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 is confident of securing additional financing for its Minas Moatize coal project, after receiving a nonbinding proposal for export finance senior debt on the basis of an agreed term sheet.

The company expects to obtain a binding and definitive financing offer for Phase 2B and Phase 2C of its wash plant expansion during the first quarter of 2014, after the conclusion of due diligence and internal approvals.

Beacon Hill CEO Rowan Karstel says the funding will likely take place in the fourth quarter of 2014.

Beacon Hill has no plans to dip into the currently undrawn Darwin standby facilities at the current share price.

The new facility will refinance the senior secured $10-million debt facility with Vitol Coal SA, in addition to providing capital financing to start implementing the wash plant expansion’s Phase 2B and Phase 2C plant long-lead items, which are expected to be completed by January 2015.

Karstel has attributed the delay in securing financing to increased concerns about the current coal market, which has resulted in “a much higher diligence threshold to achieve senior debt where only the most financially robust projects are capable of achieving funding”.

The group suspended its operations mid-November, owing to coking coal prices being at record lows, negative cash burn and narrowed focus on the development of Phase 2B and Phase 2C of the wash plant expansion.

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.