Mc Mining Regulatory News (MCM)

ANNOUNCEMENT 23 October 2014

REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2014

 Coal of Africa moves forward

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 30 September 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

· No lost-time injuries recorded during the quarter (FY2014 Q4: nil).

· Work continued on the applications to amend the Environmental Authorisation for the Vele Colliery to include the plant modifications and the Company is confident that the record of decision from the Department of Environmental Affairs will be received during the current quarter.

· Extensive work to amend and renew the Vele Colliery's IWUL to include the plant modifications resulted in the submission of the application during September 2014 and a decision is anticipated in H1 CY2015.

· Discussions with potential customers for the Vele Colliery coal continued and the Company expects to convert these into formal off-take agreements in CY2015.

· Sedgman continued with the Front End Engineering and Design ("FEED") process for the Vele Colliery plant modification, expected to be completed during Q4 CY2014.

Corporate and Financial Features

· Shareholder approval for a two stage equity placement raising up to $64.9 million.

· Signature of an Sale and Purchase Agreement ("SPA") for the disposal of the non-core Mooiplaats Colliery subject to the purchaser's confirmation of funding, expected to be finalised by the end of October 2014.

· Agreement reached with Grindrod Corridor Management Proprietary Limited and Terminal de Carvão da Matola Limitada, settling current liabilities and covering all take or pay obligations until 31 December 2016 on the payment of $10 million, $6 million of which is payable on completion of the first stage of the equity placement.

· Discussions continued with potential funders to facilitate a BEE acquisition of up to 26% in the Makhado Project.

· Discussions on the outstanding $30 million payment to Rio Tinto liability continued during the quarter.

· Restructuring of rehabilitation guarantees resulted in the release of R27 million ($2.4 million) of restricted cash.

· Available cash at period end of $1.3 million and restricted cash of $3.9 million.

Post period highlights

· Historic Biodiversity Offset Agreement for the Vele Colliery signed by the Company with the Department of Environmental Affairs and South African National Parks.

· Replacement rehabilitation guarantees lodged by the buyer of the Woestalleen Complex resulting in the release of approximately $1.7 million, expected to occur during October 2014.

Commenting today, Mr David Brown, Chief Executive Officer said: "Progress made during the September 2014 quarter reflects the culmination of several initiatives undertaken by management while shareholder approval for the issue of additional equity records their continued support for the Company and its growth strategy. The proposed disposal of the Mooiplaats Colliery ensures that CoAL is positioned to focus on the development of its significant coking and thermal coal assets in the Limpopo Province. The Company anticipates receiving the final approvals for the capital raise during late October or early November 2014 and if not received in these timeframes, cash preservation measures will have to be implemented. In this scenario the forecast expenditure set out in the 5B report also issued today would have to be reviewed and an update provided. Proceeds from the capital raise and the income from the disposal of non-core assets will be used to repay the Investec working capital facility in accordance with its terms, settle all outstanding liabilities over time and advance the Company's projects.

The remaining milestones in the Company's turnaround strategy are the regulatory approvals for Makhado and the funding of that project's BEE partners. The Company will continue to progress the regulatory process during the current quarter with a view that this will facilitate the granting of the NOMR for the project, the Company's flagship hard coking and thermal coal asset. These processes will hopefully be concluded by the end of this calendar year permitting the commencement of funding initiatives for the project in Q1 CY2015."

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 (FY2014 Q4: no LTIs).

During the quarter the Company signed a SPA with a wholly owned subsidiary of Blackspear Holdings Proprietary Limited ("Blackspear") for the disposal of the Mooiplaats Colliery for R250 million ($22.2 million). On fulfilment of all conditions precedent, including the receipt of regulatory approvals consistent with a transaction of this nature, the consideration will be settled in two tranches:

· Tranche 1 of R150 million ($13.3 million) expected to be received during Q1 CY2015; and

· Tranche 2 of R100 million ($8.9 million) is payable on the earlier of 12 months from the payment of the first tranche or, 30 November 2015.

Blackspear is required to provide CoAL with evidence of funding on or before 31 October 2014 with guarantees supplied by 31 December 2014 and will commence monthly payments of R2.3 million ($0.2 million) from November 2014. These monthly payments will increase to R4 million ($0.4 million) from February 2015 and will continue until the conditions required for the first payment tranche are satisfied.

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

The Vele coking and thermal coal colliery ("Vele Colliery") recorded no LTIs during the quarter (FY2014 Q4: no LTIs).

Sedgman South Africa ("Sedgman") continued with the FEED process for the plant modification project which is expected to be completed during Q4 CY2014 and improvements to the existing plant will result in the simultaneous production of semi-soft coking coal and export quality thermal coal.

The Company has finalised the applications required to amend the colliery's Environmental Authorisation ("EA") to include the plant modifications and is confident that the record of decision from the Department of Environmental Affairs ("DEA") will be received during Q4 CY2014. Extensive work to amend and renew the Vele's Integrated Water Use Licence ("IWUL") resulted in the submission of the application during September 2014 and the Company anticipates that approval will be received in 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 the approval of the amended EA and the granting of the IWUL renewal. Changes to the plant modification design have resulted in a shortened construction period which is expected to be complete by the end of CY2015 and the production ramp-up phase concluded in early CY2016.

Discussions with potential customers for the Vele Colliery coal continued during the quarter and the Company expects to convert these into formal off-take agreements during CY2015.

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

The Makhado coking coal project ("Makhado Project") recorded no LTIs (FY2014 Q4: 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 and the Company is in 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 New Order Mining Right ("NOMR").

Greater Soutpansberg Project (MbeuYashu) (74% owned)

The MbeuYashu Project recorded no LTIs (FY2014 Q4: no LTIs) during the period.

During the quarter the Company completed the public participation programmes in relation to the Environmental Impact Assessment phase for the Generaal, Chapudi and Mopane projects, all forming the Greater Soutpansberg Project.

Authorised by

David Brown

Chief Executive Officer

23 October 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

- Lapsed - Mining Right Application Lodged

-- Valid - Mining Right Application Lodged

~ Tenement located in the Republic of South Africa

^ Tenement located in Western Australia