CCF

Cobalt Coal Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CCF), is pleased to
provide an operations and restructuring update. 


Mining Production and Electrification

Cobalt has continued to produce coal during its restructuring with coal sales
values continuing to improve. A total of 2951 clean tons of coal were sold
during July 2011. Production remains constrained by inadequate equipment and
equipment breakdowns. As previously reported, sales volumes are not expected to
materially improve until the necessary infrastructure upgrades are completed and
additional mining equipment is secured. 


Cobalt has entered into a letter of intent with an industry partner to install
electrification to the Westchester mine site. The Company is now securing
construction quotes. 


Westchester Coal Limited Partnership Purchase 

Documentation has now been finalized pursuant to which 96% of the Class A
Limited Partnership Units and 92% of the Class C Limited Partnership Units of
the Westchester Coal Limited Partnership have agreed to tender to the offer made
by Cobalt to purchase the Class A and Class C Limited Partnership Units not
already owned by Cobalt. Cobalt intends to serve notice to the remaining Class A
and Class C unitholders whereby Cobalt will acquire the remaining units pursuant
to the provisions of the Limited Partnership Agreement. 


Cobalt Debentures 

Holders of over 90% in face value of the outstanding debentures of Cobalt (the
"Debentures") have agreed to the conversion proposal made to them by Cobalt
whereby they will receive repayment of 50% of the face value of the Debentures
by the issuance of Cobalt common shares at a deemed price of $0.12 per share and
the balance in cash payable on or before December 15, 2011 (the "Debenture
Conversion").


Senior Indebtedness

A formal agreement has been entered into between Cobalt's chairman, Al Kroontje,
and Echo Merchant Fund ("Echo"), pursuant to which Mr. Kroontje has agreed to
purchase the outstanding debt and security held by Echo. Echo will receive cash
payments from Mr. Kroontje including an immediate $100,000 deposit and a
$400,000 cash payment on or before September 7, 2011. Cobalt has also agreed to
issue 2,350,000 common shares at a deemed price of $0.12 per share to Echo to
repay $282,000 of the debt on or before September 7, 2011. A final payment of
$500,000 is required on or before November 30, 2011. A condition in favor of
Echo is that a minimum of $2,000,000 in new equity is raised by Cobalt. 


Brokered Private Placement

Cobalt is in negotiations with an investment dealer in respect of the previously
announced proposed private placement of common shares to raise $6,000,000. The
engagement letter contemplates that the restructuring will have been completed.
Management believes it will be in a position to finalize terms and execute the
engagement letter shortly after closing the restructuring. 


Restructuring Closing 

Cobalt expects to close the purchase of the Westchester Coal Limited
Partnership, the Debenture Conversion and the non-brokered $2 million private
placement of Cobalt common shares later this week. 


About Cobalt

Cobalt is a publicly traded coal exploration and production company
headquartered in Calgary, Alberta, Canada with a regional office in Welch, West
Virginia USA. Cobalt was created to capitalize on the growth opportunities that
exist in the metallurgical coal mining industry.                                
                    


The securities of Cobalt being offered have not been, nor will be, registered
under the United States Securities Act of 1933, as amended, and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons absent U.S. registration or an applicable exemption from U.S.
registration requirements. This release does not constitute an offer for sale of
securities in the United States.


READER ADVISORY

Statements in this news release may contain forward-looking information
including the timing of closing of the Private Placement. The reader is
cautioned that assumptions used in the preparation of such information may prove
to be incorrect. Events or circumstances may cause actual results to differ
materially from those predicted, a result of numerous known and unknown risks,
uncertainties, and other factors, many of which are beyond the control of the
Company. These risks include, but are not limited to, the risks associated with
the coal mining industry, commodity prices and exchange rate changes. Industry
related risks could include, but are not limited to, operational risks in
exploration, development and production, delays or changes in plans, risks
associated to the uncertainty of reserve estimates, health and safety risks and
the uncertainty of estimates and projections of production, costs and expenses.
The reader is cautioned not to place undue reliance on this forward-looking
information.

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