Report for the Quarter Ended 30 September 2017

REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2017

MAKHADO LITE APPROVED BY COAL DIRECTORS AND UITKOMST OPERATIONS CONSOLIDATED

Coal of Africa Limited ("CoAL" or "the Company") which operates in South Africa, together with its subsidiaries, hereby provides its update for the quarter ended 30 September 2017 (the "Quarter"). 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 ("LTIs") recorded during the Quarter (FY2017 Q4: nil);

· Results consolidated for the Uitkomst metallurgical and thermal coal colliery ("Uitkomst Colliery" or "Uitkomst"), acquired effective 30 June 2017 from Pan African Resources Plc for R275 million ($20.3 million), of which R25 million ($1.8 million) is deferred;

· 165,432 tonnes ("t") of metallurgical, export quality and blended thermal coal sold by Uitkomst during the Quarter;

· CoAL Board approval of the Makhado hard coking coal 'Lite' project ("Makhado Project" or "Makhado") significantly reducing capital requirements and a shorter construction period; and

· Mooiplaats thermal coal colliery ("Mooiplaats Colliery") and the Vele coking and thermal coal colliery ("Vele Colliery") remained on care and maintenance.

Corporate and financial features

· Available cash at period end of $7.8 million and restricted cash of $0.05 million; and

· Positive coking and thermal coal price movements during the Quarter, principally due to market supply constraints.

Subsequent Events

· Sale of 100% of the Mooiplaats Colliery equity and claims for R179.9 million ($13.3 million); and

· Recommendation to CoAL shareholders to approve resolutions changing the Company's name to MC Mining Limited and, a 20 for one share consolidation, at the Annual General Meeting ("AGM") on 24 November 2017.

QUARTERLY COMMENTARY

Uitkomst Colliery - Utrecht Coalfields (91% owned - 70% post BEE transaction)

At the end of the June 2017 quarter the Company acquired a 91% interest in the Uitkomst Colliery, with the remaining 9% held by broad-based Black Economic Empowerment ("BEE") trusts, including employees and communities. The Uitkomst Colliery employs approximately 520 employees (including contractors) and reported no LTI's during the Quarter.

Uitkomst is a high grade thermal export quality coal deposit with metallurgical applications, comprising an existing underground coal mine and a planned life of mine ("LoM") extension. The Uitkomst Colliery has the required environmental and social permits in place and a remaining 17 years LoM. The colliery currently mines the south adit (horizontal shaft) and has applied for an amendment of its Integrated Water Use Licence ("IWUL") to include an adit to the north for its LoM extension. Uitkomst comprises well established infrastructure including a processing plant, power and water supplies, buildings, workshops, weighbridge and water storage facilities.

The south adit comprises two underground sections and during the Quarter Uitkomst mined through two dykes in section 2, adversely affecting production but with October 2017 production much improved the colliery expects to rectify the shortfall during the next two quarters. The colliery generated 125,108t of run of mine ("RoM") coal during the Quarter resulting in sales of 80,677t while slurry processed at the wash plant yielded sales of 36,489t. RoM coal purchased from nearby collieries and sold directly after blending added sales of 48,266t. The additional costs incurred to mine through the dykes resulted in mining costs per tonne being higher than anticipated.

Uitkomst sells sized coal (peas) products and the 0 to 40mm product is sold into the domestic metallurgical market for use as pulverised coal while peas produced at the colliery are supplied to local energy generation facilities. Uitkomst's marketing strategy ensures that it is positioned to take advantage of higher international coal prices and weakening of the South African Rand.

The unaudited numbers below are extracted from Uitkomst's management accounts for the Quarter.

In order to meet the requirements of the South African Mining Charter, the Company is in the process of selling an additional 21% interest in Uitkomst to BEE shareholders at the same value CoAL acquired the colliery. The sale will be on a vendor financed basis.

Makhado Coking Coal Project - Soutpansberg Coalfield (95% owned - 69% post BEE transaction)

The Makhado Project recorded no LTIs (FY2017 Q4: nil) during the Quarter.

CoAL remains committed to the sustainable development of the Makhado Project recognising its potential to drive significant socio-economic transformation, seeking co-operation between mining, agriculture and heritage land uses. The regulatory processes governing mining are complex and time consuming and the Company has secured a New Order Mining Right ("NOMR"), IWUL and, an Environmental Authorisation ("EA") for the Makhado Project, ensuring it has the required permits to commence construction. The Company requires access to the key Lukin and Salaita farms to confirm geotechnical information prior to the construction of Makhado, and final resolution of this matter remains outstanding.

CoAL strives to unlock near-term shareholder value from its flagship Makhado Project and this resulted in an assessment of the 2013 Makhado Project Definitive Feasibility Study ("DFS"). During the Quarter the CoAL Directors approved the revised Makhado development plan resulting in reduced capital expenditure, a shorter construction period leading to earlier than planned production, an extended LoM and, an amended sales and marketing strategy. Makhado Lite is expected to deliver similar, positive internal rate of return despite the proposed lower output and required updates to costs used in the DFS, with proposals for full mining services sourced from various contract mining companies while turnkey processing plant construction and operating quotes were obtained from potential service providers. The Makhado Lite model uses the same Resource and Reserves as the DFS and anticipates hard coking coal yields of 19.0% (DFS: 18.8%) and thermal coal yields of 25.1% (DFS: 25.8%).

The DFS development plan envisaged a 26-month construction phase followed by a four month ramp-up to produce 5.5 million tonnes per annum ("mtpa") of saleable hard coking and thermal coal. The capital required to complete this was $281 million ($406 million before foreign exchange fluctuations) while estimated peak funding to develop Makhado Lite will be between $90 million and $110 million with a project payback period of four years. The revised strategy anticipates that Makhado Lite will be constructed in 12 months and allows for future expansion of mining and processing if appropriate. It is anticipated that the project will produce approximately 1.7 mtpa of saleable coal, comprising 0.7 mtpa to 0.8 mtpa of hard coking coal and 0.9 mtpa to 1.0 mtpa of export quality thermal coal. The DFS envisaged supplying thermal coal to Eskom, the state power utility, while Makhado Lite will generate export quality thermal coal which could be sold internationally. The Company has commenced hard coking and export thermal coal off-take discussions with various parties and expects that a substantial portion of Makhado's hard coking coal will be sold locally with the balance sold on international markets.

The table below compares the results of the original Makhado Project (as per the DFS) with Makhado Lite.

 *Makhado Lite parameters are based on internal CoAL estimates and assumptions.

**Based on mining the east and central pits only, the inclusion of the west pits increases the LoM to >35 years.

***Makhado Lite based on 5,200 kcal specification coal while the DFS used estimated long term Eskom pricing.

Mooiplaats Thermal Coal Colliery - Ermelo Coalfield (74% owned)

The Mooiplaats Colliery remained on care and maintenance throughout the Quarter. No LTIs were recorded during the period (FY2017 Q4: nil).

The continued commitment to delivering a successful Mooiplaats Colliery sale transaction resulted in the Company signing sales agreements post the end of the Quarter. The suspensive conditions related to the sales transaction are expected to be completed during Q2 FY2018 and will result in 100% of the Mooiplaats Colliery equity and claims being disposed of for R179.9 million ($13.3 million).

Vele Coking and Thermal Coal Colliery - Limpopo (Tuli) Coalfield (100% owned)

The Vele Colliery remained on care and maintenance throughout the Quarter and no LTIs were recorded during the period (FY2017 Q4: nil).

CoAL awaits the granting of an IWUL by the Department of Water & Sanitation, the final approval required to complete the regulatory approvals process for the stream diversion in respect of future mining. Once all regulatory approvals are in place, the Company will be in a position to consider prevailing market pricing and the ability to finalise profitable off-take agreements in order to conclude an investment decision on the requisite plant modifications.

Greater Soutpansberg Project (MbeuYashu) (74% owned)

The MbeuYashu Projects recorded no LTIs (FY2017 Q4: nil) during the three months.

No further developments to report during the Quarter.

Corporate

CoAL continues to restructure its balance sheet to ensure overheads are appropriately controlled and the Company is well positioned to unlock shareholder value. This resulted in the acquisition of the Uitkomst Colliery during the previous quarter, CoAL Board approval for Makhado Lite during the Quarter and, the sale of the Mooiplaats Colliery at the end of September 2017. CoAL is reviewing potential second cash generator prospects as well as the disposal of further non-core assets and a rationalisation of bourses on which it is listed.

CoAL was considered an appropriate name as it defined the Company's geographic and operational focus and it is the view of the present Board that the Company re-brand to reflect its potential growth, particularly of its hard coking coal (metallurgical coal) prospects. The Directors also believe that the settlement of all material legacy issues presents an opportunity to better endorse the Company to the wider investment community. As a result, it is proposed that Coal of Africa Limited's name be changed to 'MC Mining Limited' and has requested shareholders pass a special resolution at the 24th November 2017 AGM, adopting the Company's new name.

The Company has a disproportionately large number of shares in issue due to historical equity-based capital raisings and this is a disincentive for institutional investors to invest in CoAL as their mandates inhibit them from investing in stocks where unit prices are too low. As a result, the Company's Directors have recommended that shareholders approve 20 for one consolidation of the Company's issued capital at the November AGM.

Markets

The hard coking coal price continued to increase during the Quarter due to short term supply constraints owing to adverse weather and infrastructure constraints. The current international price movement underpins the tightness of world supply and, as such, is positive for longer term pricing. Thermal coal prices have also reflected more positive fundamentals in the short term with the API4 index increasing 16% during the Quarter to approximately $95/t due to increased international demand.

David Brown, CEO commented:

"I am pleased to report on another extremely positive Quarter for CoAL as we integrated the Uitkomst Colliery into our portfolio and advanced the sale of the non-core Mooiplaats Colliery, resulting in its disposal at the end of September 2017. The Uitkomst acquisition transformed CoAL into a coal producer and we are now well positioned to take advantage of higher global coal prices. The Company is currently assessing Uitkomst's coal marketing options to maximise returns given the upward trend in export coal prices."

"The review of the Makhado Project resulted in the Company's Directors approving the Makhado Lite Project. Makhado's rationalised production profile significantly reduces execution risk and will ensure that CoAL's flagship project is brought into production faster than previously anticipated with a lower capital expenditure. The Makhado Lite Project has the requisite regulatory approvals and the Company is working to secure access to two key properties that allows us to complete the confirmatory geotechnical work required before construction commences to ensure the project footprint is appropriately positioned. The Company anticipates that this will be resolved in either late H1 FY2018 or early H2 FY2018 with construction following in H1 FY2019. The accelerated build-plan positions Makhado to be able to take advantage of higher hard coking and thermal coal prices, delivering positive returns for shareholders in the near-term."

Authorised by

David Brown

Chief Executive Officer

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 Uitkomst Colliery, Makhado Project (coking and thermal coal), Vele Colliery (coking and thermal coal) and the Greater Soutpansberg Projects (MbeuYashu).

This announcement is inside information for the purposes of article 7 of EU Regulation 596/2014.

Forward-Looking Statements

This Announcement, including information included or incorporated by reference in this Announcement, may contain "forward-looking statements" concerning CoAL that are subject to risks and uncertainties. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond CoAL's ability to control or estimate precisely, such as future market conditions, changes in regulatory environment and the behaviour of other market participants. CoAL cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward looking statements. CoAL and MCH assume no obligation and do not undertake any obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent legally required.

Statements of intention

Statements of intention are statements of current intentions only, which may change as new information becomes available or circumstances change.

Tenements held by CoAL and its Controlled Entities

* Form part of the Greater Soutpansberg Projects

- Lapsed - Mining Right Application Lodged

-- Valid - Mining Right Application Lodged

~ Tenement located in the Republic of South Africa

^ Tenement located in Western Australia

# CoAL's interest will reduce to 69% owned on completion of the Broad Based BEE transaction

∞ The Company has formally agreed to sell these tenements

µ 70% post BEE transaction