Strategic Investment & Off-take

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

19 July 2010

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

US$55m Strategic Investment and Off-take Agreement at Mozambique Coal Mine

Beacon Hill Resources plc (AIM:BHR), the AIM listed resource group, is pleased to announce that it has entered into an agreement with Consolidated Minerals Pte Limited ('Consolidated Minerals') and Global Coke Limited ('Global Coke') for a strategicUS$55m investment into BHR Mining Limited ('BHR Mining'), to rapidly advance the development at its Minas Moatize coal mine in the Tete Province of Mozambique ('the Mine'). The investment is also accompanied by an intention to enter into a mine gate off-take agreement to purchase all of the coking coal produced during the mine life of the Minas Moatize coal mine.

Highlights

·; Agreement with Consolidated Minerals and Global Coke for a strategic investment of US$55m by Global Coke for a 26% interest in BHR Mining

·; Investment is accompanied by an intention to enter into an off-take agreement with Global Coke to purchase all the coking coal produced by the Mine over its life at a price referenced to market rates. The coal will be delivered at the Mine gate

·; Secures investment with two strong strategic partners as well as potentially providing a valuable mine gate off-take agreement

Beacon Hill Executive Chairman Justin Lewis said, "We are delighted to welcome Global Coke, together with our existing partner Consolidated Minerals, as strategic partners for our Minas Moatize Mine. This investment underpins the value of the Minas Moatize Mine and represents an important step in its development.

"Through our partnership with both Consolidated Minerals and Global Coke we gain funding to develop the Mine and a buyer for the coking coal produced. We also gain access to a world class expertise on the manufacture of metallurgical coke and access to long standing relationships with major steel producers.

"We look forward to developing our relationship with our partners with a view to exploring further opportunities in the region, as well as the downstream processing of the coal we produce."

Further details of the above agreement are set out below.

Contacts

For further information on the Group, visit: www.bhrplc.com or contact:

Background

BHR Mining, a joint venture between Beacon Hill and Consolidated Minerals, entered into an agreement to acquire the Minas Moatize Mine and take management control in April 2010. Since the acquisition of the Mine, BHR Mining has commenced a development programme to develop the Mine into a larger open pit operation to produce both coking and thermal coal for export markets. The Group has developed a plan which will allow the mining of up to 2Mtpa of saleable coal.

The strategic partnership announced today is a key step in the development of the Mine and through the partnership with both Consolidated Minerals and Global Coke the Group gains funding to develop the Mine, and potentially a buyer for the coking coal produced. BHR Mining also gains access to a world class expertise on the manufacture of metallurgical coke and access to long standing relationships with major steel producers.

Agreement

Beacon Hill and BHR Mining have entered into a subscription agreement ('the Agreement') with Consolidated Minerals, Global Coke and Global Minerals and Metals Pte Limited ('GMM'), a subsidiary of Global Coke, pursuant to which GMM has agreed to subscribe for 26% of BHR Mining for a cash consideration, subject to a minimum of US$55 million, equal to 26% of the net present value of the Mine to be determined by an expert. Pursuant to the Agreement, the subscription will take place no later than 9 September 2010. GMM's subscription is unconditional, save that it has a right to terminate prior to completion if it discovers an undisclosed matter which is materially prejudicial in a fundamental respect to the Mine. The parties intend to enter into a shareholders' agreement in relation to BHR Mining prior to the completion of the subscription.

Beacon Hill currently owns 49% of BHR Mining and has an option over shares held by Consolidated Minerals, enabling it to increase its holding to 75% of BHR Mining for nominal value. Beacon Hill has undertaken to Consolidated Minerals not to exercise its option prior to completion of GMM's subscription and then only to the extent necessary to give it a holding of 50% of BHR Mining.

Off-take Agreement

Pursuant to the Agreement, the parties have agreed to use reasonable endeavours to agree a long term off-take agreement between BHR Mining and Global Coke, for the life of the Mine and in respect of the coking coal production from the Mine. It is envisaged that Global Coke will take delivery of the coking coal at the site of the Mine's wash plant, thereby limiting the logistical risks for BHR Mining. The off-take price for the coking coal will be determined based on generally accepted international benchmarking price, allowing for delivery at the Mine gate as opposed to at a port. 

About Global Coke Limited

Global Coke, headquartered in Kolkata, India, is a leading manufacturer of low ash metallurgical coke in India. Coke is the key raw material in the manufacture of steel. Global Coke operates a manufacturing facility at Jamnagar with a capacity of 25,000MT per month and a second facility at Sindhudurg, Maharashtra with a capacity of 12,000MT/Month. Global Coke has entered into long term supply contract for the majority of its production thereby guaranteeing its market.

Information on Minas Moatize

Minas Moatize currently operates a small underground mine in one of the world's largest undeveloped coal regions, the Tete district of northern Mozambique, producing thermal coal for domestic consumption. Since acquiring the Mine, the Group has refurbished the underground mine and expanded production. In parallel we have commenced work on the development of a small open cut pit, which is anticipated should take production levels to an average of 20,000 tonnes per month. The Group will acquire a small scale modular beneficiation plant.

Over the next 18 months, the Group intends to develop the resource into a larger open pit operation to produce both coking and thermal coal for export markets. The Group has developed a plan which will potentially allow the mining of up to 2Mtpa of saleable coal.

The Group has commenced a drilling and testing programme which will be completed over the next few months to enable the finalisation of a mine plan and final design of a beneficiation plant. It is intended that the larger open pit mine will be in production in early 2012.

**ENDS**