Update on the re-opening of Vele colliery

-ANNOUNCEMENT 4 AUGUST 2011

UPDATE ON THE RE-OPENING OF VELE COLLIERY

Coal of Africa Limited ("CoAL" or "the Company") is pleased to advise that, following the granting of Environmental Authorisation to its subsidiary, Limpopo Coal Company for Vele Colliery on 5 July 2011, and compliance with certain conditions, initial activities relating to the re-opening of the colliery have started.

The inspection and completion of the coal treatment wash plant are immediate priorities. Work in preparation for re-employing mining employees has also commenced.

Currently, as announced on 29 July 2011, activities at the Vele Colliery that require water use remain suspended.

The Company will advise the market of the significant developments in this regards.

JOHN WALLINGTON

Chief Executive Officer

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

Wayne Koonin Finance Director Coal of Africa +27 11 575 4363

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

Melanie de Nysschen/ Annerie Britz/ JSE Sponsor Macquarie +27 11 583 2000

Yvette Labuschagne

Charmane Russell/James Duncan Financial PR S.Africa Russell & Associates +27 11 880 3924

+27 82 372 5816

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 first half of 2013 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.