Name and Location
Minas Moatize coal expansion project, Tete, Mozambique.

Client
Beacon Hill Resources, through its subsidiary, Minas Moatize.

Project Description
Minas Moatize has a Joint Ore Reserves Committee-compliant resource of 86.8-million tonnes.

The project proposes to develop a large-scale openpit mine, which will extract and process about four-million tons a year of run-of-mine coal at steady-state production and produce 2.8-million tonnes of saleable coal a year over 15 years, 30% of which will be coking coal.

Value
Total project capital was estimated at $166-million; however, Beacon Hill has identified a strategy to deliver an estimated $80-million reduction in the proposed capital expenditure associated with the expansion of Minas Moatize.

Duration
Phase 2A of the wash plant upgrade was completed in May 2013.

Owing to low commodity prices and to reduce the effect of negative cash burn, Beacon Hill will reduce production at its Minas Moatize coking coal project until phases 2B and 2C of the wash plant upgrade have been completed.

Phases 2B and 2C are scheduled for implementation during the first half of 2014.

Latest Developments
Beacon Hill Resources is considering investor interest in acquiring a stake in the company or in its Minas Moatize coking coal project.

The company is working with its adviser, Investec, to assess its options after several strategic investors expressed an interest in possibly acquiring shareholdings in the developing project or its operator.

However, with discussions at an early stage, Beacon CEO Rowan Karstel has warned that there is no certainty that the discussions will lead to an agreement on valuation or a transaction.

This comes as Beacon strengthened its $2.5-million cash balance by about $1.2-million through a planned £1.5-million capital raising and the receipt of about $1.1-million in value-added tax refunds.

The company raised the funds through the placing of up to 600-million ordinary shares at 0.25p apiece. About £745 000 of the funds will be used to refinance the final settlement of all amounts outstanding in the convertible loan from Darwin Strategic.

The balance will provide additional working capital for the third quarter as Beacon completes the financial due diligence for the Minas Moatize expansion project debt funding, which is expected to be concluded within a month, with the final relevant approvals sought shortly thereafter.

The updated opencut environmental management plan has been translated into Portuguese and submitted to the Department of Environment, and the engineering, procurement and construction contract for the expansion of the wash plant has been finalised.

Further, discussions to update the 2011 offtake contract to the satisfaction of the senior debt lender are continuing.

Key Contracts and Suppliers
Global Coke (offtake agreement); Tayanna Mozambique (excavation and coal-extraction works); Vitol Coal SA (marketing agreement) and Thelo Rolling Stock, RRL Grindrod Locomotives and Transnet Engineering (rolling stock).

On Budget and on Time?
Yes.

Contact Details for Project Information
Beacon Hill Resources executive chairperson Justin Farr Jones, tel +61 3 96279910 or email info@bhrplc.com.
Thelo Rolling Stock, tel +27 11 290 2300 or email Para.Naidoo@Thelo.co.za.
RRL Grindrod Locomotives, tel +27 12 386 4590 or fax +27 12 386 4611.
Transnet Engineering, tel +27 86 172 7427.