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Beacon Hill optimistic despite depressed coal prices

World Coal,

Beacon Hill Resources has provided an update on the company’s operational activities since the beginning of 2014.


Rowan Karstel, CEO, commented: "The Minas Moatize Coking Coal Mine has completed four years of continuous development with the potential to be a highly profitable production asset, in spite of an extended period of depressed coal prices. We are working hard to develop a highly efficient and commercially viable operation through the Minas Moatize 2B & C Expansion Project, which we aim to deliver by H2 2015.

"In the meantime we remain focused on keeping our corporate overheads low and on generating revenues to help support our cash treasury. A key focus in this regard is the assessment of opportunities to sub-lease our rolling stock and local coal sales and I am delighted to announce that we are making important headway in this vein.

"With more encouraging forecasts for coal being issued by many commodities analysts, and Beacon Hill working towards funding and commencing its Expansion Project, I remain confident that Beacon Hill will negotiate this difficult period successfully."

Rail wagons

90 rail wagons were completed by Transnet Engineering and inspected and signed-off by the company in January 2014. Inspectors from Caminos e Ferros de Mocambique (CFM) travelled to Uitenhage, South Africa to inspect the rail wagons and accepted all 90 rail wagons on 20 February 2014 as completed.

89 rail wagons underwent and passed the final acceptance tests conducted in Beira on the 26 March 2014 (one rail wagon that came loose and fell back in the hold of the vessel during handling of the rail wagons in the port of Beira is still to undergo heavy repairs by Transnet Engineering).

The rail wagons are still stored in the Beira port secure area and will be released once the final customs clearance documentation has been obtained from the Mozambique government.


Inspectors from CFM travelled to Pretoria-West, South Africa to inspect the locomotives and accepted all five locomotives on 21 February 2014 as completed. CFM has issued the trains the relevant locomotive registration numbers. The locomotives are scheduled for hot commissioning in Beira Mozambique next week.

Rolling stock sub-lease

Beacon Hill has selected a preferred party for sub-lease of the company's rolling stock and has entered final documentation stage in those negotiations. The transaction envisages sub-leasing all five locomotives and 45 rail wagons to the preferred party.

The preferred party is envisaged to use the rolling stock on the Sena Line between Tete and the Port of Beira. The rolling stock sub-lease is expected to terminate at or about Q4 2015 in time for the expected ramp-up of the Minas Moatize expansion project (Phase 2B & C).

Rail transfer stations

The Carbomoc Coal Loading Site in Tete (jointly developed with JPSL Mozambique) is functional and is being used by JPSL for the loading of their trains.

Two sites have been identified for the off-loading of coal in the Port of Beira. One site is fully functional and the other site is ready for development.

Expansion project EPC contractor

In Q4 2013, Beacon Hill concluded its tender process and selected a preferred contractor for the construction of the Minas Moatize expansion project for Phase 2B & C of the washplant including specialist sub-contractors related to flotation cells for recovery of coking coal.

In January 2014, MML received an updated and final draft US$ 16.7 million turnkey contract based on the tender documents. Negotiations are underway to finalise contracts for presentation to the senior debt financier.

Edited from various sources by Katie Woodward

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