Trading and Operations update

25 October 2012

Strategic Natural Resources plc

("SNR" or the "Company")

Trading and Operations Update

Underground Mining Agreement

SNR, the AIM listed natural resources developer operating in South Africa, is pleased to announce the following update given its near commencement of underground mining, on the following milestones:

·; Opencast mining progress delivers some 100 kt of coal

·; Arrival of underground mining equipment in next 2 weeks

·; Washing plant on site commissioning

·; Underground mining contract concluded with EMS

·; First coal shipment before the end of 2012

Opencast Mining Progress

The Company is pleased to report that about 100kt of raw coal has been stockpiled and is ready to be processed. An additional 2 cuts of opencast coal on its eastern area of the accessible open-castable coal is ready for extraction and is expected to be mined in November, which will yield an additional 20kt of coal available, exceeding earlier expectations.

Arrival of first underground mining equipment on site

The Company's first Sandvik AM10 low seam continuous miner capable of mining 300 to 400 tonnes of coal per hour, will be delivered to site before the end of October. Within a week of this delivery, additional underground Drill & Blast equipment is also due to be delivered. The combination of these two sets of new equipment will allow the Company to commence and operate two underground mining sections within near succession of each other and achieve a production capability of 800ktpa. Further, the purchase of an additional continuous miner is being negotiated with Sandvik and is anticipated to be finalised before the year end, further increasing the underground production capability to circa 1mtpa of ROM (Run of Mine) coal, ahead of original expectations.

Washing Plant on site commissioning

The Company is pleased to report that following a successful dry commissioning of the washing plant in September 2012, the relocation to site and final assembly of the plant will be completed in October. The plant is expected to become fully operational in the first week of November 2012, with a capability of washing 4.5kt of coal per day, or 135kt per month, with a primary feed of 225tph.

A secondary washing plant providing additional capacity of 225tph has been ordered, enabling the Company to wash a middlings product derived from its high value Anthracite production. This additional capacity is expected to be delivered by the end of February 2013, enabling a capability of over 400tph, or 250kt per month.

Underground Mining Agreement with EMS

SNR's 74% owned subsidiary, Elitheni Coal (Pty) Ltd ("Elitheni"), has entered into a mining contracting agreement with Bertus Steenkamp, the Technical Director of the Company and controller of the Belton Mining Group (Pty) Ltd ("Belton"), under which a newly formed company, Elitheni Mining Services (Pty) Limited ("EMS"), will act as the underground contract miner for Elitheni ("the Mining Services Contract"). Mr Steenkamp set up the Belton Group of companies after a successful career as technical Director of Grinaker-LTA Mining Contracting, now owned by Aveng and is one of the leading mining contractors in South Africa. EMS will commence underground operations at the Elitheni mine before the end of October 2012. Elitheni will own 51% of EMS and Bertus Steenkamp, or his nominee, the remaining 49%. Belton was established in 2008 and provides technical, project management and contract mining services to a range of operating coal mines in South Africa.

Under the terms of the Mining Services Contract, EMS will be responsible for all underground mining operations at Elitheni's mine and will utilise Mr Steenkamp's extensive skill, expertise and resources to carry out these contract services. Elitheni has procured the initial mining equipment for EMS to undertake the Mining Services Contract.

The board of SNR considers this agreement will ensure that Elitheni retains control over equipment, infrastructure and resources at its mine whilst at the same time, through Mr Steenkamp's participation, gain access to the low seam mining skills and engineering expertise he has built during his successful career. The SNR directors believe this will assist Elitheni in becoming one of the lowest cost, low seam coal mines in South Africa.

A competitive tender process (the "Tender") was carried out by SNR in relation to the Mining Services Contract and quotations were obtained from a number of separate mining contractors. The proposals tendered by the other parties were at a significantly higher cost than those proposed by EMS. Bertus Steenkamp was not involved in the Tender (aside from submitting a proposal from Belton). Any further sub-contracting by EMS to Belton will be done at the same cost as contained in the Mining Services Contract.

The Mining Services Contract, together with the involvement of Mr Steenkamp and the sub-contracting to Belton, (together the "Transaction") is deemed to be a related party transaction under the AIM Rules for Companies. The SNR directors (with the exception of Bertus Steenkamp), being the independent directors, having consulted with Allenby Capital Limited, as the Company's nominated adviser, consider that the terms of the Transaction are fair and reasonable insofar as the Company's shareholders are concerned.

First Coal Shipment before the end of 2012

We are pleased to confirm that the first vessel shipping dates have been confirmed to our Brazilian client for the shipment before the end of 2012 for a high value anthracite cargo at rates significantly above the prevailing market rates for thermal coal. This will also provide an opportunity for the creation of a middlings product which the Company will be able to re-wash to a thermal specification for a January/February shipment. These middlings constitute a material additional profit opportunity due to the reduced costs of production.

David Nel, Chief Executive of SNR, commented "I believe that the positive news reflected in this trading update, when considered with the announcement today of significant additional resources at the Elitheni coalfield, represents the potential for substantial additional value creation for SNR shareholders and confirms the excellent progress towards the completion of two of SNR's key objectives, namely the commencement of underground mining operations and the shipping of coal to customers in 2012."

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For further information about Strategic Natural Resources plc please visit www.snrplc.co.uk.