Cobalt Coal Ltd.: NI 43-101 Technical Report Results on Proposed Property Acquisition

Cobalt Coal Ltd (TSX VENTURE:CCF) ("Cobalt" or the "Corporation") is very
pleased to announce the results of the technical report which was prepared to
evaluate the metallurgical coal bearing properties located in Virginia, USA that
are proposed to be acquired by Cobalt, all of which were the subject of Cobalt's
February 29, 2012 news release (the "C&B Acquisition") and Cobalt's March 8,
2012 and July 11, 2012 news releases (collectively, the "KMH Acquisition"). The
qualified person responsible for the preparation of the technical report was
Mike Clisso, PE, President of Engineering Services Inc. ("ESI"). The report was
prepared in accordance with National Instrument 43-101 Standards of Disclosure
for Mineral Projects ("NI 43-101") and is dated effective May 24, 2012 (the "ESI
Technical Report"). The following is a summary of the metallurgical coal
resources identified in the ESI Technical Report:


METALLURGICAL COAL RESOURCES SUMMARY



----------------------------------------------------------------------------
                       In-Place Underground Clean Coal Resources (Tons)     
                 -----------------------------------------------------------
                                                        Total               
                                                   Measured &     Additional
STM Group              Measured      Indicated      Indicated       Inferred
----------------------------------------------------------------------------
Bituminous           51,411,000     68,297,000    119,708,000    127,580,000
----------------------------------------------------------------------------



The Metallurgical Coal Resources estimated above are situated on six different
tracts, each containing multiple seams of coal as further detailed in the
"General Information" section below. A detailed economic evaluation was then
performed, to a feasibility study level of confidence, on 2 seams out of the 11
identified seams, located on 3 of the 6 tracts proposed to be acquired. The
economic evaluation identified estimated Proven Metallurgical Coal Reserves as
follows:


METALLURGICAL COAL RESERVES SUMMARY



----------------------------------------------------------------------------
ASTM Group                   In-Place Underground Clean Coal Reserves       
                      ------------------------------------------------------
                                  Proven          Probable             Total
----------------------------------------------------------------------------
Bituminous (tons)             15,874,000                 -        15,874,000
----------------------------------------------------------------------------



The feasibility study estimated the net present value of future net cash flows
for the Proven Metallurgical Coal Reserves at different discount rates,
including required capital, as follows:


DISCOUNTED NET PRESENT VALUE OF FUTURE CASH FLOWS OF PROVEN METALLURGICAL COAL
RESERVES, INCLUDING REQUIRED CAPITAL




----------------------------------------------------------------------------
Discount Rate                  0 %                  8 %                 10 %
----------------------------------------------------------------------------
NPV                $   386,252,220      $   230,072,456      $   205,050,919
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Discount Rate                 12 %                 15 %                 18 %
----------------------------------------------------------------------------
NPV                $   183,652,766      $   156,990,438      $   135,437,385
----------------------------------------------------------------------------



KMH Acquisition

The properties associated with the KMH Acquisition are located proximate to
Clinchco, Virginia. Cobalt will be acquiring leases on 6 separate tracts
covering approximately 5,400 acres which lie within the drainage areas of the
Cranes Nest River in Dickenson County, Virginia. Numerous seams of mid vol
metallurgical coal have been identified to exist on the tracts including the
Hagy, Splashdam, Upper Banner, Lower Banner, Raven, Jawbone, Upper Seaboard,
Middle Seaboard, War Creek, Lower Horsepen, and Pocahontas No.3. One of the
tracts to be acquired, the Mill Creek Tract, is currently permitted for both
surface and underground mining involving approximately 900 acres (the "Permit"),
with a pending amendment to include an adjoining lease which will also be
acquired by Cobalt pursuant to the C&B acquisition described below, such that
the permitted area will expand to approximately 1,600 acres. The ESI Technical
Report estimated Proven Reserves included in the Upper and Lower Banner seams of
the Davis Tract and the Hagy and Splashdam seams of the Mill Creek Tract.
Payment options in relation to payment of the total purchase price of USD
$15,000,000 for the KMH Acquisition are more particularly described in Cobalt's
March 8, 2012 and July 11, 2012 news releases.


C&B Acquisition

The C&B Acquisition involves lands covering approximately 700 acres that are
immediately adjacent to the Mill Creek Tract being acquired, pursuant to the KMH
Acquisition, such that the Mill Creek Tract will expand in size from
approximately 900 acres to approximately 1,600 acres and is the subject of the
Permit extension described above. Numerous seams of mid vol metallurgical coal
exist on this expanded Mill Creek Tract and Proven Reserves of mid vol
metallurgical coal were established in two seams on this Tract, being the Hagy
and Splashdam seams. Payment terms related to the total purchase price of
$1,000,000 for the C&B Acquisition are more particularly described in Cobalt's
February 29, 2012 news release. 


General Information

The following information is extracted from the ESI Technical Report which is NI
43-101 compliant. A full text version of the ESI Technical Report has been filed
on SEDAR and is available at www.sedar.com. 


ESI used the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM")
Definition Standards on Mineral Resources and Reserves ("CIM Definitions")
adopted by the CIM Council on December 11, 2005 during the classification,
estimation and reporting of mineral resources and reserves for the KMH
Acquisition and the C&B Acquisition.


ESI conducted physical inspections of all 6 Tracts including the Mill Creek
Tract and the Davis Tract for which the ESI Technical Report has assigned Proven
Reserves. ESI has also examined the environmental conditions of the Permit and
has determined that all applicable environmental regulations have been complied
with such that the Permit is in substantial compliance with applicable
regulations. In addition, the ESI Technical Report contains a study of the other
tracts associated with the KMH Acquisition and C&B Acquisition presented
accordance with the provisions of NI 43-101.


Basis of Presentation

The majority of the data reviewed to establish seam thickness and elevation has
been obtained from historical mining operations on currently abandoned
underground and surface mines. For the Mill Creek and Davis Tracts, a total of
110 data points have been analyzed for purposes of estimating seam thickness and
seam elevation. In addition to previous mining records, surface outcrop data has
been reviewed. Additionally, drilling and core data has been used to augment
geological and mining data that is available from previous mining records or
surface outcrop information. Information from a total of 38 drill holes was
reviewed during the evaluation.


Coal samples were taken and analyzed yielding the following quality data for the
Mill Creek and Davis tracts:




--  The dry basis clean coal Ash is less than 6.0 wt%; 
--  The Ash Fusion Temperature is high; 
--  The Free Swelling Index is consistently 7 or above; and 
--  The volatile matter (VM cc DB) ranges from 27 wt% to 31%. 



This coal quality data supports the conclusion that the Proven Reserves and the
Coal Resources reported in the ESI Technical Report may be classified as
metallurgical in nature.


ESI is of the opinion that the spacing of available coal quality data for the
Hagy and Splashdam on the Mill Creek Tract are adequate to support the
metallurgical quality determination. The Upper Banner and Lower Banner on the
Davis Tract also meet the necessary criteria to support the quality as being
metallurgical in nature. 


Coal Reserves

In accordance with CIM Definitions and the policies of NI 43-101, a "Reserve" is
defined as the economically mineable portion of a "Measured" or "Indicated
Resource" that has been demonstrated, after a thorough analysis of mining,
processing, economic and other relevant factors, to be economically justified
for coal extraction at the time of reporting. Coal Reserves are sub-divided in
order of increasing confidence into 'Probable' and 'Proven' Reserves,
respectively. A "Probable" Coal Reserve is defined as the economically mineable
part of an "Indicated' Resource", and in some cases of a "Measured Resource". A
"Proven" Coal Reserve is defined as the economically mineable part of a
"Measured Resource".


Two of the 6 tracts are of interest for immediate development, being the Mill
Creek Tract and the Davis Tract. Each of these 2 tracts contains numerous coal
seams that contain substantial coal resources. These seams have well known
extent, quality and mining conditions and have been historically proven to be
high quality metallurgical coals. Only the coal resources in the Hagy and
Splashdam seams on the Mill Creek Tract and the Upper Banner and Lower Banner
seams on the Davis Tract have been economically evaluated in the ESI Technical
Report. The economic analysis was conducted to a feasibility study level of
confidence and supports the classification of these resources as Proven
Reserves. The coal shown to exist in the balance of the seams has remained
classified as Coal Resources.


The Federal Mine Safety and Health Administration ("MSHA") regulations provide
for mining to a 50' barrier against old mine workings as long as the specified
mining practice is followed. This is applicable for only the Upper Banner seam
on the Davis Tract and a small area in the Splashdam seam on the Mill Creek
Tract as old mine workings are known to exist in these seams. It is not
applicable in the case of the Hagy seam or in the southern section of the
Splashdam and Lower Banner seams on the Mill Creek and Davis Tracts insofar as
no other old mine workings are known to exist within those seams on those
Tracts. According to the ESI Technical Report, Proven Reserves quantities have
been calculated based on compliance with these regulations regarding setback.
The following table summarizes the Proven Reserves contained in the Hagy and
Splashdam seams on the Mill Creek and on the Upper and Lower Banner seams on the
Davis Tracts. According to the ESI Technical Report, Proven Reserves are
estimated to total 15,874,000 tons allocated as follows:


CLEAN COAL RESERVES SUMMARY



----------------------------------------------------------------------------
Tract                        In-Place Underground Clean Coal Reserves (Tons)
                           -------------------------------------------------
                 ASTM Group            Proven       Probable           TOTAL
----------------------------------------------------------------------------
Mill Creek       Bituminous         6,894,000              -       6,894,000
---------------            -------------------------------------------------
Davis                               8,980,000              -       8,980,000
----------------------------------------------------------------------------
Total                              15,874,000              -      15,874,000
----------------------------------------------------------------------------



The coal seams on the Mill Creek Tract and the Davis Tract are flat lying to
very gently dipping and are generally unfaulted. These characteristics indicate
that these seams should be classified as "Low Type A" Geology Type to reflect
the minimal geological complexity in accordance with GSC Paper 88-21. These
Tracts contain underground mineable deposits. The remaining seams (other than
the Hagy and Splashdam seams on the Mill Creek Tract and the Upper Banner and
Lower Banner seams on the Davis Tract) were not economically evaluated in the
ESI Technical Report; however, according to the ESI Technical Report, they
contain significant quantities of Coal Resources that have been estimated by the
methodology of GSC Paper 88-21 as discussed below.


Coal Resources

In addition to the Coal Reserves described above, the ESI Technical Report
identifies the existence of Metallurgical Coal Resources on the Mill Creek,
Davis, Tarpon, Fleming and Stanley Tracts. These tracts contain numerous seams
with well-known extent, quality and mining conditions which have been
historically proven to be high quality metallurgical coals. Volumes were
estimated in accordance with the methodology of GSC Paper 88-21.


The following table summarizes the in-place Coal Resources present in the
various seams on the Mill Creek, Davis, Tarpon, Fleming and Stanley Tracts and
includes the volumes on the Mill Creek and Davis Tracts that were classified as
Proven Reserves. It should be noted that they were included insofar as the
practices of GSC 88-21 specify that resources be reported inclusive of the
reserves, based on the premise that such reserves are simply a special class of
resources. Therefore the summary of Coal Resources presented below includes the
quantities of Coal Reserves that were presented above separately in this report:


COAL RESOURCES SUMMARY (TONS)



----------------------------------------------------------------------------
                                                 Total Measured   Additional
Tract       ASTM Group    Measured    Indicated     & Indicated     Inferred
----------------------------------------------------------------------------
Mill Creek               9,335,000   14,775,000      24,110,000    2,507,000
------------          ------------------------------------------------------
ACIN                     3,389,000            -       3,389,000            -
------------          ------------------------------------------------------
Davis       Bituminous  37,460,000   48,083,000      85,543,000   67,401,000
------------          ------------------------------------------------------
Tarpon                   1,227,000            -       1,227,000   37,025,000
------------          ------------------------------------------------------
Fleming                          -    4,921,000       4,921,000   18,354,000
------------          ------------------------------------------------------
Stanley                          -      518,000         518,000    2,293,000
----------------------------------------------------------------------------
Total                   51,411,000   68,297,000     119,708,000  127,580,000
----------------------------------------------------------------------------



Economic Analysis

For purposes of evaluating the economic viability of the project, the ESI
Technical Report used the standards of CIM and the policies of NI 43-101.They
provide that a Coal Reserve is the economically mineable portion of a Measured
or Indicated Coal Resource that has been demonstrated, after a thorough analysis
of mining, processing, economic and other relevant factors, to be economically
justified for coal extraction at the time of reporting.


Under the ESI Technical Report prepared in accordance with CIM and NI 43-101
policies, of initial startup capital requirements and ongoing operating cost
were estimated for the total mine life. Estimated capital costs are broken down
in the report into "Initial Mine Setup Costs" ($1,100,000) and "Equipment Costs"
($11,000,000) which, in each case, are the cost of "facing up" and "acquiring
the equipment needed", respectively, to place each seam into production. 


For the purposes of the ESI Technical Report: 



a.  Operating costs were segregated into "support costs" and "labor costs"
    and "supply costs" which are dependent on coal seam thickness with a
    blended average of $71.76 per ton; 
b.  The coal sales price was held constant at $125.00 per ton of clean coal
    delivered to the wash plant which is based on Goldman Sachs 2012
    metallurgical coal price forecast; 
c.  The mine life was established by preparing a detailed mine plan for all
    of the seams evaluated; 
d.  The optimum mine plan yielded overall recoveries of 60% of the in-place
    metallurgical Coal Reserves over the life of the mine; 
e.  The optimum mine plan involves a "room and pillar" scheme; 
f.  Retreat mining that would recover the balance of the metallurgical Coal
    Reserves was NOT evaluated for purposes of this report; 
g.  All estimates were completed on a "before corporate income tax basis"
    although all applicable royalties, wheelage charges and state levies
    were included in the economic evaluation.  



The table below summarizes the Discounted Net Present Value of Future Cash Flow,
including capital requirements that resulted from the evaluation described
above:




----------------------------------------------------------------------------
Discount Rate                  0 %                  8 %                 10 %
----------------------------------------------------------------------------
NPV                $   386,252,220      $   230,072,456      $   205,050,919
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Discount Rate                 12 %                 15 %                 18 %
----------------------------------------------------------------------------
NPV                $   183,652,766      $   156,990,438      $   135,437,385
----------------------------------------------------------------------------



Proposed Commencement and Mining Schedule

The ESI Technical Report projected mining to commence in the Hagy Seam (Mill
Creek Tract) during September 2012 with one continuous miner. Subject to the
availability of financing, the ESI Technical Report assumed that a second
continuous miner will be added in January of 2013 and production volumes in the
ESI Technical Report were estimated to begin at 5,500 clean tons for the first
month of production increasing to 9,400 clean tons for the second month and
increasing to 16,934 clean tons for the remaining months and annualized
production was estimated at 203,212 clean tons per year per section from this
first seam. 


Mining of the Splashdam seam (Mill Creek Tract) is forecast to begin in January
2013 with the same ramp up schedule utilized as for the Hagy seam. Two
continuous miners are included on each of the Hagy and Splashdam seams per mine
producing coal with the Splashdam seam production at 163,868 clean tons per year
per section.


Production from the Lower Banner seam (Davis Tract) is forecast to begin in 2014
with a second continuous miner added in 2015. The production in the Lower Banner
seam is estimated at 214,594 clean tons per year per section.


Production from the Upper Banner seam (Davis Tract) is forecast to begin during
January 2014 and continue for 14 years. Production is estimated at 96,000 clean
tons per year with one conventional section of equipment.


Forecast production rates for each of the first 7 years (in tons per year) from
the Proven Reserves in the Hagy, Splashdam, Lower Banner and Upper Banner seams
on the Mill Creek Tract and the Davis Tract is therefore as follows:




----------------------------------------------------------------------------
Year                             2012        2013         2014         2015 
----------------------------------------------------------------------------
Gross Production (tons)        48,766     636,424    1,014,990    1,259,348 
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Year                                      2016           2017           2018
----------------------------------------------------------------------------
Gross Production (tons)              1,239,086        852,924        852,924
----------------------------------------------------------------------------



It should be noted that there can be no assurance that the production volumes or
operating cost projections contained in the ESI Technical Report will be met by
Cobalt as many factors, many of which are beyond the control of cobalt, will
affect Cobalt's ability to achieve them including, but not limited to, the
availability of financing to acquire the necessary equipment and the markets
generally with respect to prices received for metallurgical coal.


Recommendations of the ESI Technical Report

The ESI Technical Report makes the following recommendations:



a.  That Cobalt undertakes a program of exploration and confirmation
    drilling on each of the tracts combined with surface outcrop sampling
    and measuring. The collection of this additional data will support
    improved resources mapping confidence and will in turn yield additional
    quantities of Measured and Indicated Coal Resources by transitioning the
    large quantity of Inferred Resources to one of those more confident
    Measured or Indicated categories; 
b.  That Cobalt expands the scope of the report to economically evaluate
    many of the other seams on the tracts to be acquired. Many of the seams
    situated on the tracts have been economically mined in the past on lands
    in the immediate vicinity of, and surrounding, the tracts to be
    acquired. In the opinion of the author of the ESI Technical Report,
    significant additional volumes of Proven and Probable Coal Reserves
    would be confirmed by identifying a preferred mining method for, and
    performing an economic analysis on, many of those seams; and 
c.  That Cobalt investigates the construction of, or acquisition of, a
    suitable wash plant insofar as prices realized for production can be
    significantly increased thereby. 



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. 


READER ADVISORY

Statements in this News Release may constitute "forward-looking" statements and
"forward-looking" information (collectively, "forward-looking statements") as
defined in applicable securities laws, which involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Corporation, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking statements may
include, but are not limited to, statements regarding: 




--  future extraction and exploitation of mineral deposits; 
--  the quality of mineral deposits; 
--  capital expenditure requirements; 
--  expectations regarding prices and costs; 
--  development of mineral resources and mineral extraction processes; 
--  the Corporation spending the funds available to it as stated in this
    News Release; 
--  expectations regarding the Corporation's ability to subsequently raise
    capital; 
--   expenditures to be made by the Corporation to meet certain work
    commitments; 
--  work plans to be conducted by the Corporation; and 
--  reclamation and rehabilitation obligations and liabilities. 



In certain cases, forward-looking statements can be identified by the use of
such words as "may", "would", "could", "will", "intend", "expect", "believe",
"plan", "anticipate", "estimate", "should", "provide" and other similar
terminology. These statements reflect the Corporation's current expectations
regarding future events and operating performance and speak only as of the date
of this News Release. Forward-looking statements are not a guarantee of future
performance and involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. 


Such forward-looking statements are based on a number of material factors and
assumptions, including, that: 




--  the Corporation executes its project development plans in a manner
    consistent with its budgets and planning; 
--  studies to support the Corporation's current development plans; and 
--  the Corporation obtains additional financing in the future. 



Forward-looking statements involve significant risks and uncertainties, should
not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results will be
achieved. Although the forward-looking statements contained in this News Release
are based upon what management of the Corporation believes are reasonable
assumptions, the Corporation cannot assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking
statements are made as of the date of this News Release and are expressly
qualified in their entirety by this cautionary statement. Subject to applicable
securities laws, the Corporation assumes no obligation to update or revise them
to reflect new events or circumstances.