Cobalt Coal Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CCF), announces that
it has negotiated an arrangement with its senior secured lender (the "Senior
Lender") involving an extension until September 30, 2011 to repay the
approximately $1,200,000 in indebtedness owing to the Senior Lender which is
currently in default. The arrangement is subject to conditions including the
immediate injection of working capital to Cobalt. The arrangement also reflects
that the Senior Lender has agreed that all indebtedness owing in excess of $1
million will be repaid by the issuance of Cobalt common shares on the basis of
one Cobalt common share (the "Cobalt Share") for each $0.12 of indebtedness (the
"Forbearance"). 


The Forbearance conditions are as follows:



a.  Cobalt must secure $300,000 (the "Working Capital Advance") in immediate
    capital to fund approximately $250,000 in priority payroll claims and
    $50,000 deposit payable to the Senior Lender. Al Kroontje, Chairman of
    Cobalt, has agreed to advance these funds to Cobalt upon receipt of
    regulatory approval and upon satisfaction of the Debenture Conversion
    and the Westchester Acquisition conditions described immediately below; 
b.  Cobalt must complete a conversion and repayment arrangement with each of
    the holders of the $620,000 principal amount of convertible debentures
    of Cobalt (the "Debentures") that are currently outstanding such that
    50% of the principal amount of those debentures are converted
    immediately into Common Shares of Cobalt at a price of $0.12 per share
    and the remaining 50% be payable by the issuance of a promissory note
    that must be paid before December 15, 2011 (the "Debenture Conversion").
    In connection with this requirement, Cobalt has today made an offer to
    the holders of the Debentures to repay the Debentures on the
    aforementioned basis; 
c.  Cobalt must complete the acquisition (the "Westchester Acquisition") of
    all of the outstanding limited partnership units (the "LP Units") of
    Westchester Coal Limited Partnership ("Westchester"). In connection with
    this requirement, Cobalt has today made an offer to purchase the LP
    Units for aggregate consideration of $250,000 to be paid by the issuance
    of 2,083,320 Cobalt Shares with a deemed value of $0.12 per share. The
    offer includes a release in favour of the holders of the LP Units from
    Westchester; and 
d.  Cobalt must complete a minimum of $2 million of the previously announced
    private placement of Cobalt Shares at a price of $0.12 per share (the
    "Minimum Private Placement"). 



The Chairman and other insiders of Cobalt have indicated their intention to
subscribe on the aforementioned basis for the Minimum Private Placement in order
to satisfy the minimum financing condition. The initial $2,000,000 in gross
proceeds from the Minimum Private Placement will be used to pay the costs of the
Minimum Private Placement, to repay the Working Capital Advance, to fund the
acquisition of certain additional mining equipment and to fund the purchase of a
spare parts inventory necessary to improve operational efficiency. 


As previously announced on June 8, 2011, Cobalt intends to use its best efforts
to complete the private placement for gross proceeds of up to $6 million (the
"Private Placement"). The additional proceeds will be used for the purposes
previously stated in prior press releases of Cobalt. 


Cobalt has not yet engaged an agent for the Private Placement; however, it does
intend to engage an agent for the Private Placement.


The Cobalt Shares issued pursuant to the Private Placement will be subject to a
four month hold under applicable securities laws.


The Forbearance, Debenture Conversion, Westchester Acquisition and the Private
Placement are subject to the approval of the TSX Venture Exchange Inc. (the
"Exchange"). The Exchange has provided conditional approval for the Forbearance,
for the Debenture Conversion and for the Private Placement.


Management is committed to allowing existing stakeholders of Cobalt to
participate in this significant restructuring of Cobalt. Participation is
limited to persons who qualify as "Accredited Investors" under applicable
securities laws and interested parties are referred to the contact information
provided below to indicate an expression of interest to participate in the
Private Placement. 


Rights Offering

In addition to a commitment from Management of Cobalt to allow participation
into the Private Placement by existing stakeholders, shareholders of Cobalt will
be entitled to participate in a rights offering, which is expected to be
conducted by way of a Rights Offering Circular (the "Rights Offering") after
final completion of the Minimum Private Placement. Pursuant to the Rights
Offering, each shareholder as of the record date for such offering (the "Record
Date") will be issued one right ("Right") for each Post Consolidation Share held
on the Record Date, entitling that holder to purchase one (1) Post Consolidation
Share for each four (4) Rights held at a price of $0.12 per Post Consolidation
Share at or before the expiry time of the Rights Offering, following which all
outstanding Rights shall terminate and expire. The number of Post Consolidation
Shares to be issued pursuant to the Rights Offering is the maximum permitted by
applicable securities laws to be issued pursuant to a Rights Offering Circular.
Subscribers under the Private Placement described above will NOT be entitled to
participate in the Rights Offering with respect to any securities acquired under
the Private Placement. The Rights Offering is subject to applicable regulatory
approval, including the Exchange.


Senior Indebtedness and Debenture Indebtedness 

Cobalt was required to make a monthly interest payment on June 30, 2011 of
$14,986 to the Senior Lender in respect of their loan facility. This amount was
not paid. 


Cobalt was required to make a quarterly interest payment to the debenture
holders in the amount of $23,186. This amount was not paid. 


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 Rights Offering
and the intended use of proceeds 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.