www.bhrplc.com
Beacon Hill Resources is an AIM listed resources company that is focussed on building a portfolio of near term production projects in commodities relating to the steel production industry. Beacon Hill has two key assets that provide the group with exposure to the steel production industry – Minas Moatize which is currently the only operating coal mine in the globally significant coking coal region of the Tete Province in northern Mozambique and Tasmania Magnesite, a large magnesite deposit in northern Tasmania, Australia.
Beacon Hill Resources brings forward plans to produce its first coking coal
Miner Beacon Hill (LON:BHR) says it is bringing forward plans to produce its first coking coal at the Minas Moatize open pit in Mozamique.
Shipments will commence at the beginning of next year instead of the third quarter of 2012 as originally scheduled.
The company is already producing thermal coal from its trial pit, which is due for export in the fourth quarter.
However tests have reconfirmed the hard coking coal potential of Minas Moatize.
The group has made great strides in the last few months. It now has a washing plant onsite, and a trucking operation has commenced allowing the group to transport its coal to the port of Beira.
Negotiations continue with the operators of the Sena Rail Line to agree a long-term access arrangement.
Separately, phase one of the company’s drilling programme on the Arthur River mangesite project in Tasmania has been completed, and a scoping study should be compiled by the end of the year. A full feasibility study will begin next year.
Beacon Hill chairman Justin Lewis said: "We are making good progress at both our Minas Moatize coal mine in Mozambique and at our Arthur River Magnesite project, as we advance our strategy of building and developing resource assets in commodities associated with the steel industry.
“During the period, we significantly increased the value of our assets and we firmly believe there remains considerable potential for a further step-up in valuation as we rapidly progress our asset base through the development cycle.
The update was contained in Beacon Hill’s interim results statement which revealed the company made a loss of £1.9 million, compared with £1.3 million previously.
More importantly, it has cash in the bank of just over £9 million and its net assets totalled just over £40 million.
The company recently turned down a takeover offer that valued the company at 16.25 pence a share, or £120 million (current share price 9.25 pence).
“Our confidence in, and commitment to, our projects lay behind the board's decision to reject an approach for the group,” Lewis said.
"We have met key development milestones at Minas Moatize having commenced production of export grade coal and commissioned our first wash plant.
“Initial production of coking coal has been accelerated with mining on course to commence in early 2012 which, following results attained from the recent coke test analysis, will now target hard coke which trades at a premium to thermal coal.
“We remain on track for our first export shipment in the fourth quarter of 2011 and are already stockpiling at our warehousing facilities in Beira.”
Although the tenor of today’s statement was generally upbeat, analyst Andrew McGreary, of Northland Capital Partners, said he is reducing his production forecasts to reflect “lower capacity expectation”.
This, he says, is a function of trucking the coal out of Minas Moatize rather than taking the rail route.
However he remains a buyer of the stock, and says there is “plenty upside” from the current depressed levels.
