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Penumbra Project Commencement and AIM Listing

PENUMBRA PROJECT COMMENCEMENT AND AIM LISTING Key Points Penumbra Coal Project mine development to proceed following tendering of final development contracts, with the mobilisation of contractors to site within two weeks, fully funded by ABSA Capital and proceeds from the SIOCcdt transaction Continental to list on the London Stock Exchanges AIM Market on or about 19 September 2011 Operating performance at the Companys Ferreira and Vlakvarkfontein Coal Mines continues to meet expectations with runofmine coal production of 149,155t in July 2011 Exploration on the Companys Botswana thermal coal projects to commence with appointment of drilling contractors to be concluded Share consolidation to proceed with the last day for trading in preconsolidated securities being the 25 August 2011. South African focused thermal coal mining and production company Continental Coal Limited ( CCC) (Continental or the Company) is pleased to provide this corporate and operational update on the Companys activities including its listing on the London Stock Exchanges AIM Market and the commencement of the Penumbra Coal Project development. PENUMBRA COAL PROJECT DEVELOPMENT TO COMMENCE The Company is pleased to confirm that it has proceeded with TWP Consulting, as its appointed EPCM contractor to manage the execution of the Penumbra Coal Project underground mine development, to finalise the award of the main outstanding construction contract for the civil contractor. Mobilisation of all key contractors to the development site and the commencement of civil works, the shaft portal excavation, terracing and pollution control measures will now commence with no further delays to the development activities anticipated by the Company. Activities at the Penumbra Coal Project site are scheduled to increase significantly over the month of September and throughout the December quarter as excavation of the boxcut and major civil works and environmental and pollution control measures proceed. Production from the Penumbra Coal Project is forecast to achieve a targeted rate of 750,000tpa runofmine in the third quarter of 2012.

The Company will provide regular updates to its shareholders on activities at site throughout the construction and development phase. The Penumbra Coal Project is forecast to be developed at capital costs of ZAR284m (approx. A$40m) as set out in the Bankable Feasibility Study. The major of the capital expenditure will be incurred in 2011/12 on development and infrastructure of the underground mine. There is no major additional capital expenditure associated with the coal wash plant, as the runofmine coal produced at the Penumbra Coal Project will be beneficiated through the existing Delta Processing Operations (which is currently processing production from the Companys Ferreira Coal Mine) and railed from the 1.2Mtpa Anthra Rail Siding through to RBCT under existing offtake agreements. Mine development will commence in September with the boxcut followed by the sinking off the declines, which have been positioned in order to access good quality coal with as little onseam development as possible.

Excavation of the boxcut into unweathered and competent bedrock and mining of twin declines at a 17 inclination from the highwall will proceed down to the CLower coal seam. The declines will be approximately 300m long, one equipped with a conveyor and the second serving as a trackless equipment travelling route. The declines will also serve as the primary ventilation intakes of the mine.

Two mechanised coal production sections are planned, each with a continuous miner, one section equipped with three shuttle cars, better suited to mid seam mining heights and one section equipped with battery haulers, better suited to low seam mining heights. The mine development is to be fully funded from both secured debt facilities and existing cash from operations, from cash balances and from the proceeds of the recently announced Broad Based BEE transaction. The Company and its debt financiers ABSA Capital, a division of ABSA Bank Limited are progressing the aggregate secured debt funding facilities of approx. US$65m that in addition to part funding the development costs of the Penumbra Coal Project will also be used to refinance the secured EDF Trading coal prepayment facility and provide general working capital for the Company in South Africa.

Legal documentation and satisfaction of the outstanding due diligence sign offs is continuing and the Company anticipates commencement of the drawdown of funds late in the September 2011 quarter. LISTING ON THE LONDON STOCK EXCHANGES AIM MARKET The Company is pleased to advise that it has today lodged its Preadmission Announcement for the admission of the Companys ordinary shares to trade on the London Stock Exchanges AIM Market ("AIM Admission"). Allowing for the required 20 business day notice period, it is anticipated that the Company will be admitted to AIM on or about 19 September 2011. The Companys ordinary shares will continue to be listed and trade on the ASX. RFC Corporate Finance Ltd is acting as the Companys Nominated Adviser and GMP Securities Europe LLP and Renaissance Capital Ltd are acting as the Companys joint AIM Brokers in relation to the AIM Admission. As part of the AIM Admission process, the Directors, other than Bruce Buthelezi who has announced his intention to resign prior to the AIM Admission, and their associates have agreed not to dispose of any of their securities currently held in the Company for one year from date of admission to AIM. Further information is contained in the AIM Pre Admission Announcement and Appendix that has been submitted to the London Stock Exchange and will be available on the Companys website following release by AIM.

This includes a Competent Persons Report prepared by SRK Consulting on the Companys coal projects. The Company believes that the AIM Admission will provide the Company with improved access to global investors and institutional support and to a market that has a proven record of having invested and supported resource project development, in particular in Africa, since the turn of the last century. OPERATING PERFORMANCE AT THE FERREIRA AND VLAKVARKFONTEIN COAL MINES During the month of July the Companys operations at the Ferreira and Vlakvarkfontein Coal Mines continued to meet expectations. At the Ferreira Coal Mine monthly runofmine production for July of 60,830t exceeded the average monthly production of 59,812t for the June 2011 quarter and outstripped the previous 42,744t and 28,370t for the March 2011 and December 2010 quarters respectively. During the month the Delta Processing Operations washed a total of 81,562t of ROM coal, a 7% increase on the average monthly volume washed during the June 2011 quarter and a 25% increase on the average monthly volume washed in the March 2011 quarter. Production of 44,373t of a primary export thermal coal product from the Ferreira Coal Mine was achieved in July and 4,621t of a secondary domestic product.

Total railings in July of 45,373t of an export thermal coal product were completed to the Richards Bay Coal Terminal and sold at an average nett realised price of US$110/t FOB. At the Vlakvarkfontein Coal Mine, runofmine production for July of 88,352t places the Company well on track to achieve the budgeted quarterly production. Domestic sales for July of 119,471t exceeded the average monthly sales of 83,337t for the June Quarter by 30%. Negotiations for a direct 3 year contract for thermal coal with Eskom Limited are at an advanced stage. COMMENCEMENT OF BOTSWANA EXPLORATION The Company has now finalised its discussions with its preferred Botswana based drilling contractor and is finalising agreements for their appointment this month.

Drilling of the initial two phase exploration drilling program on the Companys Serowe and Kweneng Projects, that are located immediately north of Botswanas primary producing coal mine, the Morupule Coal Mine and 25kms west of CIC Energys Mmamabula Coal Project, will commence in September 2011. The Phase 1 drilling program will comprise 30 drill holes targeting the potential for shallow to moderate depth coal which may be economically exploitable across both of the Companys projects. Results from the Phase 1 drilling program will be released throughout the December 2011 quarter. The Company will proceed with its Phase 2 drilling program, which comprises a further 30 holes and up to 8,500m of drilling, with the final program determined by the results of the Phase 1 program. SHARE CONSOLIDATION The Company is pleased to advise that it is now proceeding with the 1 for 10 share consolidation that was approved by shareholders at the Companys General Meeting on June 29th 2011. The decision to proceed with the share consolidation follows confirmation of the Companys listing date on the London Stock Exchanges AIM Market the announcement of the Sishen Iron Ore Company Community Development Trust (SIOCcdt) as the Companys new Broad Based Black Economic Empowerment partner (subject to finalisation of documentation) confirmation of the commencement date for the Penumbra Coal Project mine development as well confirmation of the commencement of exploration in Botswana. The share consolidation is considered necessary by the Company in order to establish a more efficient capital structure and to attract a wider range and larger number of institutional investors as it increases its international profile with the listing on the London Stock Exchanges AIM Market. In accordance with the Companys announcement of 19 July 2011, 7 days notice of the new timetable for the share consolidation is provided, with the 25 August 2011 being the last day for trading in the Companys preconsolidated securities. The key dates for the 1 for 10 share consolidation are as follows Event Date Last day for trading in preconsolidated securities. 25 August 2011 Trading in the consolidated securities on a deferred settlement basis commences. 26 August 2011 Last day to register transfers on a preconsolidation basis. 2 September 2011 Registration of securities on a post consolidation basis. First day for Company to register securities on a postreorganisation basis and for issue of holding statements. 5 September 2011 Dispatch of new holding statements. Deferred settlement market ends. Last day for securities to be entered into the holders security holdings and for the Company to send notice to each security holder. 9 September 2011.