Exercise of Options

-ANNOUNCEMENT 9 SEPTEMBER 2011

CONVERSION OF OPTIONS AND SECONDARY TRADING NOTICE

Coal of Africa Limited ('CoAL' or the 'Company') confirms it has today issued 500,000 ordinary shares pursuant to the exercise of Class A Options at an exercise price of 50 cents per share ("Shares").

Application has been made for the 500,000 Shares to be admitted to trading on the AIM market of the London Stock Exchange ("Admission"). Admission is expected to become effective on 9 September 2011. The Shares will rank pari passu with the Company's existing Ordinary Shares.

Following the admission of the Shares, the number of Ordinary Shares on issue will be 531,639,661.

Secondary Trading Notice Pursuant to Paragraph 708A(5)(e) of the Corporations Act 2001 ("Act")

The Act restricts the on-sale of securities issued without disclosure, unless the sale is exempt under section 708 or 708A of the Act. By giving this notice, a sale of the Shares noted above will fall within the exemption in section 708A(5) of the Act.

The Company hereby notifies ASX under paragraph 708A(5)(e) of the Act that:

(a) the Company issued the Shares without disclosure to investors under Part 6D.2 of the Act;

(b) as at 9 September 2011, the Company has complied with the provisions of Chapter 2M of the Act (other than section 319 in relation to a financial year ended in the calendar year 2004) as they apply to the Company, and section 674 of the Act; and

(c) as at 9 September 2011 there is no information:

a. that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

b. that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of:

i. the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; or

ii. the rights and liabilities attaching to the relevant Shares.

AUTHORISED BY:

Shannon Coates

Company Secretary

John Wallington Chief Executive Officer Coal of Africa +27 11 575 7423

Wayne Koonin Financial Director Coal of Africa +27 11 575 6797

Shannon Coates Company Secretary Coal of Africa +61 893 226 776

Chris Sim/Romil Patel Nominated Adviser Evolution Securities +44 20 7071 4300

Jos Simson/Emily Fenton Financial PR Tavistock +44 207 920 3150

www.coalofafrica.com

About CoAL:

CoAL is an AIM/ASX/JSE listed coal mining and development company operating in South Africa. CoAL's key projects include the Vele Colliery (coking coal), the Makhado Project (coking coal) and the Mooiplaats and Woestalleen Collieries (both thermal coal).

The Mooiplaats Colliery commenced production in 2008 and is currently ramping up to produce 2 million tonnes per annum ("Mtpa"). CoAL's Vele Colliery and Makhado Project are expected to start production in the first half of 2012 and the second half of 2014 respectively. These operations are targeted to collectively produce an initial 1Mtpa ramping up to a combined annual output of 10Mtpa of coking coal.

In 2010, CoAL completed the ZAR467m acquisition of NuCoal Mining (Pty) Limited ("NuCoal"), a thermal coal producer with assets in South Africa in close proximity to CoAL's Mooiplaats Colliery. NuCoal owns the Woestalleen Colliery, which has a number of off-take contracts in place and processes approximately 2.5Mtpa of saleable coal for domestic and export markets. The Woestalleen Colliery also incorporates two beneficiation plants with a total processing capacity of 350,000 run of mine feed tonnes per month.

In November 2010, CoAL agreed to acquire the Chapudi coal project and several other coal exploration properties in the Soutpansberg coal basin in South Africa from the previous owners, including Rio Tinto. When completed, the acquisition of these projects will significantly extend the scale and scope of certain of CoAL's existing projects in the region and will more than double the resource of the existing Makhado Project.