Mc Mining Regulatory News (MCM)

ANNOUNCEMENT 30 April 2014

REPORT FOR THE QUARTER ENDED 31 MARCH 2014

 Completion of key milestones in the repositioning of CoAL

Coal of Africa Limited ("CoAL" or "the Company") which operates in South Africa, together with its subsidiaries, hereby provides its operational report for the quarter ended 31 March 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 Features

· The focus on safety continued during the period with one lost-time injury recorded during the quarter (FY2014 Q2: nil).

· Section 11 approval granted by the Department of Mineral Resources for the sale of the Woestalleen Complex for R80 million ($7.6 million).

· Approval by the Department of Mineral Resources for the sale of the Opgoedenhoop mining right for R20.8 million ($2 million).

· Appointment of Sedgman as engineer for the front-end engineering and design ("FEED") process of the Vele Colliery plant modification project.

· Submission of applications for regulatory approvals required for the Vele plant modifications.

Corporate and Financial Features

· Signature of a Memorandum of Agreement with seven communities located in the proximity of the Makhado Project, ensuring a broad based BEE structure is in place.

· Disposal of shares in AIM listed Bushveld Mining Limited, realising $1.8 million.

· Appointment of David Brown as CoAL's Chief Executive Officer and Bernard Pryor as Chairman, effective 1 February 2014.

· AMSA confirms coal quality of Vele's proposed semi-soft coking coal product.

· Available cash at period end of $8.9 million.

Post period highlights

· Independent consultants Snowden Group are appointed and commence with a Technical Review of the Vele Colliery plant modification, expected to be completed by the end of H2 FY2014.

Commenting today, Mr David Brown, Chief Executive Officer said: "The regulatory approvals received during the quarter resulted in the satisfying of conditions required for the disposal of the non-core Woestalleen Complex and Opgoedenhoop assets. These disposals are significant milestones in the Company's strategic turnaround strategy and a portion of the proceeds from the sale will be used to reduce the Investec working capital facility exposure.

The appointment of Sedgman to complete the Vele plant modification FEED is a critical step to ensuring the colliery's ability to process 2.7 million tonnes of ROM coal annually. The Company has also continued to engage with funders and potential customers. The FEED process is expected to be completed by the end of June 2014 and will enable CoAL to arrive at a class 1 - EPC estimate with construction due to commence during July 2014, subject to the project delivering an acceptable return which will be supported by off-take agreements."

QUARTERLY COMMENTARY

Woestalleen Complex - Witbank Coalfield (100% owned)

The Woestalleen processing facility recorded one lost time injury ("LTI") during the quarter (FY2014 Q2: nil LTIs).

During the quarter, the Company received Section 11 approval from the Department of Mineral Resources ("DMR") for the sale of all of the equity and loan accounts in NuCoal Mining Proprietary Limited ("Woestalleen Complex") resulting in the sale consideration of R80 million ($7.6 million) paid to CoAL. The DMR also approved the sale of the undeveloped Opgoedenhoop mining right resulting in the deposit of R5 million ($0.5 million) becoming payable, with the R15.8 million ($1.5 million) balance of the purchase price payable within 12 months.

In terms of the interim agreement with the purchaser of the Woestalleen Complex, the Company continued to process third party run of mine ("ROM") coal on a cost recovery plus margin basis.

Mooiplaats Colliery - Ermelo Coalfield (74% owned)

The Mooiplaats thermal coal colliery ("Mooiplaats") was placed on care and maintenance during the September 2013 quarter and recorded no LTIs during the period (FY2014 Q2: nil LTIs).

The Mooiplaats disposal process continued during the period and negotiations with prospective purchasers are at an advanced stage. The Company expects to complete a transaction during H2 CY2014.

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

The Vele coking and thermal coal colliery ("Vele Colliery") recorded no LTIs during the quarter (FY2014 Q2: nil LTIs).

Operations at Vele were previously downscaled pending the start of the construction phase of the plant modifications. The colliery did not produce or process ROM coal during the quarter (FY2014 Q2: 7,068 ROM tonnes) but continued negotiations with long-term off-take customers and, potential project funders.

During the quarter, the Company appointed Sedgman South Africa ("Sedgman") as engineer for the FEED for the Vele Colliery plant modification project. The FEED process, which commenced during March 2014, is expected to take three months to complete and includes the following processes:

· improvements to the existing plant;

· addition of ROM handling, crushing and screening sections;

· de-stoning and sized coal screening plants;

· classifier and a froth flotation plant for the beneficiation of the fines and ultra-fines; and

· product and discard stockpiling and load-out facilities.

The plant modification will result in the simultaneous production of semi-soft coking coal, sized thermal coal for the domestic market and Eskom quality thermal coal and, is expected to be completed during H1 CY2015 followed by a production ramp-up phase.

During the quarter the Company submitted all necessary applications to align the Vele plant modification process with the requirements of Section 24G of the National Environmental Management Act. The Company expects to receive the relevant responses during the June 2014 quarter.

Following successful tests by ArcelorMittal South Africa Limited ("AMSA") of Vele coal, the Company received a Letter of Intent for the supply of coal in January 2014. Both AMSA and CoAL wish to convert the LoI into a formal off-take agreement dependent on agreement on pricing parameters. Furthermore Eskom, the state power utility, successfully undertook combustion tests on Vele thermal coal and further discussions will be scheduled.

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

The Makhado coking coal project ("Makhado Project") recorded no LTIs (FY2014 Q2: no LTIs) during the quarter.

During the period the Company submitted the outstanding documents required for the processing of the New Order Mining Right ("NOMR") and Integrated Water Use Licence applications. In terms of South African mining legislation a minimum 26% Black Economic Empowerment ("BEE") shareholding is required for mining and exploration projects. During the quarter, the Company signed a Memorandum of Agreement to enable a broad based BEE consortium comprising seven local communities (20%) and future employees (6%) to acquire 26% of the Makhado Project. This initiative will ensure that the project has the requisite corporate structure for the granting of the NOMR.

Greater Soutpansberg Project (MbeuYashu) (74% owned)

The MbeuYashu Project recorded no LTIs (FY2014 Q2: no LTIs) during the period.

The Company continued the public participation programmes in relation to the Environmental Impact Assessment phase for the Generaal, Chapudi and Mopane projects and the Environmental Management Programmes for the three project areas were finalised and submitted to the DMR during the March 2014 quarter.

Cash Position

Receipts from coal sales for the three months increased to $3.5 million (FY2014 Q2: $1.9 million) as outstanding balances were collected. The scaling down of activities at the Company's projects resulted in production expenses declining to $0.5 million (FY2014 Q2: $3.9 million); $0.6 million (FY2014 Q2: $5.3 million) was spent on the Vele Colliery; and $0.5 million (FY2014 Q2: $2.4 million) was paid for logistics as a result of Take or Pay obligations at the Matola Terminal in Mozambique. During the quarter the Company increased its restricted cash balance by $1.2 million (FY2014 Q2: $nil) with the issue of guarantees to secure power for the Makhado Project and, for the FEED process. During the period the Company received $7.6 million from the disposal of the Woestalleen Complex while the first tranche of proceeds of $0.5 million from the sale of Opgoedenhoop was received in the June 2014 quarter.

The estimated June 2014 quarter cash outflows included in the 5B report (attached to this commentary) is expected to be $2.6 million of which $0.6 million will be spent on development, which includes costs associated with the detailed design of the Vele plant modification. Estimated production costs of $0.4 million for the three months relate to net expenses at the Mooiplaats operations, while administration expenses of $1.5 million will be incurred to cover all other overhead costs. These will all be paid from current cash balances and the proceeds from the sale of non-core assets.

Strategic and Corporate Update

The Company has made significant progress on the Five Point Turnaround Strategy since its implementation 12 months ago. The Company is currently focused on finalising the following outstanding items in order to complete the Turnaround Strategy and successfully reposition CoAL.

1. Sale of Non-Core Assets: Mooiplaats is the only remaining non-core asset available for sale and the Company has been engaged in a formal sales process. The Company is committed to assisting interested parties in the process of completing feasibility studies and application for funding (where applicable) in order to table a successful sale during H2 CY2014.

2. Arbitration: The Envicoal arbitration is currently in process and once finalised, will resolve all material legal claims. Further details of the matter are set out in the interim financial report for the period ended 31 December 2013.

3. Outstanding Liabilities:

· Rio Tinto: An amount of $30million will become payable to Rio Tinto during the course of CY2014. This amount relates to the remainder of the purchase price for the Greater Soutpansberg assets acquired during CY2012 for a total of $75million. The Company is engaged in negotiations with Rio Tinto in order to reach an agreement on payment terms that is suitable for both parties.

· Grindrod Take or Pay liability: The Company is in the process of finalising a settlement of the Take or Pay liability for the remaining term of the contract ending end CY2016. In addition the Company will negotiate future port allocation to enable it to export coal when the Vele and Makhado projects are in production.

4. Vele funding and off-take agreements: The three month FEED process for the planned plant modification has commenced, due for completion by the end of June 2014, and is scheduled to coincide with the finalisation of the funding as well as off-take agreements for the Vele Colliery.

Authorised by

David Brown

Chief Executive Officer

30 April 2014

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, development and mining company operating in South Africa. CoAL's key projects include the Vele Colliery (coking and thermal coal), the Greater Soutpansberg Project /MbeuYashu, including CoAL's Makhado Project (coking and thermal coal).

Tenements held by CoAL and its Controlled Entities

* Form part of the Greater Soutpansberg Project

** Part of the investment in NuCoal Mining Proprietary Limited (Woestalleen Complex)

- Lapsed - Mining Right Application Lodged

-- Valid - Mining Right Application Lodged

~ Tenement located in the Republic of South Africa

^ Tenement located in Western Australia