31 July 2014 REPORT FOR THE QUARTER ENDED 30 JUNE 2014Continental Coal Limited ("Continental" or "the Company") provides itsoperations report for the quarter ended 30 June 2014. Operations - Significant revenue received from the ABSA Hedge during the Quarter - Penumbra production on track to achieve design capacity - Penumbra yields improving - Vlakvarkfontein has met production and cost guidance for year end Corporate - Wider balance sheet restructure and Rights Issue being finalized1. OPERATIONS1.1 Health and SafetyDuring the Quarter, one Dressing Station Case ("DSC") accident and one MedicalTreatment Incident ("MTI") were reported at the Company's mining andprocessing operations - all accidents were relatively minor incidents reportedat the Penumbra Underground Mine with none reported at the Vlakvarkfontein Mineand Delta processing facility. The accidents had no material impacts and theircauses are being addressed.1.2 Operational performance Operational performance (tonnes) Quarter ended Quarter ended 12 months 12 months ended ended 30 June 2014 30 June 2013 30 June 2014 30 June 2013Run of Mine (ROM)productionVlakvarkfontein 383,363 377,957 1,382,487 1,526,469Ferreira - 135,153 247,129 559,107Penumbra 155,726 42,247 498,176 143,299Total ROM production 539,089 560,357 2,127,792 2,228,875Feed to plantFerreira - 138,636 269,670 627,329Penumbra 151,925 81,999 491,424 143,299Total feed to plant 151,925 220,635 761,094 770,628Export yieldsFerreira - 72% 72% 70.4%Penumbra 60.2% 36% 57.2% 36.8%Export coal buy-in 10,831 - 31,784 -Domestic sales 360,729 318,129 1,401,080 1,315,701Export sales 82,053 130,072 523,906 453,582Total sales 442,782 448,201 1,924,986 1,769,283Total ROM coal production for the Quarter of 539,089t was achieved from theVlakvarkfontein and Penumbra Coal Mines. Mining at the Ferreira Coal Mineceased during the first half of the financial year as previously reported.Feed to the Delta Processing Operations for the Quarter of 151,925t wasachieved from the Penumbra Coal Mine and has increased since the last quarterfeed for this mine (being 123,098t). The increase from the comparable quarterin 2013 and on a year-end basis for the 12 months ended 30 June 2013 is in linewith the ramp up of the Penumbra Coal Mine.Export yields at the Penumbra Coal Mine have shown a steady increase during thepast 12 months with the average yield of 60.2% recorded for the quarter and57.2% for the year.Domestic sales from the Vlakvar kfontein Coal Mine have increased in comparisonto the previous quarter, the comparable quarter in 2013 and on a year-endbasis.1.3 Vlakvarkfontein Coal MineVlakvarkfontein Coal Mine produced 383,363t ROM for the Quarter, which is asignificant increase to the previous quarter (being 270,141t) and higher thanthe comparable quarter in 2013. The increase is due to ROM of non-select productbeing placed.An average strip ratio of 2.34:1 was achieved for the Quarter (2.22:1 YTD).Total thermal coal sales during the Quarter from the Vlakvarkfontein Coal Minewere 360,729t and comprised 311,741t to Eskom and 48,987t of non-select coal.Sales for the year ended 30 June 2014 of 1,149,216t to Eskom were above budgetwith non-select coal sales of 251,861t being below budget.Vlakvarkfontein achieved its target of planned production of 1.3 Mt ROM at acost of ZAR 90.00/t (US$8.50/t) for FY2014.1.4 Ferreira Coal MineInventory clean-up at the Ferreira Coal Mine was completed in the previousquarter. The rehabilitation work will commence upon finalisation of the closureplan and appointing contractors.1.5 Penumbra Coal MineROM coal production at the Penumbra Coal Mine for the Quarter totaled 155,726t.As previously reported the Company has encountered stone rolls that aredisplacing the coal seam in the current mining area and this is impacting onthe production rate and the delivered yield due to added contamination.Management, in conjunction with mining consultants, have been reviewing theplanned production lay-out in order to mitigate the impact of the stone rollson the production rate of the continuous miners. As procedures are implementedthe ROM and yield are increasing with the month of June 2014 producing 58,013twhich is on track to the targeted 70,000t per month.Export yields at Penumbra have been steady during the quarter with the averageyield of 60.2% recorded. The yield is expected to improve to the planned 62%with the increase in production and the mitigation of the additionalcontamination caused by the stone rolls.Mining costs of ZAR 175.17/t (US$16.53/t) ROM were similar to the costsachieved in the prior quarter with FOB costs of ZAR 841.13/t (US$79.40/t) persales tonnes recorded for the Quarter. Total FOB costs will likely reduce inthe coming months given the forecast increase in production.Penumbra delivered 498,176t ROM for the year ended 30 June 2014 comparable tothe revised forecast of 500,000t at a FOB cost of ZAR 841.13 (US$79.40) persales tonne.The Company received ZAR 2.7 million revenue for the quarter from the ABSAforward hedging contract at Penumbra.2. DEVELOPMENT PROJECT2.1 De Wittekrans Coal ProjectThe Integrated Water Use License (IWUL) application has been submitted and theCompany awaits approval.With the Mining Right successfully executed during the quarter the Company nowhas 12 months to commence mining operations, however should the IWUL not bereceived within this 12 month period the Mining Right can be delayed.During the quarter two sites were selected for mining and these are now beingevaluated as to which site will be selected for the first phase of mining.3. EXPLORATION PROJECTS3.1 Botswana Coal ProjectsThe Company is in advanced discussions in respect of the two remainingProspecting licenses (PL 340/2008 and PL 341/2008). PL341 has been transferredand the transfer documents for PL340 have been submitted to the BotswanaMinistry of Minerals, Energy.4. CORPORATE4.1. RecapitalisationDuring the Quarter the Company progressed with its previously announced RightsIssue. This proposed non-renounceable pro-rata Rights Issue is planned to raiseapprox. A$35.1m (previously noted as up to A$31.7m) at an offer price ofA$0.005 per new share and the Company has appointed Paterson's SecuritiesLimited as Corporate Advisor and Lead Manager to the offer.The Company has received strong interest in participation in the Rights Issuefrom institutional and sophisticated investors in Australia, Europe and SouthAfrica as well as a number of commodity trading groups and specialist coalmining investment funds. Proceeds from the Rights Issue will be primarily usedby the Company to repay unsecured convertible noteholders, loans and royaltyholders, repay bridging finance, reduce the Group's other borrowings, providefunds towards the development of the Company's advanced coal mining projectsand provide working capital.The fund raising will allow the Company to complete its plannedrecapitalisation and restructure of the Company's balance sheet, substantiallyreducing the Group's total indebtednessThe fund raising is being completed after reaching standstill agreements withkey unsecured convertible note and royalty holders, after negotiations of itsCoal Supply Agreement with EDF Trading and with negotiations with ABSA Bank (inrespect to the debt financing for the Penumbra Coal Mine) which are ongoing.Full details of the Rights Issue are scheduled to be released to the marketshortly.4.2 Proposed listing on the Johannesburg Stock ExchangeThe proposed listing has been postponed until such time as the recapitalisationof the Company has been completed.4.3 ASX and AIM share trading suspensionAs at the date of this report Continental's securities on both the ASX and AIMmarkets continue to be suspended whilst the Company completes the Rights Issue.Peter LandauInterim Executive DirectorFor further information please contact:Media (Australia)David TaskerProfessional Public RelationsT: +61 8 9388 0944Nominated AdvisorOliver Morse / Trinity McIntyreRFC Ambrian LimitedT: +61 8 9480 2500BrokersJonathan WilliamsRFC Ambrian LimitedT : +44 203 440 6817About Continental Coal LimitedContinental Coal Limited (ASX:CCC/AIM: COOL) is a South African thermal coalproducer with a portfolio of projects located in South Africa's major coalfields including two operating mines, the Vlakvarkfontein and Penumbra CoalMines, producing approx. 2Mtpa of thermal coal for the export and domesticmarkets. A Feasibility Study was also completed on a proposed third mine, theDe Wittekrans Coal Project with a mining right granted in September 2013.Competent Persons StatementThe information in this release that relates to Coal Resources onVlakvarkfontein, Vlakplaats and Wolvenfontein is based on resource estimatescompleted by Dr. Philip John Hancox. Dr. Hancox is a member in good standing ofthe South African Council for Natural Scientific Professions (SACNASP No.400224/04) as well as a Member and Fellow of the Geological Society of SouthAfrica. He is also a member of the Fossil Fuel Foundation, the GeostatisticalAssociation of South Africa, the Society of Economic Geologists, and a CoreMember of the Prospectors and Developer Association of Canada. Dr. Hancox hasmore than 12 years' experience in the South African Coal and Mineralsindustries and holds a Ph.D from the University of the Witwatersrand (SouthAfrica).The information in this release that relates to Coal Resources on Penumbra, DeWittekrans, Knapdaar, Leiden and Wesselton II is based on coal resourceestimates completed by Mr. Nico Denner, a full time employee of Gemecs (Pty)Ltd. Mr. Denner is a member in good standing of the South African Council forNatural Scientific Professions (SACNASP No. 400060/98) as well as a Member andFellow of the Geological Society of South Africa. He has more than 15 years'experience in the South African Coal and Minerals industries.The information in this release that relates to Coal Resources on Project X andVaalbank is based on coal resource estimates completed by Mr. Coenraad vanNiekerk, a full time employee of Gemecs (Pty) Ltd. Mr. van Niekerk is a memberin good standing of the South African Council for Natural ScientificProfessions (SACNASP No. 400066/98) as well as a Member and Fellow of theGeological Society of South Africa. He has more than 38 years' experience inthe South African Coal and Minerals industries.The information in this release that relates to Coal Resources on Mooifonteinis based on coal resource estimates completed by Mr. Dawie van Wyk, a full timeemployee of Geocoal services (Pty) Ltd. Mr. van Wyk is a member in goodstanding of the South African Council for Natural Scientific Professions(SACNASP No. 401964/83) as well as a Member and Fellow of the GeologicalSociety of South Africa. He has more than 30 years' experience in the SouthAfrican Coal and Minerals industries.The Coal Reserves on Vlakvarkfontein, De Wittekrans and Penumbra is based onreserve estimates completed by Eugène de Villiers. Mr. de Villiers is agraduated mining engineer (B.Eng) Mining from the University of Pretoria and isprofessionally registered with the Engineering Council of South Africa (Pr.engno - 20080066). He is also a member of the South African Institute of Miningand Metallurgy (SAIMM Membership no. 700348) and the South African CoalManagers Association (SACMA Membership no. 1742). Mr. de Villiers has beenworking in the coal industry since 1993 and has a vast amount of production andmine management as well as project related experience.Forward Looking StatementThis communication includes certain statements that may be deemed"forward-looking statements" and information. All statements in thiscommunication, other than statements of historical facts, that address futureproduction, reserve potential, exploration drilling, exploitation activitiesand events or developments that the Company expects to take place in the futureare forward-looking statements and information. Although the Company believesthe expectations expressed in such forward-looking statements and informationare based on reasonable assumptions, such statements are not guarantees offuture performance and actual results or developments may differ materiallyfrom those in the forward-looking statements and information. Factors thatcould cause actual results to differ materially from those in forward-lookingstatements include market prices, exploitation and exploration successes,drilling and development results, production rates and operating costs,continued availability of capital and financing and general economic, market orbusiness conditions. Investors are cautioned that any such statements are notguarantees of future performance and actual results or developments may differmaterially from those stated. South Africa Australia T +27 11 881 1420 F +27 862064487 W T +61 8 9488 5220 F +61 8 9324 3400 W www.conticoal.com www.conticoal.com 9th Floor Fredman Towers, 13 Fredman Ground Floor, 1 Havelock Street, West Drive, Sandton 2196 Perth, WA 6005 PO Box 787646, Sandton 2146 PO Box 684, West Perth, WA 6872 Interim Executive Chairman: Dr Paul D'Sylva Interim Executive Director: Mr Peter Landau Non-Executive Directors: Mr Connie Molusi and Dr Lars Schernikau