ANNOUNCEMENT 7 January 2013 Memorandum of Understanding signed with Vitol Group

Coal of Africa Limited ("the Company" or "CoAL") is pleased to announce the signing of a binding Memorandum of Understanding ("the MOU") with the Vitol Group of Companies ("Vitol"). Under the terms of the MOU, which the Company will be operating under from the date of the agreement, Vitol has been appointed as the Company's exclusive marketing agent for all export thermal and coking coal for a period of eight years, except for the Makhado product where the marketing period is five years from the start of production. The coal available under this MOU excludes all coal subject to current agreements that are in place as well as any coal off-take that may be agreed with the Company's strategic equity partners.
In addition, an agreement has also been reached between CoAL and Grindrod whereby Grindrod has agreed that, whilst CoAL's option to take up capacity for any Phase 4 Expansion at the TCM export terminal in Maputo ("TCM") remains intact, CoAL is no longer obliged to fund its own share of the capital for the Phase 4 expansion.
CoAL CEO, John Wallington said, "This MOU not only formalises our strategic relationship with Vitol but also provides CoAL with access to a global marketing network that will greatly assist the development of export markets for our coking and thermal coal products as we bring our Vele and Makhado projects online. In addition, our growing relationship with Vitol will assist CoAL with mitigating any take or pay obligations at TCM as we develop both Vele and Makhado and begin exporting."

Bob Finch, Head of Vitol Coal, said "We are delighted to have entered into this partnership with CoAL. It expands our coal trading portfolio and reaffirms our commitment to the South African coal industry, as well as helping to develop the activities of TCM and underpinning the Phase IV expansion plans."

For more information contact:

David Brown

Chairman

Coal of Africa

+27 11 575 4363

John Wallington

Sakhile Ndlovu

Tony Bevan

Chief Executive Officer

Investor Relations

Company Secretary

Coal of Africa

Coal of Africa

Endevour Corporate Services

+27 11 575 4363

+27 11 575 6858

+61 08 916 9100

Company advisors:

Jos Simson/Emily Fenton

Financial PR (United Kingdom)

Tavistock

+44 20 7920 3150

Suite 8,7 The Esplanade, Mt Pleasant, Perth WA 6153, Australia, Tel: +61 8 9316 9100, Fax: +61 8 9315 5475, Email: perth@coalofafrica.com CAN 008 905388

ZA: 2nd Floor, Gabba Building, The Campus, 57 Sloane Street, Bryanston, Johannesburg, South Africa 2021, Tel: +27 11 575 4363, Fax: +27 11 576 7484, Email: adminza@coalofafrica.co.za

UK: 5th Floor, 33 St. James's Street, London, SW1A 1HD, United Kingdom, Tel: +44 (0) 20 7839 8840, Fax: +44 (0) 20 7004 0959

David H. Brown - Chairman, John N. Wallington - Chief executive officer, Professor N. A. Nevhutanda - Corporate affairs director, Bernard R. Pryor - Non-executive director, Peter G. Cordin - Non-executive director, Khomotso B. Mosehla - Non-executive director, Dave J. K. Murray - Non-executive director, Rudolph H. Torlage - Non-executive director

Chris Sim/Neil Elliot

Charmane Russeii/James Duncan

Nominated Adviser

Financial PR (South Africa)

lnvestec Bank pie

Russell & Associates

+44 20 7597 5970

+27 11880 3924 or

+27 82 372 5816

lnvestec Bank Limited is the nominated JSE Sponsor

About CoAL:

CoAL is an AIM/ASX/JSE listed coal explor ation,development and mining company operating in South Africa.CoAL's key projects include the Vele Colliery (coking and thermal coal), the Greater Soutpansberg Pr oject, including CoAL's Makhado Project (coking coal) and the Mooiplaats and Woestalleen Collieries (both ther mal coa l).

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