 100,000tpa of calcined magnesia will be produced from 246,000tpa with a grading of around 95% MgO.

Mining

Mining operations have been modelled as being conducted by a contractor. The mining method proposed is a drill, blast, load and haul, open pit operation.

Crushing

The study assumes that ROM Ore will be delivered from the mine to a stockpile from where it will be fed into the plant. A primary crusher will reduce ore to 150mm, after which it will be fed to the main screen deck by conveyor. The screen deck will be in closed circuit with a secondary crusher to reduce the ore to -25mm. -2mm material will be pumped to a rejects containment dam. All +2mm material will be stockpiled for transfer to the purpose built calcining plant.

Calcination / Processing

It is proposed that at the calcining plant, the ore will be milled and subjected to reverse flotation in order to remove the majority of the contained silica. Previous testing has shown that silica can be reduced to acceptable levels by physical beneficiation. The flotation sinks will be filtered and calcined in an appropriate kiln, following which the product will be screened, blended and bagged into bulk bags.

Logistics

The bulk bags will be loaded into sea containers on trucks for delivery to the port of Burnie, located approximately 55km from the mine site, where the product will be shipped to the seaborne market.

OPERATING EXPENSES

The Study indicates that the mine can produce CCM at approximately A$250/t FOB Burnie, over the life of the mine.

CAPITAL EXPENDITURE

The Study indicates that the Project can be developed for a capital cost of A$155 million.

MARKETING

The forecasted long term price for Caustic Calcined Magnesia has been attained from the Eleventh Edition of the Magnesium Compounds and Chemical: Global Industry Markets and Outlook Report that was published by Roskill Information Services Ltd in 2010. The average long term price used for CCM in the model was $600 per tonne. The study assumes that all production is sold.

WORK UNDERTAKEN

·; The Study has been based on work undertaken by the Company in the past 18 months:

·; First phase of the drilling programme was completed with the drilling of eight HQ resource holes and four ground water monitoring bores. The drilling provided a clearer understanding of the magnesite ore body and its internal geological features.

·; Hydrogeology studies were completed using the water monitoring bores. This work provided a better understanding of the hydrogeology of the site and contributed to the Study.

·; Metallurgical test work was completed to assist in defining the product capability and the calcining technology to produce the targeted CCM product. The analysis was based on results from the core recovered from the recent drilling programme and from previous drilling undertaken.

·; Other key work undertaken included the analysis of transport logistics and transport infrastructure, an analysis of calcining plant options, mine design inputs and energy requirements for the Project.

·; Completion of Threatened Species and Aboriginal Heritage Studies for the lease site. These studies included an aerial survey for wedge tail eagles and other raptor species.

·; Referral under the Environmental Protection and Biodiversity Conservation Act which resulted in approvals for the drilling programme and associated works being attained.

·; Erection of a purpose built bridge across the Arthur River for accessing the mining lease.

MINERAL TITLE AND MINING RIGHTS

The mining lease is valid until 15 August 2020 and the retention licences are valid until 2 March 2014. Environmental permits and development approval will need to be attained prior to the commencement of mining from the proposed open pit.

NEXT STEPS

This Study will provide the basis for moving forward towards a full Feasibility Study, including the submission of a development proposal and environmental management plan to secure mining approval, the completion of the approved drilling programme and the securing of a JV and / or off-take partners to fund the development of the Project.

**ENDS**

For further information, please contact:

NOTES

The information in this report which relates to Exploration Results and Mineral Resources is based on information compiled by Mr Stewart Capp, who is a member of the Australasian Institute of Mining & Metallurgy. Mr Capp is a full time employee of Derwent Geoscience Propriety Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Capp consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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 London's AIM Market (Code: BHR) and the Australian Securities Exchange (Code: BHU).

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.

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.