Update on Arthur River Magnesite Project

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

17 June 2011

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

Update on Arthur River Magnesite Project in Tasmania

Beacon Hill Resources, the AIM listed resource company, is pleased to provide an update on development of its Arthur River magnesite project in north-west Tasmania ('the Project'), following completion of the first phase of the drilling programme.

Overview

·; First phase of the drilling programme completed with the drilling of eight HQ resource holes and four ground water monitoring bores

·; Hydrology studies have commenced, using the water monitoring bores

·; Metallurgical test work to assist in defining product capability and the calcining technology required to produce targeted products is progressing - analysis is based on results from the core recovered from the resource holes in addition to core from previous drilling

·; Analysis of transport logistics and transport infrastructure completed and other key requirements of the Scoping Study advancing encouragingly - analysis of calcining plant options is in progress and mine design inputs and energy requirements are expected to be completed by the end of Q3 2011

·; The Scoping Study is scheduled to be completed and provided to the Board before the end of 2011

Justin Lewis, Executive Chairman, commented, "The completion of Phase 1 of the drilling programme at the Arthur River Project represents another milestone in the development of the Project, and should provide the Group with a clearer understanding of the deposit in terms of size, metallurgy and hydrology. The resource holes drilled further confirm and expand on historic drilling results and should demonstrate the significant size and quality of the resource. The water bores will enable further hydrological studies, which are important to the final design of the mine, to be undertaken and work is commencing on this shortly.

"Overall, the Scoping Study is progressing well and on timetable, and will provide the basis for advancing the project towards the feasibility stage in 2012."

Update on Work Programme

On 25 January 2011 the Group announced that the directors had approved the next stage of a work programme for its Arthur River Magnesite project in north-west Tasmania. The programme, which included the first drilling to be undertaken by the Group on the Project, was to advance development of the Project ahead of the completion of a Feasibility Study in 2012.

The Group is in the process of finalising a Scoping Study, that it anticipates will be completed before the end of 2011, and focuses on confirming the economics of the Project as well as developing an initial conceptual mine plan. The Scoping Study will provide the basis for moving forward to 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 joint venture and or off-take partners for the Project.

The first phase of the drilling programme has now been completed with eight resources holes and four water monitoring bores drilled. The drill rig has been demobilised and the drilling sites rehabilitated. All the cores recovered from the resource holes have been logged and sampled at the Group's facility in Wynyard. This information will be used to input into the geological model that will be built and completed as part of the Scoping Study, providing a clearer understanding of the magnesite ore body and its internal geological features.

Secondly, metallurgical test work continues and will be expanded to include samples from the new cores recovered from the geological holes. This work will assist in defining the end product capability and specification of the magnesia to be produced.

Finally, hydrology studies have commenced using the water monitoring bores that have been drilled. This will assist in a better understanding of the hydrology of the Project area and contribute to the final mine design.

Other areas of the scoping study have continued alongside the drilling programme, with the transport logistics and transport infrastructure analysis being finalised and other key requirements for the Scoping Study, including an analysis of calcining plant options, mine design inputs and energy requirements, are expected to be completed by the end of Q3 2011.

**ENDS**

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Notes

Beacon Hill Resources Plc (AIM: BHR) is an AIM listed resource company focussed on the acquisition and development of assets in commodities relating to the steel production industry. The Group currently has two primary assets - the Minas Moatize Coal Mine in Tete, Mozambique and Tasmania Magnesite NL in Tasmania.