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<SEC-DOCUMENT>0000909567-04-000790.txt : 20040520
<SEC-HEADER>0000909567-04-000790.hdr.sgml : 20040520
<ACCEPTANCE-DATETIME>20040520113646
ACCESSION NUMBER:		0000909567-04-000790
CONFORMED SUBMISSION TYPE:	20-F
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20031231
FILED AS OF DATE:		20040520

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CALEDONIA MINING CORP
		CENTRAL INDEX KEY:			0000766011
		STANDARD INDUSTRIAL CLASSIFICATION:	GOLD & SILVER ORES [1040]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		20-F
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-13345
		FILM NUMBER:		04820475

	BUSINESS ADDRESS:	
		STREET 1:		9-2145 DUNWIN DR
		STREET 2:		MISSISSAUGA ONTARIO
		CITY:			CANADA
		STATE:			A6
		ZIP:			L5L4L9
		BUSINESS PHONE:		9056077543

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDEN NORTH RESOURCE CORP
		DATE OF NAME CHANGE:	19920302
</SEC-HEADER>
<DOCUMENT>
<TYPE>20-F
<SEQUENCE>1
<FILENAME>t13100e20vf.txt
<DESCRIPTION>20-F
<TEXT>
<PAGE>



                           U.S. SECURITIES & EXCHANGE
                                   COMMISSION

                                    FORM 20F

         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2003

                         COMMISSION FILE NUMBER: 0-13345

                          CALEDONIA MINING CORPORATION

                                     CANADA

                    UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA,
                             ONTARIO, CANADA L5L 4L9
                               TEL: (905) 607-7543

<PAGE>
                                     - 2 -

Securities registered or to be registered pursuant to Section 12(b) of the Act.

         NIL                              NIL
- ---------------------               ----------
(Title of each class)               (Name of each exchange on which registered)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common shares without par value
- -------------------------------
(Title of class)

Securities for which there is a reporting obligation Pursuant to Section 15(d)
of the Act.

     NIL
- --------
(Title of class)

Number of outstanding shares of each of the issuer's classes of capital or
common stock as of the close of the period covered by the Annual Report.

  252,274,997                    (as of December 31, 2003)
- ---------------                  -------------------------
(Common shares)

Indicate whether the Registrant (1) has filed all reports required to be filed
by section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

Yes        [X]        No [ ]

Indicate which financial statement item the Registrant has elected to follow:

Item 17    [X]        Item 18

NOTE: Caledonia Mining Corporation was created on February 5, 1992 following the
      amalgamation of its three predecessor companies, namely Golden North
      Resource Corporation, Thorco Resources Inc. and Doelcam Mining
      Corporation. For accounting purposes, the Amalgamation was treated as a
      purchase acquisition by Doelcam Mining Corporation of the other two
      predecessor companies.

NOTE: THAT ALL REFERENCE TO MONIES HEREIN ARE TO CANADIAN DOLLARS UNLESS
      OTHERWISE SPECIFICALLY INDICATED.

<PAGE>
                                     - 3 -

                                     PART 1

1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

      1.    DIRECTORS AND SENIOR MANAGEMENT

            Not required as this is an "annual report under the Exchange Act'.

      2.    ADVISERS

            Not required as this is an "annual report under the Exchange Act".

      3.    AUDITORS

            Not required as this is an "annual report under the Exchange Act".

HOWEVER, THE INFORMATION REQUIRED ABOVE CAN READILY BE DETERMINED FROM THE 2003
ANNUAL REPORT OF THE RESPONDENT ON PAGES 42 AND 43.

2.    OFFER STATISTICS AND TIMETABLE

      1.    OFFER STATISTICS

            Not required as this is an "annual report under the Exchange Act".

      2.    METHOD AND EXPECTED TIMETABLE

            Not required as this is an "annual report under the Exchange Act".

3.    KEY INFORMATION

      1.    Selected Financial Data

            TABLE 3 A shows the applicable selected financial data for the
            5-year period 1999 to 2003 in Canadian Generally Accepted Accounting
            Principles.

            TABLE 3 A (i) shows the applicable selected financial data for the
            5-year period 1999 to 2003 in United States Generally Accepted
            Accounting Principles.

            TABLE 3 A (ii) shows the US$ exchange rates against the $ Canadian
            for each of the 5 year periods indicated, for the period end and
            average exchange rate and the range of high and low rates for each
            year and the high and low exchange rates for the individual last six
            months ending April 2004.

<PAGE>
                                     - 4 -

TABLE 3A - SELECTED FINANCIAL INFORMATION - CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

<TABLE>
<CAPTION>
                                                                 2003          2002          2001          2000          1999
                                                              ----------    ----------    ----------    ----------    ----------
<S>                                                           <C>           <C>           <C>           <C>           <C>
FINANCIAL - $ THOUSANDS CDN EXCEPT PER SHARE AMOUNTS

Revenue from Operations                                            646            27           124         6,732        14,701

Gross Profit (Loss)                                             (3,068)         (103)         (126)          304         2,090

Earnings (loss) from Continuing Operations                     (14,556)       (4,331)       (1,195)       (1,591)      (12,770)

Expenses (General, Administration, Interest, Amortization)       1,834         1,578         1,130         2,143         3,853

Net Income (Loss) for the Year                                 (14,556)       (4,331)       (1,195)        7,412        (7,460)

Cash                                                             4,179         1,864            90            75            51

Current Assets                                                   4,573         2,094           184           200         2,179

Total Assets                                                    19,335        24,767        24,973        25,063        33,189

Current Liabilities                                                790         1,336         2,701         2,556         5,143

Long Term Liabilities                                            1,363         1,280         1,813         1,813        21,747

Working Capital (Deficiency)                                     3,783           758        (2,517)       (2,356)       (2,964)

Shareholders' Equity                                            17,182        22,151        20,459        20,694         6,299

Total Capital Expenditures                                         187           300             -             -           345

Expenditures on Mineral Properties                               2,092           624            23           120           353

Financing Raised                                                 9,459         4,786         1,078           979           497

Dividends Declared                                                   -             -             -             -             -
</TABLE>

                                SHARE INFORMATION

<TABLE>
<S>                                                             <C>           <C>           <C>           <C>           <C>
Market Capitalization ($ Thousands)                             105,955        86,836         9,086        10,374        3,441

Shares Outstanding (Thousands)                                  252,275       211,795       165,202       148,202       68,830

Warrants & Options (Thousands)                                   28,055        27,348        19,566         7,566        7,566

Earnings (Loss) per Share                                        (0.063)       (0.023)       (0.008)        0.080       (0.120)

Net Income (Loss) from Continuing Operations per Share           (0.063)       (0.023)       (0.008)        (0.02)       (0.21)
</TABLE>

<PAGE>
                                     - 5 -

TABLE 3A(i) - SELECTED FINANCIAL INFORMATION - UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

<TABLE>
<S>                                                            <C>           <C>           <C>           <C>            <C>
Revenue from Operations                                            646            27           124         6,732        14,701

Gross Profit (Loss)                                             (3,137)         (103)         (126)          304         2,090

Earnings (loss) from Continuing Operations                      (5,544)       (3,795)       (1,202)       (2,481)       (3,948)

Expenses (General and Administration, Interest and
  Amortization)                                                  1,834         3,345         1,130         2,143         3,853

Net Income (Loss)                                               (5,546)       (3,795)       (1,202)        9,574        (1,966)

Cash                                                             4,179         1,864            90            75            51

Current Assets                                                   4,573         2,094           184           200         2,179

Total Assets                                                    17,945        13,439        11,342        11,439        17,572

Current Liabilities                                                790         1,336         2,701         2,556         5,143

Long Term Liabilities                                            1,664         1,280         1,813         1,813        21,121

Working Capital (Deficiency)                                     3,783           758        (2,517)       (2,356)       (2,964)

Shareholders' Equity (Deficiency)                               15,491        10,823         6,828         7,070        (8,692)

Total Capital Expenditures                                         187           300             -             -           345

Expenditures on Mineral Properties                               2,092           624            23           120           353

Financing Raised                                                 9,459         4,786         1,078           979           497

Dividends Declared                                                   -             -             -             -             -

                   SHARE INFORMATION

Market Capitalization ($ Thousands)                            105,955        86,836           086        10,374         3,441

Shares Outstanding (Thousands)                                 252,274       211,795       165,202       148,202        68,830

Warrants & Options (Thousands)                                  27,348        28,055        19,566         7,566         7,566

Basic and Diluted Earnings (Loss) per Share from
  Continuing Operations                                         (0.024)       (0.013)       (0.008)       (0.030)       (0.070)

Basic and Diluted Net Income (Loss) per Share                   (0.024)       (0.013)       (0.008)        0.090        (0.020)
</TABLE>

TABLE 3A(ii) - SUMMARY OF EXCHANGE RATES FOR THE 5-YEAR PERIOD - 1999 TO 2003
The following table sets forth, for each of the years indicated, the exchange
rate of the United States dollar into Canadian currency at the end of such year,
the average exchange rate during each such year and the range of high and low
rates for each such year as supplied by the Bank of Canada.

<TABLE>
<CAPTION>
          EXCHANGE RATE                        2003          2002          2001          2000          1999
          -------------                     ----------    ----------    ----------    ----------    ----------
<S>                                         <C>           <C>           <C>           <C>           <C>
Rate at the End of the Period (1)             1.2965        1.5591        1.5775        1.4995        1.4433

Average Rate (2)                              1.4015        1.5703        1.5490        1.4854        1.4857

High Rate (1)                                 1.5777        1.6033        1.5955        1.4341        1.4433

Low Rate (1)                                  1.2839        1.5276        1.4991        1.5593        1.5298
</TABLE>

NOTES:

(1)   The rate of exchange is the Bank of Canada closing rate for the period.

(2)   The average rate means the average of the exchange rates during the year.

(3)   High and low rates of exchange for each of the 6 months from November 2003
      to April 2004 are as follows:

<TABLE>
<CAPTION>
        NOV. 2003        DEC. 2003       JAN. 2004    FEB. 2004      MAR. 2004  APR. 2004
<S>     <C>              <C>             <C>          <C>            <C>        <C>
HI       1.3410           1.3420          1.3360       1.3512         1.3570     1.3795
LOW      1.2948           1.2839          1.2683       1.3090         1.3055     1.3037
</TABLE>

<PAGE>
                                     - 6 -

B.    CAPITALIZATION AND INDEBTEDNESS.

      Not required as this is an "annual report under the Exchange Act"

C.    REASON FOR THE OFFER AND USE OF PROCEEDS

      Not required as this is an "annual report under the Exchange Act"

D.    RISK FACTORS

      An investment in the securities involves a high degree of risk. Investors
      need to carefully consider the following risk factors, in addition to the
      other information contained in this section "C" and the Exhibits hereto.

INDUSTRY COMPETITION

The mining industry is a highly diverse and competitive international business.
The selection of geographic areas of interest are only limited by the degree of
risk a company is willing to accept by the acquisition of properties in emerging
or developed markets and/or prospecting in explored or virgin territory. Mining
by its nature, is a competitive business with the search for fresh ground with
good exploration potential and the raising of the requisite capital to move
projects forward to production. Globally the mining industry is prone to
cyclical variations in the price of the commodities produced by it, as dictated
by supply and demand factors, speculative factors and industry-controlled
marketing cartels. Nature provides the ultimate uncertainty with geological and
occasionally climatic surprises. Commensurate with the acceptance of this risk
profile is the potential for high rewards.

EXPLORATION AND DEVELOPMENT

The exploration, and development of, and the production from mineral deposits is
potentially subject to a number of political, economic and other risks.
Exploration, development and production activities are potentially subject to
political, economic and other risks, including:

- -     cancellation or renegotiation of contracts;

- -     changes in local and foreign laws and regulations;

- -     changes in tax laws;

- -     delays in granting prospecting permissions, mining authorizations and work
      permits for foreign management staff;

- -     environmental controls and permitting

- -     expropriation or nationalization of property or assets;

- -     foreign exchange controls;

- -     government mandated social expenditures, such as comprehensive health care
      for HIV/AIDS infected employees and families;

- -     import and export regulation, including restrictions on the sale of their
      production in foreign currencies;

- -     industrial relations and the associated stability thereof;

- -     inflation of cost that is not compensated for by a currency devaluation;

- -     requirement that a foreign subsidiary or operating unit have a domestic
      joint venture partner, possibly which the foreign entity must subsidize;

- -     restrictions on the ability of local operating companies to sell their
      production for foreign currencies, and on the ability of such companies to
      hold these foreign currencies in offshore and/or local bank accounts;

- -     restrictions on the ability of a foreign company to have management
      control of exploration and/or development and/or mining operations;

- -     restrictions on the remittance of dividend and interest payments offshore;

- -     retroactive tax or royalty claims;

- -     risks of loss due to civil strife, acts of war, guerrilla activities,
      insurrection and terrorism;

- -     royalties and tax increases or claims by governmental entities;

- -     unreliable local infrastructure and services such as power, communications
      and transport links;

- -     other risks arising out of foreign sovereignty over the areas in which
      Caledonia's operations are conducted.

Such risks could potentially arise in any country in which Caledonia operates,
however the risks are regarded as greater in South Africa and Zambia. In South
Africa the recently promulgated Mining Legislation and a number of associated
and as yet undefined economic and social issues may result in an increased
political and economic risk weighting of operating in that country.

<PAGE>
                                     - 7 -

Consequently, Caledonia's exploration, development and production activities may
be substantially affected by factors beyond Caledonia's control, any of which
could materially adversely affect Caledonia's financial position or results from
operations. Furthermore, in the event of a dispute arising from such activities,
Caledonia may be subject to exclusive jurisdiction of courts outside North
America or may not be successful in subjecting persons to the jurisdiction of
the courts in North America, which could adversely affect the outcome of a
dispute.

HISTORY OF LOSSES; ACCUMULATED DEFICIT; NO ASSURANCE OF REVENUE OR OPERATING
PROFIT

Since inception from February 1992, Caledonia has recorded a loss in every year
except 1994 and 2000. As at December 31, 2003 the consolidated accumulated
deficit was $142.4 million. 77.3% of the accumulated loss relates to capital
asset and mineral property write-downs, 7.7% is due to discontinued operations
prior to 1998, and the balance of 15.0% relates to operational and
administration activity. Operational activity is defined as gross profit from
mining operations less expenses such as amortization, general and
administration, interest on debt and other miscellaneous expenses.

Write-downs on capital assets and mineral properties are typical for the mining
industry. Caledonia's policy is to review the carrying value of assets relative
to current market conditions on an annual basis. In 1997, Caledonia reduced the
carrying value of its investment in the two South African gold mines by
recording a write-down of $44.9 million. This reduction was made in response to
a decline in the average price of gold per ounce from about US$364 in 1996 to
US$327 in 1997 and the placing of the two mines onto "care and maintenance".
Similarly in 1998 and 1999 these assets were further reduced by $10.6 million
and $2.4 million respectively when the gold price fell to about US$ 250 per oz.
During the remainder of 2003 the Rand price of gold held steady at between
R82,000 and R88,000 per kilogram despite a slow but gradual increase in the
price of gold to about US $415 per ounce at the 2003 year end from a price of
$347 per ounce at the beginning of 2003. As the gold prices recovers to
acceptable levels and the South African mines recommence production, a
substantial portion of the write-down could be recovered as earnings. However,
there is no assurance the Rand price of gold will be sustainable.

In 2002, the carrying value of Caledonia's Kadola exploration property in
Zambia, amounting to $2.6 million was written down to $1 as no exploration
funding was available for this project at that time. In 2003, the carrying value
of the Nama group exploration property in Zambia, $9,534,000, was written down
to $1 due to lack of significant exploration activity on the property during the
year and despite there being strong interest shown on purchasing a cobalt
concentrate from Nama by two potential end-users.

In general, mining companies react to changing commodity prices by searching for
new methods of operating to either increase the volume of production from
existing ore reserves or reduce operating costs. Caledonia is continuously
searching for new production methods and operating cost efficiencies in an
attempt to mitigate the effects of lower commodity prices on operating profits.
However, there is no guarantee Caledonia will be successful in its efforts.
Caledonia at its Barbrook mine recommenced gold production in the 2nd quarter of
2003 and introduced the relatively new technology of Resin leaching to increase
its gold recovery and enhance economics. In late 2003 and early 2004 Caledonia
introduced additional new flotation equipment and concentrate oxidation
technology at Barbrook to further improve the gold recovery and production
economics. It is further evaluating `ultra-fine milling' and `whole-plant Biox'
metallurgical processes to determine whether further improvements in recoveries
and mine economics can be attained.

NEED FOR ADDITIONAL FUNDS

It is the belief of Caledonia that the recent financing by a group of private
investors that partially closed on the 30th April 2004 and which provided gross
funding of about $15.0 million and the recent exercise of common share purchase
warrants of about $ 0.761 million will sustain Caledonia for 2004 and into the
year 2005. The resumption of gold production at Caledonia's Barbrook mine will
also generate cash flow in 2004. However, if funds fall short of requirements,
Caledonia will undertake financing options such as private placements with
private investors, and, if this is still insufficient for its needs, will
investigate either project joint ventures or project or bank funding. The funds
raised by the 2004 financing have been and will be mainly used by Caledonia on
its exploration, development and production activities such as:

  -   at Barbrook developing access to ore resources below the 10 level and to
      the east along strike; providing continuity of the mining operations;
      making capital additions to the Barbrook metallurgical plant, such as a
      Biox(R) circuit;

<PAGE>
                                     - 8 -

  -   further drilling/possible bulk sampling and processing of material from
      Caledonia's Goedgevonden Diamond Project;

  -   further drilling at Caledonia's Rooipoort Platinum Project

  -   bulk sampling and concentration testwork on Caledonia's Nama Cobalt/Copper
      Project in Zambia.

  -   further exploration and possible drilling at the Roodepoort gold project
      of Eersteling.

The funds raised will be sufficient to move forward with the direct development
of some of the assets if economically and technically justified. The Mulonga
Plains Joint Venture with the BHP-Billiton Entity is subject to joint venture
agreements and is fully funded by the joint venture partner through to
commercial production. Similarly, the Kikerk Lake joint venture with Ashton
Mining (Canada) Limited is fully funded by Ashton. Caledonia continues to
actively review the benefits, to Caledonia and its shareholders, of seeking
joint venture partners for most, if not all of its exploration properties.

DEPENDENCE UPON KEY PERSONNEL

Caledonia's success depends (i) on the continued contributions of its directors,
executive officers, management and consultants, and (ii) on Caledonia's ability
to attract new personnel whenever Caledonia seeks to implement its business
strategy. During Caledonia 's limited operating history and the continuous
shortage of funding between 1997 and mid 2002, most of the key responsibilities
within Caledonia have been assigned to a small number of individuals. With
recommencement of production at the Barbrook mine and the expansion of other
Southern African projects, various consultants and staff have been engaged to
assist with the increased technical and administrative workload. In late 2003
and early 2004 additions have been made to the corporate staff at senior levels
to strengthen the management and operations team in South Africa and to address
some of the succession planning needs of Caledonia. Amongst others these include
the senior appointment (sequentially) of:

  -   Dr. Trevor Pearton as a Director of Barbrook and Eersteling and who
      controls the geological and ore development programs at both mines;

  -   Jacques du Plessis as General Manager, South Africa, responsible for all
      South African operations;

  -   John Blaine as Exploration Manager Africa responsible for all African
      exploration projects;

  -   Bruce Cumming as Chief Geologist Africa and the Project Manager of
      Eersteling's Rooipoort Platinum and Roodepoort Gold Projects;

  -   Kevin Buyskes as the Manager of Barbrook Mines Limited;

  -   Ann Pearton as the Manager of all Caledonia's Geological Information
      Systems;

  -   Mike Tombs as Financial Manager Africa responsible for all financial and
      accounting matters.

ABSENCE OF DIVIDENDS

The Company has never paid, and does not intend at this stage, to declare or pay
cash dividends on Common Stock in the foreseeable future.

POSSIBLE VOLATILITY OF SHARE PRICE

Market prices for mining company securities, by their nature, are volatile.
Factors, such as rapidly changing commodity prices, political unrest globally
and in countries where Caledonia operates, speculative interest in mining stocks
etc. are but a few factors affecting the volatility of the share price. The
volatility of Caledonia's stock may also be affected by the relative lack of
institutional and stock analyst coverage of Caledonia .

4     INFORMATION ON THE COMPANY

A.    HISTORY AND DEVELOPMENT OF CALEDONIA

      CALEDONIA MINING CORPORATION ("Caledonia") was incorporated, effective
      February 05, 1992, by the amalgamation pursuant to the laws of the
      Province of British Columbia, Canada of two "public" companies and one
      "private" company. The two public companies were Golden North Resource
      Corporation ("Golden North"), a British Columbia company and Thorco
      Resources Inc. ("Thorco"), an Ontario company. The private company was
      Doelcam Mining Corporation ("Doelcam"), an Ontario company. Such three
      companies being herein variously referred to as the "Amalgamating
      Companies".

<PAGE>
                                     - 9 -

      One of the Amalgamating Companies, Golden North was itself created,
      effective October 1, 1986 by the amalgamation, pursuant to the laws of the
      Province of British Columbia, Canada, of two "public" British Columbia
      companies named Golden North Resource Corporation ("Golden North") and
      Good Hope Resources Ltd. ("Good Hope") - such two companies being herein
      variously referred to as the "Predecessor Companies". Predecessor
      Corporation Golden North was itself created by an amalgamation, which
      became effective on August 30, 1984, of three companies incorporated in
      the Province of British Columbia, Canada, named Grove Explorations Ltd.,
      Rosmac Resources Ltd. and N.W.P. Resources Ltd.

      The amalgamation of companies under the British Columbia Corporation Act
      is in effect a merger of the Amalgamating Companies into a single new
      corporate entity, which replaces the original Amalgamating Companies. As a
      result of the amalgamation, Caledonia became possessed of all the assets
      and assumed responsibility for all of the liabilities, of the Amalgamating
      Companies.

      As a result of the amalgamation, all of the issued and outstanding shares
      of the Amalgamating Companies were exchanged for fully paid and
      non-assessable common shares in the capital of Caledonia. As a result of
      the share exchange Caledonia issued a total of 10,632,567 common shares to
      the shareholders of the Amalgamating Companies. The share exchange was on
      the following basis:

                  - 0.71672 shares of Caledonia for one share of Golden North;

                  - 0.19426 shares of Caledonia for one share of Thorco;

                  - 0.70810 shares of Caledonia for one share of Doelcam

      The shares of Golden North and Thorco were, prior to the amalgamation,
      listed on the Toronto Stock Exchange in Toronto Ontario, Canada.
      Additionally, up to 1991, Golden North was listed on the Vancouver Stock
      Exchange in Vancouver British Columbia, Canada and was also quoted on
      NASDAQ in the U.S. Following the amalgamation, the shares of Caledonia
      were listed for trading on the Toronto Stock Exchange and quoted on the
      NASDAQ small caps market. In October 1995, Caledonia was elevated to the
      NASDAQ National Market from the small caps market.

      In March 1995, Caledonia decided to de-register as a Corporation
      registered under the laws of the Province of British Columbia, and
      simultaneously, was registered as a Canadian Corporation under the
      provisions of the Canadian Business Corporations Act (CBCA).

      The addresses and telephone numbers of Caledonia's two principal offices
      are:

         HEAD OFFICE - CANADA               AFRICA OFFICE - SOUTH AFRICA
         Caledonia Mining Corporation       Greenstone Management Services
         Suite 9, 2145, Dunwin Drive,       24, 9th Street, Lower Houghton
         Mississauga, L5L 4L9               Johannesburg, Gauteng, 2198
         Ontario, Canada                    South Africa
         (1) 905 607 7543                   (27) 11 447 2499

      The above principal Canadian and South African office address are the same
      as those given in the 2002 Form 20F.

      In 1997, the NASDAQ stock market put Caledonia on notice that new listing
      requirements were in the process of being implemented. A minimum bid price
      of US$1.00 per share for a period of ten consecutive trade days is
      required for Caledonia to regain compliance with the new listing
      requirements. Caledonia was unable to regain compliance and on October
      16th 1998, Caledonia announced that the NASDAQ Stock Market, Inc. would no
      longer quote Caledonia's securities for trading. In addition to trading on
      the Toronto Stock Exchange, Caledonia's common stock commenced trading on
      NASDAQ's OTC Bulletin Board system under the same symbol, CALVF,
      immediately after removal from the NASDAQ National Market.

      On April 6, 2000, the Board of Directors of Caledonia approved a letter of
      intent dated April 4, 2000 whereby Caledonia disposed of its investment in
      Filon Sur S.A. ("Filon Sur") and Fynegold Exploration Limited
      ("Fynegold"). In relation to the above transaction, reference is made to
      note 5 (b) of Caledonia's financial statements contained in the 2000
      Annual Report, which information was incorporated therein by reference in
      the 2000 Form 20F.

<PAGE>
                                     - 10 -

      In August 2000, Caledonia was notified by its joint venture partner on its
      Mulonga Plain properties in Zambia that it had expended more than US$ 3
      million on exploration on the properties and as such had earned a 60%
      interest in that property. The joint venture party has continued work on
      the Mulonga Plain properties in 2003 in its search for diamondiferous
      kimberlite pipes and has planned further exploration work for the 2004
      exploration season.

      In August 2000, Caledonia concluded a deal with a major mining company
      whereby the company would spend a total of $750,000 over a 3-year period
      on Caledonia's Kikerk Lake diamond property in northern Canada to earn a
      52.5% interest in the property from Caledonia who at that time held a 70%
      interest. By the end of 2002 the mining group had spent in excess of
      $750,000 on the Kikerk property and had earned a 52.5% interest. The joint
      venture parties have signed a 3-way joint venture exploration agreement in
      early 2002 and the operator of the joint venture has completed an
      approximate $1.5 million winter and summer exploration program in 2002 and
      a further $600,000 program in 2003.The operator has proposed a $300,000
      exploration program for 2004.

      In August 2000, Caledonia signed a heads of agreement with a major mining
      group over Caledonia's Nama group licences in Zambia - the "Kalimba
      project". The mining group undertook to spend US$ 2,500,000 over a 4-year
      period to earn a 30% interest in the property by funding all of the
      exploration work on the Kalimba project. The mining group could have
      increased its interest to 50% by spending a further $4,000,000 in the same
      4-year period. The mining group carried out exploration work on the
      Kalimba project between 2000 and March 2002 when it withdrew from the
      joint venture as part of its overall cutback in worldwide exploration. The
      property is again fully owned by Caledonia. Talks were held with another
      potential joint venture partner in 2002 but without any agreement being
      reached. In late 2003 talks were held with a smelting company in Zambia
      regarding the sale of concentrates from Nama as smelter feed. Caledonia
      will collect a bulk sample from Nama during the 2nd quarter of 2004 and
      conduct metallurgical tests to produce a concentrate and confirm whether
      or not the specifications required by the smelter can be met.

      Caledonia has not been involved in any significant reorganization,
      mergers, receiverships or bankruptcies. However in January 2002,
      Caledonia's management service agreement with the Filon Sur Gold Mine in
      Southern Spain was effectively terminated due to the placing of Filon Sur
      into liquidation by its major shareholder.

      In 2002, the Corporation raised about $ 4.2 million equity financing (net
      of fees) from private placements and a convertible debenture and about
      $1.5 million from the exercise of warrants. In early 2003, Caledonia
      raised approximately $1.2 million from equity financing (net of fees) from
      the portion of the private placement carried over from December 2002,
      about $1.2 million from the exercise of warrants and about $0.037 million
      from the exercise of share options. A second private placement in August
      2003 raised a further $4.6 million (net of fees). For details of these
      equity financings and the sale of the warrants please refer to Note 4 of
      the Financial Statements on page 31 of the 2003 Annual Report that are
      incorporated herein by reference. In April 2004 a private placement of up
      to $20,000,000 was undertaken and as at April 30th 2004 had raised about
      $15 million gross financing. For details of this financing please refer to
      Note 11 of the Financial Statements on page 36 of the 2003 Annual Report
      that is incorporated herein by reference.

      A full description of Caledonia's involvement in its various subsidiaries
      is given in the following section - 4 (B). From time to time Caledonia
      receives mineral property and business proposals from third parties for
      review as potential investment opportunities. The Board of Directors or
      the officers of Caledonia will review and evaluate those opportunities of
      merit and interest to Caledonia. In 2002 Caledonia became involved with
      the "Rooipoort" mineral exploration property in South Africa following the
      review procedure outlined above.

<PAGE>
                                     - 11 -

B.    BUSINESS OVERVIEW

      MINING AND EXPLORATION PROPERTIES:

      (1)   FILON SUR GOLD MINE

            Until June 30 2000, Caledonia owned a 99.5% interest in the Filon
            Sur gold mine located at Tharsis in the Province of Huelva in the
            Andalucia area of southern Spain. The Filon Sur mine had the right
            to mine, reclaim and process all gossan and morrongo ores from the
            10,000 acre Tharsis and La Zarza lands and mining concessions,
            historic mining districts located on the world famous Iberian pyrite
            belt The operation at the mine in early 2001 and the latter part of
            the year was severely affected by wet weather that affected all of
            the feed sources to the plant and reduced production significantly.
            Despite various efforts to reduce costs and increase production,
            operating losses were made throughout the year - especially from
            August 2001 onwards. Despite seeking respite from the critical cash
            flow shortage by attempting to obtain Government funding for the
            depressed Spanish mining industry, the mine could not produce a
            viable on-going operating plan and was placed into liquidation at a
            shareholders' meeting in January 2002. This effectively terminated
            the management services contract with the mine. Because of the poor
            operating and economic results, there was no free cash from the mine
            in 2001 and therefore no fees were paid to Caledonia for management
            services.

      (2)   BARBROOK GOLD MINE

            The 100% owned Barbrook gold mine is located near the town of
            Barberton in the Mpumalanga province of the Republic of South
            Africa. Pretoria and Johannesburg are approximately 375 km to the
            west. Barberton is the natural and historic center of the gold
            mining district in the Mpumalanga province. The town has a history
            of mining dating back more than 100 years. The present property,
            which covers an area of 10,625 acres and extends for a distance of
            about 28 km along strike, represents a consolidation of about 20 old
            mines.

            The Barbrook gold deposits occur in the Barberton Greenstone belt,
            the host for the other gold deposits in the area. The belt is of
            Achaean age and includes some of the oldest volcanic and sedimentary
            rocks in South Africa. The belt trends southwest to the northeast
            and has been intruded and deformed by various granite plutons at the
            margins. The Barbrook property covers two steeply dipping banded
            iron formations oriented in an east-west direction. These two shear
            zones, called the Zwartkoppie and Barbrook Lines are the host to the
            Barbrook gold deposits.

            During 1997, prior to the suspension of activities, the mine was
            operating at a rate of 17,000 tonnes per month and the process plant
            was operating at about 20,000 tonnes per month of underground ore.
            The plant has, in the past, processed oxide ore at rates in excess
            of 30,000 tonnes per month. Through 2000, operations remained
            suspended at Barbrook due to the continuing low gold price. The
            underground mine was operated on a very small-scale basis in
            early-mid 2001 to generate cash flow to enable the plant and the
            mine to be re-started. This operation was terminated in September
            2001 due to uneconomic operation at the low production rate. The
            mine was returned to a care and maintenance basis. Reference is made
            to page 7 of the 2003 Annual Report for information on the
            resources, which information is incorporated herein by reference.

            Barbrook was re-started in January 2002, again mining a low-tonnage,
            high grade payshoot to provide cash flow to commence rehabilitation
            of the Mine planned to re-start processing at a rate of 6,000 tonnes
            per month and to pilot test the new process technology for gold
            recovery developed by Caledonia. However, due to poor economic
            returns on the low tonnage, high-grade ore, operations were
            suspended in April 2002. A full geological and mining re-evaluation
            was carried out on the Taylor's orebody from May 2002, which has led
            to the rehabilitation of the mine and plant and the resumption of
            operations in the 2nd quarter of 2003. Information on the production
            of Barbrook in 2003 is shown on Page 11 of the 2003 Annual Report
            that is incorporated herein by reference. The characteristics of the
            Taylors ore fed to the plant in 2003 were not as expected, or as
            used in earlier test work, and recoveries were below projections.
            The ore was much more refractory with considerably

<PAGE>
                                     - 12 -

            more arsenopyritic ore than expected, although these ores are of
            higher grade than the pyritic ore zones tested previously.

            A number of alternative metallurgical circuits have been tested and
            circuit improvements have been identified. In late 2003 and early
            2004 Caledonia introduced new flotation equipment and concentrate
            oxidation technology at Barbrook to improve the gold recovery and
            therefore the production economics. In early 2004, it is further
            evaluating `ultra-fine milling' and `whole-plant Biox(R)'
            metallurgical processes to determine whether further recovery
            improvements and improved economics can be attained.

            As future test work is completed, and following feasibility study,
            more revisions to the metallurgical plant are expected.

            In 2004 it has been decided to develop mining operations at Taylors
            on the Barbrook line below the 10 level, at the upper levels of
            Taylors and easterly along strike towards the Crescent area and on
            the Zwartkoppies line in order to provide additional ore to the
            metallurgical plant when the new metallurgical processes are proven
            successful.

      (3)   EERSTELING GOLD MINE

            The 96% owned Eersteling gold mine, is located 36 kilometers from
            the town of Pietersburg in the rolling terrain of the Northern
            Province of the Republic of South Africa. Pretoria and Johannesburg
            are 250 km and 300 km, respectively, to the south.

            The first gold discovered in South Africa was on a farm named
            "Eersteling" which was located near the village of Marabastad, 30 km
            southeast of Pietersburg. Mining started in May 1874 and continued
            until the second Anglo-Boer War (1899 - 1902) when the mine was shut
            down. The mining rights of the fragmented mining and exploration
            properties were consolidated. On July 16 1987, Eersteling Gold
            Mining Company Limited was formed and was listed on the Johannesburg
            Stock Exchange.

            The Eersteling Mine property has an area of 47,000 acres, extends
            for a distance of about 25 km and is located in the Pietersburg
            Greenstone belt which is of Achaean age and which consists of an
            upper and lower sequence. The upper sequence is mainly conglomerate,
            grit and sandstone. The lower sequence is undifferentiated mafic and
            ultramafic volcanic rocks and intrusives, with banded iron formation
            and chert. The feature that most dominates gold mineralization in
            the area is the Willemse shear. During 2003 operations remained
            suspended at Eersteling.

            In 2002, Eersteling obtained the Rooipoort platinum prospect from
            Anglo American Platinum Corporation (Amplats). The property is about
            30 km southwest of the Eersteling metallurgical plant and is located
            in an area that is presently undergoing a surge in platinum group
            metal exploration. In the third quarter 2003 an exploration-drilling
            program was commenced on the Rooipoort property. Exploration
            drilling is continuing in 2004.

            Eersteling has identified a near-surface gold exploration prospect
            ("Roodepoort") which will be tested during 2004.

            Reference is made to page 7 and 9 respectively of the 2003 Annual
            Report for information on the resources of Barbrook and Eersteling
            and on pages 12 and 14 respectively for a description of the
            Roodepoort and the Rooipoort prospects, which information is
            incorporated herein by reference.

            Eersteling Gold Mining Company Limited ("Eersteling") is listed on
            the Johannesburg Stock Exchange ("JSE") and is 96.2% owned by
            Caledonia. Because of the poor liquidity of trading and the high
            costs of maintaining the listed company, it is intended to delist
            Eersteling from the JSE in mid-2004 and to make an offer to take
            over the positions of the minority shareholders

<PAGE>
                                     - 13 -

      (4)   GENERAL COMMENTS

            Caledonia's activities are centered in Southern and Central Africa
            and in Northern Canada. Generally, in the gold mining industry the
            work is not seasonable except where heavy seasonal rainfall can
            affect surface mining. Caledonia is not dependent, to any material
            extent, on patents, licences, contracts or new manufacturing
            processes at this time. However, there may be occasions that
            Caledonia may wish to adopt such patents, licences etc. if these are
            economically beneficial to its operations. For example, at the
            present time Caledonia's subsidiary, Barbrook Mines Ltd, is
            negotiating a licence agreement with Biomin Technologies SA of
            Switzerland to allow Biomin's "BIOX(R)" process to be used at the
            Barbrook Gold Mine. Additional details of this process are given on
            page 11 of the 2003 Annual Report which is incorporated herein by
            reference.

            All Mining and exploration activities are conducted under the
            various Economic, Mining and Environmental Regulations of the
            country where the operations are being carried out. It is always
            Caledonia's standard that these regulations are complied with by
            Caledonia otherwise its activities risk being suspended.

      (5)   EXPLORATION AND DEVELOPMENT PROPERTIES

            As in 2002, in 2003 Caledonia continued to focus efforts on those
            exploration properties with the greatest potential in Africa and in
            Northern Canada. In 2001, Caledonia obtained interests in the
            Konkola West property in Northern Zambia and the Pruissen and the
            Vier-en-Twintig Rivier properties in the Limpopo Province of South
            Africa. In 2002, Caledonia obtained a 100% interest in the Rooipoort
            platinum prospect, also in the Limpopo Province of South Africa. Due
            to their lower prospectivity than Caledonia's other exploration
            properties, the option agreements at the Pruissen and
            Vier-en-Twintig properties were dropped in 2002. In 2003 Caledonia
            added the Lukulu licence area in Western Zambia to the Mulonga Plain
            Joint Venture lands. In late 2003 and early 2004 Caledonia increased
            its property holdings adjacent to its Rooipoort platinum project in
            South Africa.

            Reference is made to pages 4, 5 and 6 of the 2001 Annual Report
            which was incorporated into the 2001 Form 20F and pages 4 to 8
            inclusive of the 2002 Annual Report for information on exploration
            and development properties which information is incorporated herein
            by reference. Further information on exploration and project
            development is available on pages 12 to 15 of the 2003 Annual Report
            which information is incorporated herein by reference.

(C)   ORGANIZATIONAL STRUCTURE - SIGNIFICANT COMPANIES

      AFRICA:

      ZAMBIA:

      Caledonia Mining Corporation owns 100% of the shares of the following
      Zambian registered and incorporated companies:

      - Caledonia Mining (Zambia) Limited

      - Caledonia Western Limited

      - Caledonia Nama Limited

      - Caledonia Kadola Limited

      These companies are collectively known as "Caledonia Zambia" throughout
      this Form 20 F. However, on the joint venture on the Mulonga Plain
      properties, the other parties have now obtained a 60% interest after
      spending in excess of US$ 3,500,000. The joint venture parties have now
      spent in excess of US$ 5,500,000 on the Mulonga Plain joint venture
      property. It is intended that these properties, that are the sole assets
      of Caledonia Western, will be transferred to a new Zambian company in
      which Caledonia will hold a 40% interest.

<PAGE>
                                     - 14 -

      SOUTH AFRICA:

      Caledonia Mining Corporation owns the following interests in South African
      registered and incorporated companies:

      - 96% of Eersteling Gold Mining Company Limited, a company listed on the
      Johannesburg Stock Exchange

      -100% of Barbrook Mines Limited

      -100% of Greenstone Management Services Limited

      In early 2004, Caledonia gave notice of its intent, subject to obtaining
      the necessary regulatory approvals, to convert the shares held by the
      minority shareholders of Eersteling Gold Mining Limited, into redeemable
      preference shares, redeem them and to subsequently delist Eersteling from
      the Johannesburg Stock Exchange. When completed, this will result in
      Caledonia owning 100% of Eersteling's gold assets and the Rooipoort
      platinum project.

(D)   PROPERTY, PLANT AND EQUIPMENT

      The only producing area of involvement of Caledonia in 2001 was the Filon
      Sur Gold Mine in Spain. The mine produced a gold and silver product
      containing high amounts of copper. This product was sold to a refiner for
      further processing and the sale of precious metals. Caledonia sold Filon
      Sur on June 30, 2000. From this date, Caledonia managed Filon Sur for a
      fee equivalent to 30% of the excess cash flow from the mine. In 2000, the
      fee received from Filon Sur was $109,000 but in 2001, due to the severe
      cash flow problems, there was no management service fees received from
      Filon Sur. The mine has been more fully described earlier in section 4.B.1
      and, as stated previously, was placed into Liquidation in January 2002 by
      its major shareholder.

      Caledonia owns two gold assets in South Africa that have been on "care and
      maintenance" since 1997. These are the 96% owned Eersteling gold mine in
      Limpopo Province and the Barbrook gold mine in the Mpumalanga Province.
      These mines have previously been discussed in sections 4.B.2 and 4.B.3.
      Both of the mines and plants produced a dore bar product, which was sold
      to a South African refining company. Generally the gold content of the
      dore was in excess of 90% with silver and copper making up the other 10%.
      As discussed earlier, the Barbrook mine was rehabilitated in 2002 and
      early 2003 and re-commenced limited gold production during the second half
      of 2003.The Eersteling mine may be re-habilitated in 2004, dependant on
      exploration results from Roodepoort and if a sustainable economic Rand
      price of gold prevails.

      Reserve and resource estimates for the Barbrook Gold Mine and a resource
      estimate for the Eersteling Gold Mine are available on pages 7 and 9 of
      the 2003 Annual Report which information is incorporated herein by
      reference. The Barbrook reserve and resource estimates were certified by
      Mr. David Grant, C.Geol., FGS, Pr.Sci.Nat., an independent consultant and
      "Independent Qualified Person" as required by National Instrument 43-101
      of the Canadian Securities Administrators.

      Production results for the Barbrook Mine in 2003 are available on page 11
      of the 2003 Annual Report which information is incorporated herein by
      reference.

5     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A     OPERATING RESULTS

      A discussion on the `Results of Operation' for 2003 is given in the 2003
      Annual Report of Caledonia under section "Management Discussion and
      Analysis - `Operational Review' and' Consolidated Financial Results'".
      These are shown on pages 10 and 11 of the 2003 Annual Report, which are
      incorporated herein by reference.

      Reference is made to pages 38, 39, 40 and 41 of the 2003 Annual Report
      GAAP reconciliation (note 13) for the impact of the difference between
      Canadian and U.S. accounting principles on the operations of Caledonia
      that are incorporated herein by reference.

<PAGE>
                                     - 15 -

      The most critical accounting policies for Caledonia under Canadian and US
GAAP are:

      1.    MEASUREMENT UNCERTAINTIES

            Preparation of the financial statements in conformity with GAAP
            requires management to make estimates and assumptions that affect
            the reported amounts of assets and liabilities and the reported
            amounts of revenues and expenses during the reporting period. The
            more significant areas requiring estimates relate to mineral
            resources, future cash flows associated with capital assets and
            mineral properties. Management's calculation of mineral resources
            and cash flows are based upon engineering and geological estimates
            and financial estimates including gold prices and operating costs.
            The amount ultimately recovered could be materially different than
            the estimated values.

      2.    CAPITAL ASSETS

            PRODUCING ASSETS

            Producing assets are recorded at cost less government grants,
            accumulated amortization and write-downs.

            Producing assets are amortized using the straight-line method based
            on the estimated useful lives of the assets. The estimated useful
            life of the producing assets range from 3 to 5 years. Repairs and
            maintenance expenditures are charged to operations; major
            improvements and replacements that extend the useful life of an
            asset are capitalized and amortized over the remaining useful life
            of that asset. As of December 31, 2003, Caledonia's only producing
            capital asset was the Barbrook gold mine in South Africa.

            NON-PRODUCING ASSETS

            Non-producing assets are recorded at cost less write-downs. During
            non-producing periods, no amortization is recorded.

            At the time of commercial production, the assets are reclassified as
            producing and amortized in the manner described above.

      3.    MINERAL PROPERTIES

            PRODUCING PROPERTIES

            When and if properties are placed in production, the applicable
            capitalized costs are amortized using the unit-of-production method
            on the ratio of tonnes of ore mined or processed to the estimated
            proven and probable mineral reserves as defined by the Canadian
            Institute of Mining, Metallurgy and Petroleum. As of December 31,
            2002, 2001 and 2000, Caledonia did not have any producing mineral
            properties. As of December 31, 2003 the Barbrook gold mine in South
            Africa was the company's only operating mineral property.

            NON-PRODUCING PROPERTIES

            Costs relating to the acquisition, exploration and development of
            non-producing resource properties which are held by Caledonia, or
            through its participation in joint ventures, are capitalized until
            such time as either economically recoverable reserves are
            established, or the properties are sold or abandoned.

            A decision to abandon, reduce or expand activity on a specific
            project is based upon many factors including general and specific
            assessments of mineral reserves, anticipated future mineral prices,
            anticipated costs of developing and operating a producing mine, the
            expiration date of mineral property leases, and the general
            likelihood that Caledonia will continue exploration on the project.
            However, based on the results at the conclusion of each phase of an
            exploration program, properties that are not suitable as prospects
            are re-evaluated to determine if future exploration is warranted and
            that carrying values are appropriate.

<PAGE>
                                     - 16 -

            The ultimate recovery of these costs depends on the discovery and
            development of economic ore reserves, or the sale of the properties
            or the mineral rights. The amounts shown for non-producing resource
            properties do not necessarily reflect present or future values.

            However US GAAP requires that mineral properties with no proven
            resources be reflected as expenses in the period incurred. In
            addition, for US GAAP purposes, Caledonia has made a provision for
            Asset Retirement Obligations that would be incurred on closing its
            mines and exploration projects.

            Caledonia had two major capital expenditure programs for the year
            2003 that included the Rooipoort platinum exploration project and
            the previously discussed refurbishment of its Barbrook mine. The
            major capital expenditure commitments for the year 2004 are the
            previously discussed metallurgical plant additions (that may include
            the construction of a Biox (R) plant) at its Barbrook Mine that
            requires capital expenditure of $8.0 to $9.0 million. It is planned
            to carry out further drilling on the Rooipoort platinum group metals
            property, the Roodepoort gold prospect, a bulk sampling exercise on
            its Goedgevonden diamond property, in South Africa, and the Nama
            cobalt/copper property in Zambia. As discussed earlier, and
            depending upon a sustainable Rand gold price and the exploration
            results from the Roodepoort gold exploration property, it is
            possible that Caledonia will commence the refurbishment at its
            Eersteling gold mine in South Africa late in 2004.

B     LIQUIDITY AND CAPITAL RESOURCES

      A discussion on the `Liquidity and Capital Resources' for 2003 and its
      comparison to 2002 is given in the 2003 Annual Report of Caledonia under
      the section "Management Discussion and Analysis - `Liquidity and Capital
      Resources' and `Uses of Liquidity'". These are shown on page 16 of the
      2003 Annual Report, which section is incorporated herein by reference.

      Reference is also made to the section above titled "Risks and
      Uncertainties" for further information concerning liquidity and capital
      resources.

      Reference is made to the "Comments by Auditors for U.S. Readers on
      Canada-US Reporting Conflicts" which is shown on page 22 of the 2003
      Annual Report and which is incorporated here by reference.

      Cash flow from operations and investing activities has varied between
      2001, 2002 and 2003. Cash is invested in an interest-bearing money market
      fund. In 2001, private placement financing raised $0.96 million net of
      fees and short-term loans resulted in another $0.12 million. In 2002
      financing by private placement and exercise of warrants raised $5.2
      million, net of fees. This allowed repayment of loans in an amount of S1.0
      million by a combination of $0.4 million in cash and the issuance of
      shares. In 2003, financing by private placements and the exercise of
      warrants and share options raised $9.459 million net of fees. These
      transactions are discussed in more detail later in this section.

      Following previous cost curtailment programs and a significant reduction
      of expenditures on mineral and capital properties to conserve cash
      resources, the company requires about $1.4 million annually to maintain
      Caledonia as a reporting issuer in North America and maintain its assets.
      Cash flow from operations has been affected in 2001 and 2002 by the
      uneconomic operations at Filon Sur that resulted in zero fees received
      from the management services contract in 2001 and in 2002. Filon Sur was
      placed into liquidation by its major shareholder in January 2002. In 1999,
      2000 and 2001 certain officers and directors of Caledonia deferred a
      significant portion of salaries. The combination of deferral of salaries,
      short-term loans and equity financing kept Caledonia in operation over
      this period. In 2002, equity financing and exercise of warrants enabled
      the company to maintain its operation.

      In 2003, cash to continue operations was obtained by the issuance of share
      capital from private placements and from the exercise of warrants or share
      options. Due to unexpected metallurgical recoveries the cash flow from the
      restart of Caledonia 's Barbrook gold mine did not materialize. In the 1st
      quarter of 2003, an amount of about $2.39 million, net of financing costs
      was raised from the portion of the private placement financing carried
      over from December 2002, the exercise of warrants and share options. A
      further $4.6 million (net of costs) was raised by private placement in
      August 2003. In April 2004, the company raised an

<PAGE>
                                     - 17 -

      amount of about $15 million from private placements and from the exercise
      of warrants The funds raised by the 2004 financing will mainly be used on
      activities which will allow Caledonia to maintain and/or re-start
      operations, make capital additions to the Barbrook metallurgical plant,
      such as a Biox(R) circuit, and for drilling/possible bulk sampling and
      processing of material from Caledonia's Goedgevonden diamond, Roodepoort
      gold and the Rooipoort platinum projects in South Africa and Nama
      copper/cobalt project in Zambia. The funds raised will be sufficient to
      move forward with the direct development of some of the assets if
      economically and technically justified. Should additional funding be
      required it is likely that the company will raise further funds by private
      placement financings with arms-length subscribers as has been its practice
      in recent years.

C     RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, NEW TECHNOLOGY, ETC.

      Except for minor expenditures, $10,000 in 1999 and a similar amount in
      2001, Caledonia has carried out no work on research and development over
      the past 5 years. In 1999, a small amount was spent on research of three
      flotation concentrates from Caledonia's Barbrook Gold Mine by the EMR
      Microwave Technology Corporation to develop the potential of a new
      processing route to recover gold from the three refractory concentrates.
      The preliminary results from the tests were inconclusive and it was
      decided to suspend further tests until the microwave technology process
      was more industrially developed. Generally, the R & D work by Caledonia is
      limited to the development of more efficient metal extraction procedures.
      In 2001, development work was carried out on a sample of ore from the
      Taylor's section of the Barbrook Mine at the Mintek Laboratory in South
      Africa. A bulk flotation concentrate was produced from the ore and tested
      for oxidation and gold recovery procedures. These tests were carried out
      to try to attain a relatively inexpensive oxidation of the refractory
      minerals present and a higher gold recovery using the "resin-in-leach"
      process rather than the "carbon-in-leach" previously used at Barbrook. The
      "oxidation" test work proved to be inconclusive but the "resin-in-leach"
      process tested, incorporating kerosene or diesel addition to blind the
      carbonaceous material in the Barbrook ore that are highly preg-robbing,
      gave consistently higher gold recoveries in the leach process. The
      "resin-in-leach" process was included in the metallurgical plant at
      Barbrook. Management also decided that the Anglo American
      Corporation/Kemix's pump cell technology would be incorporated into the
      new resin-in-leach circuit. The metallurgical circuit has included flash
      flotation and the Knelson gravity concentration technology in the gold
      milling circuit to increase early gold recovery and reduce gold lock up in
      the primary mill. The metallurgical circuit also includes two G-cell
      flotation cleaner cells that are designed to increase the gold grades
      reporting to the regrind and leach circuits and two Aachen reactors which
      provide high-intensity oxidation and should result in higher gold recovery
      for the Taylor's ore. At the present time (April 2004), Caledonia's
      subsidiary, Barbrook Mines Ltd, is negotiating a licence agreement with
      Biomin Technologies SA of Switzerland to allow Biomin's "BIOX(R)" process
      to be used at the Barbrook Gold Mine. Additional details of this process
      are given on page 11 of the 2003 Annual Report which is incorporated
      herein by reference.

D     TREND INFORMATION

      Following the closure of the Filon Sur gold mine in January 2002,
      Caledonia has not had any involvement in producing operations until 2003.
      The Barbrook gold mine was restarted in the 2nd quarter of 2003. The
      possible re-commencement of the Eersteling gold mine in the latter part of
      2004 will depend on the price of gold, the Rand / US$ exchange rate and
      the results of the Roodepoort exploration program, all of which have been
      discussed previously in this report. Caledonia will continue to raise
      finance from time to time as needed to continue in business until it's
      operations are self funding. Until this self-financing is achieved it is
      likely that the practice used in previous years of entering into private
      placements with arms-length subscribers will continue. Similarly, as in
      the past, to minimize its own cash expenditures on its portfolio of
      exploration properties, Caledonia will continue, where possible and
      desirable to joint venture certain of its properties to major mining
      companies.

<PAGE>
                                     - 18 -

E.    OFF-BALANCE SHEET ARRANGEMENTS

The company has no off-balance sheet arrangements.

F.    TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>
                                  LESS                                 MORE
   CONTRACTUAL                    THAN        2 TO 3      4 TO 5      THAN 5
   OBLIGATIONS        TOTAL      1 YEAR       YEARS       YEARS       YEARS
   -----------       --------    -------     --------     -------     ------
<S>                  <C>         <C>         <C>          <C>         <C>
CAPITAL (FINANCE)    $ 55,000    $12,600     $28,300      $14,100      $Nil
LEASE OBLIGATIONS

OPERATING OR         $268,000    $68,000     $135,000     $65,000      $Nil
PURCHASE  LEASE
OBLIGATIONS
                     --------    -------     --------     -------     ------
TOTAL                $323,000    $80,600     $163,300     $79,100      $Nil
                     --------    -------     --------     -------     ------
</TABLE>

The above relate to the restart of the Barbrook mine and the South African head
office administration costs. Caledonia has minor cost obligations in respect of
licences and prospecting fees for its exploration and mining properties some of
which are paid by Caledonia's joint venture partners.

6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A     DIRECTORS AND SENIOR MANAGEMENT

      A list of the directors and the officers of Caledonia is given on page 42
      of the 2003 Annual Report that is incorporated by reference. A brief
      profile of each of the Directors and the senior management is given below:

      STEFAN E. HAYDEN - Chairman, President and Chief Executive Officer

      Mr. Hayden has extensive experience as a company manager in South Africa.
      Initially he founded, developed and managed an engineering company that
      manufactured flameproof mining machinery. He followed this by managing a
      company holding the Massey Ferguson franchise in the Transvaal and the
      Orange Free State and returned it to profitability for the then owners
      Standard Corporate Merchant Bank. He then founded and managed the South
      African agency for heavy electrical equipment sales and installations for
      Toshiba Corporation of Japan. He has been Managing Director of Industrial
      Brokers, a family company specializing in the procurement of steel and
      mining machinery, since 1971 and continues in this position.

      With his wide managerial, electrical and mechanical, and mining experience
      Mr. Hayden has acted as technical advisor to numerous mines and companies
      in Southern Africa. Prior to the Caledonia acquisition, Mr. Hayden as the
      Chief Executive Officer of Eersteling Gold Mining Company Limited and
      Barbrook Mines Limited was responsible for both operations. He joined
      Caledonia in 1995 and was appointed Managing Director, African Operations
      responsible for the development of Caledonia's business in Africa. In June
      1996, Mr. Hayden was elected as a Director of Caledonia and subsequently
      appointed Deputy Chairman of Caledonia. In January 1997 he was appointed
      Chairman of Caledonia and in June 1997 the position of President and Chief
      Executive Officer was added to his responsibilities.

      JAMES JOHNSTONE, B.Sc., ARCST, P.Eng. Director, Vice President Operations
      and Chief Operating Officer

      A graduate-mining engineer Mr. Johnstone has 40 years experience in mine
      operations in North America, Africa and Europe. He has experience in both
      underground and open pit operations. For the past 20 years he has been
      employed as General Manager or Vice-President Operations for mining
      companies producing gold, base metals and industrial minerals. Mr.
      Johnstone has been responsible for the construction, start up and
      commissioning of two major mines in addition to the commissioning of
      Caledonia's Filon Sur operation. He has also been involved in the orderly
      closure of three operations. He has operated successfully in
      environmentally sensitive areas and has a good understanding of the
      permitting process in Canada and the

<PAGE>
                                     - 19 -

      United States. Mr. Johnstone joined Caledonia in April 1997 as Vice
      President Operations and is responsible for Caledonia's operations in
      Zambia and South Africa and for all activities in Canada. He was elected a
      Director of Caledonia in June 1997. Mr. Johnstone is a director of several
      of Caledonia's subsidiaries and of Fynegold Exploration Limited (UK).

      CHRISTOPHER HARVEY, LRIC, HNC (Chem.), Director and Technical Director

      A Chemistry graduate from Wigan Mining College, Mr. Harvey has spent his
      career in the international mineral processing industry. Prior to
      immigrating to Canada in 1987 he worked for the Anglo American Group in a
      number of senior metallurgical positions. These included projects
      associated with gold and copper/cobalt production, gold, uranium and
      sulfuric acid production from old gold tailings and the investigation and
      development of a copper/cobalt flow sheet. Mr. Harvey joined Doelcam, a
      predecessor company of Caledonia in 1989 as Vice-President Operations and
      was responsible for a number of property evaluations in several countries.
      He was appointed Senior Vice President of Caledonia at its inception in
      1992 and has been a Director since 1993. He has since held a number of
      senior positions within the company and is currently the company's
      Technical Director. From late 1996 to the end of September 1998, Mr.
      Harvey was seconded to Filon Sur in Spain for the construction,
      commissioning and ongoing operation of the expansion to the heap-leach
      expansion project. He has also coordinated metallurgical studies for most
      of the company's projects, such as the Nama copper/cobalt project, the
      Eureka copper/gold project and the Kadola copper project in Zambia,
      Barbrook gold mine refractory gold recovery project in South Africa and
      the Cononish gold project in Scotland. He is also a director of Holmer
      Gold Mines Limited (TSX), Fynegold Exploration Limited (UK) and subsidiary
      companies, Barbrook Gold Mines Limited and Eersteling Gold Mining Company
      Limited of South Africa.

      JEFF SMITH, B.Sc. Vice President Exploration

      A geologist with over 30 years experience in the international mining
      industry. Mr. Smith worked as a mine geologist for Consolidated Murchison
      in South Africa and Turkey before moving to JCI's head office. With JCI he
      was responsible for various exploration and evaluation projects in
      southern Africa and Europe and managed a joint venture lead project. Mr.
      Smith worked for Caledonia as an independent consultant for a number of
      years, initially drawing on his wide knowledge of the Iberian pyrite belt
      and then on a worldwide basis. He joined Caledonia as Vice President -
      Exploration in November 1996. He presently works for Caledonia on a
      consulting basis and operates a consulting service covering the Iberian
      Peninsula and Europe.

      STEVEN W. POAD, B. Comm., C.A. Vice-President Finance and Administration.

      A graduate of McMaster University in Hamilton, Ontario, Mr. Poad received
      his C.A. designation in 1976. After some years in the manufacturing
      industry he was first associated with the mining industry in 1981. He has
      held financial positions with a number of Canadian mining companies
      including Falconbridge, Hudson Bay Mining & Smelting, and Northgate
      Exploration. He joined Caledonia as Manager Finance in 1994 and was
      appointed Vice-President Finance and Administration in November 1996. He
      is responsible for all financial activities of the Caledonia group of
      companies in terms of information management and treasury activities. Mr.
      Poad is also employed as Chief Financial Officer by High River Gold Mines
      Ltd and Intrepid Minerals Corporation, both of Toronto Canada and
      currently works for Caledonia on a part-time consulting basis. He is a
      director of Intrepid Minerals International Ltd (Toronto, Canada).

      IAN FORREST - Non- executive Director

      Mr. Forrest is an accountant by profession and has wide experience as an
      executive in the resource industry. He has been a director of Caledonia
      since inception in February 1992 and prior to that date he was a director
      of one of the predecessor companies for many years. He is a member of the
      board of directors of Mengold Resources Inc. (Montreal, Canada), Georex
      S.A. (Paris, France), Desire Petroleum plc (London, AIM, UK), Polymet
      Mining Corp (Toronto, Canada and OTCBB), Viatrade plc (London, OFEX, UK)
      and Belmore Resources plc (Ireland). Mr. Forrest is based in Geneva,
      Switzerland.

<PAGE>
                                     - 20 -

      CARL JONSSON - Non- executive Director and legal adviser to Caledonia

      Mr. Jonsson is a lawyer by profession and has been associated with the
      resource industry for over 30 years. In his legal practice he has
      specialized in securities and corporate work. He has been a director of
      Caledonia since February 1992 and prior to that date he was a director of
      one of the predecessor companies, Golden North Resources Inc. for many
      years. Mr. Jonsson is resident in Vancouver, British Columbia, Canada and
      is a principal of the law firm Tupper, Jonsson and Yeadon. Mr. Jonsson
      sits on the board of directors of several companies in Canada, including,
      Acrex Ventures, Altima Resources Ltd., Bonterra Energy Income Trust, Comet
      Industries Ltd., Dolly Varden Resources Inc., Earthworks Industries Inc. -
      (Secretary only), Novitas Energy Ltd, TelcoPlus Enterprises Ltd. and
      Comaplex Minerals Corporation.

      FAMILY RELATIONSHIPS:

      There are no known family relationships between the officers, key
      employees and directors.

      ARRANGEMENTS, UNDERSTANDINGS, ETC.

      To the best knowledge of Caledonia, there are no arrangements or
      understanding with any major shareholders, customers, suppliers or others,
      pursuant to which any person referred to above, was selected as a director
      or member of senior management.

B     COMPENSATION

      The amount of compensation paid, and benefits in kind granted to
      Caledonia's directors and senior management is given under the "Summary
      Compensation Table" on page 5 of the 2004 Management Proxy Circular to the
      shareholders that is incorporated herein by reference. This table lists
      the compensation to the three executive directors and to Messer's. Poad
      and Smith. As stated in the notes to the table, in view of the cash
      situation of Caledonia, senior management deferred receiving a part of
      their salaries in 1999, 2000 and 2001. No compensation was deferred in
      2002 or 2003. Some deferred compensation was paid during 2003. The balance
      of deferred compensation at December 31, 2003 is as listed below:

      TABLE OF DEFERRED DIRECTORS AND OFFICERS COMPENSATION AT DECEMBER 31, 2003

<TABLE>
<CAPTION>

   NAME          DEFERRED SALARY            DEFERRED DIRECTOR'S FEES    TOTAL SUM DEFERRED
   ----          ---------------            ------------------------    ------------------
<S>              <C>                           <C>                      <C>
S. Hayden        $        55,300                      Nil               $           55,300

C. Harvey        $       112,250                      Nil               $          112,250

TOTAL            $       167,550                      NIL               $          167,550
                 ---------------                                        ------------------
</TABLE>

      There is a $ 5,000 fee paid to each of the directors annually. The adverse
      cash situation from 1999 to 2001 caused each of the directors to defer
      receiving this fee since 1998. However during 2003, the deferred
      director's fees owing to all directors, and amounting to $20,000 each,
      were paid out in full. Mr. J. Johnstone, Chief Operating Officer, was paid
      his deferred salary of $278,666 in the fourth quarter of 2003. Mr. C.
      Harvey, Technical Director was paid $100,000 in deferred salary in
      November 2003. Mr. J. Smith, Caledonia's Vice-President Exploration was
      paid $ 31,014, being the balance of his deferred salary in January 2003.
      There were no stock options awarded to senior management or the directors
      in 1999, 2000 and 2001. In 2002, a total of 10,000,000 stock options were
      granted to the directors of Caledonia. The exercise price of the options
      was $0.235 and the options expire in April 2012. A total of 225,000
      options were granted to officers of Caledonia at $0.35 and expiring in
      June 2012. Mr. J. du Plessis, the General Manager - South Africa, was
      granted 500,000 share options with an exercise price of $0.28 and an
      expiry date of November 03, 2013 when he joined the company in 2003. An
      amount of 300,000 of these share options are un-exercisable until various
      productivity targets in South Africa had been met. Mr. du Plessis was paid
      $50,000 in salary and benefits in 2003. In April 2004, 1,010,000 stock
      options were granted to an officer and senior management of Caledonia with
      an exercise price of $0.26 and an expiry date of April 29th 2014. The
      total

<PAGE>
                                     - 21 -

      share options granted to the senior management, in 2003 and prior years
      are given in the table "Summary Compensation Table" on page 5 of the 2004
      Management Proxy Circular to the shareholders that is incorporated herein
      by reference.

      Caledonia does not have a bonus or profit-sharing plan. Caledonia does not
      have a pension, retirement or similar benefits scheme.

C     BOARD PRACTICES

      The directors all hold their positions for an indefinite term, subject to
      re-election at each annual general meeting of the shareholders. The
      officers hold their positions subject to being removed by resolution of
      the Board of Directors. Furthermore, the "Election of Directors" is
      discussed on page 3 of the 2004 Management Proxy Circular that is
      incorporated herein by reference. The Table on page 4 of the 2004
      Management Proxy Circular provides the term of office for each director.
      In addition, the shareholdings of those directors named on the table hold
      about 0.015% collectively of the total shares of Caledonia outstanding at
      December 31, 2003. Officers of Caledonia who are not directors do not own
      any shares as at December 31, 2003.

      There are no service contracts between Caledonia and any of the Directors
      of Caledonia or its subsidiaries except for (i) a "Key Executive Severance
      Protection Plan" between Caledonia and two of its directors - namely Mr.
      S. Hayden and Mr. F. C. Harvey dating from 1996, (ii) the indirect
      employment of Caledonia's chairman through a management and administrative
      agreement with Epicure Overseas SA and (iii) an employment contract with a
      director, Mr. J. Johnstone. The "Severance Plan" calls for severance
      payments to these executives if employment is terminated as a result of a
      change of control of Caledonia. Mr. Johnstone's employment contract with
      Caledonia has a termination clause whereby Mr. Johnstone is paid a
      severance payment of one year of salary in the event of his termination
      due to change of control or without cause. Details concerning Caledonia's
      Audit and Compensation committees are given in the 2004 Management Proxy
      Circular on pages 6, 8 & 9, which are incorporated herein by reference.
      The following directors are members of the audit and compensation
      committees:

<TABLE>
<CAPTION>
    AUDIT                          COMPENSATION
<S>                               <C>
Mr. C. Jonsson                    Mr. C. Jonsson
Mr. S. Hayden                     Mr. S. Hayden
Mr. I. Forrest                    Mr. I. Forrest
</TABLE>

D     EMPLOYEES

      The average, approximate number of employees, their categories and
      geographic location for each of the last 3 years are summarized in the
      table below:

      GEOGRAPHIC LOCATION AND NUMBER OF EMPLOYEES:

<TABLE>
<CAPTION>
EMPLOYEE LOCATION ETC                                       2001            2002         2003
                                                            ----            ----         ----
<S>                                                     <C>                 <C>          <C>
TOTAL EMPLOYEES

Canada (Head Office)                                               2           2            3
South Africa (Head Office)                                         5           6            9
Spain    (Filon Sur Gold Mine)                          Sold in 2000           -            -
South Africa (Mine Security and Operations)                       36         115          250
Zambia (Head Office and Security)                                 10           9            8
                                                        ------------        ----         ----
TOTAL EMPLOYEES AT ALL LOCATIONS                                  53         132          270
                                                        ------------        ----         ----
</TABLE>

<PAGE>
                                     - 22 -

MANAGEMENT AND ADMINISTRATION:

<TABLE>
<CAPTION>
  EMPLOYEE LOCATION ETC.
<S>                                                     <C>                 <C>          <C>
Canada (Head Office)                                               2           2            3
South Africa (Head Office)                                         3           3            5
Spain    (Filon Sur Gold Mine)                          Sold in 2000           -            -
South Africa (Exploration and Operations)                          2           2            7
Zambia (Head Office and Security)                                  2           2            2
                                                        ------------        ----         ----
TOTAL MANAGEMENT AND ADMINISTRATION                                9           9           17
                                                        ------------        ----         ----
</TABLE>

E     SHARE OWNERSHIP

      As of the date of the 2004 Management Proxy Circular (May 4TH, 2004) the
      individual share ownership of each of the directors of Caledonia is
      depicted in the Table on page 4 of the Management Proxy Circular that is
      incorporated herein by reference. The combined total share ownership of
      Caledonia's directors, senior management and officers is less than 1% of
      the total issued common shares.

      Caledonia has established "Incentive Stock Option Plans" (the "Plans")
      that have been approved and accepted by the Toronto Stock Exchange ("TSX")
      and Caledonia's shareholders - the "1995 Plan" and the "1996 Plan".
      Another Plan was amended in 2001 and this amended Plan was approved by a
      majority of shareholders at the Special and Annual General Meeting of the
      shareholders held on the 29th June 2001. However, the three Plans that
      were approved by the shareholders for the years 1999 to 2001 were never
      registered with the TSX. Due to financial constraints in 1999 to 2001,
      Caledonia decided not to implement these plans and in September 2001
      requested the TSX to withdraw all requests to register these plans as no
      options had been issued under the plans at that time. The TSX agreed to
      this request and the plans were cancelled. In 2002 a new Plan was
      prepared, the "2002 Plan", and approval was sought and obtained from the
      Shareholders at the 2002 Annual General and Special Meeting held on the
      21st June 2002. Details of the new Share Option plan was reported in the
      2002 Management Information Circular to the shareholders, that was
      incorporated therein by reference in the Form 20F 2001. The Company will
      be preparing a new stock option plan, the "2004 Plan", for approval by the
      shareholders at the 2004 AGM. Details of the 2004 stock option plan is
      given on pages 10 and 11 of the 2004 Management Information Circular to
      the shareholders, that is incorporated herein by reference.

SHARE OPTION REGISTER LISTING OF OPTIONS OUTSTANDING AS OF DECEMBER 31ST 2003

<TABLE>
<CAPTION>
                                                OPTION PRICE      OPTION EXPIRY           OPTIONS
                                                ------------      -------------           -------
     NAME                   PLAN                   CDN. $             DATE                  O/S
     ----                   ----                   ------             ----                  ---
<S>                       <C>                   <C>               <C>                    <C>
Forrest, W.I.L.           1995 Plan                  0.75         Apr. 28, 2005             12,500
Forrest, W.I.L.           1996 Plan                  0.33         Feb. 09, 2008             66,000
Forrest, W.I.L.           2002 Plan                 0.235         Apr. 24, 2012            500,000
FORREST, TOTAL            ALL PLANS                                                        578,500
                                                                                         ---------

Harvey, F.C.              1995 Plan                  0.75         Apr. 28, 2005             93,750
Harvey, F.C.              1996 Plan                  0.33         Feb. 09, 2008            135,000
Harvey, F.C.              2002 Plan                 0.235         Apr. 24, 2012          2,000,000
HARVEY TOTAL              ALL PLANS                                                      2,228,750
                                                                                         ---------

Hayden, S.                1995 Plan                  0.75         Apr. 28, 2005            125,000
Hayden, S.                1996 Plan                  0.33         Feb. 09, 2008            175,000
Hayden, S.                2002 Plan                 0.235         Apr. 24, 2012          4,000,000
HAYDEN, TOTAL             ALL PLANS                                                      4,300,000
                                                                                         ---------
</TABLE>

<PAGE>
                                     - 23 -

<TABLE>
<S>                       <C>                       <C>           <C>                    <C>
Johnstone, J.             1995 Plan                  0.75         Apr. 28, 2005             37,500
Johnstone, J.             1996 Plan                  0.33         Feb. 09, 2008            135,000
Johnstone, J.             2002 Plan                 0.235         Apr. 24, 2012          2,000,000
JOHNSTONE, TOTAL          ALL PLANS                                                      2,172,500
                                                                                         ---------

Jonsson, C.R.             1995 Plan                  0.75         Apr. 28, 2005             12,500
Jonsson, C.R.             1996 Plan                  0.33         Feb. 09, 2008             66,000
Jonsson, C.R.             2002 Plan                 0.235         Apr. 24, 2012          1,450,000
JONSSON, TOTAL            ALL PLANS                                                      1,616,000
                                                                                         ---------

Poad, S.W.                1995 Plan                  0.75         Apr. 28, 2005             18,825
Poad, S.W.                1996 Plan                  0.33         Feb. 09, 2008             80,000
Poad, S W.                2002 Plan                 0.345         June 02, 2012            150,000
POAD, TOTAL               ALL PLANS                                                        248,825
                                                                                         ---------

Smith, J.                 1995 Plan                  0.75         Apr. 28, 2005             23,750
Smith, J.                 1996 Plan                  0.33         Feb. 09, 2008             80,000
Smith, J                  2002 Plan                 0.345         June 02, 2012             75,000
SMITH, TOTAL              ALL PLANS                                                        178,750
                                                                                         ---------

du Plessis, J             2002 Plan                  0.28         Nov. 03, 2013            500,000*
DU PLESSIS, TOTAL         ALL PLANS                                                        500,000
                                                                                         ---------
</TABLE>

NOTES TO THE ABOVE TABLE:

      The price of the options granted under the 1995 Plan were those, which had
      been re-priced and reduced in number granted, and which were approved by
      the shareholders of Caledonia at the 1998 Annual General Meeting. The
      price of the Options granted under the 1996 Plan were those at the close
      of trading on the Toronto Stock Exchange on the day prior to the granting
      thereof. The price of the Options granted under the 2002 Plan were those
      at the close of trading on the Toronto Stock Exchange on the day prior to
      the granting thereof. Share options granted pursuant to the 2002 Plan
      above were approved at the Annual Meeting of Shareholders held on June 21,
      2002. The 2002 Plan was discussed in the 2002 Management Proxy circular
      which was incorporated by reference in the 2001 Form 20 F.

      In 2003, an officer of Caledonia exercised 56,475 options priced at $0.50
      and 50,000 options priced at $0.235 were exercised by a director of
      Caledonia. The balance of the $0.50 share options allocated, in total
      1,175,625 options, expired on the 28th of April 2003 without exercising.

      * An amount of 300,000 of the stock options awarded to Mr. du Plessis are
      un-exercisable until certain productivity targets associated with the two
      South African gold mines are achieved.

7     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

      SIGNIFICANT SHAREHOLDERS

      To the best of Caledonia's knowledge, as of April 21, 2004 there are 1
      known shareholder and 2 depository trusts who beneficially own, directly
      or indirectly, or exercise control or direction over more than 5% of the
      voting shares of Caledonia. As at April 21, 2004 Caledonia had 298,198,247
      shares outstanding and the known shareholders and depository trusts
      holding more than 5% of the shares of Caledonia are given in the table
      below:

<TABLE>
<CAPTION>
NAME OF SHAREHOLDER                      NUMBER OF SHARES HELD               % OF SHARES ISSUED
- -------------------                      ---------------------               ------------------
<S>                                      <C>                                 <C>

CEDE and Co.                                   75,134,109                           24.20%
</TABLE>

<PAGE>
                                     - 24 -

<TABLE>
<CAPTION>
NAME OF SHAREHOLDER                      NUMBER OF SHARES HELD               % OF SHARES ISSUED
- -------------------                      ---------------------               ------------------
<S>                                      <C>                                 <C>
Suborad S.A.                                   15,150,000                           5.08%

CDS & Co. NCI Accounts                        142,783,089                          47.88%
</TABLE>

      The only shares issued by Caledonia are common shares. Although Caledonia
      has an unlimited number of preferential shares available for issue, none
      of these have yet been issued.

      Caledonia's major shareholders have the same voting rights as the other
      shareholders of Caledonia.

      To the best of the knowledge of Caledonia, the portion of the common
      shares of Caledonia are held in the following geographic locations:

<TABLE>
<CAPTION>
 GEOGRAPHIC AREA           NUMBER OF SHARES HELD    PERCENTAGE OF SHARES ISSUED
 ---------------           ---------------------    ---------------------------
<S>                        <C>                      <C>
USA (Host country)               79,262,537                   26.58%

Canada                          160,376,981                   53.78%

Europe                           12,896,466                    4.33%

Other                            45,662,263                   15.31%
</TABLE>

      There are 1,347 record holders listed by Equity Transfer Services Inc. in
      Toronto, Canada that includes the two large depository trusts - CEDE & Co.
      and CDS & Co.

      Caledonia is not, to the best of its knowledge, directly or indirectly
      owned or controlled by another corporation or corporations, by any other
      natural or legal person or persons severally or jointly or by any foreign
      government.

      Caledonia is not aware of any arrangement, the operation of which may at
      some subsequent date result in a change of control of Caledonia.

B     RELATED PARTY TRANSACTIONS

      Caledonia pays Epicure Overseas S.A., a company that employs Caledonia's
      Chairman, President and CEO, a fee of $180,000 per annum in terms of the
      management and administration services agreement. Caledonia pays Doelcam
      Inc. on a per diem rate for financial and administration services.
      Caledonia's Vice-President Finance is a major shareholder in Doelcam Inc.
      Caledonia leases office premises in South Africa from a company of which
      the family of Caledonia's Chairman, President and CEO are shareholders.

C     INTERESTS OF EXPERTS AND COUNSEL

      Not required, as this is an "annual report under the Exchange Act".

8     FINANCIAL INFORMATION

A     CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

      Attached as Exhibit 1 is the 2003 Annual Report of Caledonia, which
      reports include the audited financial statements of Caledonia and which
      are incorporated herein by reference. Note 14 of the 2003 Annual Report of
      these financial statements titled "Generally Accepted Accounting
      Principles in Canada and the United States" compares the differences in
      GAAP between the two countries.

<PAGE>
                                     - 25 -

      The 2003 consolidated financial statements have been audited by BDO
      Dunwoody LLP and comprise the following:

      Auditor's report
      Balance sheet
      Income statement (Statement of Operations)
      Statement of deficit
      Statement of cash flows
      Summary of significant accounting policies
      Notes to financial statements

      Note 4 of the 2003 financial statements - "Share Capital" which is
      incorporated herein by reference, shows the changes, in share capital
      since 31st December 2001.

      The 2003 financial statements cover the period from 2001 to 2003 and thus
      cover the requirements for the Form 20F disclosure.

      Export sales are not a significant portion of the sales volume.

      Caledonia has no ongoing legal or arbitration proceedings at the 31st
      December 2003. To the best knowledge of Caledonia, neither any of its
      directors or senior management or its affiliates is a party adverse to
      Caledonia or its subsidiaries, or has a material interest adverse to
      Caledonia or its subsidiaries. However, in April 2001, Caledonia initiated
      civil legal proceedings against Mr. Gert Jordaan the principal of Spring
      Hills Trading to recover damages resulting from its non-fulfillment of its
      obligations in respect of its agreement with Caledonia for the purchase of
      a 49% interest in the Barbrook and Eersteling mines in South Africa. Mr.
      Jordaan has been declared insolvent and Caledonia, Barbrook and Eersteling
      have received a portion of the monies owed to them from the Liquidator of
      Jordaan's estate

      The Company has never paid and does not intend, at this stage, to declare
      or pay cash dividends on Common Stock in the foreseeable future.

9     THE OFFER AND LISTING

      Caledonia's stock trades on the Toronto Stock Exchange under the symbol
      "CAL" and on the NASDAQ Stock Exchange's "Over-the-counter Bulletin Board"
      under the symbol "CALVF".

      The trading history is as follows:

(a)   5 YEAR MARKET TRADING RECORD

<TABLE>
<CAPTION>
STOCK EXCHANGE                   1999            2000            2001            2002            2003
- --------------               ------------    ------------    ------------    ------------    ------------
<S>                          <C>             <C>             <C>             <C>             <C>
TORONTO
     High                    $      0.175    $       0.35    $       0.09    $       0.50    $       0.61
     Low                     $       0.05    $       0.05    $       0.03    $       0.05    $       0.22
     Volume                    16,397,063      22,938,622      22,309,687      80,447,746      99,233,133

NASDAQ (US$)
     High                    $       0.09    $       0.18    $       0.06    $      0.281    $       0.39
     Low                     $       0.03    $       0.03    $       0.02    $      0.040    $       0.16
     Volume                    34,815,000      61,918,700      74,714,400     271,403,969     440,810,918
</TABLE>

<PAGE>
                                     - 26 -

(b)   2 YEAR MARKET TRADING RECORD BY QUARTER - 2002, 2003 AND 1ST QUARTER 2004

<TABLE>
<CAPTION>
STOCK EXCHANGE                                TSE                   NASDAQ
- --------------                          -----------------     ------------------
SHARE PRICE                             HIGH        LOW        HIGH         LOW
- -----------                             ----        ---        ----         ---
<S>                                     <C>        <C>        <C>         <C>
2002 - 1st Qtr.                         $0.28      $0.055     $0.161      $ 0.03

     - 2nd Qtr.                         $0.44      $0.175     $0.281      $0.112

     - 3rd Qtr.                         $0.37      $ 0.22     $0.245      $0.146

     - 4th Qtr.                         $0.42      $ 0.22     $0.271      $0.149

2003 - 1st Qtr.                         $0.61      $ 0.27     $0.385      $0.180

     - 2nd Qtr.                         $0.33      $ 0.22     $ 0.25      $ 0.16

     - 3rd Qtr.                         $0.43      $ 0.25     $ 0.30      $ 0.19

     - 4th Qtr.                         $0.48      $ 0.26     $ 0.37      $ 0.19

2004 - 1st Qtr.                         $0.47      $ 0.32     $ 0.37      $ 0.25
</TABLE>

(c)   6 MONTH MARKET TRADING RECORD BY MONTH - NOVEMBER 2003 TO APRIL 2004

<TABLE>
<CAPTION>
STOCK EXCHANGE                                TSE                   NASDAQ
- --------------                         ------------------     ------------------
SHARE PRICE                             HIGH        LOW        HIGH         LOW
- -----------                             ----        ---        ----         ---
<S>                                     <C>        <C>        <C>         <C>
November 2003                          $ 0.41      $ 0.26     $ 0.32      $ 0.20

December 2003                          $ 0.48      $ 0.34     $ 0.37      $ 0.25

January 2004                           $ 0.47      $ 0.35     $ 0.37      $ 0.26

February 2043                          $ 0.42      $ 0.34     $ 0.32      $ 0.26

March 2004                             $ 0.38      $ 0.32     $ 0.29      $ 0.25

April 2004                             $0.290      $0.240     $0.198      $0.160
</TABLE>

B     PLAN OF DISTRIBUTION

      Not required, as this is an "annual report under the Securities Act".

<PAGE>
                                     - 27 -

C     MARKETS

      Please refer to section 9A of this Form 20F for details of Caledonia's
      trading history on the Toronto Stock Exchange and the NASDAQ OTCBB
      exchange. The Corporation is currently determining whether it should be
      listed on the American Stock Exchange ("AMEX").

D     SELLING SHAREHOLDERS

      Not required as this is an "annual report under the Securities Act".

E     DILUTION

      Not required as this is an "annual report under the Securities Act".

F     EXPENSES OF THE ISSUE

      Not required as this is an "annual report under the Securities Act".

10    ADDITIONAL INFORMATION

A     SHARE CAPITAL

      Not required as this is an "annual report under the Securities Act".

B     MEMORANDUM AND ARTICLES OF ASSOCIATION

      The memorandum and articles of association of Caledonia have previously
      been provided. At a Special Meeting of the Shareholders held on January
      18th 1999, the shareholders approved a resolution amending the articles of
      Caledonia by creating a class of preference shares of Caledonia. Such
      preference shares could be issued in series and the directors of Caledonia
      were authorized to divide such class into series and to fix the number in
      each series and the rights, privileges, restrictions and conditions
      thereof.

C     MATERIAL CONTRACTS

      There are no material contracts other than contracts entered into in the
      ordinary course of business.

D     EXCHANGE CONTROLS

      There are no governmental laws, decrees or regulations existing in Canada
      (where Caledonia is incorporated), which restrict the export or import of
      capital, or the remittance of dividends, interest or other payments to
      non-resident holders of Caledonia's securities. Nor does Canada have
      foreign exchange currency controls.

E     TAXATION

      To the best of Caledonia's knowledge, there are no taxes or similar levies
      which holders of Caledonia's shares resident in the United States are
      subject to; provided however, Caledonia understands that pursuant to a
      Canada - U.S. tax treaty, any dividends which Caledonia might declare will
      be subject to such Canadian withholding taxes as the then current
      provisions of the treaty may require.

<PAGE>
                                     - 28 -

F     DIVIDENDS AND PAYING AGENTS

      Not required as this is an "annual report under the Securities Act".

G     STATEMENT BY EXPERTS

      Not required as this is an "annual report under the Securities Act".

H     DOCUMENTS ON DISPLAY

      The documents referred to in this report are either attached as "Exhibits"
      to this report or can be viewed at the Canadian Head Office of Caledonia
      whose address is given in section 4 of this report.

I     SUBSIDIARY INFORMATION

      To the best knowledge of Caledonia there is no other information related
      to Caledonia's subsidiaries that requires to be provided.

11    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      As Caledonia is considered to be a "small business issuer" as defined,
      information is not required to be provided for this section.

12    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not required as this is an "annual report under the Securities Act".

                                     PART 2

13    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      There have been no material defaults in the payment of interest or
      principal or any dividend arrearages or material delinquencies.

14    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS

      There has been no material modification to the rights of Caledonia's or
      subsidiaries security holders.

15    CONTROLS AND PROCEDURES

      (a)   Evaluation of disclosure controls and procedures. Our chief
            executive officer and principal financial officer have evaluated the
            effectiveness of our disclosure controls and procedures (as defined
            in Rules 13a-14(c) and 15d-14(c) under the Exchange Act), as of the
            year end of December 31, 2003. Based on such evaluation, they have
            concluded that as of such date, our disclosure controls and
            procedures are effective and designed to ensure that information
            required to be disclosed by us in reports that we file or submit
            under the Exchange Act is recorded, processed, summarized and
            reported within the time periods specified in applicable SEC rules
            and forms.

      (b)   Management's annual report on internal control over financial
            reporting

            Not yet required as the Registrant is a Foreign Private Issuer.

      (c)   Attestation Report of registered public accounting firm

            Not yet required as the Registrant is a Foreign Private Issuer.
<PAGE>
                                     - 29 -

      (d)   Changes in internal controls over financial reporting. There were no
            significant changes in our internal controls over financial
            reporting identified in connection with the evaluation required by
            paragraph (d) of 17 CFR 240.13a-15 or 240.15d-15 that occurred
            during the period covered by this annual report that has affected,
            or is reasonably likely to materially affect, the issuer's internal
            control over financial reporting.

16    (RESERVED)

16A   AUDIT COMMITTEE FINANCIAL EXPERT

      (a)   The registrant's board of directors has determined that the
            registrant has at least one audit committee financial expert serving
            on its audit committee.

      (b)   The audit committee financial expert serving on the audit committee
            is Mr. W.I.L. Forrest who is an independent director under the
            NASDAQ rules.

16B   CODE OF ETHICS

      (a)   On April 8, 2004 the registrant's Board of Directors adopted a code
            of ethics that applies to the registrant's chief executive officer,
            chief financial officer, principal accounting officer or controller,
            or persons performing similar functions.

      (b)   The registrant has filed with the Commission a copy of this code of
            ethics that applies to the registrant's chief executive officer,
            chief financial officer, principal accounting officer or controller,
            or persons performing similar functions as an exhibit to this annual
            report.

      (c)   The text of this code of ethics has been posted on the company
            website at http://www.caledoniamining.com

      (d)   The text of this code of ethics is available on request, without
            charge, by contacting the company at either of the principal offices
            listed in part 4A of this report or by e-mail to
            info@caledoniamining.com

16C   AUDIT FEES

      (a)   For 2002 Caledonia's principal auditor's fees were $93,208. The
            principal auditor's fees for 2003 are estimated to be about
            $106,000.

      (b)   Nil.

      (c)   Nil.

      (d)   Nil.

      (e)   Prior to the start of the audit process, Caledonia's audit committee
            receives an estimate of the costs, from its auditors and reviews
            such costs for their reasonableness. After their review and
            pre-approval of the fees, the audit committee recommend to the board
            of directors to accept the estimated audit fees given by the
            auditors.

      (e)   Not applicable

16D   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

      Not applicable.

16E   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

      There were no purchases made by or on behalf of the issuer or any
      "affiliated purchaser " as defined in Section 240.10b-18(a)(3), of shares
      or other units of any class of the issuer's equity securities that is
      registered by the issuer pursuant to section 12 of the Exchange Act (15
      U.S.C. 781).

<PAGE>
                                     - 30 -

                                     PART 3

17.   FINANCIAL STATEMENTS

      The audited consolidated financial statements and related notes of
      Caledonia at December 31, 2003, 2002 and 2001 are set forth in the
      Registrant's 2003 Annual Report that is incorporated herein by reference.

18.   FINANCIAL STATEMENTS

      The registrant has elected to provide financial statements pursuant to
      Item 17 that include as note 14 the differences between Canadian and US
      GAAP's.

19.   EXHIBITS

      The following Financial Statements and Exhibits are attached to and form
      part of this Statement and are incorporated herein by reference:

      11.   Code of Ethics.

      12.   Certifications Pursuant to Rule 13a-14(a)(17CFR240.13a-14(a) or Rule
            15d-14(a)(17CFR240.15d- 14(a).

      13.a  Certification Pursuant to 18 U.S.C. section 1350, as adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      14.a  Caledonia Mining Corporation, 2003 Annual Report.

      14.b  Caledonia Mining Corporation, 2004 Management Proxy Circular.

      14.c  Schedules.

      14.d  Mineral Properties.

      14.e  Summary of Independent Qualified Person's Report - "Barbrook Mines
            Limited".

                                   SIGNATURES

      The Registrant hereby certifies that it meets all of the requirements for
      filing on Form 20-F and that it has duly caused and authorized the
      undersigned to sign this registration statement [Annual Report] on its
      behalf.

      DATED at Mississauga, Ontario, Canada, on the 4th day of May 2004.

      CALEDONIA MINING CORPORATION

      Per: /s/ J. JOHNSTONE
           ---------------------
              J. JOHNSTONE
              Vice President Operations

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>2
<FILENAME>t13100exv11.txt
<DESCRIPTION>EX-11
<TEXT>
<PAGE>



                                                                      EXHIBIT 11

                          CALEDONIA MINING CORPORATION

                       CODE OF BUSINESS CONDUCT AND ETHICS

      1. COMPLYING WITH LAW

All employees, officers and directors of Caledonia Mining Corporation and its
wholly-and partially owned subsidiaries (individually and collectively, the
"Company") should respect and comply with all of the laws, rules and regulations
of the countries and jurisdictions in which the Company conducts its business.
Such legal compliance should include, without limitation, compliance with the
"insider trading" prohibitions applicable to the Company and its employees,
officers and directors. Generally, employees, officers and directors who have
access to or knowledge of confidential or non-public information from or about
the Company are not permitted to buy, sell or otherwise trade in the Company's
securities, whether or not they are using or relying upon that information. This
restriction extends to sharing or tipping others about such information,
especially since the individuals receiving such information might utilize such
information to trade in the Company's securities. This Code does not summarize
all laws, rules and regulations applicable to the Company and its employees,
officers and directors.

      2. CONFLICTS OF INTEREST

All employees, officers and directors of the Company should be scrupulous in
avoiding a conflict of interest with regard to the Company's interests. A
"conflict of interest" exists whenever an individual's private interests
interfere or conflict in any way (or even appear to interfere or conflict) with
the interests of the Company. A conflict situation can arise when an employee,
officer or director takes actions or has interests that may make it difficult to
perform his or her work objectively and effectively. Conflicts of interest may
also arise when an employee, officer or director, or members of his or her
family, receives improper personal benefits as a result of his or her position
in the Company, whether received from the Company or a third party. Loans to
employees, officers and directors and their respective family members are
prohibited. Conflicts of interest are prohibited as a matter of Company policy,
except under guidelines that may be approved by the Board of Directors or
committees of the Board. Any employee, officer or director who becomes aware of
a conflict or potential conflict should bring it to the attention of a
supervisor, manager or other appropriate person or officer.

      3. GIFTS

The purpose of business entertainment and gifts in a commercial setting is to
create good will and sound working relationships, not to gain unfair advantage
with customers or others. No gift or entertainment should be offered, given,
provided or accepted by any Company employee, family member of an employee or
agent unless it: (1) is not a cash gift, (2) is consistent with customary
business practices, (3) is not excessive in value, (4) cannot be construed as a
bribe or payoff and (5) does not violate any laws or regulations.

      4. CORPORATE OPPORTUNITY

Employees, officers and directors are prohibited from (a) taking for themselves
personally opportunities that properly belong to the Company or are discovered
through the use of corporate property, information or position; (b) using
corporate property, information or position for personal gain; and (c) competing
with the


<PAGE>



Company. Employees, officers and directors owe a duty to the Company to advance
its legitimate interests when the opportunity to do so arises in preference to
their own personal interests.

      5. CONFIDENTIALITY

Employees, officers and directors of the Company must maintain the
confidentiality of confidential information entrusted to them by the Company or
its suppliers or customers, except when disclosure is authorized by or required
by applicable laws, regulations or legal proceedings. Confidential information
includes all non-public information that might be of use to competitors of the
Company, or harmful to the Company or its customers if disclosed. The interests
of the Company must not be advanced through unethical or illegal business
practices. Stealing proprietary information, possessing trade secret information
that was obtained without the owner's consent, or inducing such disclosures by
past or present employees of other companies is prohibited.

      6. FAIR DEALING

Each employee, officer and director should endeavor to deal fairly with the
Company's customers, suppliers, competitors, officers and employees and with all
stay of the various regulatory authorities with which the Company deals. No one
should take unfair advantage of anyone through manipulation, concealment, abuse
of privileged information, misrepresentation of material facts or any other
unfair dealing practice.

      7. PROTECTION AND PROPER USE OF COMPANY ASSETS

All employees, officers and directors should protect the Company's assets and
ensure their efficient use. Theft, carelessness, and waste have a direct impact
on the Company's profitability. All Company assets should be used only for
legitimate business purposes.

      8. ACCOUNTING COMPLAINTS

The Company's policy is to comply with all applicable financial reporting and
accounting regulations applicable to the Company. If any employee, officer or
director of the Company has concerns or complaints regarding questionable
accounting or auditing matters of the Company, then he or she is encouraged to
submit those concerns or complaints (anonymously, confidentially or otherwise)
to any member of the Audit Committee of the Board of Directors, which will,
subject to its duties arising under applicable law, regulations and legal
proceedings, treat such submissions confidentially.

      9. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

Employees are encouraged to talk to supervisors, managers or other appropriate
personnel about observed illegal or unethical behavior and, when in doubt, about
the best course of action in a particular situation. Employees, officers and
directors who are concerned that violations of this Code or that other illegal
or unethical conduct by employees, officers or directors of the Company have
occurred or may occur should either contact their supervisor or superiors. If
their concerns or complaints require confidentiality, including keeping their
identity anonymous, then this confidentiality will be protected, subject to
applicable law, regulation or legal proceedings.

      10. NO RETALIATION

The Company will not permit retaliation of any kind by or on behalf of the
Company and its employees, officers and directors against good faith reports or
complaints of apparent violations of this Code or other illegal or unethical
conduct.

<PAGE>



      11. PUBLIC COMPANY REPORTING

As a public company, it is of critical importance that the Company's public
filings be accurate and timely. Depending on their position with the Company, an
employee, officer or director may be called upon to provide necessary
information to assure that the Company's public reports are complete, fair and
understandable. The Company expects employees, officers and directors to provide
prompt accurate answers to inquiries related to the Company's public disclosure
requirements. All of the Company's books, records, accounts and financial
statements must be maintained in reasonable detail, must appropriately reflect
the Company's transactions and must conform both to applicable legal
requirements and to the Company's system of internal controls. Unrecorded or
"off the books" funds or assets should not be maintained unless permitted by
applicable law or regulation and approved by a person in a superior position.

12. Where any director, officer or employee of the Company is in any doubt about
the meaning of any of the provisions of this Code or of how he or she should
handle or report any apparent violations of this Code or any apparent violations
by the Company or any of its other directors, officers or employees of any of
the applicable laws, rules or regulations, such person should consult the
Company's solicitors or such members of the board of directors of the Company
who are qualified lawyers. The Company accepts responsibility for paying the
fees of the lawyers for any time they spend advising any person consulting them
as a result of the provisions of this clause.

      13. AMENDMENT, MODIFICATION AND WAIVER

This Code may be amended, modified or waived by the Board of Directors, subject
to the disclosure and other provisions of the Securities Exchange Act of 1934,
and the rules thereunder and the applicable rules of the NASDAQ and the Toronto
Stock Exchange.

April 8th  2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>3
<FILENAME>t13100exv12.txt
<DESCRIPTION>EX-12
<TEXT>
<PAGE>



                                                                      EXHIBIT 12

                               302 CERTIFICATIONS

I, Stefan E. Hayden, certify that:

1.    I have reviewed this annual report on Form 20-F of Caledonia Mining
      Corporation.

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the company as of, and for, the periods presented in this report;

4.    The company's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            company, including its consolidated subsidiaries, is made known to
            us by others within those entities, particularly during the period
            in which this report is being prepared;

      b.    Evaluated the effectiveness of the company's disclosure controls and
            procedures and presented in this report our conclusions about the
            effectiveness of the disclosure controls and procedures, as of the
            end of the period covered by this report based on such evaluation;
            and

      c.    Disclosed in this report any change in the company's internal
            control over financial reporting that occurred during the period
            covered by the annual report that has materially affected, or is
            likely to materially affect, the company's internal control over
            financial reporting; and

5.    The company's other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the company's auditors and the audit committee of the company's board of
      directors (or persons performing the equivalent function);

      a.    All significant deficiencies and material weaknesses in the design
            or operation of internal controls over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b.    Any, fraud, whether or not material, that involves management or
            other employees who have a significant role in the company's
            internal control over financial reporting.

      Date: May 5th, 2004                                /s/ S.E. Hayden
                                                         ---------------

                                                    Chairman, President and CEO

<PAGE>



I, Steven W. Poad, certify that:

1.    I have reviewed this annual report on Form 20-F of Caledonia Mining
      Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the company as of, and for, the periods presented in this report;

4.    The company's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

      a.    Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            company, including its consolidated subsidiaries, is made known to
            us by others within those entities, particularly during the period
            in which this report is being prepared;

      b.    Evaluated the effectiveness of the company's disclosure controls and
            procedures and presented in this report our conclusions about the
            effectiveness of the disclosure controls and procedures, as of the
            end of the period covered by this report based on such evaluation;
            and

      c.    Disclosed in this report any change in the company's internal
            control over financial reporting that occurred during the period
            covered by the annual report that has materially affected, or is
            likely to materially affect, the company's internal control over
            financial reporting; and

5.    The company's other certifying officers and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the company's auditors and the audit committee of the company's board of
      directors (or persons performing the equivalent function);

      a.    All significant deficiencies and material weaknesses in the design
            or operation of internal controls over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b.    Any, fraud, whether or not material, that involves management or
            other employees who have a significant role in the company's
            internal control over financial reporting.

      Date: May 5th, 2004                               /s/ S.W. Poad
                                                        --------------

                                                    Vice President - Finance


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>t13100exv13.txt
<DESCRIPTION>EX-13
<TEXT>
<PAGE>


                                                                     EXHIBIT 13a

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Caledonia Mining
Corporation (the "Company") for the year ended December 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), Stefan
E. Hayden, President of Caledonia , certify, pursuant to 18 U.S.C. section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to
the best of my knowledge:

1.    The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of Caledonia .

By:   /s/ S. E. HAYDEN
      ---------------------
      Stefan E. Hayden, President
      Caledonia Mining Corporation

A signed original of this written statement required by Section 906 has been
provided by Stefan E. Hayden and will be retained by Caledonia Mining
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Caledonia Mining
Corporation (the "Company") for the year ended December 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), Steven
W. Poad, Vice President Finance of Caledonia , certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:

3.    The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and

4.    The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of Caledonia .

By:   /s/ S. W. POAD
      -------------------
      Steven W. Poad, Vice President Finance
      Caledonia Mining Corporation

  A signed original of this written statement required by Section 906 has been
provided by Steven W. Poad and will be retained by Caledonia Mining Corporation
      and furnished to the Securities and Exchange Commission or its staff
                                  upon request.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.A
<SEQUENCE>5
<FILENAME>t13100exv14wa.txt
<DESCRIPTION>EX-14.A
<TEXT>
<PAGE>

                                                                     EXHIBIT 14a

                                      2003

                                  ANNUAL REPORT

                       [CALEDONIA MINING CORPORATION LOGO]

                                    CALEDONIA

                               MINING CORPORATION



<PAGE>

                                TABLE OF CONTENTS

3.       2003 Highlights, 2004 Objectives
4.       Performance Highlights
5.       Letter to Shareholders
6.       Management Discussion and Analysis
21.      Management's Responsibility for
         Financial Reporting
22.      Auditors' Report
23.      Financial Statements
42.      Directors and Management
43.      Corporate Directory

Note: All figures in the 2003 Annual Report are in Canadian dollars unless
otherwise noted.

                              CORPORATE OBJECTIVES

      Caledonia Mining Corporation ("Caledonia") was formed on February 5, 1992.
The focus of the Caledonia group of companies is to identify and acquire
properties and projects early in the development cycle, and then add value by
either operating or joint venturing, or disposing of mineral assets at the most
economically opportune time. Caledonia defines its operations as the
acquisition, funding, development, and operation of mineral properties, with the
possibility of divestiture at different points in time on the valuation curve,
possibly when the asset is in production or perhaps when it is at the
exploration stage. The economics of the divestiture decision governs the timing
of any such transaction. Cognisant of the economic risks and vagaries inherent
in the exploration for, and mining of mineral resources Caledonia will continue
to seek and develop only those mineral assets with the potential to be low cost
producers.

      ENVIRONMENTAL POLICY

      Caledonia Mining Corporation ("Caledonia") and its Board of Directors are
      committed to maintain the highest environmental standards such that its
      operations and/or its products do not present an unacceptable risk to its
      employees, its customers, the public or the environment. Caledonia and its
      subsidiaries operate under an environmental code of practice that
      encompasses the following:

      Caledonia directs its employees and its subsidiary companies to conduct
      their exploration and operations activities in a professional,
      environmentally responsible manner, in compliance with all applicable
      legislation and policies in the jurisdictions in which they undertake
      business.

      Caledonia liaises closely with the applicable government regulatory bodies
      and the public to optimize communication and an understanding of
      Caledonia's activities in relation to environmental protection.

      Caledonia is committed to the diligent application of technically proven,
      economically feasible, environmental protection measures throughout its
      exploration, development, mining, processing and decommissioning
      activities.

      Caledonia on a regular ongoing basis monitors its environmental protection
      management programs to ensure their compliance with the applicable
      regulatory requirements.

      It is the responsibility of all the employees of Caledonia and its
      subsidiaries to carry out their employment activities in accordance with
      this code of practice. Operational line management has the direct
      responsibility for regular environmental protection management.

      (signed)                                   (signed)
      S. E. Hayden,                              J. Johnstone,
      Chairman of the Board, President and       Vice-President Operations and
      Chief Executive Officer                    Chief Operating Officer

                                        2
<PAGE>

2003 HIGHLIGHTS

      -     Resumed mining at Barbrook and achieved 6,000 tpm mining rate;

      -     Refurbished metallurgical plant at Barbrook, commissioned the
            resin-in-leach circuit and continued metallurgical testwork;

      -     Recruited a General Manager - South Africa as initial step in
            strengthening senior staff in South Africa;

      -     Strengthened management at the Barbrook Mine by recruiting
            additional senior operations manager and department heads;

      -     Identified the Roodepoort exploration area at Eersteling which
            potentially hosts a low-grade gold open-pit;

      -     Recruited senior exploration staff for the Rooipoort and Roodepoort
            exploration properties in South Africa.

      -     Commenced exploration drilling for stratigraphic evaluation of the
            Rooipoort platinum exploration property. In all 14 holes totalling
            3,305 meters were completed during the year;

      -     At the Mulonga Plain diamond exploration property in Zambia our
            joint-venture partner carried out ground geophysical and mineral
            indicator sampling and added the Lukulu licence area to the Mulonga
            Plain joint-venture area;

      -     Implemented a centralised geoscience information system (GIS) in the
            Johannesburg office.

      -     Raised $10.2 million financing from arms-length private placement
            and exercise of warrants and options;

      -     Redesigned the Caledonia website.

2004 OBJECTIVES

      -     Return the Barbrook Gold Mine in South Africa to economic gold
            production;

      -     Develop additional gold reserves/resources at the Barbrook mine;

      -     Explore potential for low gold grade open-pit at Eersteling's
            Roodepoort property in South Africa;

      -     Identify platinum resource at Eersteling's Rooipoort property in
            South Africa;

      -     Test feasibility of producing an economic cobalt concentrate from
            Nama property in Zambia;

      -     Seek joint-venture partner to commence an exploration program at the
            Kadola copper/cobalt property in Zambia.;

      -     Encourage and support our joint venture partners in their
            exploration for diamonds at the Kikerk Lake property ,Canada and on
            the Mulonga Plain joint venture in Zambia;

      -     Conduct a bulk sampling program on the Goedgevonden diamond property
            in South Africa and conduct a limited washing program on the old
            dumps and pits to collect a 100ct parcel of stones which can be
            assessed to establish the coloured stone potential of the property;

      -     Recruit additional senior staff for the South African operations as
            they develop;

      -     Strengthen the Board of Directors of Caledonia to address recent
            changes in Corporate Governance Regulations;

      -     Adopt a Code of Ethics and relevant charters to Caledonia;

      -     Evaluate listing Caledonia on American (AMEX) and London (LSE) Stock
            Exchanges;

      -     As necessary, arrange financing to support the activities required
            to meet these objectives.

                                        3
<PAGE>

PERFORMANCE HIGHLIGHTS              (1) Filon Sur to June 30 for year 2000 only.

<TABLE>
<CAPTION>
                                                          2003       2002       2001       2000      1999
                                                        -------    -------     ------    -------    -------
<S>                                                     <C>        <C>         <C>       <C>        <C>
         FINANCIAL - C$ 000'S

Revenue from Sales                                          646         27        124      6,623     14,701

Gross Profit (Loss)                                      (3,068)      (103)      (126)       304      2,090

Expenses (General and Administration,
  Interest and Amortization)                              1,834      1,578      1,130      2,143      3,853

Net Income (Loss) - before Write-Downs                   (4,835)    (1,754)    (1,195)     7,412      3,082

Net Income (Loss) - after Write-Downs                   (14,556)    (4,331)    (1,195)     7,412     (7,460)

Cash                                                      4,179      1,864         90         75         51

Current Assets                                            4,573      2,094        184        200      2,179

Assets                                                   19,335     24,767     24,973     25,063     33,189

Current Liabilities                                         790      1,336      2,701      2,556      5,143

Long Term Liabilities                                     1,363      1,280      1,813      1,813     21,747

Working Capital (Deficiency)                              3,783        758     (2,517)    (2,356)    (2,964)

Shareholders' Equity                                     17,182     22,151     20,459     20,694      6,299

Total Capital Expenditures                                  187        300          -          -        345

Expenditures on Mineral Properties                        2,092        624         23        120        353

Financing Raised                                          9,528      5,174      1,078        979        497

         SHARE INFORMATION

Market Capitalization ($ Thousands)                     105,955     86,836      9,086     10,374      3,441

Shares Outstanding (Thousands)                          252,274    211,795    165,202    148,202     68,830

Warrants & Options (Thousands)                           27,348     28,055     19,566      7,566      7,566

Earnings (Loss) per Share                                 (0.06)     (0.02)     (0.01)      0.08      (0.12)

TSE Share Price High                                      0.610       0.44       0.09       0.35       0.15

TSE Share Price Low                                       0.215      0.060       0.04       0.05       0.05

TSE Share Volume (Thousands)                             99,233     81,234     22,310     22,939     16,397

NASDAQ Share Price High (US$)                              0.39      0.281       0.06       0.18       0.09

NASDAQ Share Price Low (US$)                               0.16      0.040       0.02       0.03       0.03

NASDAQ Share Volume (Thousands)                         440,811    271,404     74,714     61,919     34,815

       OPERATING RESULTS(1)

Gold Production (Ounces)                                  1,187         52        114     14,558     32,300

Silver Production (Ounces)                                   42          4          -    122,665    240,675

Average Cost per Ounce Gold (US $) Sold                   3,129          -          -        240        204

Average Revenue per Ounce Gold (U $) Sold                   402          -          -        285        288

Year End Gold Resource (Thousand Ounces)                  2,478      2,489      2,930      2,930      3,487
</TABLE>

                                        4
<PAGE>

LETTER TO SHAREHOLDERS

In late 2002 it was decided to re-commence commercial scale mining operations at
the Barbrook Mine in South Africa. Since then work has been carried out to
refurbish the mine, metallurgical plant and other surface infrastructure. Mining
commenced in January 2003 and the first gold was produced during the second
quarter 2003. Commercial scale mining operations were achieved during the third
quarter 2003. The plant start-up was delayed by a decision to install a Resin
pumped-cell leach carousel in preference to a conventional RIL circuit. The ore
mined underground has had a higher gold content than was anticipated. However
gold recoveries from this material did not meet expectations. A number of
metallurgical studies and tests have been conducted which have resulted in
changes and additions to the metallurgical plant circuit. This work will
continue in 2004. Barbrook has recently commissioned an economic study for a
full-plant Biox(R) process of gold recovery which has been successful in
treating refractory gold ores, similar to those at Barbrook, since 1988. The
installation of the Biox(R) technology should allow Barbrook to process all of
its different ore types and lead to greater mining flexibility.

During 2003 exploration work continued on the Mulonga Plain diamond joint
venture in Zambia and at the Kikerk Lake diamond joint-venture in Northern
Canada.

In the fourth quarter of 2003 Caledonia undertook a stratigraphic diamond drill
program on Eersteling's wholly owned Rooipoort property east of Potgietersrus in
South Africa that is highly prospective for platinum group minerals ("PGM"). The
second-phase drill program was started in January 2004. Data recovered will be
used to focus the next drilling program which is intended to define an initial
PGM resource at Rooipoort.

Further details of Caledonia's properties are to be found elsewhere in this
report. The latest information and maps on all Caledonia's properties and
interests can be found on the Caledonia website http://www.caledoniamining.com

In early 2004 Caledonia gave notice of its intent, subject to obtaining the
necessary and regulatory approvals, to convert the shares held by the minority
shareholders into redeemable preference shares, redeem them and subsequently
delist Eersteling from the Johannesburg Stock Exchange ("JSE"). This will result
in Caledonia owning 100% of Eersteling's of gold assets and the Rooipoort
platinum project.

As a result of succession planning efforts, and to strengthen the operating team
in South Africa, Caledonia has added senior staff in South Africa. It is
anticipated that further senior personnel will be added during 2004.

As can be seen from these financial statements, Caledonia continues to remain
largely debt free. It will continue to focus its efforts on advancing its
assets. An amount of $9.5 million, net of financing costs was raised during 2003
from private placements and the exercise of warrants. During early 2003, $1.2
million, net of financing costs, was raised from the portion of the private
placement carried over from December 2002 and from the exercise of warrants. A
further $5 million, gross, was raised through a private placement in August
2003. In the period from November 27, 2003 to January 6, 2004 a total of 8.3
million warrants were exercised raising $2.5 million. During March and April
2004, 2.8 million warrants were exercised raising $545,000. Currently Caledonia
is raising up to $20 million through the sale of 61 million units in a private
placement. During 2004, Caledonia intends to extend this focus to include the
addition of income producing assets in order to fund its activities and further
acquisitions.

My thanks to Caledonia's management, directors, staff, joint venture partners,
and particularly to our shareholders for supporting Caledonia during the
challenges and opportunities of another year. The management and directors look
forward to your continued confidence as we work diligently towards the objective
of building Caledonia into a significant international mining company.

On behalf of the Board of Directors,

(signed)

S. E. Hayden,                                                      May 4th, 2004
Chairman of the Board, President and
Chief Executive Officer

                                        5
<PAGE>

CALEDONIA MINING CORPORATION                                   DECEMBER 31, 2003
MANAGEMENT'S DISCUSSION AND ANALYSIS
Expressed in Canadian Dollars

      This discussion and analysis of the consolidated operating results and
financial condition of the Caledonia Mining Corporation (the "Company",
"Caledonia") for the fiscal years ended December 31, 2003 and December 31, 2002
should be read in conjunction with the Consolidated Financial Statements and
related notes. The Consolidated Financial Statements and related notes have been
prepared in accordance with Canadian generally accepted accounting principles
("GAAP").

      Caledonia was formed in February 1992 and is listed on the Toronto Stock
Exchange as "CAL" and on Nasdaq OTC BB as "CALVF".

VISION AND STRATEGY

      The Company is focussed on exploration activities in Canada and Southern
Africa, some through joint venture arrangements, and the production of gold in
South Africa. The Company has a strong management team and Board of Directors
with diverse expertise in gold production, mineral exploration, mine
development, finance and marketing. The goal of the Company is to grow the asset
base through successful exploration activity and to increase gold production in
South Africa.

      Caledonia continues to focus on the re-start of the Barbrook mine in South
Africa in order to establish a production base. Simultaneously, exploration
activities are being undertaken on prospective diamond, gold and platinum
properties. In order to extend its influence in greenfields areas or other areas
of exceptional exploration merit, Caledonia seeks to establish preferred status
relationships and/or strategic alliances with well-managed exploration companies
through existing or new joint ventures. The Company's primary growth strategy is
focussed on Southern Africa.

      Caledonia believes that the gold mining industry is in a new, long-term
uptrend in the gold price. The $US gold price has not disappointed and Caledonia
management believes gold bullion and gold shares remain in the early stages of a
long-term bull market that could last for some years. Some believe that the gold
price could exceed its 1980 high of US $875 per ounce. As a result, Caledonia is
not hedged.

      Similarly, the prices of base metals, principally copper, have reached
levels not seen in a decade or longer. This makes Caledonia's Zambian base metal
properties more attractive and Caledonia will actively seek joint venture
parties to advance its Nama and Kadola properties. Caledonia intends to carry
out further work on its Nama cobalt/copper property in Zambia to produce an
economic cobalt /copper concentrate.

      With the expectations of an improving gold and base metal prices over the
long term, Caledonia is following the strategy of diversification through the
search for diamonds, gold, platinum group metals and base metals. This activity
is being undertaken through joint ventures or direct exploration expenditures.

      The next few years should be exciting for Caledonia shareholders as itis
uniquely positioned to develop its gold production base and base metals projects
and participate in the rewards of the diamond joint ventures and platinum
exploration projects.

CORE BUSINESSES

GOLD MINING

      BARBROOK MINES LIMITED

      The 100% owned Barbrook Mines Limited ("Barbrook") is located near the
town of Barberton in the Mpumalanga province of the Republic of South Africa.
Pretoria and Johannesburg are approximately 375 km to the west. Barberton is the
natural and historic centre of the Barberton gold mining district. The town has
a history of

                                        6
<PAGE>

gold mining dating back more than 100 years. The Barbrook property, which covers
an area of 10,625 acres and extends for a distance of about 28 km along strike,
represents a consolidation of about 20 old mines.

      The Barbrook gold deposits occur in the Barberton Greenstone belt, the
host for the other gold deposits in the area. The belt is of Archaen age and
includes some of the oldest volcanic and sedimentary rocks in South Africa. The
belt trends southwest to the northeast and has been intruded and deformed by
various granite plutons at the margins. The Barbrook property covers two
steeply-dipping, banded iron formations oriented in an east-west direction.
These two shear zones, called the Zwartkoppie and Barbrook lines are the host to
the Barbrook gold deposits.

      During 1997, prior to the suspension of activities, the mine was operating
at a rate of 17,000 tonnes per month and the process plant was operating at
about 20,000 tonnes per month of underground ore. The plant has, in the past,
processed oxide ore at rates in excess of 30,000 tonnes per month. Through 2000,
operations remained suspended at Barbrook due to a continuing low gold price.

      The underground mine was operated on a very small-scale basis in early-mid
2001 to generate cash flow to enable the plant and the mine to be re-started.
This operation was terminated in September 2001 due to uneconomic operation at a
low production rate. The mine was returned to a care and maintenance basis.

      The design capacity of the metallurgical plant is 30,000 to 40,000 tonnes
per month for free-milling oxide ores, or up to 25,000 tonnes per month for the
harder, metallurgically more complex, refractory sulphide ores. Caledonia has
recognised that these throughput levels exceed the current capacity of the
underground mine.

      The Barbrook mine gold reserves and resources are as follows:

      GOLD RESERVES & RESOURCES (UNDILUTED) - AS AT DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                            GOLD GRADE -
CATEGORY                         TONNES       G/TONNE      GOLD OUNCES
- --------                         ------       -------      -----------
<S>                            <C>          <C>            <C>
RESERVES
Proven                            187,983       5.84           35,270
Probable                           55,213       6.35           11,253
                               ----------       ----        ---------
                    TOTAL         243,196       5.95           46,554
                               ----------       ----        ---------

RESOURCES
Measured                          473,536       2.94           44,690
Indicated                       1,284,951       5.58          230,361
Inferred                        8,781,652       5.76        1,626,165
                               ----------       ----        ---------
                    TOTAL      10,540,139       5.61        1,901,217
                               ----------       ----        ---------

   TOTAL MINERAL RESERVES
              & RESOURCES      10,783,335       5.62        1,947,772
                               ----------       ----        ---------
</TABLE>

      The reserve and resource estimates were certified by Mr. David Grant,
C.Geol., FGS, Pr.Sci.Nat., an independent consultant and "Independent Qualified
Person" as required by National Instrument 43-101 of the Canadian Securities
Administrators.

      In total, the reserves and resources have increased by 22,000 tonnes when
the 2003 mined tonnage is considered. Generally however, the categories assigned
to reserves and resources in 2003 are lower than those of 2002. This is the
result of using more stringent category definitions in the tabulation and of the
availability of more geological information.

      However, in the first half of 2004, continued drilling and development
have shown that an increase in reserves/resources is likely in 2004.

      Mining at Barbrook is from underground using an open-stope, sub-level
benching method. Broken ore is transported to the surface crushing area along
the main 10 level haulage way. At present all workings are on or above the main
10 level haulage. A decline shaft is currently being developed on the Taylors
ore zone to access the ore block below 10 level.

                                        7
<PAGE>

      In the metallurgical processing plant, the broken ore is de-slimed to 2mm,
crushed to minus 15mm size and stored in a coarse ore storage bin. From this bin
ore is fed to the 250 kW Vecor primary ball mill and then to the flotation
circuit which includes both rougher and cleaner circuits. Flotation concentrate
with a gold grade of 30 to 40 g/t is re-ground in the Sala 90 kW regrind mill to
produce a product of 95% -25i which is pumped to the 2-stage Aachen
pre-oxidation circuit and thence to the resin-in-leach circuit. Gold is
recovered from the loaded resin in the elution and electrowinning circuits. Gold
electrowinning is located in the smelt house and produces high-grade gold
bullion bars.

      Bullion is transported on a random schedule to the Rand Refinery where it
is refined.

      Tailings are pumped to the tailings deposition area located about 3km from
the mine site. Tailings deposition operations are managed by a contractor.

      There is a full mine infrastructure at Barbrook including administration
areas, change-house, lamp room, security barracks, training and first aid rooms,
mine stores, engineering/maintenance workshops, assay and metallurgical
laboratories, explosive magazines and the tailings deposition area.

      The required regulatory and environmental practices for Barbrook have been
evaluated, risk assessments have been carried out and the required Codes of
Practices drawn up and implemented. Barbrook was granted its Section 9 permanent
mining authorization in March 2003.

      The present metallurgical circuit is designed to treat 6,000 to 8,000
tonnes per month. This throughput can be increased to 10,000 tonnes per month as
the underground and stope development progresses and provides greater mining
flexibility. The on-site, un-utilized, 1300 kW drive ball milling circuit can
process sulphide-ore up to 20,000 tonnes per month.

      EERSTELING GOLD MINING COMPANY LIMITED

      The 96.2% owned Eersteling Gold Mining Company Limited ("Eersteling"), is
located 36 km from the town of Pietersburg in the rolling terrain of the
Northern Province of the Republic of South Africa. Pretoria and Johannesburg are
250 km and 300 km, respectively, to the south.

      The first gold discovered in South Africa was on a farm named "Eersteling"
which was located near the village of Marabastad, 30 km southeast of
Pietersburg. Mining started in May 1874 and continued until the second
Anglo-Boer War (1899 - 1902) when the mine was shut down. The mining rights of
the fragmented mining and exploration properties were consolidated. On July 16
1987, Eersteling Gold Mining Company Limited was formed and was listed on the
JSE. However, due to the current illiquidity of trading and the high cost of
maintaining the listed company, subject to obtaining the necessary approvals it
is intended to convert the share held by the minority shareholders into
redeemable preference shares, redeem them and subsequently delist Eersteling
from the JSE in mid 2004. This will result in Eersteling becoming 100% owned by
Caledonia.

      The Eersteling mine property has an area of 47,000 acres, extends for a
distance of about 25 km and is located in the Pietersburg Greenstone belt which
is of Archaean age and which consists of an upper and lower sequence. The upper
sequence is mainly conglomerate, grit and sandstone. The lower sequence is
undifferentiated mafic and ultramafic volcanic rocks and intrusives, with banded
iron formation and chert. The feature that most dominates gold mineralization in
the area is the Willemse shear.

      In 2002, Eersteling obtained the Rooipoort platinum prospect from Anglo
American Platinum Corporation ("Amplats"). The property is about 30 km southwest
of the Eersteling metallurgical plant and is located in an area that is
presently undergoing a surge in platinum group metal exploration. In the third
quarter of 2003, an exploration drilling program was commenced on the Rooipoort
property and is continuing in 2004.

      Eersteling has also identified a near-surface gold exploration prospect
("Roodepoort") which will be tested during 2004. The Roodepoort gold property,
located 22 km north east of the Eersteling mine area and 8 km east of the
Zandrivier mine area, is situated on an area of historical gold mining and an
unusual gold-bearing albitite intrusive (a hydrothermally altered granodiorite).
Grab samples have returned values of up to 2g/t gold from pyritic portions of
this unit and values greater than 16g/t gold from younger shear zones. Detailed
soil sampling has been completed over a 2,500m x 1,500m area. Soil samples have
been analysed for gold at the "Low-level Gold" laboratory facility of Genalysis
in Perth, Western Australia. Results have been received and are being evaluated.
The open pit potential for Roodepoort for a large lower grade operation has
never previously been evaluated. Drilling is planned in mid-year on targets
generated from the soil sampling program and previous data of Roodepoort.

                                        8
<PAGE>

      The Eersteling mine gold resource estimate is based on the data from early
1997, before the mine was placed on a care and maintenance basis and is as
follows:

      GOLD RESOURCES (UNDILUTED) - AS AT DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                   GOLD GRADE -      GOLD
RESOURCE CATEGORY                    TONNES          G/TONNE        OUNCES
- -----------------                   ---------      ------------     -------
<S>                                 <C>            <C>              <C>
Measured                               60,527          7.43          14,457
Indicated                             537,232          7.78         134,382
Inferred                            2,048,961          5.79         381,600
                                    ---------          ----         -------
TOTAL MINERAL RESOURCE              2,646,720          6.23         530,439
                                    ---------          ----         -------
</TABLE>

      In 2002 Eersteling applied for its required Section 9 permanent mining
permit that was granted during April 2003. The mine has been on a care and
maintenance basis since early 1997 when production was halted due to low gold
prices.

      MARKETING

      All gold bullion production is refined by Rand Refinery in Germiston and
sold to Absa Bank Limited in Johannesburg, South Africa under contract.

      KEY PERFORMANCE FACTORS

      The key performance factor of a gold mine is the ability to produce gold
at a cost per ounce that is low enough to pay all obligations and generate an
acceptable return to shareholders. The price of gold is established in an
international market and is considered a commodity. The Rand price of gold in
the future will play a large part in determining whether the South African gold
mines can be profitably operated.

      CAPABILITY TO DELIVER RESULTS

The successful operation of mining and exploration depends on the availability
of in situ resources, experienced and skilled management and employees and the
financial resources to be able to carry out the work and support the corporate
body.

      In 2003 and early 2004 additions have been made to the corporate staff at
senior levels to strengthen the management, exploration and operations team in
South Africa and to address some of the succession planning needs of Caledonia.
Amongst others, these include the senior appointments of:

      - Dr. Trevor Pearton as a Director of Barbrook and Eersteling. Dr. Pearton
controls the geological and ore development programs at both mines. He has
extensive experience in the mine geology of the mines in the Barberton area;

      - Mr. Jacques du Plessis as General Manager, South Africa, responsible for
all South African operations. Mr. du Plessis is a graduate mining engineer and
holds BSc and MBA degrees. He has extensive experience in the South African
mining industry including 15 years in managerial positions. His experience
includes managerial experience in the Greenstone mines in the Barbrook area.
Most recently, Mr. du Plessis was General Manager for the mine contracting
division of the largest South African contracting company;

      - Mr. John Blaine, Professional Geologist and Consulting Geologist, as
Exploration Manager Africa responsible for all African exploration projects;

      - Mr. Bruce Cumming as Chief Geologist Africa and the Project Manager of
Eersteling's Rooipoort platinum and Roodepoort gold exploration projects;

      - Mr. Kevin Buyskes as the Manager of Barbrook Mines Limited. Mr. Buyskes
has extensive operating and mine managment experience in the South African
greenstone mines including those in the Barberton area; and

      - Mr. Mike Tombs as Financial Manager Africa responsible for all financial
and accounting matters. Mr.Tombs is a Fellow of the Chartered Institute of
Management Accountants and holds an MBA degree. He has extensive accounting and
financial experience in the mining industry in Southern Africa including several
years with the Anglovaal Group.

                                        9
<PAGE>

      - Ms. Anne Pearton as Head of Geological Information Systems for the
Caledonia Group. Ms. Pearton is based at the Caledonia head office in
Johannesburg.

With the above senior staff recruitment, the planned 2004 work program on the
properties can now be adequately managed.

The financings of 2003 and that of April/May 2004 will allow Caledonia to carry
out the planned development of its projects throughout 2004 and into 2005. The
2003 financing has allowed Caledonia to pay off most of its debt to its officers
and it is now largely debt free.

      OPERATIONAL REVIEW

      BARBROOK MINES LIMITED

      Barbrook was re-started in January 2002, mining a low-tonnage, high grade
payshoot to provide cash flow to finance rehabilitation of the mine, planned to
re-start processing at a rate of 6,000 tonnes per month, and to pilot test the
new process technology for gold recovery developed by Caledonia. However, due to
poor economic returns on the low tonnage, high-grade ore, operations were
suspended in April 2002. A full geological and mining re-evaluation was carried
out on the Taylors orebody from May 2002 which has lead to the rehabilitation of
the mine and plant and the resumption of operations during the 2nd quarter of
2003. The characteristics of the Taylors ore fed to the plant in 2003 were not
as defined in earlier test work and gold recoveries were below projections. The
ore was much more refractory with considerably more arsenopyritic content than
expected, although these ores are of higher grade than the pyritic ore types
tested previously. A number of alternative metallurgical circuits have been
tested and circuit improvements have been identified. The installation of a
cleaner flotation circuit during the 4th quarter of 2003 assisted flotation gold
recovery but cyanide leach gold recoveries were still below expectations. A
series of laboratory and pilot plant tests are continuing and changes to the
metallurgical plant circuit are being made during the first half of 2004. These
changes include the installation of an additional cleaner flotation circuit to
increase the gold grade of the flotation concentrate and more aggressive oxygen
addition to the reground flotation concentrate prior to leaching in the
Resin-in-Leach (RIL) section. The resin elution section is also being enlarged
to give more flexibility in operation of the RIL section. Caledonia is further
evaluating `ultra-fine milling' and `whole-plant Biox(R)' metallurgical
processes to determine whether further recovery improvements and improved
economics can be attained. As future test work is completed and following a
feasibility study, more revisions to the metallurgical plant are expected.

      The mineability, geology, and mineralization of the Taylors ore body,
which is the main operating area of the mine, was re-evaluated and re-modelled
during 2002 to determine the optimum mining methods to minimize grade dilution.
Mining has commenced in the Taylors ore zone between 10 and 7 levels. Geological
sampling and evaluation on adjacent blocks in the Taylors zone is ongoing.
Development and stope tonnages from this area will supplement the present
production allowing the mill throughput to be increased to the 8,000 tonnes per
month range. Bulk ore samples from the Taylors and the Daylight/Victory zones
have been taken and will be tested to confirm the metallurgical amenability of
this material in a Biox(R) circuit. Previous Biox(R) tests on Barbrook
concentrates showed gold leach recovery in excess of 90%. If the new Biox(R)
tests, as anticipated, prove positive, the Daylight/Victory area will provide
the plant with a readily accessible additional ore source of higher than average
grade ore. Development is now in progress on 10-level which is the main haulage
level to access two known ore shoots that extend 110 vertical meters above
10-level. To ensure the continuity of the ore supply from the Taylors ore zone,
development has started on a decline shaft which will provide access to the
Taylors zone below the 10 level elevation. The mine has now embarked on an
aggressive development program to access the lower portions of the Taylors,
Victory, Daylight, Crescent and Browns ore zones.

                                       10
<PAGE>

      The Barbrook metallurgical plant was re-commissioned during the 2nd
quarter of 2003. The results achieved are as follows:

                     BARBROOK MINE - 2003 PRODUCTION RESULTS

<TABLE>
<S>                                  <C>                       <C>
Ore mined                            Tonnes                    24,723

Development advance                  Meters                     1,189

Ore trammed from mine                Tonnes                    33,740

Ore milled                           Tonnes                    28,785

Grade milled                         g/t                          8.4

Gold recovered                       Ounces                     1,078
</TABLE>

      Because of the extreme variability of the Barbrook ore types, the higher
gold grades associated with the refractory arsenopyritic ore zones and lower
gold metallurgical recoveries associated with these highly refractory ore types,
Barbrook has commissioned Goldfields of Johannesburg South Africa to carry out
an economic study for the design and installation of a full-plant Biox(R)
process of gold recovery. Goldfields are internationally recognised for their
expertise and experience in the bacterial oxidation of refractory gold ores such
as those found at Barbrook. Caledonia believes that the Goldfields Biox(R)
technology, successfully used since 1988 at the Barberton Mines complex, located
next to Barbrook will be amenable to all of the different ore types at Barbrook.
Previous test work showed over 90% gold recovery on samples of the Barbrook
flotation concentrate. If implemented, the Biox(R) plant will be sized to take
concentrates from Caledonia's other mines and from toll processing.

      EERSTELING GOLD MINE

      The mine has been on a care and maintenance basis since early 1997 when
production was halted due to low gold prices.

      CONSOLIDATED FINANCIAL RESULTS

      For the year ended December 31, 2003, the Company recorded a net loss,
after write downs, of $ 14.6 million ($0.063 per share) compared to a net loss
of $4.3 million ($0.023 per share) in 2002 and a net loss of $1.2 million
($0.008 per share) in 2001. The loss in 2003 resulted mainly from the write down
of mineral properties of $9.8 million and losses from operations of $4.8
million. There was a mineral property write down of $2.6 million in 2002 and
none in 2001. The loss from operating activities of $4.8 million has increased
from $1.7 million in 2002 and $1.2 in 2001 reflecting a higher level of activity
associated with efforts in 2003 to refurbish the Barbrook operation and
increased amortization and general and administrative expenses. In 2003 general
and administrative expense includes a charge of $0.076 million for stock option
grant expense as compared to $0.209 million in 2002. Prior to 2002 there is no
stock option grant expense recorded in the accounts.

      In 2003, the gold mining industry enjoyed some strengthening in the gold
price, which was largely offset in South Africa by a strengthening of the South
African Rand relative to the US dollar. In Rand terms, the price remained fairly
constant throughout 2003. The improvement in the precious and base metals market
helped Caledonia to obtain private placement financing in January and August
2003. This allowed management to continue to bring the Barbrook mine back into
production and to modify the process plant as recommended by metallurgical
tests. The financing also allowed Caledonia to undertake a stratigraphical
drilling program at the Rooipoort platinum exploration project.

      The financing allowed Caledonia to significantly reduce its short-term
loan debt. Throughout 2003, the primary focus of management was on the
continuation of operations without incurring significant debt, the continuing
development of the asset base of Caledonia and the procurement of longer term
financing.

      In 2003, the main contributor to revenue was the Barbrook gold mine in
South Africa.

                                       11
<PAGE>

      OUTLOOK

      The production and sale of gold for 2004 is difficult to estimate, and
will depend upon the rate and timing of the commercial production achieved at
the Barbrook gold mine.

      In the future, if the new Biox(R) process tests prove positive, the
Daylight/Victory ore zone could provide the Barbrook plant with a readily
accessible, additional source of higher than average grade ore. As mentioned
above, development is now in progress on 10 level to access to other known ore
shoots which extend 110 vertical meters above 10 level at Barbrook. To ensure
continuity of the ore supply from the Taylors ore zone, development has started
on a decline shaft which will provide access to the Taylors zone below the 10
level elevation. The mine has also embarked on an aggressive development program
to access the lower portions of the Taylors, Victory/Daylight, Crescent and
Browns ore zones, all part of the Barbrook underground infrastructure.

      Caledonia intends, subject to a sustainable economic Rand gold price and
favourable Roodepoort exploration results to re-commence commercial production
at Eersteling at some time in the future.

EXPLORATION AND PROJECT DEVELOPMENT

      GOLD PROPERTY

      ROODEPOORT

      The Roodepoort gold property situated 22 km north east of the Eersteling
gold plant and 8 km east of the Zandrivier mine area, is situated on an area of
historical gold mining with an unusual gold-bearing "albitite" intrusive (a
hydrothermally altered granodiorite). To date, grab samples have returned values
of up to 2g/t gold from pyritic portions of this unit and values greater than
16g/t gold from younger shear zones.

      The open pit potential of Roodepoort for a large low grade operation has
never been evaluated. As more information becomes available, the economics of an
open pit mining operation will be assessed.

      DIAMOND PROPERTIES

      KIKERK LAKE

      In 2001 and 2002, Caledonia announced the discoveries of two
diamondiferous kimberlites, "Potentilla" and "Stellaria", on the Kikerk Lake
property in Nunavut Canada, by its joint venture partner and operator of the
property, Ashton Mining of Canada Inc. ("Ashton"). The two kimberlite pipes are
approximately 700 metres apart.

      A total of 100 heavy mineral samples were collected from the property
during the 2003 summer season. This sampling consisted of follow-up work in six
separate areas using detailed sample grids and fences. The summer work focussed
primarily on indicator dispersion trains and isolated anomalies outside the
Potentilla/Stellaria kimberlite area.

      All samples collected in 2003 were shipped to Ashton's laboratory and are
currently awaiting processing. No results have been received to date.

      The Kikerk Lake property consists of 15 mineral leases currently pending
approval by the Nunavut Mining Recorder. These leases cover 38,737.5 acres
(15,677 hectares).

      Ashton has not yet finalised the program for 2004. They anticipate that
work in 2004 will focus on generating new targets by collecting approximately
250 heavy mineral samples. No drilling or geophysics is planned at this time.

      Caledonia currently has a 17.5% interest in the Kikerk Lake property,
Ashton holds a 52.5% interest, having incurred in excess of $750,000 in
exploration expenditures on the property. This interest can be increased to
59.5% if Ashton funds Caledonia's share of the costs through to a completed
feasibility study. The remaining 30% interest is held by Stornoway Diamond
Corporation.

      MULONGA PLAIN

      Caledonia has a joint venture agreement with BHP World Exploration Inc.
and its affiliate Motapa Diamonds Inc., ("Motapa") collectively "the BHP
Entity", on the Mulonga Plain, Kashiji Plain and Lukulu licences in Western
Zambia. Motapa is the project operator on behalf of the Joint Venture. The BHP
Entity is now vested with a 60%

                                       12
<PAGE>

participating interest and Caledonia has the remaining 40% interest. In terms of
the joint venture, the BHP Entity will continue to fund operations through the
completion of a feasibility study at which point their interest will increase to
75%. Caledonia will then have various options including that of BHP funding the
project through to commercial production.

      The Mulonga Plain licence area is located in Western Zambia, between the
Zambezi river and the Angolan border. Work on the Mulonga Plain anomaly in 2003
focussed on detailed data interpretation and development of a more constrained
geological model of the Mulonga Plain region. The eastern portion of the Mulonga
Plain anomaly has been identified as having a higher probability for an initial
kimberlite discovery in the Mulonga Plain project area. Motapa intends to expand
airborne geophysical coverage in this eastern area in 2004 with the objective of
continuing drill testing in 2004 or 2005.

      KASHIJI PLAIN

      This licence area is located in northwest Zambia, adjacent to the Angolan
border. The BHP Entity field work completed during 2003 consisted of ground
geophysical and mineral indicator sampling work focussed on locating the Chundra
Falls diamond and indicator-mineral anomaly and wide spaced indicator-mineral
sampling on the recently acquired Lukulu licence area. Ground magnetic surveys
were completed on 24 airborne magnetic geophysical anomalies. Ground gravity
surveys were completed on 10 of these anomalies and indicator mineral samples
were collected on 16 targets.

      In late 2003, the BHP Entity joint venture added the Lukulu licence area
to its land holdings. The Lukulu licence consists of 1,900 km(2) and is
immediately adjacent to the south-east portion of the Kashiji licence area.
Approximately 40 wide spaced indicator mineral samples were collected on the
Lukulu licence in 2003 to provide closure of the diamond and ilmenite anomaly
and better define an airborne magnetic survey block that will be contract
surveyed in 2004.

       Future work planned for the Kashiji and Lukulu licences consists of
stream sediment and infill sampling around the Chundra Falls area and additional
airborne magnetic survey work followed by ground geophysical and geochemical
work as needed to define drill targets. Upon completion of this target
definition phase, a drill testing program in both the Chundra Falls and the
south east portion of the Kashiji licence will be finalised.

      GOEDGEVONDEN

      Caledonia has signed a Prospecting and Option Agreement over the
Goedgevonden diamond bearing kimberlite pipe located approximately 20 kilometres
north of the Stilfontein gold mine in the Klerksdorp district of the North West
Province in South Africa. In early 2002, Caledonia signed Prospecting and Option
Agreements over adjacent areas of interest, including the exploration rights to
the Syferfontein kimberlite pipe that is located about 1 km north east of the
Goedgevonden pipe and other adjacent areas of interest.

      Previous prospecting activities carried out in the mid 1970's on
Goedgevonden indicated that the pipe is oval in shape and covers a surface area
of approximately 27,000 square metres. This work also confirms that the pipe was
drill intersected at a depth of 425 metres, and that further down dip extensions
remain undefined. Previous drilling reported an average diamond content of 35 to
45 cpht, with one hole yielding 65 cpht. A fair portion of the diamonds
recovered from the drilling were gem quality with a notable tendency toward pink
coloured diamonds.

      Caledonia conducted a stratagem geophysical survey in 2001 prior to
planning a preliminary drilling program in 2002. The preliminary drilling
program consisted of 7", 8" and 12"diameter reverse circulation drill holes, the
collection of the drill samples and diamond recovery. Four holes were drilled in
the centre of the pipe, three to a depth of 150 metres, and the other to 120
metres. The three remaining holes were drilled to delineate the pipe in more
detail. All of the 7 holes drilled entered the kimberlite at a depth of about 6
metres, and the 4 centrally-located holes were stopped whilst still in the
kimberlite. A total of about 56 tonnes of drilling sample was collected and
processed through a Van Eck and Lurie dense-media separation ("DMS") plant and
wet Sortex machine. From the diamond recoveries it was confirmed that the
Goedgevonden pipe was diamondiferous, and sufficient gem-quality diamonds were
recovered to warrant a larger bulk sample.

      Compilation of base plans is complete and re-compilation of historical
data is in progress prior to commencement of bulk sampling later in 2004. In the
meantime, a limited washing operation will be conducted from the old pits and
dumps to collect an approximately 100ct parcel of stones to give a wider
appreciation of possible coloured stones in the kimberlite.

                                       13
<PAGE>

      PLATINUM PROPERTIES

      ROOIPOORT

      During 2002 Caledonia acquired via Eersteling, the Rooipoort platinum
prospect, located about 30 km south west of Eersteling's gold mine in the
Mokopane (Potgietersrus) area of the Limpopo province of South Africa.

      A total of 3,305 meters of drilling in 14 holes was completed in the
planned 15 hole programme during 2003. Drill holes siting was based on the
results of a soil geochemical survey completed during the 3rd quarter of 2003
and which is assisting in the interpretation of the stratigraphy of the Bushveld
Complex underlying this relatively poorly-exposed property. A further 5 holes
have been completed to date in 2004 with 2 in progress and a further 2 planned
in order to complete this phase of work. Encouraging results are being received
that is providing valuable information to define the stratigraphy of the
Rooipoort target area. This stratigraphic interpretation will be used to define
the next drilling phase. This next drilling program is intended to define an
initial mineral resource at Rooipoort and is scheduled to commence in mid 2004.

      Additional prospecting rights have been acquired over 342 hectares
immediately adjoining the Rooipoort property to the south on the farm
Grasvalley. Application for a Prospecting Permit from the Department of Minerals
and Energy has been submitted to enable drilling to commence on this new area.
In the meantime, soil geochemical survey and mapping will be extended to better
cover this exposed area.

      The map termed the "Rooipoort Platinum Project" shown on Caledonia's
website provides an appreciation of the exploration activity that has been
carried out on the Rooipoort property.

      BASE METAL PROPERTIES

      NAMA

            Caledonia Nama Limited, a wholly owned subsidiary of Caledonia,
holds five contiguous exploration licences in northern Zambia which host
open-pittable near-surface low grade cobalt /copper mineralization. The
2001/2002 soil-sampling program carried out jointly by Caledonia and BHP
Billiton was completed over the majority of the remaining licence area. This
program identified a number of high priority anomalous targets within the
required geological setting. These targets should be followed up in the search
for the suspected presence of larger, deeper, sulphide ore bodies. With the
recent substantial increase in the price of copper, Caledonia will search for
joint venture partners for the exploration of the potential deeper sulphide-ore
zones.

      In the second quarter of 2004 a mini bulk sample will be excavated at Nama
and will then undergo screening tests and heavy media/gravity separation tests
in South Africa. Subject to satisfactory results, a larger tonnage sample will
be screened and processed on site to produce a suitable cobalt concentrate for
testing through a Zambian smelter. If the test is successful and satisfactory
economic terms are obtained, it is expected that a long-term supply contract for
the Nama cobalt/copper concentrate may be negotiated with the Zambian smelter.

      Despite the increasing activity at Nama, after several years of relative
low activity, the property carrying value was written down to $1 in December
2003 to comply with the new Canadian accounting standards.

      KADOLA

      This large exploration property consisting of three contiguous licence
areas was previously joint ventured with Cyprus Amex and is prospective for
copper and cobalt. With the recent substantial increase in the price of copper,
Caledonia will search for joint venture partners for the exploration of the
copper/cobalt potential of Kadola.

      The Kadola properties also include the Eureka gold/copper/pyrite anomaly.
With the significant increase in the price of gold and copper, this project area
will be re-evaluated for either joint-venture or for further work by Caledonia.

      OUTLOOK

      The outlook for the aforementioned exploration properties is difficult to
quantify. Exploration by its nature is speculative with a high degree of risk
accompanied by the potential for high returns. Caledonia manages this risk by
using well-qualified exploration professionals, senior mining company joint
venture partners and by exploring in

                                       14
<PAGE>

areas which are considered as having a better than average potential for
discovery. The recent "across-the-board" increases in the prices of precious and
base metals should improve exploration expenditures of the major mining
companies and could improve the likelihood of Caledonia negotiating joint
ventures agreements for its remaining wholly-owned exploration properties.

STRATEGIC ALLIANCES

      The focus of the Caledonia group of companies is to identify and acquire
properties and projects early in the development cycle, and then add value by
either operating or joint venturing, or disposing of mineral assets at the most
economically opportune time. Caledonia defines its operations as the
acquisition, funding, development, and operation of mineral properties, with the
possibility of divestiture at different points in time on the valuation curve,
possibly when the asset is in production or perhaps when it is at the
exploration stage. The economics of the divestiture decision governs the timing
of any such transaction. Cognisant of the economic risks and vagaries inherent
in the exploration for, and mining of, mineral resources Caledonia will continue
to seek and develop only those mineral assets with the potential to be low cost
producers.

      Caledonia continues to focus exploration activities of prospective diamond
properties by developing the properties through joint ventures with senior
producers.

      Exploration is a high-risk, high-cost but potentially high-reward
business. Caledonia's strategy in this area is to position itself to participate
in a significant part of the "reward" through joint venture interests in order
to minimize early exploration costs. Caledonia currently has two joint venture
interests in place, each of which is presently conducting aggressive exploration
programmes.

      Details of the strategic alliances with joint venture partners have been
discussed above.

INVESTING

      During 2003 Caledonia invested $2.3 million on capital assets and mineral
properties as compared to $1.0 million in 2002. Of the total of $2.3 million in
2003, an amount of $2.1 million was invested in South Africa and the balance in
Zambia. The South African investment was spent on Barbrook and Rooipoort.

FINANCING

      During the year, $9.5 million was raised from private placements, exercise
of warrants and options as compared to $5.2 million in 2002 and $1.1 million in
2001 (all net of issue costs). The increased financing level reflects improving
investor confidence in gold mining and exploration companies in general.

      In the first quarter of 2004, Caledonia raised an amount of $0.7 million
from the exercise of warrants.

      As of April 30, 2004, the Company has raised a further amount of
approximately $15.0 million from a private placement. The majority of these
funds will be used to finance the improvements in the processing of gold ore at
Barbrook and exploration activity on the Company's most prospective projects.

      Caledonia and its subsidiaries are largely debt-free.

                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      The following table summarizes cash flows and cash on hand ($ thousands):

<TABLE>
<CAPTION>
                                                       2003       2002       2001
                                                      ------     ------     ------
<S>                                                   <C>        <C>        <C>
Cash                                                   4,179      1,864         90
Working capital (deficiency)                           3,783        758     (2,517)
Debt                                                       -          -          -
Cash provided (used) by operating activities          (4,865)    (2,009)    (1,121)
Cash provided (used) by investing activities          (2,279)    (1,003)        58
Cash provided (used) by financing activities           9,459      4,786      1,078
                                                      ------     ------     ------
</TABLE>

      As of December 31, 2003 the Company had working capital of $3.8 million as
compared to $0.8 million at December 31, 2002 and a working capital deficiency
of $2.5 million at December 31, 2001. Cash and short term deposits increased
from $1.9 million at the end of 2002 to $4.2 million at December 31, 2003.

      During 2003, Caledonia raised $5.7 million in equity financing from two
private placements by issuing 25,280,000 common shares and $3.8 million from the
exercise of 15,093,252 common share purchase warrants and options. Details of
financing activities are presented in note 4 (b) of the notes to the
consolidated financial statements. During 2004 it is expected that further cash
requirements of Caledonia will be met from private placement equity financing
activity (see note 11 of the notes to the consolidated financial statements) and
cash flow from gold production at Barbrook.

USES OF LIQUIDITY

     It is the belief of Caledonia that the recent financing by a group of
private investors which to April 30, 2004 has provided gross proceeds of
approximately $15.0 million and the recent exercise of common share purchase
warrants will sustain Caledonia for 2004 and into the year 2005. The resumption
of gold production at Caledonia's Barbrook mine will also generate cash flow in
2004. However, if funds fall short of requirements, Caledonia will undertake
financing options such as private placements with private investors, and if this
is still insufficient for its needs, will investigate either project joint
ventures or project bank funding. The funds raised by the 2004 financing have
been and will be used mainly by Caledonia on its exploration, development and
production activities such as:

      -     at Barbrook by developing access to ore resources below the 10 level
            and to the east along strike, providing continuity of the mining
            operations, making capital additions to the Barbrook metallurgical
            plant, such as a Biox(R) circuit; and

      -     by further drilling/possible bulk sampling and processing of
            material from Caledonia's Goedgevonden Diamond Project; and

      -     by further drilling at Caledonia's Rooipoort platinum project; and

      -     by further bulk sampling and concentration test work on Caledonia's
            Nama Cobalt/Copper Project; and

      -     by further exploration and possible drilling at the Roodepoort gold
            property at Eersteling.

The funds raised will be sufficient to move forward with the direct development
of the above assets if the projects are proven to be economically and
technically justified. The Mulonga Plain joint venture with the BHP Entity is
subject to joint venture agreements and is fully funded by the joint venture
partner through to commercial production. Similarly the Kikerk Lake joint
venture with Ashton Mining is fully funded by Ashton. Caledonia continues to
actively review the benefits, to Caledonia and its shareholders, of seeking new
joint venture partners for most, if not all of its exploration properties.

                                       16
<PAGE>

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

      The Company does not have any significant long-term contractual
obligations or commercial commitments other than its responsibilities pursuant
to two joint venture agreements discussed elsewhere in this document, except as
given below.

<TABLE>
<CAPTION>
CONTRACTUAL OBLIGATIONS (000'S)       TOTAL          LESS THAN 1 YEAR           1 TO 5 YEARS     AFTER 5 YEARS
- -------------------------------       -----          ----------------           ------------     -------------
<S>                                   <C>            <C>                        <C>              <C>
CAPITAL LEASE OBLIGATIONS             $  55                $ 12                     $ 42              $ 0
PURCHASE OBLIGATIONS                  $ 268                $ 68                     $200              $ 0
</TABLE>

      The above are related to the restart of operations at the Barbrook mine
and the South African head office. The company has minor obligations in respect
of licence fees for its exploration and mining properties some of which are paid
by Caledonia's joint venture partners.

QUARTERLY DATA (UNAUDITED)

SELECTED FINANCIAL HIGHLIGHTS - 2003

<TABLE>
<CAPTION>
                                               FIRST         SECOND          THIRD         FOURTH
  000'S EXCEPT PER SHARE AMOUNT               QUARTER        QUARTER        QUARTER        QUARTER      TOTAL YEAR
  -----------------------------             -----------    -----------    -----------    -----------    -----------
<S>                                         <C>            <C>            <C>            <C>            <C>
BALANCE SHEET

                 Current assets             $     2,938    $     1,133    $     4,623    $     4,573    $     4,573

                 Capital assets                   7,899          7,909          8,123          7,471          7,471

             Mineral properties                  15,915         15,960         16,070          7,212          7,212

           Shareholders' equity                  24,454         23,057         26,656         17,182         17,182

OPERATIONS

                        Revenue                      53              -            259            334            646

                Operating costs                      72          1,232            921          1,489          3,714

         Costs and expenses (1)                     189            174            410         10,753         11,526

      Net (loss) for the period                    (208)        (1,406)        (1,072)       (11,870)       (14,556)

       Net (loss) per share (2)                  (0.001)        (0.006)        (0.004)        (0.052)        (0.063)
</TABLE>

(1)   Includes a write down of mineral properties in Zambia and South Africa in
      the fourth quarter of $9,759

(2)   Represents basic and fully diluted loss per share

The increase in operating costs for the 4th quarter result from an amount of
$76,000 for the expensing of the issue of stock options in the quarter and from
increased activities at Barbrook. The revenue increase is from the increase in
gold production at Barbrook. The significant reduction in carrying value is
explained in Note (1) above which was in part offset by the increase in
exploration activities at the Rooipoort platinum project in South Africa. Gold
production at Barbrook remained below target, due to poor metallurgical
recoveries, despite higher than planned gold feed grades. Metallurgical tests at
Barbrook indicated that more intensive oxidation of the reground flotation
concentrate may increase the overall gold recovery. Further laboratory and pilot
plant test work and potential plant modifications to include this oxidation
technology in the process are planned for the 1st quarter of 2004.

RISKS AND UNCERTAINTIES

      The Company is subject to a number of risk factors due to the nature of
the mining business in which the Company operates. An investment in the
securities involves a high degree of risk. Investors need to carefully consider
the following risk factors, in addition to the other information contained in
this report.

                                       17
<PAGE>

      MINING INDUSTRY COMPETITION

      The mining industry is a highly diverse and competitive international
business. The selection of geographic areas of interest are only limited by the
degree of risk a company is willing to accept by the acquisition of properties
in emerging or developed markets and/or prospecting in explored or virgin
territory. Mining by its nature, is a competitive business in the search for
fresh ground with good exploration potential and the raising of the requisite
capital to move projects forward to production. Globally the mining industry is
prone to cyclical variations in the price for the commodities produced by it, as
dictated by supply and demand factors, speculative factors and industry
controlled marketing cartels. The year 2004 has been a typical example of this
cyclic nature as many precious and base metal prices have increased
significantly in US$ terms. However, these $ increases have not necessarily
translated into local area price increases. Nature provides the ultimate
uncertainty with geological and occasionally climatic surprises. Commensurate
with the acceptance of this risk profile is the potential for high rewards.

      EXPLORATION AND DEVELOPMENT

      The exploration, and development of, and the production from mineral
deposits is potentially subject to a number of political, economic and other
risks including:

      -     cancellation or renegotiation of contracts;

      -     changes in local and foreign laws and regulations;

      -     changes in tax laws;

      -     delays in granting prospecting permissions, mining authorizations
            and work permits for foreign management staff;

      -     environmental controls and permitting;

      -     expropriation or nationalization of property or assets;

      -     foreign exchange controls;

      -     government mandated social expenditures, such as comprehensive
            health care for HIV/AIDS infected employees and families;

      -     import and export regulation, including restrictions on the sale of
            their production in foreign currencies;

      -     industrial relations and the associated stability thereof;

      -     inflation of cost that is not compensated for by a currency
            devaluation;

      -     requirement that a foreign subsidiary or operating unit have a
            domestic joint venture partner, possibly which the foreign entity
            must subsidize;

      -     restrictions on the ability of local operating companies to sell
            their production for foreign currencies, and on the ability of such
            companies to hold these foreign currencies in offshore and/or local
            bank accounts;

      -     restrictions on the ability of a foreign company to have management
            control of exploration and/or development and/or mining operations;

      -     restrictions on the remittance of dividend and interest payments
            offshore;

      -     retroactive tax or royalty claims;

      -     risks of loss due to civil strife, acts of war, guerrilla
            activities, insurrection and terrorism;

      -     royalties and tax increases or claims by governmental entities;

      -     unreliable local infrastructure and services such as power,
            communications and transport links; and

      -     other risks arising out of foreign sovereignty over the areas in
            which Caledonia's operations are conducted.

Such risks could potentially arise in any country in which Caledonia operates,
however the risks are regarded as greater in South Africa and Zambia. In South
Africa, the recently-promulgated Mining Legislation and a number of associated
and as yet undefined economic and social issues may result in an increased
political and economic risk weighting of operating in that country.

Consequently, Caledonia's exploration, development and production activities may
be substantially affected by factors beyond Caledonia's control, any of which
could materially adversely affect Caledonia's financial position or results from
operations. Furthermore, in the event of a dispute arising from such activities,
Caledonia may be subject to exclusive jurisdiction of courts outside North
America or may not be successful in subjecting persons to the jurisdiction of
the courts in North America, which could adversely affect the outcome of a
dispute.

                                       18
<PAGE>

CRITICAL ACCOUNTING POLICIES

      Preparing financial statements requires management to make estimates and
assumptions that affect the reported results. Estimates are based on historical
experience and other assumptions that are believed to be reasonable under the
circumstances. The Company's accounting policies are those that affect the
Consolidated Financial Statements and are summarized under the "Summary of
Critical Accounting Policies". The critical accounting policies include
accounting for foreign currency translation, capitalization of exploration
expenditures and the recognition of impairment of those assets.

      Costs relating to the acquisition, exploration and development of
non-producing resource properties are capitalized until such time as either
economically recoverable reserves are established or the properties are sold or
abandoned. Based on the results at the conclusion of each phase of an
exploration program, properties that are not suitable as prospects are
re-evaluated to determine if future exploration is warranted and that carrying
values are appropriate The decision to capitalize exploration expenditures and
the timing of the recognition that capitalized exploration is unlikely to have
future economic benefits can materially affect the reported earnings of the
Company.

      A significant portion of the Company's assets and liabilities are
denominated in South African Rand. Fluctuations in the value of the Rand
relative to the Canadian dollar could have a significant impact on results of
operations. Exchange gains or losses arising from the translation of South
African assets and liabilities are reflected through the income statement in the
period in which they occur.

CHANGES IN CANADIAN ACCOUNTING RECOMMENDATIONS

2001

      Effective January 1, 2001, the Company adopted a new accounting standard
of the Canadian Institute of Chartered Accounts ("CICA") in respect of
unrealized foreign exchange gains and losses on long-term monetary items. This
standard significantly changed the accounting for such gains and losses which
were previously deferred and amortized over their fixed and ascertainable life
but are now recognized in the statement of operations as incurred.

2002

      During 2002, the Company chose to present the impact of stock-based
compensation as pro-forma information in the notes of the financial statements.

2003

      Effective January 1, 2003, the Company adopted the new recommendations of
the CICA in Handbook Section 3870, "Stock-based compensation and other
stock-based payments". Section 3870 is applied prospectively to all stock-based
payments granted on or after January 1, 2003. The Company has chosen to reflect
the stock-based compensation as an expense in the statement of operations from
that date.

      Effective January 1, 2003, the Company adopted a new accounting standard
of the CICA in respect of the impairment or disposal of long-lived assets.
During the year, the Company reviewed the carrying value of numerous long-lived
assets under the new standard resulting in the recording of valuation
adjustments as disclosed in Note 3 of the financial statements.

2004

      The Company will be adopting new accounting guidelines issued by the CICA
in respect of hedging relationships for Canadian reporting purposes. The new
guidelines will be applied at such time as Caledonia undertakes any hedging
contracts. The Company does not anticipate that the new guidelines will have a
material effect on the results of operations and financial condition.

      Effective January 1, 2004, the Company will adopt CICA 1100, Generally
Accepted Accounting Principles. CICA 1100 describes what constitutes Canadian
GAAP and its sources. The Company is currently evaluating what impact the
adoption of this new standard will have on the financial statements.

                                       19
<PAGE>

      Effective January 1, 2004, the Company will be adopting the new CICA rules
concerning the accounting for asset retirement obligations. The adoption of this
rule will bring Canadian and US GAAP into alignment.

SUPPLEMENT TO THE FINANCIAL STATEMENTS

      As at April 30, 2004 the following equity instruments were outstanding:

      301,111,786 common shares.

      11,898,700 common share purchase options at an average price of $0.26
      maturing at various dates until November 4, 2013.

      12,000,000 common share purchase warrants at a price of $0.35 maturing at
      various dates until February 6, 2005.

      22,694,091 common share purchase warrants exercisable at a price of $0.55
      per share until October 26, 2005.

      4,538,818 financing agents' common share purchase warrants exercisable at
      a price of $0.55 until October 26, 2005.

      3,449,114 share purchase warrants were exercised during the period January
      1 to April 30, 2004.

FORWARD LOOKING STATEMENTS

      This annual report contains certain forward-looking statements relating
but not limited to the Company's expectations, intentions, plans and beliefs.
Forward-looking information can often be identified by forward-looking words
such as "anticipate", "believe", "expect", "goal", "plan", "intend", "estimate",
"could", "should", "may" and "will" or similar words suggesting future outcomes,
or other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. Forward-looking information may
include reserve and resource estimates, estimates of future production, unit
costs, costs of capital projects and timing of commencement of operations, and
is based on current expectations that involve a number of business risks and
uncertainties. Factors that could cause actual results to differ materially from
any forward-looking statement include, but are not limited to, failure to
establish estimated resources and reserves, the grade and recovery of ore which
is mined varying from estimates, capital and operating costs varying
significantly from estimates, delays in obtaining or failures to obtain required
governmental, environmental or other project approvals, inflation, changes in
exchange rates, fluctuations in commodity prices, delays in the development of
projects and other factors. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from expected results.

      Potential shareholders and prospective investors should be aware that
these statements are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from those
suggested by the forward-looking statements. Shareholders are cautioned not to
place undue reliance on forward-looking information. By its nature,
forward-looking information involves numerous assumptions, inherent risks and
uncertainties, both general and specific, that contribute to the possibility
that the predictions, forecasts, projections and various future events will not
occur. Caledonia undertakes no obligation to update publicly or otherwise revise
any forward-looking information whether as a result of new information, future
events or other such factors which affect this information, except as required
by law.

OTHER INFORMATION

      Additional information relating to the Company may be obtained or viewed
from the System for Electronic Data Analysis and Retrieval at www.sedar.com or
the Company website at www.caledoniamining.com.

                                       20
<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION

      TO THE SHAREHOLDERS OF CALEDONIA MINING CORPORATION:

      Management has prepared the information and representations in this annual
report. The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles applied in Canada and, where
appropriate, reflect management's best estimates and judgement. The financial
information presented throughout this report is consistent with the data
presented in the consolidated financial statements.

      Caledonia maintains adequate systems of internal accounting and
administrative controls, consistent with reasonable cost. Such systems are
designed to provide reasonable assurance that relevant and reliable financial
information is produced. Our independent auditors have the responsibility of
auditing the consolidated financial statements and expressing an opinion on
them.

      The Board of Directors, through its Audit Committee, is responsible for
ensuring that management fulfils its responsibilities for financial reporting
and internal control. The Audit Committee is composed of three directors. This
Committee meets periodically with management and the external auditors to review
accounting, auditing, internal control and financial reporting matters.

      The consolidated financial statements have been audited on behalf of the
shareholders by the Company's independent auditors, BDO Dunwoody LLP, in
accordance with generally accepted auditing standards. The auditors' report
outlines the scope of their examination and their opinion on the consolidated
financial statements.

      (signed}                                                          (signed)
      S. E. Hayden                                                    S. W. Poad
      Chairman of the Board, President and                Vice-President Finance
      Chief Executive Officer                                 and Administration

                                       21
<PAGE>

                                                                AUDITORS' REPORT

      TO THE SHAREHOLDERS OF
      CALEDONIA MINING CORPORATION

      We have audited the consolidated balance sheets of Caledonia Mining
Corporation as at December 31, 2003 and 2002 and the consolidated statements of
deficit, operations and cash flow for each of the years in the three year period
ended December 31, 2003. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

      We conducted our audits in accordance with Canadian generally accepted
auditing standards and United States generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financials statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.

      In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
2003 and 2002 and the results of its operations and its cash flow for each of
the years in the three year period ended December 31, 2003 in accordance with
Canadian generally accepted accounting principles.

      /s/ BDO Dunwoody LLP

      Chartered Accountants

      Toronto, Ontario
      April 8, 2004 (except for Note 11, which is as of April 30, 2004)

        COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA - U.S. REPORTING
                                    CONFLICT

      In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph) when the
financial statements are affected by conditions and events that cast substantial
doubt on the Company's ability to continue as a going concern, such as those
described in the summary of significant accounting policies. The United States
reporting standards also require the addition of an explanatory paragraph when
changes in an accounting policy, such as those involving stock based
compensation described in the summary of significant accounting policies, has a
material effect on the consolidated financial statements. Our report to the
shareholders dated April 8, 2004 (except for Note 11, which is as of April 30,
2004) is expressed in accordance with Canadian reporting standards which do not
require a reference to such events and conditions in the auditors' report when
these are adequately disclosed in the financial statements.

      /s/ BDO Dunwoody LLP

      Chartered Accountants
      Toronto, Ontario
      April 8, 2004 (except for Note 11, which is as of April 30, 2004)

                                       22
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                                     CONSOLIDATED BALANCE SHEETS
                                              (IN THOUSANDS OF CANADIAN DOLLARS)

<TABLE>
<CAPTION>
                 DECEMBER 31                         2003            2002
                 -----------                     ------------    ------------
<S>                                              <C>             <C>
ASSETS

Current
    Cash and short term deposits                 $      4,179    $      1,864
    Accounts receivable                                   178             113
    Inventories                                            86               -
    Prepaid expenses                                      130             117
                                                 ------------    ------------
                                                        4,573           2,094
INVESTMENT AT COST (Note 1)                                79              79
CAPITAL ASSETS (Note 2)                                 7,471           7,715
MINERAL PROPERTIES (Note 3)                             7,212          14,879
                                                 ------------    ------------
                                                 $     19,335    $     24,767
                                                 ------------    ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
    Accounts payable                             $        790    $      1,267
    Loan payable                                            -              69
                                                 ------------    ------------
                                                          790           1,336
PROVISION FOR SITE RESTORATION                            627             506
                                                 ------------    ------------
                                                        1,417           1,842
NON-CONTROLLING INTEREST                                  736             774
                                                 ------------    ------------
                                                        2,153           2,616
                                                 ------------    ------------

SHAREHOLDERS' EQUITY
    Share capital (Note 4 (b))                        159,151         149,623
    Contributed surplus (Note 4 (c))                      285             209
    Compensation warrants (Note 4 (d))                    160             177
    Deficit                                          (142,414)       (127,858)
                                                 ------------    ------------
                                                       17,182          22,151
                                                 ------------    ------------
                                                 $     19,335    $     24,767
                                                 ------------    ------------
</TABLE>

On behalf of the Board:

 /s/ (signed)                              Director
- -------------------
F.C. Harvey

 /s/ (signed)                              Director
- -------------------
J. Johnstone

  The accompanying summary of significant accounting policies and notes are an
                  integral part of these financial statements.

                                       23
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                              CONSOLIDATED STATEMENTS OF DEFICIT
                                              (IN THOUSANDS OF CANADIAN DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31                 2003            2002            2001
- -------------------------------             ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
DEFICIT, beginning of year                  ($   127,858)   ($   123,527)   ($   122,332)
NET INCOME (LOSS) FOR THE YEAR                   (14,556)         (4,331)         (1,195)
                                            ------------    ------------    ------------
DEFICIT, end of year                        ($   142,414)   ($   127,858)   ($   123,527)
                                            ============    ============    ============
</TABLE>

                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
      FOR THE YEARS ENDED DECEMBER 31                                    2003            2002            2001
      -------------------------------                                ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>
REVENUE AND OPERATING COSTS
    Revenue from sales                                               $        646    $         27    $        124
    Operating costs                                                         3,714             130             250
                                                                     ------------    ------------    ------------
GROSS PROFIT (LOSS)                                                        (3,068)           (103)           (126)
                                                                     ------------    ------------    ------------

COSTS AND EXPENSES
    General and administrative                                              1,276           1,540           1,030
    Interest                                                                  127              29              84
    Amortization                                                              431               9              16
    Other expense (income) (Note 7)                                           (67)             73             (61)
    Write down of mineral properties (Note 3)                               9,759           2,590               -
                                                                     ------------    ------------    ------------
                                                                           11,526           4,241           1,069
                                                                     ------------    ------------    ------------

(LOSS) BEFORE NON-CONTROLLING INTEREST                                    (14,594)         (4,344)         (1,195)
    Non-controlling interest                                                  (38)            (13)              -
                                                                     ------------    ------------    ------------
NET (LOSS) FOR THE YEAR                                              ($    14,556)   ($     4,331)   ($     1,195)
                                                                     ============    ============    ============

NET (LOSS) PER SHARE (NOTE 6)

    Basic and fully diluted                                          ($     0.063)   ($     0.023)   ($     0.008)
                                                                     ============    ============    ============
</TABLE>

  The accompanying summary of significant accounting policies and notes are an
                  integral part of these financial statements.

                                       24
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (IN THOUSANDS OF CANADIAN DOLLARS)

<TABLE>
<CAPTION>
     FOR THE YEARS ENDED DECEMBER 31                           2003            2002            2001
     -------------------------------                       ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>
CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
  Net (loss) for the year                                  ($    14,556)   ($     4,331)   ($     1,195)

  Adjustments to reconcile net cash from
    operations (Note 8)                                          10,332           2,795              16

   Changes in non-cash working capital
      balances ( Note 8)                                           (641)           (473)             58

                                                           ------------    ------------    ------------
                                                                 (4,865)         (2,009)         (1,121)
                                                           ------------    ------------    ------------

INVESTING ACTIVITIES
  Purchase of investment                                              -             (79)              -
  Proceeds from sale of capital assets                                -               -              81
  Expenditures on capital assets                                   (187)           (300)              -
  Expenditures on mineral properties                             (2,092)           (624)            (23)
                                                           ------------    ------------    ------------
                                                                 (2,279)         (1,003)             58
                                                           ------------    ------------    ------------

FINANCING ACTIVITIES
  Loan payable                                                      (69)           (388)            118
  Issue of share capital net of issue costs                       9,528           5,174             960
                                                           ------------    ------------    ------------
                                                                  9,459           4,786           1,078
                                                           ------------    ------------    ------------

INCREASE IN CASH FOR THE YEAR                                     2,315           1,774              15
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                      1,864              90              75
                                                           ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                     $      4,179    $      1,864    $         90
                                                           ------------    ------------    ------------
</TABLE>

  The accompanying summary of significant accounting policies and notes are an
                  integral part of these financial statements.

                                       25
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                                DECEMBER 31, 2003, 2002 AND 2001

NATURE OF BUSINESS

The Company is engaged in the acquisition, exploration and development of
mineral properties for the exploitation of base and precious metals. The ability
of the Company to recover the amounts shown for its capital assets and mineral
properties is dependent upon the existence of economically recoverable reserves;
the ability of the Company to obtain the necessary financing to complete
exploration and development; and future profitable production or proceeds from
the disposition of such capital assets and mineral properties.

BASIS OF PRESENTATION

These financial statements have been prepared on the basis of a going concern,
which contemplates that the Company will be able to realize assets and discharge
liabilities in the normal course of business. The Company's ability to continue
as a going concern is dependent upon attaining profitable operations and
obtaining sufficient financing to meet its liabilities, its obligations with
respect to operating expenditures and expenditures required on its mineral
properties.

MEASUREMENT UNCERTAINTIES

Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. The more significant areas
requiring estimates relate to mineral resources, future cash flows associated
with capital assets and mineral properties. Management's calculation of reserves
and resources and cash flows are based upon engineering and geological estimates
and financial estimates including gold prices and operating costs. The amount
ultimately recovered could be materially different than the estimated values.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
together with all its subsidiaries.

The Company's principal consolidated subsidiaries are Barbrook Mines Limited
(100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned)
("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited,
Caledonia Nama Limited and Caledonia Western Limited (all 100% owned)
(collectively known as "Caledonia Zambia").

CASH AND CASH EQUIVALENTS

Cash and cash equivalents represent cash on hand in operating bank accounts and
money market funds.

INVENTORIES

Inventories are stated at the lower of cost, which is determined on the
first-in, first-out basis, and net realizable value.

CAPITAL ASSETS

PRODUCING ASSETS

Producing assets are recorded at cost less grants, accumulated amortization and
write-downs. Producing assets are amortized using the straight line method based
on the estimated useful lives of the assets. The estimated useful life of the
producing assets range from 3 to 5 years. Repairs and maintenance expenditures
are charged to operations; major improvements and replacements which extend the
useful life of an asset are capitalized and amortized over the remaining useful
life of that asset. Barbrook is undergoing efforts to commence commercial
operations and has been

                                       26
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
                                                DECEMBER 31, 2003, 2002 AND 2001

presented as a producing asset in these financial statements. As of December 31,
2002 and 2001, the Company did not have any producing capital assets.

NON-PRODUCING ASSETS

Non-producing assets are recorded at cost less write downs. During non-producing
periods, no amortization is recorded.

At the time of commercial production, the assets are reclassified as producing
and amortized in the manner described above.

MINERAL PROPERTIES

PRODUCING PROPERTIES

When and if properties are placed in production, the applicable capitalized
costs are amortized using the unit-of-production method on the ratio of tonnes
of ore mined or processed to the estimated proven and probable mineral reserves
as defined by the Canadian Institute of Mining, Metallurgy and Petroleum.
Barbrook is undergoing efforts to commence commercial operations and has been
presented as a producing asset in these financial statements. As of December 31,
2002 and 2001, the Company did not have any producing mineral properties.

NON-PRODUCING PROPERTIES

Costs relating to the acquisition, exploration and development of non-producing
resource properties which are held by the Company or through its participation
in joint ventures are capitalized until such time as either economically
recoverable reserves are established, or the properties are sold or abandoned.

A decision to abandon, reduce or expand activity on a specific project is based
upon many factors including general and specific assessments of mineral
reserves, anticipated future mineral prices, anticipated costs of developing and
operating a producing mine, the expiration date of mineral property leases, and
the general likelihood that the Company will continue exploration on the
project. However, based on the results at the conclusion of each phase of an
exploration program, properties that are not suitable as prospects are
re-evaluated to determine if future exploration is warranted and that carrying
values are appropriate.

The ultimate recovery of these costs depends on the discovery and development of
economic ore reserves or the sale of the properties or the mineral rights. The
amounts shown for non-producing resource properties do not necessarily reflect
present or future values.

JOINT VENTURES

Certain of the Company's exploration activities are conducted jointly with
others. These financial statements reflect only the Company's expenditures on
these properties.

FOREIGN CURRENCY TRANSLATION

Balances of the Company denominated in foreign currencies and the accounts of
its foreign subsidiaries are translated into Canadian dollars as follows:

      (i)   monetary assets and liabilities at period end rates;

      (ii)  all other assets and liabilities at historical rates; and

      (iii) revenue and expense transactions at the average rate of exchange
            prevailing during the period.

Exchange gains or losses arising on these translations are reflected in income
in the year incurred. Gains and losses arising on translation of long term
foreign currency denominated liabilities at each year end are reflected in
income.

                                       27
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
                                                DECEMBER 31, 2003, 2002 AND 2001

REVENUE RECOGNITION

Revenue from the sale of precious metals is recognized when delivery occurs.

PROVISION FOR SITE RESTORATION

Site restoration costs are accrued when the need for such expenditure is
established, and then written off as part of the cost of production. It is
always possible that the Company's estimate of its ultimate site restoration
liability could change in the near term due to possible changes in laws and
regulations in applicable jurisdictions and changes in cost estimates.

INCOME TAXES

The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, future tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Future tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply when the asset is
realized or the liability settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the period that
substantive enactment or enactment occurs.

CHANGE IN ACCOUNTING POLICIES

(a)   Stock Based Compensation

The Company has adopted the new accounting standard of the Canadian Institute of
Chartered Accountants ("CICA") for the accounting of stock-based compensation
expense effective January 1, 2002 on a prospective basis. Under this standard,
compensation expense on stock options granted to non-employees is recorded as an
expense in the period the options are vested using the fair value method
estimated by using the Black-Scholes Option Pricing Model.

During 2002, the Company reported compensation expense associated with stock
options granted to directors, officers and employees as pro-forma information in
Note 4 (c). Effective January 1, 2003, the Company commenced recording
compensation expense for stock options granted to directors, officers and
employees in the Consolidated Statements of Operations.

Any consideration paid by directors, officers, employees and non-employees on
exercise of stock options or purchases of shares is credited to share capital.

(b)   Impairment of Long-lived Assets

Effective January 1, 2003, the Company adopted the new accounting standard of
the CICA in respect of the impairment or disposal of long-lived assets. The new
standard requires that a fair value determination be made for long-lived assets.
During the year, the Company reviewed the carrying value of numerous long-lived
assets under the new standard resulting in the recording of valuation
adjustments as disclosed in Note 3.

                                       28
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

1.    INVESTMENT AT COST

      On May 9, 2002 the Company participated in a private placement of Motapa
      Diamonds Inc. in an amount of $50 US ($79 Canadian). Motapa Diamonds Inc.
      is the Company's joint venture partner on the Mulonga Plain diamond
      exploration project in Zambia.

2.    CAPITAL ASSETS

<TABLE>
<CAPTION>
                                        2003
                          ----------------------------------
                                    Accumulated      Net
                          Cost (1)  Amortization  Book Value
                          --------  ------------  ----------
<S>                       <C>       <C>           <C>
Land - plant sites        $  1,833    $      -     $  1,833
Plant and equipment
    - producing (2)          4,465         421        4,044
    - non-producing (3)      1,435           -        1,435
Office furniture               771         749           22
Vehicles                       395         258          137
                          --------    --------     --------
                          $  8,899    $  1,428     $  7,471
                          ========    ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                        2002
                          ----------------------------------
                                    Accumulated      Net
                          Cost (1)  Amortization  Book Value
                          --------  ------------  ----------
<S>                       <C>       <C>           <C>
Land - plant sites        $  1,833    $      -     $  1,833
Plant and equipment
    - non-producing (3)      6,521         664        5,857
Office furniture               750         739           11
Vehicles                       357         343           14
                          --------    --------     --------
                          $  9,461    $  1,746     $  7,715
                          ========    ========     ========
</TABLE>

(1)   Cost is comprised of the original cost of the asset, less previous write
      downs, removal of cost for disposals and government grants. In addition,
      cost and accumulated amortisation has been adjusted for the retirement of
      various pieces of plant and equipment.

(2)   The producing plant and equipment in 2003 relates to the Barbrook.

(3)   The net book value of the Barbrook plant and equipment at December 31,
      2002 is $4,460 and Eersteling is $1,397. The net book value of
      non-producing plant and equipment at December 31, 2003 represents
      Eersteling.

The recoverability of the carrying amount of the Barbrook capital assets is
dependent upon the availability of sufficient funding, the ability of the
Company to successfully bring the property into commercial production, the price
of gold, the exchange rate of the South African rand relative to the US dollar
and the undertaking of a profitable mining operation. The recoverability of the
carrying amount of the Eersteling capital assets is dependent upon the
availability of sufficient funding to bring the property into commercial
production or the value realized from the possible disposal of the assets. As a
result of these uncertainties, the actual amount recovered may vary
significantly from the carrying amount.

                                       29
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

3.    MINERAL PROPERTIES

<TABLE>
<CAPTION>
                                                               2003
                                                ----------------------------------
                                                           Accumulated     Net
                                                Cost (1)  Amortization  Book Value
                                                --------  ------------  ----------
<S>                                             <C>       <C>           <C>
Producing:
       Barbrook, South Africa - gold property   $  4,692     $  17       $  4,675
Non-producing - care and maintenance:
  Eersteling, South Africa - gold and
  platinum property                                  810        67            743
Non-producing - exploration:
        Nunavut, Canada                              750         -            750
        Zambia (2)                                 1,044         -          1,044
                                                --------     -----       --------
                                                $  7,296     $  84       $  7,212
                                                ========     =====       ========
</TABLE>

<TABLE>
<CAPTION>
                                                               2002
                                                ----------------------------------
                                                           Accumulated     Net
                                                Cost (1)  Amortization  Book Value
                                                --------  ------------  ----------
<S>                                             <C>       <C>           <C>
Non-producing - care and maintenance:
    Barbrook, South Africa - gold property      $  3,278     $  17       $  3,261
    Eersteling, South Africa - gold property         357        67            290
Non-producing - exploration:

    Nunavut, Canada                                  750         -            750
    Zambia                                        10,578         -         10,578
    Other                                            488       488              -
                                                --------     -----       --------
                                                $ 15,451     $ 572       $ 14,879
                                                ========     =====       ========
</TABLE>

(1)   Cost is comprised of the original cost of the asset, less previous write
      downs, removal of cost for disposals and government grants.

(2)   The carrying value of the Zambian properties have been written down by
      $9,534 during the fourth quarter of 2003. The remaining $225 of the $9,759
      total write down relates to property in South Africa.

The Company has entered into joint venture agreements with third parties on one
Canadian property and one Zambian property valued at $750 and $1,044
respectively. The third parties may earn varying percentage interests in these
properties by carrying out exploration work on the properties.

The recoverability of the carrying amount of the Canadian, South African and
Zambian mineral properties is dependent upon the availability of sufficient
funding to bring the properties into commercial production, the price of gold,
the exchange rate of the local currency relative to the US dollar and the
undertaking of a profitable mining operation. As a result of these
uncertainties, the actual amount recovered may vary significantly from the
carrying amount.

                                       30
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

4.    SHARE CAPITAL

      (a)   Authorized
            Unlimited number of common shares.
            Unlimited number of preference shares.

      (b)   Issued

<TABLE>
<CAPTION>
                                                          Number of
                                                            Shares      Amount
                                                         -----------   --------
<S>                                                      <C>           <C>
Common shares
  Balance, December 31, 2001                             165,202,115   $143,986
  Issued pursuant to a private placement - notes (1)&(3)  27,409,655      4,023
  Warrants exercised                                      18,018,000      1,474
  Shares issued for debt - note (2)                        1,165,500        140
                                                         -----------   --------
  Balance, December 31, 2002                             211,795,270    149,623
  Issued pursuant to private placements - notes (4)&(5)   25,280,000      5,674
  Warrants exercised                                      15,093,252      3,814
  Shares issued from exercise of stock options               106,475         40
                                                         -----------   --------
  Balance, December 31, 2003                             252,274,997   $159,151
                                                         ===========   ========
</TABLE>

      (1)   On April 12, 2002, the Company completed a private placement for
            proceeds of $3,000 comprised of gross cash consideration of $2,500
            and the retirement of debt of $500. The issue price was $0.145 per
            unit, each unit being comprised of one common share and one half
            common share purchase warrant exercisable at $0.195 per whole common
            share purchase warrant for a period of two years from the issue
            date. A total of 20,689,655 shares were issued pursuant to the
            private placement of which 3,448,029 were issued for the retirement
            of debt. Share issue costs of $328 for the private placement have
            been charged to share capital. In addition, whole broker warrants in
            the amount of 1,724,163 were issued exercisable at $0.195 per
            warrant. A value of $0.06 per warrant was assigned to the broker
            compensation warrants for a total consideration of $103.

      (2)   A loan convertible into common shares of the Company was redeemed
            and converted during the third quarter of 2002 into 1,165,500 common
            shares valued at $140.

      (3)   During December 2002, the Company commenced a private placement to
            raise $3,000. As at December 31, 2002 the first closing raised gross
            proceeds of $1,680 resulting in the issuance of 6,720,000 common
            shares. The balance of the offering was received on January 6, 2003
            upon completion of the second closing (see (4) below). A total of 12
            million units priced at $0.25 per unit were subscribed for both
            closings. Each unit consisted of one common share and one half
            common share purchase warrant. Each full warrant entitled the holder
            to purchase one common share at a price of $0.33 for a period of one
            year from the date of issue. Share issue costs for the first closing
            of $152 have been charged to share capital in 2002. A total of
            672,000 broker warrants were issued upon behalf of the first closing
            under the same terms and conditions as noted above. A value of $0.11
            per warrant was assigned to broker compensation warrants for a total
            consideration of $74.

      (4)   On January 6, 2003, the Company concluded the private placement
            described above with the second closing for gross proceeds of $1,320
            resulting in the issuance of 5,280,000 common shares. A further
            528,000 broker warrants were issued under the same terms and
            conditions as noted above. A value of $0.11 per warrant was assigned
            to the broker compensation warrants for total consideration of $58.
            Share issue costs associated with the second closing have been
            charged to share capital in 2003 in an amount of $119.

                                       31
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

4.    SHARE CAPITAL (continued)

      (5)   During the third quarter of 2003, the Company concluded a private
            placement financing for $5,000 gross proceeds comprised of
            20,000,000 units. Each unit is comprised of one common share and one
            half common share purchase warrant issued at $0.25 per unit. In
            addition, a total of 2,000,000 whole broker warrrants were issued
            with each warrant exchangeable for one whole common share. Whole
            warrants are exchangeable for shares at $0.35 per share for a period
            of eighteen months from the date of closing. The 2,000,000 broker
            compensation warrants issued upon closing were assigned a value of
            $0.08 per warrant for total considerations of $160. Share issue
            costs of $544 have been charged to share capital.

      (c)       Stock Option Plans and Stock-Based Compensation

       The Company has established incentive stock option plans (the "Plans")
       for employees, officers, directors, consultants and other service
       providers. Under the Plans, as at December 31, 2003, the Company has the
       following options exercisable and outstanding:

<TABLE>
<CAPTION>
Number of Options   Exercise Price       Expiry Date
- -----------------   --------------    ----------------
<S>                 <C>               <C>
     410,700            $ 0.750       April 28, 2005
     813,000            $ 0.330       February 9, 2008
   9,950,000            $ 0.235       April 24, 2012
     225,000            $ 0.345       June 2, 2012
     500,000            $ 0.280       November 4, 2013
</TABLE>

      The continuity of the options granted, exercised and cancelled under the
      Plans during 2003 and 2002 are as follows and all of the options
      outstanding are exercisable.

<TABLE>
<CAPTION>
                                               Number of     Weighted Average
                                                Options       Exercise Price
                                               ----------    ----------------
<S>                                            <C>           <C>
Options outstanding as at December 31, 2001     2,565,800         $ 0.48
Granted                                        10,225,000         $ 0.24
Cancelled or expired                             (110,000)       ($ 0.33)
                                               ----------
Options outstanding as at December 31, 2002    12,680,800         $ 0.29
Granted                                           500,000         $ 0.28
Exercised                                        (106,475)       ($ 0.38)
Cancelled or expired                           (1,175,625)       ($ 0.50)
                                               ----------
Options outstanding as at December 31, 2003    11,898,700         $ 0.27
                                               ==========
</TABLE>

      The options to purchase common shares noted above, have been granted to
      directors, officers, employees and service providers at exercise prices
      determined by reference to the market value of the common shares on the
      date of grant. The vesting of options is made at the discretion of the
      board of directors at the time the options are granted. Of the options
      outstanding at December 31, 2003, all are exercisable except for 300,000
      options that are exercisable only if certain South African based
      profitability targets are achieved. As of December 31, 2003 there are
      2,180,625 stock options available to grant.

      Effective January 1, 2003 the Company commenced recording compensation
      expense in the Consolidated Statements of Operations for stock options
      granted to directors, officers and employees using the fair value method.
      During 2003, stock option expense of $76 for the grant of 500,000 options
      was charged to expense and credited to contributed surplus. Of the stock
      options granted to directors in 2002, an amount of 1,000,000 options were
      granted as compensation for legal services. The fair value assigned to the
      options granted for legal

                                       32
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

4.    SHARE CAPITAL (continued)

      services amounted to $209 and the amount was recorded as an expense and
      credited to contributed surplus. The fair value of the remaining 9,225,000
      stock options granted in 2002 were valued at $1,916 and disclosed as
      pro-forma information as noted below.

      For the year ended December 31, 2001, no stock options were granted to
      directors, officers and employees.

      The fair value of compensation expenses noted above was estimated using
      the Black-Scholes Option Pricing Model with the following assumptions as
      at December 31, 2003 and 2002.

<TABLE>
<S>                                  <C>
Risk-free interest rate              3.63%
Expected dividend yield              nil
Expected stock price volatility        48%
Expected option life in years           3
</TABLE>

      The pro-forma effect on net loss and loss per share for the period ended
      December 31, 2002 of the actual results had the Company accounted for the
      9,225,000 stock options granted to directors, officers and employees using
      the fair value method is as follows:

<TABLE>
<S>                           <C>
Net loss for the period
Reported                      $ 4,331
Compensation expense          $ 1,916
                              -------
Pro-forma                     $ 6,247
                              =======

Basic loss per share
Reported                      $ 0.023
                              =======
Pro-forma                     $ 0.033
                              =======
</TABLE>

      Option pricing models require the input of highly subjective assumptions
      including the expected price volatility. Changes in the subjective input
      assumptions can materially affect the fair value estimate, and therefore
      the existing models do not necessarily provide a reliable single measure
      of the fair value of the Company's stock options.

      (d)   Warrants

      The Company has issued the following common share purchase warrants
      pursuant to private placements which are outstanding as of December 31,
      2003:

<TABLE>
<CAPTION>
  Number of                            Exercise
   Warrants     Shares for Warrants      Price       Expiry Date
- -------------   -------------------    --------    ----------------
<S>             <C>                    <C>         <C>
(1) 2,000,000         1 for 1           $ 0.350    February 6, 2005
      654,000         1 for 1           $ 0.330    January 6, 2004
    2,795,114         1 for 1           $ 0.195    April 12, 2004
   10,000,000         1 for 1           $ 0.350    February 6, 2005
</TABLE>

      (1)   These warrants represent broker compensation warrants issued during
            the year at an assigned value of $160.

                                       33
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

4.    SHARE CAPITAL (continued)

      The continuity of warrants issued and outstanding is as follows:

<TABLE>
<CAPTION>
                                           Number of Warrants
                                           ------------------
<S>                                        <C>
Outstanding December 31, 2001                  17,000,000
Issued pursuant to private placements          13,704,828
Issued to Broker                                2,396,163
Issued for conversion of debt                     291,375
Exercised                                     (18,018,000)
                                              -----------
Outstanding December 31, 2002                  15,374,366
Issued pursuant to private placements          12,640,000
Issued to Broker                                2,528,000
Exercised                                     (15,093,252)
                                              -----------
Outstanding December 31, 2003                  15,449,114
                                              ===========
</TABLE>

5.    INCOME TAXES

      The Company's effective tax rate, which differs from the combined federal
      and provincial statutory income tax rates, may be reconciled as follows:

<TABLE>
<CAPTION>
                                                     2003                  2002                 2001
                                              -----------------     -----------------     ---------------
                                                 $          %          $          %         $         %
                                              ------      -----     ------      -----     ----       ----
<S>                                           <C>         <C>       <C>         <C>       <C>        <C>
Basic rate applied to pre-tax income (loss)   (5,327)     (36.6)    (1,672)     (38.6)    (509)      42.6
Losses and other benefits not recognized       5,327       36.6      1,672       38.6      509       42.6
                                              ------      -----     ------      -----     ----       ----
                                                   -          -          -          -        -          -
                                              ======      =====     ======      =====     ====       ====
</TABLE>

      The Company and its subsidiaries have non-capital losses of approximately
      $18,886 which may be carried forward to reduce future taxable income. The
      right to claim non-capital losses of $1,345, $3,611, $142, $628, $10,191
      and $2,969 expires in 2010, 2009, 2008, 2007, 2005 and 2004 respectively.
      The Company also has approximately $70,713 in capital losses which can be
      applied to reduce future capital gains. The right to claim these capital
      losses is carried forward indefinitely.

      The Company also has the following expenses which are available to be
      applied against future income for income tax purposes:

<TABLE>
<S>                                                    <C>
Canadian exploration and development expenses          $7,560
                                                       ======
Foreign exploration and development expenses           $1,812
                                                       ======
</TABLE>

      The benefit of the above tax assets have not been recognized in the
      accounts for financial statement purposes and have been reduced by a
      valuation adjustment.

                                       34
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

6.    NET (LOSS) PER SHARE

      The net (loss) per share figures have been calculated using the weighted
      average number of common shares outstanding during the respective fiscal
      years which amounted to 230,640,700 (2002 - 187,710,451; 2001 -
      155,285,448). Under the treasury method of calculating fully diluted
      income per share, exercise of the outstanding stock options and warrants
      would be anti-dilutive in 2003, 2002 and 2001.

7.    OTHER EXPENSE (INCOME)

      Other expense (income) is comprised of the following:

<TABLE>
<CAPTION>
                               2003    2002    2001
                               ----    ----    ----
<S>                           <C>     <C>     <C>
Investment income             ($ 51)  ($  7)   $ (2)
Oil and gas net income            -      (7)    (27)
Foreign exchange (gain) loss    (16)     87     (32)
                              -----   -----   -----
                              ($ 67)   $ 73   ($ 61)
                              =====   =====   =====
</TABLE>

8.    STATEMENT OF CASH FLOW

      Items not involving cash are as follows:

<TABLE>
<CAPTION>
                                     2003       2002      2001
                                   --------    -------    ----
<S>                                <C>         <C>        <C>
Amortization                       $    431    $     9    $ 16
Provision for site restoration          121          -       -
Write down of mineral properties      9,759      2,590       -
Non-controlling interest                (38)       (13)      -
Option grant expensed                    76        209       -
Other                                   (17)         -       -
                                   --------    -------    ----
                                   $ 10,332    $ 2,795    $ 16
                                   ========    =======    ====
</TABLE>

      The net changes in non-cash working capital balances for continuing
      operations are as follows:

<TABLE>
<CAPTION>
                      2003     2002     2001
                      -----    -----    -----
<S>                   <C>      <C>      <C>
Accounts payable      ($477)   ($337)   $  27
Accounts receivable     (65)     (24)      29
Inventories             (86)       -        -
Prepaid expenses        (13)    (112)       2
                      -----    -----    -----
                      ($641)   ($473)   $  58
                      =====    =====    =====
</TABLE>

      Additional cash flow information:

      In 2002, the Company issued 4,613,529 shares to settle loans payable of
      $640.

                                       35
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

9.    FINANCIAL INSTRUMENTS

      Unless otherwise noted, it is the opinion of management that the Company
      is not exposed to significant interest rate or credit risks arising from
      its financial instruments. A significant portion of the Company's assets
      and liabilities are denominated in South African rand. Fluctuations in the
      value of the rand relative to the Canadian dollar could have a significant
      impact on the results of operations. The fair values of these financial
      instruments approximate their carrying values, unless otherwise noted.

10.   RELATED PARTY TRANSACTIONS

      The Company had the following related party transactions:

<TABLE>
<CAPTION>
                                                              2003   2002   2001
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Management and administrative services paid or accrued to a
company which employs the Company's Chairman                  $180   $180   $180
                                                              ----   ----   ----
Rent paid to a company owned by members of the
Chairman's family                                             $ 78   $ 63   $ 57
                                                              ----   ----   ----
</TABLE>

      The Company has the following related party balances:

<TABLE>
<CAPTION>
                                                              2003   2002   2001
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Included in accounts payable
  - owing to a company that employs the Company's Chairman    $ 55   $296   $271
  - owing to directors/officers for unpaid salaries           $112   $556   $588
</TABLE>

11.   SUBSEQUENT EVENT

      During March 2004, the Company began efforts to raise up to $20,130 in a
      private placement by the issuance of up to 61,000,000 units consisting of
      one common share and one-half common share purchase warrant. Each unit is
      priced at $0.33 per unit and the common share purchase warrants are
      exercisable for one common share at $0.55 per whole warrant for a period
      of eighteen months from the date of issuance. As of April 30, 2004 a total
      of 45,388,175 units have been closed for gross proceeds of $14,978.

      The private placement agents are paid a commission of 9% of the gross
      proceeds raised and whole common share purchase warrants equal to 10% of
      the total units sold. The agent broker warrants are exercisable for one
      common share at $0.55 per warrant for a period of eighteen months from the
      date of issuance.

                                       36
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

12.   SEGMENTED FINANCIAL INFORMATION

      The Company has been engaged directly or through subsidiaries in the
      production of and the exploration for precious metals in various
      geographical locations.

      The Company's operating segments have been identified based on geographic
      areas as follows:

<TABLE>
<CAPTION>
                                                            FOR THE YEAR ENDED DECEMBER 31, 2003
                                                      ------------------------------------------------
                                                                     SOUTH
                                                      CORPORATE     AFRICA       ZAMBIA        TOTAL
                                                      ---------    ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>          <C>
Revenue from sales                                    $       -    $     646    $       -    $     646
Operating costs                                               -       (3,714)           -       (3,714)
General and administrative                               (1,276)           -            -       (1,276)
Interest                                                      -         (127)           -         (127)
Amortization                                                  -         (431)           -         (431)
Other income (expense)                                      (26)          93            -           67
Write down of mineral properties                              -         (225)      (9,534)      (9,759)
                                                      ---------    ---------    ---------    ---------
(Loss) before the undernoted                             (1,302)      (3,758)      (9,534)     (14,594)
Non-controlling interest                                      -           38            -           38
                                                      ---------    ---------    ---------    ---------
Net income (loss) for the year                           (1,302)      (3,720)      (9,534)     (14,556)
                                                      =========    =========    =========    =========
Identifiable assets                                       5,000       13,291        1,044       19,335
                                                      =========    =========    =========    =========
Expenditures on capital assets & mineral properties   $       -    $   2,140    $     139    $   2,279
                                                      =========    =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                            For the year ended December 31, 2002
                                                      ------------------------------------------------
                                                                     South
                                                      Corporate     Africa       Zambia        Total
                                                      ---------    ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>          <C>
Revenue from sales                                    $       -    $      27    $       -    $      27
Operating costs                                               -         (130)           -         (130)
General and administrative                               (1,405)        (135)           -       (1,540)
Interest                                                    (29)           -            -          (29)
Amortization                                                 (9)           -            -           (9)
Write down of mineral properties                              -            -       (2,590)      (2,590)
Other income (expense)                                      (23)         (50)           -          (73)
                                                      ---------    ---------    ---------    ---------
(Loss) before the undernoted                             (1,466)        (288)      (2,590)      (4,344)
Non-controlling interest                                      -           13            -           13
                                                      ---------    ---------    ---------    ---------
Net (loss) for the year                                  (1,466)        (275)      (2,590)      (4,331)
                                                      =========    =========    =========    =========
Identifiable assets                                       2,614       11,743       10,410       24,767
                                                      =========    =========    =========    =========
Expenditures on capital assets & mineral properties   $       -    $     805    $     119    $     924
                                                      ---------    ---------    ---------    ---------
</TABLE>

                                       37
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

12.   SEGMENTED FINANCIAL INFORMATION (continued)

<TABLE>
<CAPTION>
                                                            For the year ended December 31, 2001
                                                      ------------------------------------------------
                                                                     South
                                                      Corporate     Africa       Zambia       Total
                                                      ---------    ---------    ---------   ----------
<S>                                                   <C>          <C>          <C>         <C>
Revenue from sales                                    $       -    $     124    $       -   $     124
Operating costs                                               -         (250)           -        (250)
General and administrative                                 (891)        (139)           -      (1,030)
Interest                                                    (84)           -            -         (84)
Amortization                                                  -          (16)           -         (16)
Other income                                                 26           35            -          61
                                                      =========    =========    =========   =========
Net (loss) for the year                                    (949)        (246)           -      (1,195)
                                                      =========    =========    =========   =========
Identifiable assets                                         934       11,158       12,881      24,973
                                                      =========    =========    =========   =========
Expenditures on capital assets and mineral properties $       -    $       -    $      23   $      23
                                                      =========    =========    =========   =========
</TABLE>

13.   CONTRACTUAL OBLIGATIONS

      The Company has a capital finance lease obligation of $55 (2002 - $nil,
      2001 - $nil), payable over 48 months and bearing interest at 2% less than
      the prime overdraft interest rate in South Africa which is secured by
      motor vehicles with a net book value of $142. This lease obligation has
      been included in accounts payable.

      The future minimum lease payments under non-cancellable operating leases
      amount to $268 (2002 - $nil, 2001 - $nil). Of this amount, $68 (2002 -
      $nil, 2001 - $nil) is payable in the next twelve months and $200 (2002 -
      $nil, 2001 - $nil) is payable over the next five years.

14.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES

      The Company's accounting policies do not differ materially from accounting
      principles generally accepted in the United States ("US GAAP") except for
      the following:

      (a)   Mineral Properties

            US GAAP requires that mineral properties with no proven reserves be
            reflected as expenses in the period incurred.

      (b)   Other Paid in Capital

            Under Canadian GAAP, convertible debentures have been segregated
            into a debt and equity component. The resulting debt discount is
            amortized over the term of the debt and is included with interest
            expense. Under US GAAP, the convertible debentures would be shown as
            debt only and therefore would not include an equity component or
            amortization expense.

                                       38
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
     (in thousands of Canadian Dollars unless otherwise indicated and except for
                                                              per share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

14.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES
      (continued)

      (c)   Employee and Directors Stock Options

            Prior to 2003, the Company accounted for employee and director stock
            options under APB Opinion No. 25 under which no compensation cost is
            recognized when the exercise price equals or exceeds the fair value
            at the date of grant. Since no stock options were granted with an
            exercise price less than fair value, no compensation was recorded
            under US GAAP. Effective January 1, 2003 the Company, for US
            purposes, has applied, prospectively, the fair value recognition
            provisions of SFAS No. 123.

            Under Canadian GAAP, effective January 1, 2002 on a prospective
            basis, the Company adopted the new CICA policy of accounting for
            stock based compensation. Compensation expense on stock options
            granted to directors, officers and employees, was not recorded.
            However, disclosure of the effects of accounting for the
            compensation expense, utilizing the fair value method estimated
            using the Black-Scholes Option Pricing Model, was disclosed as
            pro-forma information. During 2002 a compensation expense was shown
            for US GAAP to reflect the intrinsic value attributable to stock
            options granted to directors, officers and employees.

            Under Canadian GAAP, effective January 1, 2003 on a prospective
            basis, the Company commenced the expensing of all stock based
            compensation for new stock option grants applying the fair value
            method estimated by using the Black-Scholes Option Pricing Model.

      (d)   Comprehensive Income

            Under US GAAP, comprehensive income must be reported which is
            defined as all changes in equity other than those resulting from
            investments by owners and distributions to owners.

      (e)   Net Gain on Conversion of the Convertible Debentures and Settlement
            of Debt

            For US GAAP purposes a loss is recognized on settlement of debt to
            the extent that the quoted market value of shares and fair value of
            warrants issued at the date of settlement exceeds the carrying
            amount of debt.

      (f)   Asset Retirement Obligations

            In 2004, the Company will adopt Canadian GAAP standards of "Asset
            Retirement Obligations" which are consistent with SFAS No. 143
            (effective from January 1, 2003), "Accounting for Asset Retirement
            Obligations". These standards address financial accounting and
            reporting for obligations associated with the retirement of tangible
            long-lived assets and the associated asset retirement costs. These
            standards require that the fair value of a liability for an asset
            retirement obligation be recognized in the period in which it is
            incurred if a reasonable estimate of fair value can be made. The
            associated asset retirement costs are capitalized as part of the
            carrying value of the long-lived asset. For Canadian accounting
            purposes, the Company will adopt this standard during 2004 with
            retroactive restatement to 2002. Under US GAAP, the cumulative
            effect of the change in accounting principle is shown and no
            retroactive restatement of the comparative figures is made.

                                       39
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
     (in thousands of Canadian Dollars unless otherwise indicated and except for
                                                              per share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

14.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES
      (continued)

      (g)   Recently Issued United States Accounting Standards

            In January 2003, the FASB issued Financial Interpretation 46
            "Accounting for Variable Interest Entities" ("FIN 46") that will
            require the consolidation of certain entities that are controlled
            through financial interests that indicate control (referred to as
            "variable interests"), subsequently revised through the issuance of
            FIN 46R. Variable interests are the rights or obligations that
            convey economic gains or losses from changes in the values of the
            entity's assets or liabilities. The holder of the majority of an
            entity's variable interests will be required to consolidate the
            variable interest entity. FIN 46 applies to variable interest
            entities as of January 31, 2003, and to variable interest entities
            created after or in which an enterprise obtains an interest after
            that date. FIN 46R applies for periods ending after March 15, 2004.
            The Company does not have any arrangements with variable interest
            entities that will require consolidation of their financial
            information in the financial statements.

            In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133
            on Derivative Instruments and Hedging Activities". SFAS 149 amends
            and clarifies financial accounting and reporting for derivative
            instruments, including certain derivative instrumentss embedded in
            other contracts and for hedging activities under SFAS 133,
            "Accounting for Derivative Instruments and Hedging Activities". The
            changes are intended to improve financial reporting by requiring
            that contracts with comparable characteristics be acconted for
            similarly. Additionally, those changes are expected to result in
            more consistent reporting of contracts as either derivatives or
            hybrid instruments. SFAS No. 149 is effective for contracts and
            hedging relationships entered into or modified after June 30, 2003,
            and for provisions that relate to SFAS No. 133 implementation issues
            that have been effective for fiscal quarters that began prior to
            June 15, 2003, apply in accordance with their respective effective
            dates. The adoption of this statement did not have a significant
            effect on the Company's consolidated financial position or results
            of operations.

            In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
            Financial Instruments with Characteristics of both Liability and
            Equity". SFAS No. 150 establishes standards for how an issuer
            classifies and measures certain financial instruments with
            characteristics of both liability and equity. It also requires that
            an issuer classify a financial instrument that is within its scope
            as a liability (or an asset in some circumstances). Many of those
            instruments were previously classified as equity. SFAS No. 150 is
            effective for financial instruments entered into or modified after
            May 31, 2003, and otherwise is effective generally at the beginning
            of the first interim period beginning after June 15, 2003, except
            for mandatory redeemable financial instruments of non-public
            entities. It is to be implemented by reporting a cumulative effect
            of a change in an accounting principle for financial instruments
            created before the issuance date of the Statement and still existing
            at the beginning of the interim period of adoption. Restatement is
            not permitted. The adoption of this statement did not have a
            material effect on the financial position of the Company or results
            of its operations.

                                       40
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

14.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES
      (continued)

      The impact of the foregoing on the financial statements is as follows:

      (a) Income Statement

<TABLE>
<CAPTION>
                                                                       2003        2002        2001
                                                                     --------    --------    --------
<S>                                                                  <C>         <C>         <C>
Loss for the year per Canadian GAAP                                  ($14,556)   ($ 4,331)   $ (1,195)
Mineral property expenditure with no proven reserves (expensed) or
 previously expensed under US GAAP                                      9,081       2,303          (7)
Amortization and accretion of asset retirement obligation                 (69)          -           -
Compensation expense                                                        -      (1,405)          -
Loss on settlement of debt                                                  -        (362)          -
                                                                     --------    --------    --------
Income before cumulative effect adjustment                             (5,544)     (3,795)     (1,202)
Cumulative effect adjustment                                              559           -           -
                                                                     --------    --------    --------
Net income (loss) per US GAAP                                        ($ 4,985)   ($ 3,795)   ($ 1,202)
                                                                     ========    ========    ========
Loss per share before cumulative effect adjustment                   ($ 0.024)   ($ 0.020)   ($ 0.008)
                                                                     ========    ========    ========
Cumulative effect adjustment  per share                               $ 0.002           -           -
                                                                     ========    ========    ========
Basic and diluted loss per share for the year                        ($ 0.022)   ($ 0.020)   ($ 0.008)
                                                                     ========    ========    ========
</TABLE>

                                       41
<PAGE>

                                                    CALEDONIA MINING CORPORATION
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands of Canadian Dollars unless otherwise indicated and except for per
                                                                  share amounts)
                                                DECEMBER 31, 2003, 2002 AND 2001

14.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES
      (continued)

      (b)   Balance Sheet

<TABLE>
<CAPTION>
                                                                 2003         2002
                                                              ---------    ---------
<S>                                                           <C>          <C>
Total assets per Canadian GAAP                                $  19,335    $  24,767
Asset retirement cost capitalized                                   827            -
Amortization on asset retirement obligation                         (36)           -
Mineral properties with no proven reserves expensed              (2,247)     (11,328)
                                                              ---------    ---------
Total assets per US GAAP                                      $  17,879    $  13,439
                                                              =========    =========

Total liabilities per Canadian and US GAAP                    $   2,153    $   2,616
Asset retirement obligation                                         301            -
                                                              ---------    ---------
Total liabilities per US GAAP                                 $   2,454    $   2,616
                                                              =========    =========

Share capital per Canadian GAAP                               $ 159,151    $ 149,623
Other paid in capital
      Loss on settlement of debt                                    362          362
      Convertible debt                                             (560)        (560)
                                                              ---------    ---------
Share capital per US GAAP                                     $ 158,953    $ 149,425
                                                              =========    =========

Compensation warrants per Canadian and US GAAP                $     160    $     177
                                                              =========    =========

Contributed surplus per Canadian GAAP                         $     285    $     209
Compensation expense                                              1,405        1,405
                                                              ---------    ---------
Contributed surplus per US GAAP                               $   1,690    $   1,614
                                                              =========    =========

Shareholders' equity

        Deficit end of the year per Canadian GAAP             ($142,414)   ($127,858)
        Loss on settlement of debt                                 (362)        (362)
        Mineral properties with no proven reserves expensed      (2,247)     (11,328)
        Compensation expense                                     (1,405)      (1,405)
        Asset retirement adjustment                                 490            -
        Debenture discount amortization                             560          560
                                                              ---------    ---------
        Deficit end of year per US GAAP                       ($145,378)   ($140,393)
                                                              =========    =========

Total shareholders' equity per US GAAP                        $  15,425    $  10,823
                                                              =========    =========
</TABLE>

                                       42
<PAGE>

DIRECTORS AND MANAGEMENT

 BOARD OF DIRECTORS                                      OFFICERS
 S. E. Hayden (1) (2) (3) (4)               S. E. Hayden
 Chairman of the Board, President and       Chairman of the Board, President and
 Chief Executive Officer                    Chief Executive Officer
 Johannesburg, South Africa
                                            F. C. Harvey
 J. Johnstone                               Technical Director, Secretary of
 Vice President Operations and              the Corporation
 Chief Operating Officer
 Mississauga, Ontario, Canada               J. Johnstone
                                            Vice-President Operations and
 F C. Harvey                                Chief Operating Officer
 Technical Director,
 Secretary to Corporation                   S. W. Poad
Mississauga, Ontario, Canada                Vice-President Finance
                                            and Administration
 W. I. L. Forrest (1) (2) (4)
 Business Executive                         J. Smith
 Gingins, Switzerland                     Vice-President Exploration

 C. R. Jonsson (1) (2) (3)
 Principal of Tupper Jonsson
 & Yeadon
 Barristers & Solicitors
 Vancouver, British Columbia,
 Canada

 BOARD COMMITTEE
 MEMBERS
 (1) Audit Committee
 (2) Compensation Committee
 (3) Corporate Governance Committee
 (4) Nominating Committee

                                       43
<PAGE>

CORPORATE DIRECTORY

CORPORATE OFFICES                            SOLICITORS
CANADA - HEAD OFFICE                          BORDEN LADNER GERVAIS LLP
CALEDONIA MINING CORPORATION                  Suite 4100, Scotia Plaza
Unit 9, 2145 Dunwin Drive                     40 King Street West
Mississauga, Ontario                          Toronto, Ontario M5H 3Y4 Canada
L5L 4L9 Canada
Tel: (905) 607-7543                           TUPPER, JONSSON & Yeadon
Fax: (905) 607-9806                           1710-1177 West Hastings Street
                                              Vancouver, British Columbia
SOUTH AFRICA                                  V6E 2L3 Canada
GREENSTONE MANAGEMENT SERVICES (PTY) LTD.
P.O. Box 587                                  AUDITORS
Johannesburg 2000                             BDO DUNWOODY LLP
South Africa                                  CHARTERED ACCOUNTANTS
Tel: (27)(11) 447-2499                        Suite 3200, 200 Bay Street
Fax: (27)(11) 447-2554                        Royal Bank Plaza, South Tower
                                              Toronto, Ontario M5J 2J8 Canada
ZAMBIA
CALEDONIA MINING (ZAMBIA) LIMITED             REGISTRAR & TRANSFER AGENT
P.O. Box 36604                                EQUITY TRANSFER SERVICES INC.
Lusaka, Zambia                                Suite 420 120 Adelaide Street West
Tel: (260)(1) 29-1574                         Toronto, Ontario M5H 4C3 Canada
Fax: (260)(1) 29-2154                         Tel: (416) 361-0152
                                              Fax: (416) 361-0470
SHARES LISTED
The Toronto Stock Exchange Symbol "CAL"      BANKERS
NASDAQ OTC BB Symbol "CALVF"               CANADIAN IMPERIAL BANK OF COMMERCE
                                              6266 Dixie Road
CAPITALIZATION at December 31, 2003           Mississauga, Ontario
Authorised: Unlimited                         L5T 1A7 Canada
Shares, Warrants and Options Issued:
Common Shares: 252,274,497
Warrants: 15,449,114
Options: 11,898,700

WEB SITE: http://www.caledoniamining.com

                                                    CALEDONIA MINING CORPORATION
                                                                        Unit # 9
                                                               2145 Dunwin Drive
                                                    Mississauga, Ontario, Canada
                                                                         L5L 4L9
                                                             Tel: (905) 607-7543
                                                             Fax: (905) 607-9806
                                                        info@caledoniamining.com

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.B
<SEQUENCE>6
<FILENAME>t13100exv14wb.txt
<DESCRIPTION>EX-14.B
<TEXT>
<PAGE>

                                                                     EXHIBIT 14b

                          CALEDONIA MINING CORPORATION

                         2004 MANAGEMENT PROXY CIRCULAR


                              Notice of Annual and
                        Special Meeting of Shareholders
                                on June 24, 2004
                           Management Proxy Circular

                               Instrument of Proxy
                             Solicited by Management


<PAGE>

                                    CALEDONIA

                               Mining Corporation

                          NOTICE OF ANNUAL AND SPECIAL
                             MEETING OF SHAREHOLDERS

TAKE NOTICE that the Annual and Special Meeting of Shareholders of Caledonia
Mining Corporation (the "Corporation") will be held in Boardroom No. 3, 44th
Floor, (the offices of the Corporation's Solicitors, Borden Ladner Gervais LLP)
Scotia Plaza, 40 King Street West, Toronto, Ontario, on Thursday, June 24, 2004
commencing at 14:30 p.m. in the afternoon (local time) for the purposes of:

1.    receiving the annual report that includes the financial statements and
      auditors' report thereon for the financial year ended December 31, 2003,

2.    considering and, if deemed appropriate, approving an ordinary resolution
      that the number of directors be set at six until further notice,

3.    electing directors;

4.    appointing auditors and authorizing the directors to fix their
      remuneration

5.    considering and, if deemed appropriate, approve an ordinary resolution
      that, subject to regulatory approval and in compliance with the policies
      of The Toronto Stock Exchange, the Corporation be authorized to enter into
      one or more private placement transactions with subscribers substantially
      at arm's length to the Corporation, during the ensuing 12 month period,
      providing for the issuance of up to 75% of the number of common shares
      outstanding as of the date of the resolution;

6.    considering and, if deemed advisable, approving an ordinary resolution of
      the shareholders of the Corporation in favour of the creation of the 2004
      Stock Option Plan;

7.    transacting such other business as may properly be brought before the
      meeting.

A copy of the annual report, form of proxy and management proxy circular
accompany this notice. A copy of the Corporation's Form 20F, filed with the
United States Securities and Exchange Commission, is available upon request.

Shareholders will be entitled to vote at the meeting in person or by proxy.
Shareholders not attending the meeting may exercise their right to vote by
promptly signing, dating and returning the proxy in the envelope provided for
that purpose.

DATED: May 4th, 2004 BY ORDER OF THE BOARD

 S. E. Hayden
Chairman of the Board, President and
Chief Executive Officer

                                       1
<PAGE>

                            MANAGEMENT PROXY CIRCULAR

SOLICITATION OF PROXIES

THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION
BY AND ON BEHALF OF THE MANAGEMENT OF CALEDONIA MINING CORPORATION (THE
"CORPORATION") OF PROXIES TO BE USED AT THE ANNUAL AND SPECIAL MEETING (THE
"MEETING") OF SHAREHOLDERS OF THE CORPORATION TO BE HELD ON TUESDAY, JUNE 24,
2004 AT THE HOUR OF 14:30 O'CLOCK LOCAL TIME, IN BOARDROOM #3, 44TH FLOOR,
SCOTIA PLAZA, 40 KING STREET WEST, TORONTO, ONTARIO, for the purposes set forth
in the accompanying notice of meeting. It is expected that the solicitation will
be primarily by mail but proxies may also be solicited personally or by
telephone by employees or agents of the Corporation. The cost of any such
solicitation by management will be borne by the Corporation.

APPOINTMENT AND REVOCATION OF PROXIES

THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY ARE DIRECTORS OF THE
CORPORATION. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON TO REPRESENT
HIM AT THE MEETING MAY DO SO BY INSERTING SUCH PERSON'S NAME, WHICH NEED NOT BE
A SHAREHOLDER OF THE CORPORATION, IN THE BLANK SPACE PROVIDED IN THE FORM OF
PROXY AND STRIKING OUT THE NAMES OF THE PERSONS SPECIFIED OR BY COMPLETING
ANOTHER PROPER FORM OF PROXY. In all cases, the completed proxy is to be
deposited at the registered office of the Corporation or at the offices of
Equity Transfer Services Inc., Suite 420, 120 Adelaide Street West, Toronto,
Ontario, M5H 4C3 prior to the day of the Meeting or with the Chairman of the
Meeting on the day of the Meeting or any adjournment thereof.

A shareholder giving a proxy has the right to revoke the proxy by instrument in
writing executed by the shareholder or by the shareholder's attorney authorized
in writing and deposited at the registered office of the Corporation at any time
up to and including the last business day preceding the date of the Meeting, or
any adjournment thereof, at which the proxy is to be used, or with the Chairman
of the Meeting on the date of the Meeting, or any adjournment thereof, or in any
other manner permitted by law.

EXERCISE OF DISCRETION BY PROXIES

THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY WILL VOTE THE SHARES IN RESPECT
OF WHICH THEY ARE APPOINTED IN ACCORDANCE WITH THE DIRECTION OF THE SHAREHOLDERS
APPOINTING THEM. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED FOR
ALL OF THE MATTERS REFERRED TO IN THE NOTICE OF MEETING AND THE RE-ELECTION OF
THE EXISTING DIRECTORS.

The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to any amendments or variations to matters identified
in the notice of meeting and with respect to other matters which may properly
come before the Meeting. At the time of printing this management proxy circular,
management of the Corporation knows of no such amendments, variations or other
matters to come before the Meeting.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

On April 30, 2004, the Corporation had outstanding 301,111,786 common shares,
each carrying the right of one vote per share. To the best of the knowledge of
the directors and officers of the Corporation, no person beneficially owns,
directly or indirectly, or exercises control or direction over, shares carrying
more than 10% of the votes attached to all issued shares of the Corporation.

The Board of Directors of the Corporation has fixed a record date of May 24,
2004 for the purpose of determining who is entitled to receive Notice of
Meeting. Shareholders entitled to vote at the meeting will be the shareholders
of record at 10:00 a.m. (Toronto, Ontario time) on the day preceding the day of
the meeting. The failure of any shareholder to receive notice of the Meeting
shall not deprive the shareholder of voting at the Meeting.

NUMBER OF DIRECTORS

The directors of the Corporation have considered the most effective composition
of the Board of Directors in light of the current business of the Corporation
and the regulatory requirements being introduced to ensure the independence of a
number of directors and membership of board committees. The directors have
concluded that the composition of the existing board is effective in the overall
operation of the Corporation but may be unable to provide adequate independence
to some board committees to fully satisfy recently introduced regulatory
requirements. The board therefore recommends that the number of directors of the
Corporation be increased to six until further notice -

                                       2
<PAGE>

although it will be proposed that the meeting only reappoint the existing five
Directors. The increase in the size of the Board will create one vacancy that
the Board can fill when it determines to do so.

ELECTION OF DIRECTORS

All of the nominees are now members of the Board of Directors and have been
since the dates indicated. Management does not contemplate that any of the
nominees will be unable to serve as a director but, if that should occur for any
reason prior to the Meeting, the persons named in the enclosed form of proxy
reserve the right to vote for another nominee in their discretion. Each director
elected will hold office until the next annual meeting or until he earlier
ceases to be a director. Set out below are the names of the persons proposed to
be nominated at the meeting for election as directors.

<TABLE>
<CAPTION>
                                                                                             NUMBER OF SHARES
     NAME, OFFICE HELD AND                                                      DIRECTOR    BENEFICIALLY OWNED,
   MUNICIPALITY OF RESIDENCE                 PRINCIPAL OCCUPATION                SINCE    CONTROLLED OR DIRECTED
- ------------------------------  ----------------------------------------------  --------  ----------------------
<S>                             <C>                                             <C>       <C>
S. E. Hayden, (1)(2)(3)(4)      Chairman, President and Chief Executive           1996               Nil
Chairman, President and  Chief  Officer of the Corporation and Director of all
Executive Officer  & Director   Caledonia's  subsidiary companies.  Chief
Johannesburg, South Africa      Executive Officer of Eersteling Gold Mining
                                Company Limited, Greenstone Management
                                Services (Pty) Ltd., and Barbrook Mines
                                Limited.

J. Johnstone,                   Chief Operating Officer of the Corporation        1997               Nil
Vice President Operations       and Director of various subsidiary
and Chief Operating Officer     companies.
& Director
Oakville, Ontario, Canada

F. C. Harvey, Technical         Technical Director and Secretary of the           1993             4,300
Director , Secretary &          Corporation and Director of various
Director Oakville, Ontario,     subsidiary companies.
Canada

C.R. Jonsson,                   Principal of Tupper, Jonsson & Yeadon,            1992            59,469
Director (1)(2)(3) Vancouver,   Barristers & Solicitors.
British Columbia, Canada

W. I. L. Forrest,               Business Executive.                               1992            17,000
Director (1)(2)(4)
Gingins, Switzerland
</TABLE>

Notes:

(1) Member of Audit Committee, (2) Member of Compensation Committee, (3) Member
of Corporate Governance Committee, (4) Member of Nominating Committee.

The information as to shares beneficially owned or controlled or directed, not
being within the knowledge of the Corporation, has been furnished by the
respective nominees individually.

APPOINTMENT OF AUDITORS

Management is proposing the re-appointment of BDO Dunwoody LLP as auditors of
the Corporation to hold office until the next annual meeting of shareholders and
to authorize the Directors to fix their remuneration.

                                       3
<PAGE>

REPORT ON EXECUTIVE COMPENSATION

COMPENSATION OF NAMED EXECUTIVE OFFICERS

The following table, presented in accordance with the applicable regulation (the
"Regulation") under the Securities Act (Ontario), sets forth all annual and long
term compensation for services in all capacities to the Corporation and its
subsidiaries for the fiscal year ended December 31, 2003 in respect of the named
executive officers:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                   ANNUAL COMPENSATION                   LONG TERM COMPENSATION
                         ---------------------------------------   ----------------------------------
                                                                     AWARDS                   PAYOUTS
                                                                   -----------                -------
                                                                   SECURITIES    RESTRICTED
                                                                      UNDER       SHARES OR
       NAME AND                                    OTHER ANNUAL      OPTIONS/    RESTRICTED    LTIP       ALL OTHER
      PRINCIPAL                  SALARY   BONUS    COMPENSATION       SARS       SHARE UNITS  PAYOUTS   COMPENSATION
       POSITION          YEAR     ($)      ($)       ($) (1)       GRANTED (#)      (#)         ($)         ($)
- -----------------------  ----   -------   -----   --------------   -----------   -----------  -------   ------------
<S>                      <C>    <C>       <C>     <C>              <C>           <C>          <C>       <C>
Stefan E. Hayden (2)(4)  2003   180,000     -           -              Nil           Nil        Nil        5,000
Chairman of the          2002   180,000     -           -           4,000,000        Nil        Nil        5,000
Board, President         2001   180,000     -           -              Nil           Nil        Nil        5,000
& Chief Executive
Officer

Jim Johnstone (4)        2003   207,200     -           -              Nil           Nil        Nil        5,000
Vice President           2002   207,200     -           -           2,000,000        Nil        Nil        5,000
Operations and           2001   207,200     -           -              Nil           Nil        Nil        5,000
Chief Operating
Officer

F.Chris Harvey  (4)      2003   150,000     -           -              Nil           Nil        Nil        5,000
Technical Director       2002   150,000     -           -           2,000,000        Nil        Nil        5,000
and Secretary            2001   150,000     -           -              Nil           Nil        Nil        5,000

J. Smith (3)(4)          2003     Nil       -           -              Nil           Nil        Nil         Nil
Vice-President           2002     Nil       -           -              75,000        Nil        Nil         Nil
Exploration              2001     7,508     -           -              Nil           Nil        Nil         Nil

Steve Poad (5)           2003    26,971     -           -              Nil           Nil        Nil         Nil
V-P, Finance             2002    19,914     -           -             150,000        Nil        Nil         Nil
                         2001    12,156     -           -              Nil           Nil        Nil         Nil
</TABLE>

Notes:

(1)   Perquisites and other personal benefits for each of the named executive
      officers did not exceed the lesser of $50,000 and 10% of total annual
      salary and bonus in 2001, 2002 and 2003.

(2)   Mr. S. E. Hayden is employed indirectly by the Corporation through a
      management and administrative agreement with Epicure Overseas SA.

                                       4
<PAGE>

(3)   Since December 1999, Mr. J. Smith has provided consulting services to the
      Corporation and its subsidiaries through a consulting agreement.

(4)   The figures shown are the agreed salaries. The Officers noted have, in
      recognition of the Corporation's cash position in the respective years
      agreed to defer an aggregate total of $302,201 of the salaries due them
      for the period ending December 31, 2001 and further amounts totaling
      $173,067 and $383,810 for the periods ending December 31, 2000 and
      December 31, 1999 respectively. During 2003 Mr. Johnstone was paid in full
      the sum of $278,666.33. Mr. Harvey was paid $100,000.00 and deferred the
      balance of his outstanding salary to 2004. Mr. Hayden has been paid
      $216,342 of the outstanding balance upon behalf of Epicure.

(4)   Mr S. Poad is employed indirectly by the Corporation through a service
      contract with Doelcam Inc.

The following table (presented in accordance with the Regulation) sets forth
stock options granted by the Board of Directors of the Corporation during the
fiscal year ended December 31, 2003 to the named executive officers:

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                             MARKET VALUE OF
                         % OF TOTAL                             SECURITIES
                         OPTIONS/SARS                           UNDERLYING
      SECURITIES UNDER    GRANTED TO                         OPTIONS/SARS ON
        OPTIONS/SARS     EMPLOYEES IN   EXERCISE OR BASE     DATE OF GRANT      EXPIRATION
NAME      GRANTED #      FISCAL YEAR    PRICE ($/SECURITY)     ($/SECURITY)        DATE
- ----  ----------------   ------------   ------------------   ----------------   ----------
<S>   <C>                <C>            <C>                  <C>                <C>
    No Options or SARS were granted to the named executive officers in 2003.
</TABLE>

The following table (presented in accordance with the Regulation) sets forth
stock options exercised by the named executive officers during the fiscal year
ended December 31, 2003:

OPTION/SAR EXERCISES IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                               VALUE OF UNEXERCISED IN-
                                              UNEXERCISED            THE-MONEY (1)
              SECURITIES                    OPTIONS/SARS AT        OPTIONS/SARS AT
               ACQUIRED                    DECEMBER 31, 2003      DECEMBER 31, 2003
                 ON       AGGREGATE VALUE        (#)                    ($)
               EXERCISE       REALIZED       EXERCISABLE/           EXERCISABLE/
    NAME          (#)           ($)          UNEXERCISABLE          UNEXERCISABLE
- ------------  ----------  ---------------  -----------------   -------------=----------
<S>           <C>         <C>              <C>                 <C>
S. E. Hayden      Nil          Nil           4,300,000/Nil           $755,750/Nil
J. Johnstone      Nil          Nil           2,172,500/Nil           $382,150/Nil
F. C. Harvey      Nil          Nil           2,228,750/Nil           $382,150/Nil
J. Smith          Nil          Nil             178,750/Nil           $12,825/Nil
S. Poad         56,475      $ 28,237.50        248,825/Nil           $18,450/Nil
</TABLE>

Notes:

(1)   "In-the-money" means the excess of the market value of the common shares
      of the Corporation outstanding on December 31 2003 over the exercise price
      of the options

The Corporation does not have a long-term incentive plan, a pension plan or
other form of defined benefit plan - other than its Stock Option Plan.

                                       5
<PAGE>

COMPOSITION OF THE COMPENSATION COMMITTEE

The Corporation has a compensation committee ("Committee") comprised of three
members. All issues as to compensation of the Officers are considered by the
Committee, the members of which, during the fiscal year ended December 31, 2003,
were C. R. Jonsson, W. I. L. Forrest and S. E. Hayden. Mr. S. E. Hayden as
President and CEO of the Corporation is therefore an inside director. Mr. C. R.
Jonsson was granted 1,000,000 stock options in 2002 in lieu of being paid for
legal services provided by him. He has therefore been a service provider within
the past three years and may be considered a related director under recently
adopted OSC rules. Mr. Jonsson continues to provide the company with legal
services on a no-fee basis. The Board considers that this situation cannot be
perceived to interfere with Mr. Jonsson's ability to act with a view to the best
interests of the company and therefore considers him to be an unrelated
director. Mr. W. I. L. Forrest is an outside and unrelated director within the
meaning of The Toronto Stock Exchange ("TSX") Report on Corporate Governance
Practices.

COMPENSATION POLICIES

While the Committee of the Board of Directors of the Corporation has not adopted
a written policy concerning the compensation of executive officers, it has
developed a consistent approach and philosophy relating to executive
compensation. The overriding principles in the determination of executive
compensation are the need to provide total compensation packages that will
attract and retain qualified and experienced executives, to reward the
executives for their contribution to the overall success of the Corporation and
to integrate the longer-term interest of the executives with the investment
objectives of the Corporation's shareholders.

Executive compensation at the Corporation has two principal components: salary
and stock options. The Committee is mindful that the Corporation competes within
the framework of the international mining industry. The Compensation Committee
is of the view that a competitive salary level is appropriate for the executive
officers, as their total compensation package should emphasize salaries and the
stock options granted by the Corporation. The chief executive officer of the
Corporation is one of the named executive officers and therefore his
compensation is determined in the same manner as for the other executive
officers of the Corporation.

COMPENSATION OF DIRECTORS

Each of the five directors, including directors who are officers of the
Corporation, is entitled to an annual director's fee of $5,000 Canadian and out
of pocket expenses relating to attendance at a board or committee meeting. In
recognition of the Corporation's cash position, no director fees were paid in
1999, 2000, 2001 or 2002 for duties performed in 1998, 1999, 2000 and 2001.
Subsequently all outstanding directors' fees were paid in 2003. The Corporation
obtained, in June, 2003, liability insurance for directors and officers of the
Corporation and its affiliates with coverage of $1,000,000 Canadian per
occurrence and in the aggregate.

                                       6
<PAGE>

PERFORMANCE GRAPH

The following graph and table compares the year-end value of the common shares
of the Corporation with the TSX 300 Stock Index for the last six years on the
basis of cumulative total return.

              CALEDONIA SHARES VS S&P/TSX COMPOSITE AT DECEMBER 31
      (ASSUMING $100 OF CALEDONIA SHARES WERE PURCHASED DECEMBER 31, 1998)

                              [PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
                           Dec 1998    Dec 1999       Dec 2000       Dec 2001     Dec 2002      Dec 2003
                           --------    --------       --------       --------     --------      --------
<S>                        <C>         <C>            <C>            <C>          <C>           <C>
S&P/TSX Composite             100         133            141            121          104           130
Caledonia Common Shares       100          45             64             50          373           382
</TABLE>

CORPORATE GOVERNANCE PRACTICES

The TSX Committee on Corporate Governance in Canada issued a report (the "TSX
Report") in December 1994 containing guidelines for effective corporate
governance of corporations. The by-laws of the TSX were subsequently amended to
require each listed corporation incorporated in Canada to make annual disclosure
of its corporate governance practices with reference to those guidelines. The
Corporation's Statement of Corporate Governance Practices follows:

MANDATE OF THE BOARD

The Board of Directors of the Corporation is responsible for the overall
stewardship of the Corporation, and has full power and authority to manage and
control the affairs and business of the Corporation. Amongst other things, the
Board is responsible for:

1.    supervising the officers of the Corporation in their management of the
      business and affairs of the Corporation;

2.    adoption of and managing the Corporation's strategic planning process;

3.    identifying and managing principal risks to the Corporation's
      business;succession planning including the appointment, training,
      monitoring and appraisal of senior officers of the Corporation;

                                       7
<PAGE>

4.    overseeing the administration of a policy for communications by the
      Corporation with shareholders, the investment

5.    community, the media, governments and the general public;

6.    examination, through its Audit Committee, of the effectiveness of the
      company's internal control processes and management information systems.
      The Board consults with the VP Finance and management of the Corporation
      to ensure the integrity of these systems;

7.    developing position descriptions and terms of reference for the Board, the
      President and Chief Executive Officer and the committees of the Board.

The Board holds regular meetings. Additional meetings are held to address
special items of business. The frequency of meetings, as well as the nature of
agenda items change depending upon the state of the Corporation's affairs and in
light of opportunities or risks which the Corporation faces. On average the
Board has met between nine and ten times per year during the past five years.

In 2004 the Board adopted a Charter of the Board of Directors. This Charter can
be viewed at the Company's head office and at the Annual Meeting of
Shareholders.

BOARD COMPOSITION

The TSX Report recommends that a majority of the Board be unrelated to the
Corporation. The TSX Report uses the term unrelated director to mean a director
who is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
director's ability to act with a view to the best interests of the Corporation,
other than interests and relationships arising from shareholding.

The Board of Directors currently has five members. The Board has concluded that
two of these directors, Messrs. Forrest and Jonsson, are unrelated directors
within the meaning of the TSX Report. In reaching that conclusion, the Board has
examined the factual circumstances of each director and has considered any
interests and business or other relationship that any director may have with the
Corporation. Mr. S. E. Hayden is a related director by virtue of his position as
the President and Chief Executive Officer of the Corporation and Messrs. J.
Johnstone and F. C. Harvey are related directors by virtue of their positions as
employees of the Corporation. The Board believes that the extensive knowledge of
Messrs. Hayden, Johnstone and Harvey of the Corporation's business is beneficial
to the other directors and their participation as directors contributes to the
effectiveness of the Board.

The Corporation does not have a significant shareholder, defined in the TSX
Report as a shareholder with the ability to exercise a majority of votes for the
election of directors.

The Board determines each year the number of directors to be elected at the
annual general meeting. Under the articles of the Corporation, the number of
directors of the Corporation must be at least three. For 2004, the Board has
concluded that the number of directors should be increased to satisfy the
recently announced requirement to appoint three independent directors to the
Audit Committee. At the 2004 Annual Meeting of Shareholders the Board of
Directors will request the shareholders to approve increasing the number of
directors to six.

Caledonia's Board members consider that the Board's composition is tight and
efficient considering the extent of the Corporation's activities and the
location of the properties on which most of its activities are conducted. It is
the opinion of the two unrelated Directors, Messrs Forrest and Jonsson that the
Board functions adequately independently of management.

While Mr. Hayden holds the positions of Chairman and CEO, in board meetings Mr.
Jonsson, as the only lawyer on the Board, takes a leading role and acts somewhat
as quasi-chairman.

The Board does not consider it feasible to have effective meetings of the
Directors without having related Directors participating. If they were not
participating the Board meetings would essentially be conducted in a vacuum.

                                       8
<PAGE>

BOARD COMMITTEES

The Board of Directors has four standing committees: the Audit Committee, the
Compensation Committee, the Corporate Governance Committee and the Nominating
Committee. The Board has established a policy to strive to implement the
recommendations of the TSX Report wherever possible and practical.

AUDIT COMMITTEE

The Audit Committee is currently composed of a majority of outside directors and
unrelated directors. In accordance with recent guidelines and, subject to the
availability of suitably qualified directors, it is the Board's objective to
appoint only independent directors to the Audit Committee. The members of the
Audit Committee, the internal accounting staff and the external auditors have
unrestricted direct access to, and communication with, each other to assist them
in carrying out their respective duties. The Committee is responsible for
reviewing and making recommendations to the Board on:

1.    financial statements and the related reports of management and external
      auditors;

2.    accounting and financial reporting procedures and methods;

3.    internal audit procedures and reports, and matters relating to external
      auditors, including the appointment and terms of engagement of external
      auditors and their reports relating to accounting, financial and internal
      audit matters.

During 2004 the Board adopted a "Charter of the Audit Committee". This Charter
is attached as Appendix 1 of this Management Information Circular.

      COMPENSATION COMMITTEE

The Compensation Committee is currently composed of one related and two
unrelated directors. The Committee is responsible for making recommendations to
the Board on:

1.    compensation of officers and senior employees of the Corporation,
      including stock option incentives;

2.    succession planning for officers of the Corporation;

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee is currently composed of one unrelated and
one related director. The Committee has general responsibility for developing
the approach of the Corporation to matters of corporate governance, which
includes the responsibility for:

1.    assessing, at least annually, the effectiveness of the Board as a whole
      and the committees of the Board;

2.    reviewing annually the mandates of the Board and its committees and making
      recommendations for change;

3.    recommending procedures to permit the Board to function independently from
      management;

4.    seeing to the adequacy of the orientation and education programs for new
      members of the Board;

5.    determining annually which directors should be considered to be unrelated
      directors, and recommending such determination to the Board; and

6.    preparing annually and recommending to the Board a "Statement of Corporate
      Governance Practices".

      NOMINATING COMMITTEE

The Nominating Committee is composed of one unrelated and one related director.
The Committee is responsible for:

1.    identifying prospective nominees for the Board and recommending them to
      the Board; and

2.    establishing criteria for Board membership and retirement therefrom.

      DECISIONS REQUIRING BOARD APPROVAL

As part of the Board's responsibility for the strategic planning process of the
Corporation, the Board considers and, where appropriate, adopts the goals of the
business that are proposed by Management and the strategies and policies within
which the Corporation is managed. Management is required to seek the approval of
the Board for material deviations, financial or otherwise, from the approved
business goals, strategies and policies of the Corporation.

                                       9
<PAGE>

      SHAREHOLDER FEEDBACK

The Corporate Governance Committee is responsible for overseeing the
Corporation's policy for communications with shareholders, the investment
community, the media, governments and the general public. In accordance with
that policy, communications with such parties are handled through the head
office located in Mississauga, Canada.

      EXPECTATIONS OF MANAGEMENT

The Board requires management to keep the Board informed in a timely and candid
manner of the progress of the Corporation towards the achievement of its
established goals, and of any material deviations from such goals and from
corporate strategies and policies approved by the Board.

This Statement of Corporate Governance Practices has been prepared by the
Corporate Governance Committee.

PRIVATE PLACEMENT TRANSACTIONS

The Corporation from time to time investigates opportunities to raise financing
on advantageous terms. While it is not the intention of management at this time
to enter into any private placement agreements other than as previously publicly
disclosed, it seeks the flexibility to enter into private placement agreements,
if required, which could result in the issue of up to 75% of the number of
shares issued and outstanding at this time.

Under the rules of the TSX the aggregate number of shares of a listed company
which are issued or made subject to issuance (i.e. issuable under a share
purchase warrant or option or other convertible security) by way of one or more
private placement transactions during any particular six-month period must not
exceed 25% of the number of shares outstanding (on a non-diluted basis) prior to
giving effect to such transactions (the "TSX 25% Rule"), unless there has been
shareholder approval of such transactions.

The application of the TSX 25% Rule may restrict the availability to the
Corporation of funds which it may wish to raise in the future by private
placement of its securities. The TSX has a working practice that it will accept
advance approval by shareholders in anticipation of private placements that may
exceed the TSX 25% Rule, provided such private placements are completed within
12 months of the date such advance shareholder approval is given.

Any private placement proceeded with by the Corporation under the advance
approval being sought at the Meeting will be subject to the following additional
restrictions:

1.    it must be substantially with parties at arm's length to the Corporation;

2.    it must not result in control of the Corporation being materially
      affected;

3.    it must be completed within a twelve month period following the date the
      shareholder approval is given; and

4.    it must comply with the private placement pricing rules of the TSX which
      currently require that the issue price per common share must not be lower
      than the closing market price of the common shares on the TSX on the
      trading day prior to the date notice of the private placement is given to
      the TSX (the "Market Price"), less the applicable discount. For these
      purposes, a private placement of unlisted convertible securities is deemed
      to be a private placement of the underlying listed securities at an issue
      price equal to the lowest possible price at which the securities are
      convertible by the holders thereof.

The directors of the Corporation believe the passing of a resolution authorizing
the Corporation to enter into private placement transactions for the issuance of
up to 75% of the number of common shares outstanding is in the best interests of
the Corporation and recommend that shareholders vote in favour of the
resolution.

Approval of the resolution will require the favourable vote of a majority of the
votes cast thereon at the Meeting.

APPROVAL OF INCENTIVE STOCK OPTION PLAN

At the annual meeting shareholders will be asked to approve a resolution
creating a new incentive stock option plan (the "2004 Plan") and fixing the
maximum number of shares issuable under the 2004 Plan at 11,250,000 shares. An
explanation of the 2004 Plan and the Corporation's policy in granting incentive
stock options follows:

                                       10
<PAGE>

The Corporation currently has three Stock Option Plans which were approved by
the shareholders in 1995, 1996 and 2002 (collectively referred to as the
"Existing Plans") which in total made 18,750,000 options available to the
Corporation for issuance.

The 2004 Plan was prepared in accordance with the TSX's revised policy on stock
option plans for listed companies (the "TSX Policy") and has the same terms as
the Corporation's existing plans. Options may be granted under the 2004 Plan to
employees, officers, directors, consultants and other service providers of the
Corporation or its affiliates or subsidiaries. The 2004 Plan in common with the
previous stock option plans or share compensation arrangement of the
Corporation, limits the number of outstanding options at any one time and the
total number of shares issuable upon the exercise of options in any one-year
period to 10% of the outstanding issued capital of the Corporation. The total
number of shares issuable to any individual during a one-year period cannot
exceed 5% of the issued capital. The exercise price may not be less than an
approved discount to the market price for shares at the time the option is
granted, options are non-transferrable and cannot be outstanding for more than
10 years and no financial assistance will be provided by the Corporation to
facilitate the purchase of shares under the Plan.

The expressed policy of the Corporation is that its stock incentive plans should
serve to advance the interests of the Corporation by affording employees and
other qualified individuals the opportunity of acquiring an actual interest in
the Corporation, as a supplement to the purposely modest remuneration levels
they are otherwise entitled to, thereby identifying their interests with the
interests of other shareholders. It is the opinion of the Board that this policy
has been successful in the past in enabling the Corporation to attract talented
and resourceful personnel. To augment this policy, the Board of Directors
appointed a Compensation Committee, as advocated by the report of the TSX on
Corporate Governance, and adopted a procedure to be followed in allocating
specific incentive stock options.

This procedure requires that allocations of stock options must be initiated by
the Compensation Committee and supported by a majority of the disinterested
members of that Committee. This procedure also sets a limit on the maximum
number of options available at any one time to non-executive directors and
reserves the balance of the options available exclusively for employees and
other service providers to the Corporation and its subsidiaries. Management is
encouraged to offer advice to the Compensation Committee in respect of options
to employees and service providers but recommendations from the Compensation
Committee to the Board of Directors in the allocation of specific options can
only come from a majority of the disinterested members of the Compensation
Committee, excluding management. This procedure ensures that incentive stock
options granted by the Board of Directors will be based on the recommendations
of members of the Compensation Committee who are free from any apparent conflict
of interest.

The TSX Policy requires incentive stock option plans to specify the aggregate
maximum number of shares that may be issuable under such plans and any number in
excess of that amount requires an amendment to the plan and approval by the
shareholders. The Board has determined that 11,250,000 shares is an appropriate
limit for the 2004 Plan as it will enable the Corporation to continue its stock
incentive policy. Under the Existing Plans, that limit is set at 18,750,000
shares. To accommodate the 2004 plan the Board has determined that this limit be
set at 30,000,000 which is within the "10% of issued and outstanding"
requirement of the Plans. Since the Existing Plans' inception, of the shares
available, options for 4,670,675 shares have been granted and exercised
resulting in a contribution to the Corporation's treasury of $6,696,975. Options
for 12,908,700 shares have been granted and are outstanding and unexercised, and
options for 1,170,625 shares remain available to be granted under the Existing
Plans. This limited number of options available under the Existing Plans
restricts the Corporation in the continued implementation of its remuneration
policy and inhibits the potential cash contributions to its treasury as options
are exercised. It is for this reason that shareholders will be asked to approve
the creation of the 2004 Plan and to increase the limit on the aggregate number
of shares that may be issued under the Plans.

The Existing Plans would continue in effect so that the total number of shares
available for future options granted pursuant to the Corporation's stock
incentive policy under the Existing Plans and the 2004 Plan would be a total of
12,420,625 shares. The proviso that at all times the number of shares which may
be issued upon the exercise of options granted and outstanding under the
Existing Plans and the 2004 Plan cannot exceed 10% of the outstanding issued
capital of the Corporation would continue to apply as well as the other limits
described above.

                                       11
<PAGE>

A copy of the 2004 Plan is available for inspection at the Corporation's offices
in Mississauga, Ontario and will be available at the annual meeting.

The resolution to approve the creation of the 2004 Plan will require the
favourable vote of a majority of the votes cast at the annual meeting. An
aggregate of 80,769 votes attached to common shares of the Corporation
beneficially owned by shareholders who are eligible to participate under the
2004 Plan will be excluded from voting on the resolution.

GENERAL APPROVAL OF CIRCULAR

The contents and sending of this management information circular have been
approved by the Board of Directors of the Corporation,

ON BEHALF OF THE BOARD OF DIRECTORS                         DATED: May 4th, 2004

                                       12
<PAGE>

                                   APPENDIX 1

            CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

      I.    PURPOSE

The purpose of the Audit Committee (the "Committee") of the Board of Directors
(the "Board") of Caledonia Mining Corporation ("Caledonia") is to provide an
open avenue of communication between Caledonia's management ("Management"), the
independent auditors ("Auditors") and the Board and to assist the Board in its
oversight of the:

      -     integrity, adequacy and timeliness of Caledonia's financial
            reporting and disclosure practices;

      -     processes for identifying the principal financial risks of Caledonia
            and the control systems in place to monitor them;

      -     compliance with legal and regulatory requirements related to
            financial reporting; and

      -     independence and performance of Caledonia's Auditors.

The Committee shall also perform any other activities consistent with this
Charter, Caledonia's by-laws and governing laws as the Committee or Board deems
necessary or appropriate.

The Committee's role is one of oversight. It is not the responsibility of the
Committee to determine that Caledonia's financial statements are complete and
accurate and in accordance with generally accepted accounting principles or to
plan or conduct audits. The financial statements are the responsibility of
Management. The Auditors are responsible for performing an audit and expressing
an opinion on the fair presentation of Caledonia's financial statements in
accordance with generally accepted accounting principles.

      II.   AUTHORITY

The Committee has the authority to conduct any investigation appropriate to its
responsibilities, and it may request the Auditors as well as any officer of
Caledonia, or Caledonia's outside counsel, to attend a meeting of the Committee
or to meet with any members of, or consultants to, the Committee. The Committee
shall have unrestricted access to Caledonia's books and records and has the
authority to retain, at Caledonia's expense, special legal, accounting, or other
consultants or experts to assist in the performance of the Committee's duties.
Subject to Board approval, the Committee has the authority to set and pay the
compensation of the advisors employed by the Committee. The Chairperson of the
Committee ("Chairperson") or other member of the Committee so designated by the
Committee may represent the Committee to the extent permitted by applicable
legal and listing requirements.

The Committee shall review and assess the adequacy of this Charter annually and
submit any proposed revisions to the Board for approval.

       III.       COMPOSITION AND MEETINGS

1.    The Committee and its membership shall meet all applicable legal,
      regulatory and listing requirements.

2.    Members of the Committee and the Chairperson shall be appointed by the
      Board and may be removed by the Board in its discretion. The Committee
      will be elected annually at the first Board meeting following the annual
      general meeting.

3.    The Committee shall be comprised of three or more directors, one of whom
      shall serve as the Chairperson.

4.    Each member of the Committee shall be an independent, non-executive
      director, free from any relationship that, in the opinion of the Board,
      could reasonably be expected to interfere with the exercise of his or her
      independence from management, Caledonia, or the Auditors.

5.    All members of the Committee shall be, or promptly after appointment,
      shall become financially literate as determined by the Board. Preferably
      at least one member of the Committee shall have accounting or related
      financial management expertise as determined by the Board.

6.    The Committee shall meet, at the discretion of the Chairperson or a
      majority of its members, as circumstances dictate or as may be required by
      applicable legal or listing requirements, and a majority of the members of
      the Committee shall constitute a quorum.

7.    If and whenever a vacancy shall exist, the remaining members of the
      Committee may exercise all of its powers and responsibilities so long as a
      quorum remains in office.

                                       13
<PAGE>

8.    Any matters to be determined by the Committee shall be decided by a
      majority of votes cast at a meeting of the Committee called for such
      purpose; actions of the Committee may be taken by an instrument or
      instruments in writing signed by all of the members of the Committee, and
      such actions shall be effective as though they had been decided by a
      majority of votes cast at a meeting of the Committee called for such
      purpose. In the case of a tie the Chairperson shall have a second or
      tie-breaking vote.

9.    The Committee shall maintain minutes of meetings and periodically report
      to the Board on significant results of the Committee's activities.

10.   The Committee may invite such other persons to its meetings as it deems
      appropriate.

11.   The Auditors will have direct access to the Committee on their own
      initiative.

      IV.   RESPONSIBILITIES

A.    WITH RESPECT TO THE INTERIM AND ANNUAL FINANCIAL STATEMENTS, THE MD&A, AND
      THE AIF

1.    The Committee shall review Caledonia's interim statements for approval of
      same prior to their being filed with the appropriate regulatory
      authorities. The Committee shall review Caledonia's annual audited
      financial statements and report thereon to prior to their being filed with
      the appropriate regulatory authorities. With respect to the annual audited
      financial statements, the Committee shall discuss significant issues
      regarding accounting principles, practices, and judgments of Management
      with Management and the Auditors as and when the Committee deems it
      appropriate to do so.

2.    The Committee shall review Management's Discussion and Analysis relating
      to annual and interim financial statements, the Annual Information Form
      and any other public disclosure documents that are required to be reviewed
      by the Committee under any applicable laws prior to their being filed with
      the appropriate regulatory authorities.

3.    The Committee shall review Management's earnings releases relating to
      annual and interim financial statements and any other public disclosure
      documents that are required to be reviewed by the Committee under any
      applicable laws prior to their being filed with the appropriate regulatory
      authorities.

4.    The Committee shall review the post-audit or management letter containing
      the recommendations of the Auditors and Management's response and
      subsequent follow-up to any identified weaknesses.

5.    The Committee shall review the evaluation of internal controls by the
      Auditors, together with Management's response.

6.    The Committee shall meet no less frequently than annually separately with
      the Auditors and the Chief Financial Officer to review Caledonia's
      accounting practices, internal controls and such other matters as the
      Committee or Chief Financial Officer deems appropriate.

B.    WITH RESPECT TO THE AUDITORS

1.    The Auditors are ultimately accountable to the Board of Directors. The
      Board has the ultimate authority and responsibility to select, evaluate
      and, where appropriate, replace the Auditors (or nominate the Auditors to
      be proposed for shareholder approval in any proxy statement).

2.    The Committee shall review the performance of the Auditors.

3.    The Committee shall annually recommend to the Board the appointment of the
      Auditors, or, as appropriate, the discharge or replacement of the Auditors
      when circumstances warrant. The Board will set the compensation for the
      Auditors.

4.    The Committee shall be responsible for ensuring that the Auditors submit
      on a periodic basis to the Committee a formal written statement
      delineating all relationships between the Auditors and Caledonia. The
      Committee is responsible for discussing with the Auditors any disclosed
      relationships or services that may impact the objectivity and independence
      of the Auditors and for recommending that the Board take appropriate
      action in response to the Auditor's report to satisfy itself of the
      Auditor's independence.

5.    Caledonia considers the core services provided by the Auditors to include
      the annual audit, tax planning and tax compliance. The Committee shall
      review any engagements for non-audit services beyond the core services
      proposed to be provided by the Auditors or any of their affiliates,
      together with estimated fees, and consider the impact on the independence
      of the Auditors.

6.    The Committee shall review the Auditor's audit plan, including scope,
      procedures and timing of the audit.

                                       14
<PAGE>

C.    OTHER COMMITTEE RESPONSIBILITIES

The Committee shall perform any other activities consistent with this Charter
and governing law, as the Committee or the Board deems necessary or appropriate
including:

1.    Establishing and reviewing Caledonia's procedures for the receipt,
      retention and treatment of complaints regarding accounting, financial
      disclosure, internal controls or auditing matters.

2.    Establishing and reviewing Caledonia's procedures for confidential,
      anonymous submissions by employees regarding questionable accounting,
      auditing and financial reporting and disclosure matters.

3.    Conducting or authorizing investigations into any matters that the
      Committee believes is within the scope of its responsibilities.

4.    Making inquires of management and the Auditors to identify significant
      business, political, financial and control risks and exposures and assess
      the steps management has taken to minimize such risk.

                                       15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.C
<SEQUENCE>7
<FILENAME>t13100exv14wc.txt
<DESCRIPTION>EX-14.C
<TEXT>
<PAGE>

                                                                     EXHIBIT 14c

                          CALEDONIA MINING CORPORATION

                                    SCHEDULES

ALL SCHEDULES SPECIFIED IN ARTICLE 5-04 OF REGULATION S-X ARE CONSIDERED NOT TO
BE APPLICABLE TO CALEDONIA.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.D
<SEQUENCE>8
<FILENAME>t13100exv14wd.txt
<DESCRIPTION>EX-14.D
<TEXT>
<PAGE>

                                                                     EXHIBIT 14d

                          CALEDONIA MINING CORPORATION

                     MINERAL PROPERTIES (THOUSANDS OF $CDN)

The following is a summary of Caledonia's mineral properties and the capitalized
costs as at the 31st December 2003:
<TABLE>
<S>                           <C>         <C>
CANADA:

         Nunavut                          $   750
AFRICA:

         SOUTH AFRICA          5,418
         ZAMBIA                1,044
                              ------

                                            6,462
                                          -------
TOTAL MINERAL PROPERTIES                  $ 7,212
                                          -------
</TABLE>

NOTE: The cost of acquisition of mineral properties and all related exploration
and development expenditures, less recoveries, are capitalized and carried as an
asset to be amortized against income if the property is brought into commercial
production or charged to income if the property is, or is to be, abandoned or
disposed of.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.E
<SEQUENCE>9
<FILENAME>t13100exv14we.txt
<DESCRIPTION>EX-14.E
<TEXT>
<PAGE>

                                                                     EXHIBIT 14e

                          CALEDONIA MINING CORPORATION

                                   SUMMARY OF
                      INDEPENDENT QUALIFIED PERSON'S REPORT

                             BARBROOK MINES LIMITED
                        MPUMALANGA PROVINCE, SOUTH AFRICA

                     PREPARED BY APPLIED GEOLOGY SERVICES CC
                                  ON BEHALF OF
                          CALEDONIA MINING CORPORATION
                                  14TH MAY 2004


<PAGE>

SUMMARY

Barbrook Mines Ltd holds title to a Mining Authorization covering 2,286 hectare
in extent in the Barberton District of South Africa. The Mining Authorization
area hosts numerous small gold deposits collectively known as the Barbrook Mine.
Mining activities started in the area in 1885 and have continued intermittently
since then, culminating in the consolidation of the Barbrook mines in 1975.

Following a period of extensive exploration involving surface diamond drilling
and underground development, a state-of-the-art gold plant was commissioned in
1989. The mine operated for 16 months before being put on care and maintenance
on account of the grade and tonnage forecasts not being met.

For a brief period Maid O' the Mist operated the mine before Caledonia Mining
Corporation acquired control in 1995. Operations continued until 1997 when low
head grades caused by the mass mining methods forced the mine to close pending a
re-assessment of the reserves and resources. The mineral resources were
re-evaluated in 2001-2 and following a recommendation to commence with trial
mining, Caledonia re-started operations in 2002. For the period to December
2003, Barbrook produced 33,000 tonnes at a head grade of 6,8 g/t showing that
the ore body could be mined successfully. However, metallurgical difficulties
caused by mechanical breakdowns have necessitated a substantial re-engineering
of the plant (in progress).

Barbrook ore bodies are typical Archean gold deposits occurring as near vertical
shoots in the Barberton Greenstone Belt, which is host to a number of
significant gold mines, viz. Sheba, Fairview, and Consort mines. The mineralized
shoots tend to be vertically continuous in this environment and Barbrook is
considered to have potential resources down to 1,000 m below existing levels.
Some 60 mineralized structures have been defined by exploration, mainly on-reef
development. While many of these are currently uneconomic, a number of large
bodies along the Barbrook and Zwartkoppie lines contain substantial mineral
resources. French Bob, Victory, Daylight and Taylors are the main bodies of
economic interest. The ores are refractory on account of the fine dissemination
of gold in sulphides as well as the associated organic carbon and metallurgical
recoveries have generally been between 60% and 70%.

Mineral Reserves and Resources have been estimated as at 31 December 2003 based
largely on data gained during previous periods of operation. Proven and Probable
Reserves amount to 243,000 tonnes at 6.0 g/t while Measured and Indicated
Resources are estimated at 1,760,000 tonnes at an in situ grade of 4.9 g/t.
Relative to the 2002 estimate, 47% of the Reserves were transferred to the
Resource category, mainly due to the application of more stringent criteria in
estimating Reserves. Barbrook's reserves are sufficient to last the mine 27
months at planned production rates, during which time ongoing exploration is
expected to convert part of the above Resources to Reserves as new zones are
exposed.

Key activities at the mine include the sinking of an incline shaft at French Bob
to access the next 150 m section of the ore body, deep diamond drilling to
define shoot extensions and lateral development to establish further reserves.
The mine plan is to expand the current production of 6,000 tpm to 12,000 tpm by
2005 while keeping the target head grade at 5.5 g/t



</TEXT>
</DOCUMENT>
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