Mc Mining Regulatory News (MCM)

ANNOUNCEMENT 30 January 2015

REPORT FOR THE QUARTER ENDED 31 DECEMBER 2014

Significant Progress for Coal of Africa

Coal of Africa Limited ("CoAL" or "the Company") which operates in South Africa, together with its subsidiaries, hereby provides its operational update for the quarter ended 31 December 2014. All figures are denominated in United States dollars unless otherwise stated. A copy of this report is available on the Company's website, www.coalofafrica.com.

Salient Operational Features

· No lost-time injuries recorded during the quarter (FY2015 Q1: nil).

· Signature of Biodiversity Offset Agreement ("BOA") for the Vele Colliery with the Department of Environmental Affairs and South African National Parks.

· Work continued on the applications to amend the Environmental Authorisation ("EA") for the Vele Colliery to include the anticipated plant modifications, approval for which was received post 31 December 2014.

· Sedgman completed the Front End Engineering and Design ("FEED") process for the Vele Colliery plant modification during the quarter.

Corporate and Financial Features

· Completion of the first two stages of the three stage equity placement process raising $46 million net of costs, with the final stage raising gross proceeds of approximately $14 million, due to be completed on or around 29 April 2015.

· Payment of $10 million to Grindrod Corridor Management Proprietary Limited and Terminal de Carvão da Matola Limitada, settling all outstanding liabilities and take or pay obligations until 31 December 2016. Any further obligations would be dependent on any future capacity requirements still to be contracted.

· The liability owing to Rio Tinto was reduced during the quarter on the payment of $6.2 million while discussions continued on the settlement of the remaining balance of $23.5 million.

· Settlement of the Investec working capital facility, in accordance with its terms, during the quarter with the payment of $5.8 million.

· Settlement of the last outstanding significant legal matter following an arbitration award of $1.4 million and $1 million interest to Envicoal.

· Continued discussions with stakeholders including the communities and the Department of Mineral Resources in advancing the award of the Makhado New Order Mining Right ("NOMR").

· The Company continued to engage with the Department of Water Affairs to progress the application for the Makhado Project Integrated Water Use Licence ("IWUL"), which CoAL anticipates will be issued after the receipt of the NOMR.

· Extension of the option period until end CY2015 following receipt of a further payment of ZAR2.5 million ($0.2 million) for the sale of Holfontein.

· Extension for the proof of funding period in terms of the Sale and Purchase Agreement ("SPA") with Blackspear for the disposal of the non-core Mooiplaats Colliery until April 2015.

· Restructuring of rehabilitation guarantees resulted in the release of R16 million ($1.3 million) of restricted cash.

· Resignation of David Murray as Senior Non-Executive Director and appointment of Andrew Mifflin and Thabo Mosololi as Non-Executive Directors.

· Available cash at period end was $20.6 million after settlement of liabilities, payment of operating costs of $3.4 million and restricted cash of $1.9 million.

Post period highlights

· The Company received the amended and updated EA for the Vele Colliery. The application for the amendment and extension of the IWUL for the colliery is still pending, following which the Company will make a decision as the timing of the start of the plant modification at the colliery.

Commenting today, Mr David Brown, Chief Executive Officer said: "The successful completion of two stages of the equity placement process at a premium to the current CoAL share price is a vote of confidence in the Company's strategy and the intrinsic value of its assets, as well as the progress made during the last 18 months. The third stage of the placement process is expected to be completed during April 2015, resulting in a successful capital raise in what are considered to be very tough market conditions for mining companies, especially junior mining companies. The funds raised will be utilised to settle historic obligations and progress the Company's projects which are at various stages of exploration and development."

QUARTERLY COMMENTARY

Mooiplaats Colliery - Ermelo Coalfield (74% owned)

The Mooiplaats thermal coal colliery ("Mooiplaats Colliery") was placed on care and maintenance during the September 2013 quarter and recorded no lost time injuries ("LTIs") during the period (FY2015 Q1: no LTIs).

During the previous quarter the Company signed an SPA with Blackspear Capital ("Blackspear"), a wholly owned subsidiary of Blackspear Holdings Proprietary Limited, for the disposal of the Mooiplaats Colliery for R250 million ($22.2 million). As announced on 6 November 2014, Blackspear had agreed terms with a financial and operational partner to fund its acquisition of Mooiplaats. Post period end however, Blackspear have informed the Company they are no longer engaged in discussions with their proposed partner and as a result are seeking an alternative partner. However, given current market conditions, the Company and Blackspear have agreed an extension on a non-exclusive basis for Blackspear to meet the proof of funding condition precedent until 30 April 2015.

Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)

The Vele coking and thermal coal colliery ("Vele Colliery") recorded no LTIs during the quarter (FY2015 Q1: no LTIs).

During the quarter a historic BOA was signed by the Department of Environmental Affairs ("DEA"), South African National Parks Board ("SANparks") and CoAL to the value of R55 million ($4.7 million) over a 25 year period. The BOA is intended to promote the development of Mapungubwe so that it benefits the environment, the local economy and resident communities and provides an appropriate framework to manage the interface between mining operations and the Mapungubwe World Heritage Site.

The BOA is based on the ecosystem approach to biodiversity management, promoting the integrated management of land, water and natural capital and enhance co-operation between the three parties towards the conservation and sustainable development of the Mapungubwe World Heritage Site, safeguarding its integrity and ensuring that the negative impacts of development are avoided, minimised or remedied.

The Company previously submitted applications to amend the colliery's EA to include the plant modifications. These applications were approved by the DEA in early CY2015. The Company has also submitted applications to amend and renew Vele's IWUL and CoAL is confident these will be received during H1 CY2015. The current Vele Colliery IWUL is valid until March 2016 and the Company has delayed the commencement of the plant modification construction to Q3 CY2015 pending these approvals, which also gives the Company further time to assess the outlook for coal prices.

The FEED process for the Vele Colliery plant modification project undertaken by Sedgman South Africa was completed during the quarter. Changes to the plant modification design have resulted in a shortened construction period with the improvements resulting in the simultaneous production of semi-soft coking coal and thermal coal and the next stage of detailed design will commence upon project execution.

Makhado Coking Coal Project - Soutpansberg Coalfield (100% owned)

The Makhado coking coal project ("Makhado Project") recorded no LTIs (FY2015 Q1: no LTIs) during the quarter.

As required under South African mining legislation, a minimum 26% black economic empowerment ("BEE") shareholding is required for mining and exploration projects. CoAL previously signed a Memorandum of Agreement to enable a Broad Based Black Economic Empowerment ("BBBEE") consortium comprising seven local communities to acquire a 20% interest in the Makhado Project, subject to funding, and during the quarter the Company continued the process of identifying suitable BEE shareholders to acquire a further 6% of the project. These transactions will ensure that the Makhado Project has the requisite corporate structure for the granting of the NOMR.

During the quarter an interim court interdict was issued against the Makhado Project seeking to halt any mining or construction activity on the site. The Company, as one of the respondents, has commenced work with the other respondents to set aside the interim interdict. CoAL does not anticipate that this process will impede on the delivery timetable for the mine to come into commercial production during CY2019 as no construction or mining activities are anticipated during CY2015.

Greater Soutpansberg Project (MbeuYashu) (74% owned)

The MbeuYashu Project recorded no LTIs (FY2015 Q1: no LTIs) during the period.

During the quarter the Company continued to engage with stakeholders, in particular communities, in relation to the Greater Soutpansberg Project which comprises the Generaal, Chapudi and Mopane projects.

Corporate Update

During the previous quarter CoAL shareholders approved a two stage equity placement for the issue of up to 695 million shares for GBP0.055 raising approximately $64.9 million. This balance was calculated in August 2014 using an indicative exchange rate of GBP1:$1.70 which had weakened 8.6% to GBP1:$1.55 at the end of the quarter, resulting in the revised expected proceeds of $60 million. The 8.4% weakening of the ZAR:$ exchange rate between August and December 2014 partially mitigated the decline in the US$ receipts as the Company's future expenses are predominantly Rand denominated. The required regulatory approvals for stage 1 were received during November 2014 resulting in the issue of 295 million CoAL shares.

During December 2014 the Company announced that it had agreed with all participants in the equity placement to split the second stage of the placement into two parts. This stage was previously conditional on receipt from TMM Holdings (Pty) Ltd, of confirmation that it had received sufficient funding to fulfil its second stage funding commitment. The second stage of the equity placement was completed during December 2014 with the issue of 300 million ordinary shares and the third stage will result in the issue of 144 million shares, anticipated to be completed by April 2015.

Authorised by

David Brown

Chief Executive Officer

30 January 2015

For more information contact:

Company advisors:

Investec Bank Limited is the nominated JSE Sponsor

About CoAL:

CoAL is an AIM/ASX/JSE listed coal exploration and development company operating in South Africa. CoAL's key projects include the Vele Colliery (coking and thermal coal), Makhado Project (coking and thermal coal) and the Greater Soutpansberg Project /MbeuYashu.

Tenements held by CoAL and its Controlled Entities

* Form part of the Greater Soutpansberg Project

- Lapsed - Mining Right Application Lodged

-- Valid - Mining Right Application Lodged

~ Tenement located in the Republic of South Africa

^ Tenement located in Western Australia