Coal Energy S.A

Coal Energy S.A. (incorporated as a public limited company (société anonyme), under the laws of Grand Duchy of Luxembourg, having its registered office at 46A, avenue J. F. Kennedy, L-1855 Luxemburg, Grand Duchy of Luxembourg, and registered with Registre de Commerce et des Sociétés in Luxembourg under number B 154.144) Offering of 11,252,780 Shares, with a nominal value of US$ 0.01 each and admission of all the issued Offer Shares to trading on the main market of the Warsaw Stock Exchange This document (the "Prospectus") has been prepared for the purpose of (i) the offering (the “Offering”) of 11,252,780 ordinary bearer shares in the share capital, each with a nominal value of US$ 0.01 (the "Offer Shares"), in Coal Energy S.A. (the “Issuer” ), and (ii) the admission of all of the issued Offer Shares (i.e., up to 11,252,780 Shares) to trading on the main market of Giełda Papierów Wartościowych w Warszawie S.A. (the Warsaw Stock Exchange, the “WSE”). The Offering will consist solely of the newly issued shares to be issued by the Issuer. The Issuer will receive all the net proceeds from the sale of the Offer Shares. The Offer Shares offered in this Offering constitute a minority interest in the Issuer. The Offering consists of: (i) public offering to retail investors in Poland (the "Retail Investors"), (ii) public offering to institutional investors in Poland (the "Polish Institutional Investors"), and (iii) private placement to institutional investors in certain jurisdictions outside the United States and Poland in reliance on Regulation S under the U.S. Securities Act (the "International Investors", and together with the Polish Institutional Investors, the "Institutional Investors"), in each case in accordance with applicable securities laws. The Offer Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act"), or with any securities regulatory authority of any state or any jurisdiction in the United States. The Offer Shares are being offered and sold only outside the United States in accordance with the Regulation S under the US Securities Act (the “Regulation S”) and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as defined in the Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. See: "Selling Restrictions". The Offer Shares are being offered, as specified in this Prospectus, subject to cancellation or modification of the Offering and subject to certain other conditions. The Prospectus constitutes a prospectus in the form of a single document within the meaning of Art. 5.3 of Directive 2003/71/EC of the European Parliament and of the Council of the European Union (the "Prospectus Directive") and the Luxembourg law dated July 10, 2005, relating to prospectuses for securities, implementing the Prospectus Directive into Luxembourg law (the "Prospectus Act 2005"), and has been prepared in accordance with the Prospectus Act 2005 and Regulation 809/2004. The Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as the competent authority in Luxembourg under the Prospectus Act 2005, has approved this document as a prospectus. The Issuer will be authorised to carry out the Offering to the public in Poland, once the CSSF has provided the Polish Financial Supervision Authority (the "PFSA"), which is the competent authority in Poland, (in accordance with Art. 19 of the Prospectus Act 2005, Art. 18 of the Prospectus Directive and Art. 37 of the Polish Public Offerings Act) with a certificate of approval of this Prospectus and after the Prospectus has been made available to the public. See "Risk Factors" for a discussion of certain considerations to be taken into account when deciding whether to invest in the Offer Shares. Prior to the Offering, there was no public market for the Shares. Based on this Prospectus, the Issuer intends to apply for all of the issued Offer Shares (i.e., up to 11,252,780 Shares) to be admitted to listing and trading on the main market of the WSE (the "Admission"). The Issuer expects that trading in the Offer Shares on the WSE will commence on or about August 4, 2011 (the "Listing Date"). Settlement of the Offering is expected to occur on or about July 27, 2011 (the "Settlement Date"). Prospective retail and institutional investors in Poland (other than "U.S. persons" as defined in the Regulation S) may subscribe for the Offer Shares during a period which is expected to commence on or about July 18, 2011 and is expected to end on or about July 21, 2011. The final offer price per Offer Share (the "Offer Price") will not exceed PLN 32 (the “Maximum Price”). The final Offer Price and the final number of the Ofer Shares will be determined by the Issuer upon recommendation of the managers named herein (the "Managers") after completion of bookbuilding for institutional investors on or about July 15, 2011, based on interest from investors and will, in accordance with Art. 10 of the Prospectus Act 2005 and Art. 54 of the Polish Public Offerings Act, be filed with the CSSF and the PFSA and published on the website of the Issuer www.coalenergy.com.ua, on the website of the Co-Lead Manager www.dmbzwbk.pl and on the website of the Luxembourg Stock Exchange www.bourse.lu. All the Offer Shares are ordinary bearer shares and will exist in the territory of Poland in book entry form once they have been registered with the Polish clearing and settlement institution – the National Depository for Securities (Krajowy Depozyt Papierów Wartościowych S.A., the "NDS"). Shareholders in the Issuer may hold them through the NDS participants, such as investment firms and custodian banks operating in Poland. Offer Price: To be determined in PLN and announced on or about July 15, 2011 Dragon Capital (Cyprus) Limited (the "Lead Manager") and Dom Maklerski BZWBK S.A. (the "Co-Lead Manager") will act as Managers and the bookrunners for the Offering. Dom Maklerski BZWBK S.A. (the "Offering Agent") will act as the offering agent in Poland for the purposes of the public offering and admission of the Offer Shares on the WSE. Lead Manager Co-Lead Manager Dragon Capital (Cyprus) Limited Dom Maklerski BZ WBK S.A. The date of this Prospectus is July 4, 2011 TABLE OF CONTENTS TABLE OF CONTENTS SUMMARY 1 RISK FACTORS 12 EXCHANGE RATES 35 USE OF PROCEEDS 36 DIVIDENDS AND DIVIDEND POLICY 38 CAPITALISATION AND INDEBTEDNESS 39 SELECTED HISTORICAL FINANCIAL INFORMATION 40 OPERATING AND FINANCIAL REVIEW 42 INDUSTRY OVERVIEW 64 BUSINESS DESCRIPTION 76 MANAGEMENT AND CORPORATE GOVERNANCE 99 MATERIAL CONTRACTS 106 RELATED PARTY TRANSACTIONS 113 THE ISSUER 115 PRINCIPAL SHAREHOLDER 125 THE OFFERING AND PLAN OF DISTRIBUTION 126 PLACING 135 SELLING RESTRICTIONS 137 CERTAIN LUXEMBOURG AND POLISH SECURITIES MARKET REGULATIONS AND PROCEDURES AND THE WARSAW STOCK EXCHANGE 141 TAXATION 144 INDEPENDENT AUDITORS 151 ADDITIONAL INFORMATION 152 INDEX TO FINANCIAL STATEMENTS F-1 ANNEX I DEFINED TERMS A-1 ANNEX II GLOSSARY OF TECHNICAL TERMS A-6 ANNEX III MINERAL REPORT A-9 ANNEX IV LIST OF PLACES ACCEPTING SUBSCRIPTIONS FOR OFFER SHARES FROM RETAIL INVESTORS A-115 COAL ENERGY S.A. SUMMARY SUMMARY The following constitutes the summary of the essential characteristics and risks associated with the Issuer, the Group, and the Shares. This summary should be read only as an introduction to this Prospectus and contains information included elsewhere in this Prospectus. It is expressly pointed out that this summary is not exhaustive and does not contain all information which is of importance to prospective investors. Reading this summary should, in no way, be considered a substitute for reading this Prospectus in its entirety. Prospective investors should read this Prospectus thoroughly and completely, including the "Risk Factors", any supplements to this Prospectus required under applicable laws and the Consolidated Financial Statements of the Group and other financial information and related notes, before making any decision with respect to investing in the Offer Shares. No civil liability will attach to the Issuer and other companies of the Group in respect of this summary (including the Summary Financial and Operating Data) or any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. Where a claim relating to the information contained in this Prospectus is brought before a court in a Member State, the plaintiff may, under the national legislation of the Member State where the claim is brought, be required to bear the costs of translating this Prospectus before the legal proceedings are initiated. Summary of the Business The Issuer, Coal Energy S.A., incorporated in the Grand Duchy of Luxembourg, is a holding company for a group of companies incorporated and operating in Cyprus and in Ukraine in the mining industry (the “Group” or “Coal Energy”). The Group’s principal business is mining, beneficiation and sale of thermal and coking coal. Coal Energy is the third largest private1 coal producer2 in Ukraine in terms of reserves as of end of 2010 and the seventh largest private coal producer in the country by output based on the 2010 results. Coal Energy’s coal reserves are located in the country’s largest coal basin – Donbas. The table below provides a breakdown of the Group’s coal reserves estimated by John T. Boyd Company (Boyd) in June, 2011 according

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