Dear HC CCC investors,I've been in touch with a very busy JB,...

Dear HC CCC investors,

I've been in touch with a very busy JB, who is in Zurich now with DT, before heading back to London tomorrow for more meetings & presentations. The response from potential investors so far has been extremely positive. The only problem is that JB & DT do not have enough time to meet one-on-one with all those who are interested in Continental Coal! Don flies back to SA tomorrow, while JB stays on in London for more meeting until Friday.


Here is a paraphrase of our discussions about Ferreira:

Ferreira is higher cost than Pen. and De Witt., due to higher strip ratio of open cast operations. High cost nature of F. more than offset by high quality coal, which requires lower quality coal to be bought in and blended, to get it down to RB1 requirements. RB1 spec. coal is 6,000kCal, F.'s is up to 6,200kCal - little value received for this higher energy content. Coal from F. is also exported under both Company's entitlement at RBCT and under the leased allocation being utilised.

F. costs, under current prices = up to US$75/t. Some cost inputs directly linked to the prevailing prices, so Conti doesn't directly participate in 100% of any price rises. E.g.: the cost to buy in coal is linked to the prevailing prices + the costs of the leased allocation at RBCT used in addition to Conti's own to export the coal also linked to a % of prevailing price. So, under the rising prices do not get the full benefit of them but do get a substantial proportion. Range of pricing (on presentation) reflects this. Since first railing coal to RBCT: averaged prices in Nov. and Dec. of US$105/t under EDF off take arrangements. Range used in the presentation reflects the range of net margins Conti expects to receive over the past quarter, and at current approx US$120/t prices.

No change in the coal qualities at F. From the Dec. update: Conti has started the new Northern Pit - having ceased operations in the Southern pit and has appointed a new mining contractor with new equipment. This will substantially improve performance for the remaining mine life. F. still offers a number of opportunities, in terms of additional resources and provides immediate export earnings.

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Re: Project Summary Table Figures:

Project summary table includes the ROM production potential for each mine. Stated target = 7Mtpa by end of 2012. Clearly have opportunity to exceed this with organic growth in portfolio. Have assumed a conservative approach and one Conti are certain they can deliver upon.

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Re: reported floods and derailments of trains in SA's coal mining sector. COO and both project managers for Vlak and Ferreira both say that mine sites continue to operate without any material impact on productivity or operating performance. Both operations working in line with forecasts. Some days affected by the rainfall, but no material impact on output.

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Thanks to JB for being so obliging, amidst a very busy time for he & Don in London & Europe.

Trust this clarifies a few concerns.

M.