-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Rng6nxeO5kSoRjcuP42isnyhgE9ZesS2rDzvUvyS4sBEMqtNa0z8JYIymLNHLEV+
 JWrd+l34Ux7nfIBt/oGxvg==

<SEC-DOCUMENT>0001137171-04-001077.txt : 20040813
<SEC-HEADER>0001137171-04-001077.hdr.sgml : 20040813
<ACCEPTANCE-DATETIME>20040813162316
ACCESSION NUMBER:		0001137171-04-001077
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040813
FILED AS OF DATE:		20040813

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CALEDONIA MINING CORP
		CENTRAL INDEX KEY:			0000766011
		STANDARD INDUSTRIAL CLASSIFICATION:	GOLD & SILVER ORES [1040]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			A1
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-13345
		FILM NUMBER:		04974660

	BUSINESS ADDRESS:	
		STREET 1:		9-2145 DUNWIN DRIVE
		CITY:			MISSISSAUGA
		STATE:			A6
		ZIP:			L5L 4L9
		BUSINESS PHONE:		9056077543

	MAIL ADDRESS:	
		STREET 1:		9-2145 DUNWIN DRIVE
		CITY:			MISSISSAUGA
		STATE:			A6
		ZIP:			L5L 4L9

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDEN NORTH RESOURCE CORP
		DATE OF NAME CHANGE:	19920302
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>cal6k.htm
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>Filed By Filing Services Canada Inc.&nbsp; 403-717-3898</title>
<META NAME="author" CONTENT="rszczype">
<META NAME="date" CONTENT="08/13/2004">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center><B>FORM 6-K<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center><B>Report of Foreign Private Issuer </B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center><B>Pursuant to Rule 13a-16 or 15d-16 <BR>
of the Securities Exchange Act of 1934</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">For the month of &nbsp;August 2004</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Commission File Number: <FONT COLOR=#3F3F3F>000-13345</FONT></P>
<P style="margin:0pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Caledonia Mining Corporation</B> <BR>
(Translation of registrant's name into English)</P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Unit #9, 2145 Dunwin Drive</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Mississauga</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Ontario L5L 4L9</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Canada<BR>
</B>(Address of principal executive offices)<BR>
</P>
<P style="margin:0pt; font-family:Times New Roman" align=center>&nbsp;
</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman" align=center>Form 20-F _X__ Form 40-F_____</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp; </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): <U>____</U> </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp; </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): <U>____</U> </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.</P>
<P style="margin:0pt; font-family:Times New Roman" align=center>Yes <U>____</U> No <U>__X___</U></P>
<P style="margin:0pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">If &quot;Yes&quot; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- <U>_______</U> </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center><B>Signatures</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:360pt; font-family:Times New Roman"><B>Caledonia Mining Corporation<BR>
</B>(Registrant)</P>
<P style="margin:0pt; padding-left:360pt; text-indent:252pt; font-family:Times New Roman">&nbsp;<BR>
</P>
<P style="margin:0pt; padding-left:324pt; text-indent:36pt; font-family:Times New Roman">By:<u>_/s/ James Johnstone</u></P>
<P style="margin:0pt; padding-left:360pt; font-family:Times New Roman">Name: James Johnstone</P>
<P style="margin:0pt; padding-left:360pt; font-family:Times New Roman">Title: Vice President Operations</P>
<P style="margin:0pt; padding-left:360pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman">Dated: &nbsp;&nbsp;August 13, 2004<BR>
</P>
<P style="margin:0pt; text-indent:180pt; font-family:Times New Roman"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>Exhibit Index</B></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman"><U>Exhibit</U></P>
<P style="margin:0pt; text-indent:216pt; font-family:Times New Roman"><U>Description</U></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:234pt; text-indent:-216pt; font-family:Times New Roman">31</P>
<P style="margin:0pt; padding-left:234pt; font-family:Times New Roman"><U>Form 52-109F2 Certification of Interim Filings CEO</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:234pt; text-indent:-216pt; font-family:Times New Roman">32</P>
<P style="margin:0pt; padding-left:234pt; font-family:Times New Roman"><U>Form 52-109F2 Certification of Interim Filings CFO</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:216pt; text-indent:-216pt; font-family:Times New Roman">99.1</P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Second Quarter Report 2004</U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:216pt; text-indent:-216pt; font-family:Times New Roman">99.2</P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Press Release dated August 13, 2004<BR>
</U></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:20pt" align="center"><i>&nbsp;</i></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; line-height:52pt; font-family:Times New Roman; font-size:50pt" align="center"><b>2004</b></p>
<p style="margin:0pt; line-height:52pt; font-family:Times New Roman; font-size:50pt" align="center"><b>Second
Quarter&nbsp;</b></p>
<p style="margin:0pt; line-height:52pt; font-family:Times New Roman; font-size:50pt" align="center"><b>Report</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center"><img border="0" src="cal6k1.gif"></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:30pt" align="center">&nbsp;</p>
<p style="margin:0pt; line-height:50pt; font-family:Times New Roman; font-size:48pt" align="center"><b>CALEDONIA</b></p>
<p style="margin:0pt; line-height:50pt; font-family:Times New Roman; font-size:48pt" align="center"><b>Mining
Corporation</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<br>
<p align="center">1</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>2004
Objectives &nbsp;(as expressed in 2003 Annual Report)</b></p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Return
    the Barbrook Gold Mine in South Africa to economic gold production;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Develop
    additional reserves/resources at the Barbrook mine;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Complete
    a feasibility study of installing a Biox(r) bacterial leach circuit at
    Barbrook;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Acquire
    the 3.78% minority interests in Eersteling and delist Eersteling from the
    JSE Securities Exchange, South Africa;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Explore
    potential for low grade gold open-pit at Eersteling's Roodepoort
    Exploration Project in South Africa;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Identify
    platinum resource at Eersteling's Rooipoort Exploration Project in South
    Africa;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Test
    the feasibility of producing an economic cobalt concentrate from Nama
    property in Zambia;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Seek
    joint-venture partner to commence an exploration program at the Kadola
    copper/cobalt property in Zambia;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">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;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Conduct
    a bulk sampling program on the Goedgevonden diamond property in South Africa
    and conduct a limited washing program on the oxidized cap to collect a 100ct
    parcel of stones which can be assessed to establish the coloured stone
    potential of the property;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Recruit
    additional senior staff for the South African operations as they develop;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Strengthen
    the Board of Directors of Caledonia to address recent changes in Corporate
    Governance Regulations;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Adopt
    a Code of Ethics and the relevant charters to Caledonia;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Evaluate
    listing Caledonia on American (AMEX) and London (LSE) Stock Exchanges;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Arrange
    necessary financing to support the activities required to meet these
    objectives.</font></li>
</ul>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Second
Quarter 2004 Highlights &nbsp;&nbsp;</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Redeemed
    minority shareholdings in Eersteling thus making it 100% owned by Caledonia.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Conducted
    major modifications to metallurgical plant at Barbrook. &nbsp;Continued
    investigation to improve gold recoveries in resin-in-leach (RIL) circuit.
    &nbsp;Progressed with metallurgical testwork on a number of different
    process alternatives;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Continued
    underground development at Barbrook including excavation of hoist room at
    decline shaft to access Taylors ore zone below 10 level;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Appointed
    Mike Tombs as Vice President Finance and Chief Financial Officer, to be
    based in Johannesburg, South Africa. Steven Poad has assumed the position of
    Controller;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Completed
    additional detailed soil sampling at the Roodepoort Exploration Project at
    Eersteling, and designed a drill program for third quarter to test the
    potential of a low-grade gold open-pit for this area;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Drilled
    an additional 1,880 meters on the Rooipoort Platinum Exploration Project to
    virtually complete Phase 1 of this explorationstratigraphic drilling
    program;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Obtained
    shareholder approval to increase the Caledonia board of directors to six
    members;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Mobilised
    contractor and equipment to Nama cobalt project in preparation for a bulk
    sample collection;</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol; font-size:11pt" align="justify"><font FACE="Times New Roman">Raised
    $4.8 million net of financing costs from arms-length private placement and
    $79,000 from the exercise of warrants.</font></li>
</ul>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify">&nbsp;</p>
<p align="center">2</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>President's
Message</b></p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Despite
the further circuit changes made in the metallurgical operations during March
and April there was no significant gold recovery or production achieved in the
Barbrook plant in the quarter. However, there have been improvements in gold
recovered in July and August and gold recovery and production now appears to be
increasing. &nbsp;Efforts are being directed at the oxygenation and
resin-in-leach circuits, particularly in the area of resin contamination, to
resolve the problem. Concurrent with this work, metallurgical testing is
continuing on a number of fronts including the initial engineering studies for a
full Biox(r) plant at Barbrook and ultra fine milling of its flotation
concentrate.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Mining
was refocused on underground development during this period with encouraging
results in the Taylors zone. &nbsp;&nbsp;Underground services have been
re-installed in the Daylight/Victory area and development there is progressing.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Exploration
drilling at the Rooipoort Platinum Exploration Project near Mokopane, South
Africa continued throughout the quarter and 286 hectares of mineral rights were
purchased and 56 hectares of prospecting rights were acquired, totalling 342
hectares of additional property immediately adjoining the Rooipoort Platinum
Exploration Project.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Exploration
activities were conducted on the Rooipoort (platinum), Roodepoort (gold), Kikerk
Lake (diamonds) and Nama (cobalt) properties during the quarter.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Mike
Tombs was appointed Vice President Finance and Chief Financial Officer of the
Corporation. &nbsp;He is based in the Johannesburg office.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-9pt; font-family:Times New Roman" align="justify">The
net loss of $1.4 million during the quarter is comprised of unrealized currency
&nbsp;translation losses, operating losses and administration costs.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">Caledonia
completed the private placement financing which commenced during the first
quarter. &nbsp;In total the Corporation raised $14.2 million, net of financing
costs, during the first six months of 2004 through the financing program and the
exercise of warrants.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<p style="margin:0pt; padding-left:-27pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="text-indent: 63pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt; padding-left: -27pt" align="justify">("signed")</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:-27pt; padding-right:-18pt; text-indent:63pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>S.
E. Hayden</b></p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; text-indent:135pt; font-family:Times New Roman" align="justify"><b><br>
</b></p>
<p style="margin:0pt; padding-left:-27pt; text-indent:63pt; font-family:Times New Roman" align="justify">Chairman
of the Board,</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:-27pt; text-indent:63pt; line-height:14pt; font-family:Times New Roman" align="justify">President
and</p>
<p style="margin:0pt; padding-left:-27pt; text-indent:135pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:-27pt; text-indent:63pt; line-height:14pt; font-family:Times New Roman" align="justify">Chief
Executive Officer</p>
<p style="margin:0pt; padding-left:-27pt; text-indent:171pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; font-family:Bookman Old Style; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Bookman Old Style; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>Management's
Responsibility for Financial Reporting</b></p>
<i>
<p style="margin:0pt; padding-left:-27pt; text-indent:387pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</i></p>
<p style="margin:0pt; padding-left:-27pt; font-family:Times New Roman" align="justify"><b><i>To
the Shareholders of Caledonia Mining Corporation:</i></b></p>
<p style="margin:0pt; padding-left:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">The
accompanying unaudited consolidated financial statements of Caledonia were
prepared by management in accordance with accounting principles generally
accepted in Canada, consistently applied and within the framework of the summary
of significant accounting policies in these consolidated financial statements.
&nbsp;Management is responsible for all information in the quarterly report.
&nbsp;All financial and operating data in the quarterly report is consistent,
where appropriate, with that contained in the consolidated financial statements.</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Times New Roman" align="justify">The
Board of Directors discharges its responsibilities for the consolidated
financial statements primarily through the activities of its Audit Committee
composed of three directors, two of whom are not members of management.
&nbsp;This Committee meets with management to assure that it is performing its
responsibility to maintain financial controls and systems and to approve the
quarterly consolidated financial statements of Caledonia. &nbsp;</p>
<p style="margin:0pt; padding-right:-18pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; text-indent:-27pt; font-family:Times New Roman" align="justify">The
consolidated financial statements have not been reviewed by Caledonia's
auditors.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify">("signed")</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman" align="justify">("signed")</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify">&nbsp;<b>S.
E. Hayden</b></p>
<b>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman" align="justify">M.D.
Tombs</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify">Chairman
of the Board, President and</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman" align="justify">Vice-President
Finance and</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify">Chief
Executive Officer</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman" align="justify">&nbsp;Chief
Financial Officer</p>
<p align="center"><br>
<p align="center">&nbsp;</p>
<p align="center">3</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>CALEDONIA
MINING CORPORATION</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:252pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:324pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;June
30, 2004 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<b>
<p style="margin:0pt; text-indent:540pt; font-family:Times New Roman; font-size:12pt"><br>
</b></p>
<p style="margin:0pt; padding-left:144pt; text-indent:-144pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>Management's
Discussion and Analysis</b></p>
<p style="margin:0pt; padding-left:144pt; text-indent:-144pt; font-family:Times New Roman">Expressed
in Canadian Dollars</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">This
discussion provides updated information to the Management Discussion and
Analysis contained in Caledonia's Annual Report for 2003 and in the First
Quarter Report for 2004. &nbsp;Where no comments are made there are no updates
to report.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>OPERATIONAL
REVIEW</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Barbrook
Mines Limited</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Modifications
to the metallurgical plant were completed in May when re-commissioning
commenced. &nbsp;Fine tuning of the plant revisions continued into June. The
plant operated sporadically during the month, treating 3,986 tonnes in June.
&nbsp;As no significant quantity of gold was recovered it was apparent that
further changes were necessary to the Aachen oxygenation and Resin-in-Leach (RIL)
sections. &nbsp;These plant changes were in progress at the quarter's end.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Caledonia
continues to evaluate 'ultra-fine milling' and 'whole-plant Biox(r)'
metallurgical processes to determine whether further recovery improvements and
improved economics can be attained. As ongoing test work and the in-house
feasibility are completed, further revisions and additions to the metallurgical
plant may be expected.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The focus of
underground mining remained on development during the quarter. &nbsp;Development
advance has been restricted by the need to re-establish services, particularly
electric power for ventilation fans, in those areas remote from the main Taylors
block. &nbsp;In the Taylors ore zone the main development emphasis was the
development of a double compartment decline shaft which will provide access to
the Taylors zone below the 10 level elevation. &nbsp;The hoist room has been
established as has the access to the shaft location on 10 level.</p>
<p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">&nbsp;&nbsp;</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td style="border:0.5pt solid #000000" valign="top" width="409.667" colspan="3">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify"><b><u>Barbrook
        mine - Q2 -2004 Production Results</u></b></p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; padding-right:-102.7pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Ore
        mined</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Tonnes</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">7,247</p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Development
        advance</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Meters</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">471</p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Ore
        trammed from mine</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Tonnes</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">6,220</p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Ore
        milled</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Tonnes</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">3,986</p>
      </td>
    </tr>
    <tr>
      <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="193.667">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">Grade
        milled</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">g/t</p>
      </td>
      <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">5.8</p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; text-indent:21.6pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>CONSOLIDATED
FINANCIAL RESULTS</b> &nbsp;&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">For the
quarter ended June 30, 2004 the Caledonia recorded a net loss of $1.4 million
($0.005 per share) compared to a net loss of $1.4 million ($0.006 per share)
during the same period in 2003 and a net loss of $436,000 ($0.003 per share) in
the second quarter of 2002. &nbsp;The loss in 2004 primarily reflects the
results from operations at Barbrook during the quarter; the normal
administration expenses and an unrealized currency translation loss.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Financing</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">In the second
quarter of 2004, Caledonia raised an amount of $79,000 from the exercise of
warrants.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The private
placement financing, which commenced in March, continued into the second
quarter. &nbsp;During the &nbsp;second quarter the Company raised a total of
$4.9 million, net of financing costs through the private placement and the
exercise of warrants. 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
remain largely debt-free.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>EXPLORATION
AND PROJECT DEVELOPMENT</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Roodepoort
Gold Exploration Project</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The soil
sampling grid was extended and an additional 467 samples collected. &nbsp;The
results have identified one area of the most intense gold-in-soil signatures.
&nbsp;A drill programme consisting of 300m of diamond drill core drilling has</p>
<p align="center"><br>
<br>
4
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; font-family:Times New Roman" align="justify">been proposed
to further examine this area and evaluate the open pit potential of this unit
for a large low-grade gold operation. &nbsp;During the month of July the
programme was refined and drilling is expected to commence in August<font FACE="Arial">.</font></p>
<p style="margin:0pt; font-family:Arial; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman">Other areas of lower
intensity signatures also exist which warrant further field checking and
follow-up.</p>
<p style="margin:0pt; font-family:Arial; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Rooipoort
Platinum Exploration Project</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">At the
Rooipoort Platinum Exploration Project near Mokopane, South Africa, a total of
1,880 meters was drilled during the quarter. &nbsp;The final hole in the Phase 1
stratigraphic drilling program was being drilled at the end of the quarter.
&nbsp;To date 6,879 meters have been drilled in this 23-hole Phase 1 program
which covers the full 6 km strike-length of the property. &nbsp;Platinum group
mineralisation has been intersected in virtually all of these holes. &nbsp;The
information provided continues to define the stratigraphy of the Rooipoort
target area and will be used to focus the next drilling phase, which is intended
to define an initial resource at Rooipoort. This resource definition-drilling
program is currently scheduled to commence in the third quarter of 2004.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">During the
quarter, mineral rights were negotiated over portions of Grasvally 293KR which
is immediately adjacent to the Southern boundary of the Rooipoort property.
&nbsp;A total of 342 hectares of additional exploration property was either
purchased or optioned. &nbsp;Further land negotiations in this area are ongoing.
&nbsp;A soil-sampling program was completed at Grasvally during May and June.
&nbsp;In total, 672 samples were collected. Results from the initial samples
taken in May are being analysed and prepared for plotting.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Kikerk
Lake Diamond Joint Venture Project</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Processing of
heavy mineral follow-up samples collected from six separate areas on the
property during the 2003 summer season by the operator of the joint venture,
Ashton Mining of Canada ("Ashton"), continued in Ashton's laboratory
during the quarter. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Ashton has
proposed a heavy mineral sampling program and renewal of the 15 Kikerk mineral
leases for 2004. The sampling program which involves the collection of ~350
samples will increase the sample density across the property in those areas
removed from the core Potentilla and Stellaria occurrences. &nbsp;Caledonia's
share of this $300,000 program is funded by Ashton. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><i>Nama
Cobalt Project</i></b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Nine
kilometres of access road were upgraded to allow heavy equipment to reach the
sample site on the Nama cobalt project. &nbsp;Equipment was mobilized to the
site and sampling commenced during July. &nbsp;This bulk sample will be shipped
to Johannesburg, South Africa and, after blending and splitting, will be tested
in South Africa and Canada to determine whether an economically viable
concentrate can be produced for sale. Test results should be available before
the end of the year.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>SUPPLEMENT
TO THE FINANCIAL STATEMENTS</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">As at July
31, 2004 the following items were outstanding:</p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">301,112,288
    common shares.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">12,908,700
    common share purchase options at an average price of $0.26 maturing at
    various dates until April 29, 2014.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">12,000,000
    common share purchase warrants at a price of $0.35 maturing at various dates
    until February 6, 2005.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">22,694,091
    common share purchase warrants exercisable at a price of $0.55 per share
    until October 26, 2005.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">4,538,818
    financing agents' common share purchase warrants exercisable at a price of
    $0.55 until October 26, 2005.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; font-family:Symbol" align="justify"><font FACE="Times New Roman">3,449,114
    share purchase warrants were exercised during the period January 1 to June
    30, 2004.</font></li>
</ul>
<br>
<br>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">5<br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Consolidated
Balance Sheets</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>(in
thousands of Canadian dollars)</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:324pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><font size="2">&nbsp;&nbsp;</font></b></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="432"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
  </tr>
  <tr>
    <td valign="top" width="432"></td>
    <td valign="top" width="96" align="right"><b><font size="2">June 30,</font></b></td>
    <td valign="top" width="96" align="right"><font size="2">December 31</font></td>
  </tr>
  <tr>
    <td valign="top" width="432" style="border-bottom: 1 solid #000000"><b><font size="2">(Unaudited)</font></b></td>
    <td valign="top" width="96" align="right" style="border-bottom: 1 solid #000000"><b><font size="2">2004</font></b></td>
    <td valign="top" width="96" align="right" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Assets</font></b></p>
    </td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">Current</font></p>
    </td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Cash
      and short term deposits</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$12,644</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$4,179</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      receivable</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">325</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">178</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">29</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">86</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Prepaid
      expenses</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">4</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">130</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">13,002</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">4,573</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Investment
      at cost</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">79</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">79</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Capital
      assets</b> (Note 1)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">9,411</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">8,166</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Mineral
      properties</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">7,891</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">7,212</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432" style="border-bottom: 2 solid #000000"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96" style="border-bottom: 2 solid #000000">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$30,383</font></b></p>
    </td>
    <td valign="top" width="96" style="border-bottom: 2 solid #000000">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$20,030</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Liabilities
      and Shareholders' Equity</font></b></p>
    </td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">Current</font></p>
    </td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      payable</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$597</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$790</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Provision
      for site restoration </b>(Note 1)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">904</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">928</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">1,501</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,718</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Non-controlling
      interest </b>(Note 5)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">736</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">1,501</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,454</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Shareholders'
      Equity </b>(Note 2)</font></p>
    </td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Share
      capital</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">173,318</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">159,151</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Contributed
      surplus</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">437</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">285</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Compensation
      warrants</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">307</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">160</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Deficit</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(145,180)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(142,020)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">28,882</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">17,576</font></p>
    </td>
  </tr>
  <tr>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="432"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$30,383</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$20,030</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman">On
behalf of the Board:</p>
<p style="margin:0pt; text-indent:324pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman">("signed")</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:144pt; line-height:14pt; font-family:Times New Roman">Director</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman">F. C. Harvey</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman">("signed")</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:144pt; line-height:14pt; font-family:Times New Roman">Director</p>
<p style="margin:0pt; text-indent:360pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman">J. Johnstone</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p align="center"><br>
6
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:1.35pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Consolidated
Statements of Deficit</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>(in
thousands of Canadian dollars<small>)</small></b></p>
<p>&nbsp;</p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="319.733"></td>
    <td valign="top" width="276" colspan="3" align="center"><font size="2">&nbsp;Three
      month period ended June 30,</font></td>
    <td valign="top" width="74.4" align="center"></td>
    <td valign="top" width="288" colspan="3" align="center"><font size="2">Six
      month period ended June 30,</font></td>
  </tr>
  <tr>
    <td valign="top" width="319.733" style="border-bottom: 1 solid #000000"><font size="2">(Unaudited)</font></td>
    <td valign="top" width="93.4" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="91.867" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="92.6" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
    <td valign="top" width="74.4" align="center" style="border-bottom: 1 solid #000000"><font size="2" color="#FFFFFF">-</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Deficit</b>,
      beginning of period</font></p>
    </td>
    <td valign="top" width="93.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="91.867"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;</b>As
      previously reported</font></p>
    </td>
    <td valign="top" width="93.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($143,614)</font></b></p>
    </td>
    <td valign="top" width="91.867">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($127,541)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($123,403)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($142,414)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($127,858)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($123,527)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;&nbsp;</b>&nbsp;Change
      in accounting policy (Note 1)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="93.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(131)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="91.867">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">394</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">533</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">541</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;</b>As
      restated</font></p>
    </td>
    <td valign="top" width="93.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(143,745)</font></b></p>
    </td>
    <td valign="top" width="91.867">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(127,541)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(123,403)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(142,020)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(127,325)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(122,986)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Net
      (loss) for the period</font></b></p>
    </td>
    <td valign="top" width="93.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,435)</font></b></p>
    </td>
    <td valign="top" width="91.867">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,414)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(436)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(3,160)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,630)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(853)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="319.733">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>Deficit</b>,
      end of period</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="93.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><b>($145,180</b>)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="91.867">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($128,955)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($123,839)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($145,180)</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($128,955)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($123,839)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:3pt solid #000000"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Consolidated
Statements of Operations</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>(in
thousands of Canadian dollars except per share amounts)</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:288pt; line-height:14pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;</font></p>
</b>
<table cellspacing="0">
  <tr>
    <td valign="top" width="319.733"></td>
    <td valign="top" width="276" colspan="3" align="center"><font size="2">&nbsp;Three
      month period ended June 30,</font></td>
    <td valign="top" width="74.4" align="center"></td>
    <td valign="top" width="288" colspan="3" align="center"><font size="2">Six
      month period ended June 30,</font></td>
  </tr>
  <tr>
    <td valign="top" width="319.733" style="border-bottom: 1 solid #000000"><font size="2">(Unaudited)</font></td>
    <td valign="top" width="93.4" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="91.867" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="92.6" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
    <td valign="top" width="74.4" align="center" style="border-bottom: 1 solid #000000"><font size="2" color="#FFFFFF">-</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Revenue
      and operating costs</font></b></p>
    </td>
    <td valign="top" width="93.467"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Revenue
      from sales</font></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$30</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$-</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$21</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$170</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$53</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$30</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Operating
      costs (Note 1)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">1,396</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,240</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">144</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">2,711</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,320</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">219</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Gross
      profit (loss)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,366)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,240)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(123)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(2,541)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,267)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(189)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Costs
      and expenses</font></b></p>
    </td>
    <td valign="top" width="93.467"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;General
      and administrative</font></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">660</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">258</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">266</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">959</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">628</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">588</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Interest</font></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">88</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">44</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">135</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">64</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">24</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Other
      expense (income) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Note 4)</font></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(679)</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(128)</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">49</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(462)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(329)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">54</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">69</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">174</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">315</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">632</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">363</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">666</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">(Loss)
      before non-controlling interest</font></b></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,435)</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,414)</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(438)</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(3,173)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,630)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(855)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling
      interest</font></p>
    </td>
    <td valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2</font></p>
    </td>
    <td valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(13)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(2)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="320.133">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Net
      (loss) for the period</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="93.467">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($1,435)</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($1,414)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="92.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($436)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($3,160)</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($1,630)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($853)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td style="border-top:3pt solid #000000" valign="top" width="320.133">
      <p style="margin-top:6pt; margin-bottom:0pt; font-family:Times New Roman"><b><font size="2">Net
      (loss) per share (Note 3)</font></b></p>
    </td>
    <td style="border-top:3pt solid #000000" valign="top" width="93.467"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="92.4"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td style="border-top:3pt solid #000000" valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td style="border-bottom:3pt solid #000000" valign="top" width="320.133">
      <p style="margin-top:0pt; margin-bottom:6pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Basic
      and fully diluted</font></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="93.467">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><b><font size="2">($0.005)</font></b></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="92.4">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><font size="2">($0.006)</font></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="92.4">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><font size="2">($0.003)</font></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="73.6"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="96">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><b><font size="2">($0.011)</font></b></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="96">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><font size="2">($0.007)</font></p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="96">
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="right"><font size="2">($0.005)</font></p>
    </td>
  </tr>
</table>
<font size="2"><br>
</font>
<p>&nbsp;</p>
<p align="center">7<br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<br>
<br>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Consolidated
Statements of Cash Flows</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>(in
thousands of Canadian dollars)</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right">&nbsp;</p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="319.733"></td>
    <td valign="top" width="276" colspan="3" align="center"><font size="2">&nbsp;Three
      month period ended June 30,</font></td>
    <td valign="top" width="74.4" align="center"></td>
    <td valign="top" width="288" colspan="3" align="center"><font size="2">Six
      month period ended June 30,</font></td>
  </tr>
  <tr>
    <td valign="top" width="319.733" style="border-bottom: 1 solid #000000"><font size="2">(Unaudited)</font></td>
    <td valign="top" width="93.4" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="91.867" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="92.6" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
    <td valign="top" width="74.4" align="center" style="border-bottom: 1 solid #000000"><font size="2" color="#FFFFFF">-</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2"><b>2004</b></font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2003</font></td>
    <td valign="top" width="96" align="center" style="border-bottom: 1 solid #000000"><font size="2">2002</font></td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Cash
      provided by (used in)</font></b></p>
    </td>
    <td valign="top" width="90.8"><font size="2">&nbsp;</font></td>
    <td valign="top" width="90.933"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Operating
      activities</font></b></p>
    </td>
    <td valign="top" width="90.8"><font size="2">&nbsp;</font></td>
    <td valign="top" width="90.933"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Net
      (loss) for the period</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><b>($1,435</b>)</font></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($1,414)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($436)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($3,160)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($1,630)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($853)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Adjustments
      to reconcile net cash from</font></p>
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;operations
      &nbsp;(Note 6)</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(682)</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">8</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">6</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(592)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">34</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">14</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;Changes
      in non-cash working capital</font></p>
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balances
      &nbsp;(Note 6)</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(169)</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(67)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(47)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(157)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(336)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
      </font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">86</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(2,286)</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,473)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(477)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(3,909)</font></b></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,932)</font></p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(753)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Investing
      activities</font></b></p>
    </td>
    <td valign="top" width="90.8"><font size="2">&nbsp;</font></td>
    <td valign="top" width="90.933"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Purchase
      of investment</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(79)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(79)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Expenditures
      on capital assets</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(927)</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(10)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(27)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,114)</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(194)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(27)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Expenditures
      on mineral properties</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(496)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(45)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(79)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(679)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,081)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(13)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,423)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(55)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(185)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(1,793)</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,275)</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(119)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Financing
      activities</font></b></p>
    </td>
    <td valign="top" width="90.8"><font size="2">&nbsp;</font></td>
    <td valign="top" width="90.933"><font size="2">&nbsp;</font></td>
    <td valign="top" width="92.6"><font size="2">&nbsp;</font></td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Loan
      payable</font></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(5)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,275)</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">-</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(44)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,030)</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Issue
      of share capital net of issue costs</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">4,885</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">9</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,672</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">14,167</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,520</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,672</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">4,885</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">4</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,397</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">14,167</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,476</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,642</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Increase
      (decrease) in cash for the period</font></b></p>
    </td>
    <td valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">1,176</font></b></p>
    </td>
    <td valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,524)</font></p>
    </td>
    <td valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">735</font></p>
    </td>
    <td valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">8,465</font></b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(731)</font></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">770</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Cash
      and cash equivalents, beginning of period</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">11,468</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2,657</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">125</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">4,179</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">1,864</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">90</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="323.267">
      <p style="margin:0pt; font-family:Times New Roman"><b><font size="2">Cash
      and cash equivalents, end of period</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$12,644</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="90.933">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$1,133</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$860</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="74.4"><font size="2">&nbsp;</font></td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$12,644</font></b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$1,133</font></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$860</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:3pt solid #000000"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<br>
<br>
<br>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<br>
<br>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:3pt solid #000000"><br>
</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:3pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Summary
of Significant Accounting Policies</b></p>
<p style="margin-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>(Unaudited)</b></p>
<b>
<p style="text-indent: 216pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</b>
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Nature of
Business</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The Company
is engaged in the acquisition, exploration and development of mineral properties
for the exploitation of base and precious metals. &nbsp;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 disposal of such capital assets and mineral properties.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Basis of
Presentation</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">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. &nbsp;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.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Measurement
Uncertainties</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">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. &nbsp;The more significant areas
requiring estimates relate to mineral resources, future cash flows associated
with capital assets and mineral properties. &nbsp;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.
&nbsp;The amount ultimately recovered could be materially different than the
estimated values.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Principles
of Consolidation</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The
consolidated financial statements include the accounts of the Company together
with all its subsidiaries. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">The Company's
principal consolidated subsidiaries are Barbrook Mines Limited (100% owned)
(&quot;Barbrook&quot;), Eersteling Gold Mining Company Limited (96% owned up to
June 14, 2004; &nbsp;100% thereafter) (&quot;Eersteling&quot;) and Caledonia
Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and
Caledonia Western Limited (all 100% owned) (collectively known as
&quot;Caledonia Zambia&quot;).</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Change in
Accounting Policy</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Asset
Retirement Obligation</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">Effective
January 1, 2004 the Company adopted the Canadian Institute of Chartered
Accountants Standard 3110, "Asset Retirement Obligations" This standard
requires that a liability for retirement obligations to be settled as a result
of an existing law, regulation or contract be recognized when incurred and
recorded at fair value on a retroactive basis, see Note 1.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="center"><br>
9</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
<br>
<br>
</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Notes
to the Consolidated Financial Statements</b></p>
<p style="margin-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>&nbsp;(Unaudited)</b></p>
<b>
<p style="text-indent: 252pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>1.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman" align="justify"><b>Asset
Retirement Obligation</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:9pt" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Company retroactively applied the standard effective January 1, 2002. As a
result, comparative financial information has been restated as follows ($000's):</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><br>
</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="324"><font size="2">&nbsp;</font></td>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">Previously
        reported</font></p>
      </td>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">As
        restated</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Net
        loss as at June 30, 2003</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$1,614</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$1,630</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Deficit
        as at June 30, 2003</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">&nbsp;129,472</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">128,955</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Net
        loss as at June 30, 2002</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">837</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">853</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Deficit
        as at June 30, 2002</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">124,364</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">123,839</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Capital
        assets as at Dec. 31, 2003</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">7,471</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">8,166</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Provision
        for site restoration as at Dec. 31, 2003</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">627</font></p>
      </td>
      <td valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">928</font></p>
      </td>
    </tr>
    <tr>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Deficit
        as at Dec. 31, 2003</font></p>
      </td>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">142,414</font></p>
      </td>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">142,020</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
new accounting standard applies to future asset retirement requirements for the
Barbrook and Eersteling mines located in South Africa. &nbsp;The Company is in
the process of confirming the fair value of certain asset retirement obligations
and thus the determination of the provision under the new accounting standard is
subject to refinement.</p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>2.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Share
Capital</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:49.65pt; text-indent:-21.3pt; line-height:14pt; font-family:Times New Roman">(a)</p>
<p style="margin:0pt; padding-left:49.65pt; font-family:Times New Roman">Issued</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td valign="top" width="324"><font size="2">&nbsp;</font></td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">Number
        of Shares</font></u></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">Amount
        (000's)</font></u></p>
      </td>
    </tr>
    <tr>
      <td style="border-top:0.5pt solid #000000" valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Balance,
        December 31, 2003</font></p>
      </td>
      <td style="border-top:0.5pt solid #000000" valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">252,274,997</font></p>
      </td>
      <td style="border-top:0.5pt solid #000000" valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$159,151</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Issued
        pursuant to private placement<sup> (1)</sup></font></p>
      </td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">29,095,525</font></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">&nbsp;9,602</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;Warrants
        exercised</font></p>
      </td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">3,042,648</font></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">&nbsp;682</font></p>
      </td>
    </tr>
    <tr>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;</b>Share
        issue expense and agent compensation warrants<sup>(1)</sup></font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(1,002)</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;</b>Balance,
        March 31, 2004</font></p>
      </td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">284,413,170</font></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">168,433</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;Issued
        pursuant to private placement<sup> (1)</sup></font></p>
      </td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">16,292,652</font></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">5,376</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;Warrants
        exercised</font></p>
      </td>
      <td valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">406,466</font></p>
      </td>
      <td valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">79</font></p>
      </td>
    </tr>
    <tr>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;Share
        issue expense and agent compensation warrants<sup>(1)</sup></font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(570)</font></p>
      </td>
    </tr>
    <tr>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="324">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2"><b>&nbsp;&nbsp;</b>Balance,
        June 30, 2004</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="119.4">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">301,112,288</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="122.867">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$173,318</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:49.5pt; text-indent:-49.5pt; font-family:Times New Roman" align="justify"><sup>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</sup></p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:28.35pt; line-height:14pt; font-family:Times New Roman" align="justify"><sup>(1)</sup></p>
<p style="margin:0pt; padding-left:28.35pt; text-indent:25.65pt; font-family:Times New Roman" align="justify">During
the first half of 2004, Caledonia raised a gross amount $15.0 million from a
private placement by the issuance of 45,388,177 units consisting of one common
share and one-half common share purchase warrant. &nbsp;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. &nbsp;&nbsp;</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">The
private placement agents were paid a commission of 9% of the gross proceeds
raised and whole common share purchase warrants equal to 10% of the total units
sold. &nbsp;The agent compensation warrants are exercisable for one common share
at $0.55 per warrant for a period of eighteen months from the date of issuance.
&nbsp;A total of 4,538,818 agent compensation warrants were issued at an
assigned a value of $147,000 or $0.032 per warrant. &nbsp;Cash commissions and
expenses paid amounted to $1.4 million. &nbsp;&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p align="center"><br>
<br>
<br>
10
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
<br>
</p>
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt">&nbsp;</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Notes
to the Consolidated Financial Statements</b></p>
<p style="margin-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>&nbsp;(Unaudited)</b></p>
<b>
<p style="text-indent: 252pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman">&nbsp;</p>
<p style="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>2.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Share
Capital </b>(continued)</p>
<p style="margin:0pt; padding-left:49.65pt; text-indent:-21.3pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:49.65pt; text-indent:-21.3pt; line-height:14pt; font-family:Times New Roman">(b)</p>
<p style="margin:0pt; padding-left:49.65pt; font-family:Times New Roman">Stock
Option Plans</p>
<p style="margin:0pt; padding-left:-1.2pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">The
Company has established incentive stock option plans for employees, officers,
directors, consultants and other service providers. &nbsp;As at June 30, 2004,
the Company has 12,908,700 options outstanding comprised of the following:</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><br>
</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><u><font size="2">Number
        of Options</font></u></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><u><font size="2">Exercise
        Price</font></u></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><u><font size="2">Expiry
        Date</font></u></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">410,700</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.750</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">April
        28, 2005</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">813,000</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.330</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">February
        9, 2008</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">9,950,000</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.235</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">April
        24, 2012</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">225,000</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.345</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">June
        2, 2012</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">500,000</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.280</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">November
        4, 2013</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="168">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">1,010,000</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">&nbsp;$
        0.260</font></p>
      </td>
      <td valign="top" width="150">
        <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">April
        29, 2014</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:36pt; text-indent:-9pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:36pt; text-indent:-9pt; line-height:14pt; font-family:Times New Roman">(c)</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:36pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman">Warrants
&nbsp;</p>
<p style="margin:0pt; padding-left:36pt; text-indent:108pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">The
Company has 39,232,909 common share purchase warrants issued pursuant to private
placements which are outstanding as of June 30, 2004:</p>
<p style="margin:0pt; padding-left:-1.2pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td valign="top" width="144">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><u><font size="2">Number
        of Warrants</font></u></p>
      </td>
      <td valign="top" width="162">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><u><font size="2">Shares
        for Warrants</font></u></p>
      </td>
      <td valign="top" width="116.8">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><u><font size="2">Exercise
        Price</font></u></p>
      </td>
      <td valign="top" width="153.2">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><u><font size="2">Expiry
        Date</font></u></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="144">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">12,000,000</font></p>
      </td>
      <td valign="top" width="162">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">1
        for 1</font></p>
      </td>
      <td valign="top" width="116.8">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">$0.350</font></p>
      </td>
      <td valign="top" width="153.2">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">February
        6, 2005</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="144">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">17,457,315</font></p>
      </td>
      <td valign="top" width="162">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">1
        for 1</font></p>
      </td>
      <td valign="top" width="116.8">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">$0.550</font></p>
      </td>
      <td valign="top" width="153.2">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">September
        29, 2005</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="144">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">9,775,594</font></p>
      </td>
      <td valign="top" width="162">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">1
        for 1</font></p>
      </td>
      <td valign="top" width="116.8">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">$0.550</font></p>
      </td>
      <td valign="top" width="153.2">
        <p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">October
        26, 2005</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>3.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Net
(Loss) Per Share</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">The
net (loss) per share figures have been calculated using the weighted average
number of common shares outstanding during the year to date which amounted to
278,450,034 and 298,543,193 shares for the second quarter. &nbsp;Under the
treasury method of calculating fully diluted income per share, exercise of the
outstanding stock options and warrants would be anti-dilutive in 2004. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>4.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Other
Expense (Income)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">Included
in other expense (income) are unrealized currency translation losses of
$334,000, (2003 - gain of $304,000; 2002 - loss $54,000) and a gain on
redemption of the non-controlling interest of a subsidiary company of $724,000
in 2004 (see Note 5). &nbsp;&nbsp;These currency translation losses are a result
of the increase of the value of the South African Rand against the Canadian
dollar.</p>
<p style="margin:0pt; padding-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>5.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Non-controlling
Interest</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">During
the second quarter of 2004, Eersteling Gold Mining Company Limited completed a
share redemption arrangement for those shares which traded on the Johannesburg
Stock Exchange ("JSE"). &nbsp;Pursuant to the terms of the redemption plan,
the minority shareholders had their 584,362 ordinary shares converted into
584,362 redeemable preference shares, which were redeemed at a price of 0.21
rand per share. &nbsp;The price of 0.21 rand</p>
<p align="center"><br>
<br>
<br>
11
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt">&nbsp;</p>
<p style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align="right"><b>Caledonia
Mining Corporation</b></p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align="right"><b>Notes
to the Consolidated Financial Statements</b></p>
<p style="margin-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>&nbsp;(Unaudited)</b></p>
<b>
<p style="text-indent: 252pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<p style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><br>
<br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>5.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Non-controlling
Interest</b> (continued)</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">per
share was the highest price traded for the shares on the JSE last year.
&nbsp;Payment during June 2004 amounted to approximately 123,000 rand ($25,000
Cdn.). &nbsp;</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify">As
a result of the redemption, Eersteling is now a 100% owned subsidiary of
Caledonia. &nbsp;Accordingly a gain of $724,000 was recognized in the
consolidated accounts upon acquisition of the non-controlling interest in
Eersteling.</p>
<p style="margin:0pt; padding-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>6.</b></p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><b>Supplemental
Cash Flow Information</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman">Items
not involving cash are as follows ($000's):</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td valign="top" width="228"><font size="2">&nbsp;</font></td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><u><font size="2">2004</font></u></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">2003</font></u></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">2002</font></u></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Accretion
        asset retirement obligation</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">$8</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$16</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$16</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Non-controlling
        interest</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(13)</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(2)</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Stock
        option benefit expense</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">153</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Gain
        on acquisition of non-controlling &nbsp;&nbsp;&nbsp;&nbsp;interest of
        subsidiary company</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
        </font></p>
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(724)</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
        </font></p>
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2"><br>
        </font></p>
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Other</font></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">16</font></b></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">18</font></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228"><font size="2">&nbsp;</font></td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($592)</font></b></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$34</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$14</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman">The net
changes in non-cash working capital balances for continuing operations are as
follows:</p>
<p style="margin:0pt; text-indent:28.35pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table cellspacing="0">
    <tr>
      <td valign="top" width="228"><font size="2">&nbsp;</font></td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><u><font size="2">2004</font></u></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">2003</font></u></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><u><font size="2">2002</font></u></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Accounts
        payable</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($193)</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($167)</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$96</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Accounts
        receivable</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">(147)</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">(171)</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">10</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Inventories</font></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">57</font></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
      <td valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">Prepaid
        expenses</font></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">126</font></b></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">2</font></p>
      </td>
      <td style="border-bottom:1pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">-</font></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="228"><font size="2">&nbsp;</font></td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><b><font size="2">($157)</font></b></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="108">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">($336)</font></p>
      </td>
      <td style="border-bottom:1.5pt solid #000000" valign="top" width="96">
        <p style="margin:0pt; font-family:Times New Roman" align="right"><font size="2">$86</font></p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p align="center"><br>
<br>
<br>
12
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><br>
</p>
<table border="0" width="65%">
  <tr>
    <td width="45%" valign="top">
      <p style="margin:0pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align="justify"><b><font size="2">Corporate
      Directory</font></b></p>
      <b>
      <p style="margin:0pt; text-indent:252pt; font-family:Times New Roman; font-size:14pt" align="justify"><font size="2"><br>
      </font></b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><b><font size="2">BOARD
      OF DIRECTORS</font></b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">S.
      E. Hayden</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">J.
      Johnstone</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">F.
      C. Harvey</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">W.
      I. L. Forrest</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">C.
      R. Jonsson</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><b><font size="2">OFFICERS</font></b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">S.
      E. Hayden</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Chairman
      of the Board, President and</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Chief
      Executive Officer</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">F.
      C. Harvey</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Technical
      Director</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;</p>
      <p style="margin:0pt; font-family:Times New Roman"><font size="2">J.
      Johnstone</font></p>
      <p style="margin:0pt; font-family:Times New Roman"><i><font size="2">Vice-President
      Operations and</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman"><i><font size="2">Chief
      Operating Officer</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">M.
      D. Tombs</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Vice-President
      Finance and</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Chief
      Financial Officer</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;</p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">J.
      Smith</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><i><font size="2">Vice-President
      Exploration</font></i></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      <b>CORPORATE OFFICES<br>
      Canada - Head Office</b></font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><b><font size="2">Caledonia
      Mining Corporation</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Unit
      9, 2145 Dunwin Drive</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Mississauga,
      Ontario</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">L5L
      4L9 Canada</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Tel:
      (905) 607-7543</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Fax:
      (905) 607-9806</font></p>
      <p style="text-indent: 0; font-family: Times New Roman; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><b><font size="2">South
      Africa</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><b><font size="2">Greenstone
      Management Services (Pty) Ltd.</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">P.O.
      Box 587</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Johannesburg
      2000</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">South
      Africa</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Tel:
      &nbsp;(27)(11) 447-2499</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Fax:
      (27)(11) 447-2554</font></p>
      <p style="text-indent: 0; font-family: Times New Roman; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2"><br>
      <b>Zambia</b></font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><b><font size="2">Caledonia
      Mining (Zambia) Limited</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">P.O.
      Box 36604</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Lusaka,
      Zambia</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Tel:
      (260)(1) 29-1574</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Fax:
      (260)(1) 29-2154</font></p>
      <p style="text-indent: 0; font-family: Times New Roman; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2"><br>
      <b>SHARES LISTED</b></font></p>
    <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">The
      Toronto Stock Exchange Symbol "CAL"</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">NASDAQ
      OTC BB Symbol &quot;CALVF&quot;</font></td>
    <td width="46%" valign="top">
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2"><b>CAPITALIZATION
      </b>at June 30, 2004</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Authorised:
      Unlimited</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Shares,
      Warrants and Options Issued:</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Common
      Shares: 301,112,288</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Warrants:
      39,232,909</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Options:
      12,908,700</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2"><br>
      <b>Web Site: </b><u>http://www.caledoniamining.com</u></font></p>
      <p style="font-family: Times New Roman; font-size: 12pt; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">SOLICITORS</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">Borden
      Ladner Gervais LLP</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Suite
      4100, Scotia Plaza</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">40
      King Street West</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Toronto,
      Ontario M5H 3Y4 Canada</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0">&nbsp;</p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">Tupper,
      Jonsson &amp; Yeadon</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">1710-1177
      West Hastings Street</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Vancouver,
      British Columbia</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">V6E
      2L3 Canada</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2"><br>
      <b>AUDITORS</b></font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">BDO
      Dunwoody LLP</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">Chartered
      Accountants</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Suite
      3200, 200 Bay Street</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Royal
      Bank Plaza, South Tower</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Toronto,
      Ontario M5J 2J8 Canada</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0">&nbsp;</p>
      <p style="line-height: 11pt; font-family: Times New Roman; font-size: 9pt; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">REGISTRAR
      &amp; TRANSFER AGENT</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2"><b>Equity
      Transfer Services Inc</b>.</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Suite
      420 120 Adelaide Street West</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Toronto,
      Ontario M5H 4C3 Canada</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Tel:
      &nbsp;(416) 361-0152</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Fax:
      (416) 361-0470</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2"><br>
      <b>BANKERS</b></font></p>
      <p style="line-height: 11pt; font-family: Times New Roman; font-size: 9pt; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">Canadian
      Imperial Bank of Commerce</font></b></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">6266
      Dixie Road</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">Mississauga,
      Ontario</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">L5T
      1A7 Canada</font></p>
      <p style="font-family: Bookman Old Style; font-size: 14pt; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0">&nbsp;</p>
      <p style="line-height: 14pt; font-family: Times New Roman; font-size: 12pt; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><b><font size="2">Caledonia
      Mining Corporation</font></b></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Unit
      # 9</font></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">2145
      Dunwin Drive</font></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Mississauga,
      Ontario, Canada</font></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">L5L
      4L9</font></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify">&nbsp;</p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Tel:&nbsp;&nbsp;
      (905) 607-7543</font></p>
      <p style="font-family: Shruti; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0" align="justify"><font size="2">Fax:&nbsp;
      (905) 607-9806</font></p>
      <p style="font-family: Times New Roman; text-indent: 0; margin-left: 0; margin-right: 0; margin-top: 0pt; margin-bottom: 0"><font size="2">info@caledoniamining.com</font></td>
  </tr>
</table>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; padding:3pt; font-family:Times New Roman; font-size:12pt; border:0.75pt solid #FFFFFF" align="center"><br>
<img border="0" src="cal6k2.gif"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:12pt"><br>
</p>
<p style="margin-top:14pt; margin-bottom:3.5pt; line-height:16pt; font-family:Arial; font-size:14pt" align="center"><b>CALEDONIA
MINING CORPORATION</b></p>
<p style="margin-top:14pt; margin-bottom:3.5pt; line-height:16pt; font-family:Arial; font-size:14pt" align="center"><b>NEWS
RELEASE</b></p>
<p style="margin-top:14pt; margin-bottom:3.5pt; line-height:16pt; font-family:Arial; font-size:14pt" align="center"><b>SECOND
QUARTER 2004 FINANCIAL RESULTS</b></p>
<p style="margin-top:14pt; margin-bottom:3.5pt; line-height:16pt; font-family:Arial; font-size:14pt" align="center"><b>and
GENERAL UPDATE</b></p>
<p style="margin-top:15pt; margin-bottom:3.75pt; line-height:16pt; font-family:Arial; font-size:14pt" align="center"><b>13<sup>th
</sup>August 2004, &nbsp;4.00 pm.</b></p>
<p style="margin:0pt; font-family:TimesNewRoman; font-size:11pt"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman" align="justify">Caledonia
Mining Corporation ("Caledonia") of Toronto (TSX: CAL and NASDAQ-OTCBB:
CALVF) is pleased to announce its key financial results for the second quarter
of its 2004 fiscal year, together with a general update of its properties. The
results are reported in Canadian dollars except where stated otherwise.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman" align="justify">The
Corporation reports an overall loss for the quarter of $1.4 million ($0.005 per
share). &nbsp;<font FACE="Times New Roman">The net loss of $1.4 million during
the quarter is comprised of unrealized currency translation losses, operating
losses and administration costs.</font></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman" align="justify">The
year-to date loss was $3.2 million ($0.011 per share) compared to a loss of $1.6
million for the same period in 2003.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman,Bold"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; line-height:14pt; font-family:TimesNewRoman,Bold; font-size:12pt"><b>Performance
Highlights:</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Caledonia
continues to remain largely debt free and continues to focus its efforts on
advancing its assets. &nbsp;It has made significant enhancements to its South
African gold operations and management team, and has, either alone or with its
joint venture partners, exploration initiatives in South Africa, Canada and
Zambia.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">At
the Barbrook Mine, despite the further circuit changes made in the metallurgical
operations during March and April there was no significant gold recovery or
production achieved in the plant in the quarter. &nbsp;However, there have been
improvements in gold recovered in July and August and gold recovery and
production now appears to be increasing. &nbsp;Efforts are being directed at the
oxygenation and resin-in-leach circuits particularly in the area of resin
contamination in order to resolve the problem.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Exploration
drilling at the Rooipoort Platinum Exploration Project near Mokopane, South
Africa continued throughout the quarter and 286 hectares of mineral rights were
purchased and 56 hectares of prospecting rights were acquired, totaling 342
hectares of additional property immediately adjoining the Rooipoort Platinum
Exploration Project.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Exploration
activities were conducted on the Rooipoort (Platinum), Roodepoort (gold), Kikerk
Lake (diamonds) and Nama (cobalt) properties during the quarter and will
continue in the third quarter.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Mike
Tombs was appointed Vice President Finance and Chief Financial Officer of the
Corporation. &nbsp;He is based in the Johannesburg, South Africa office.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">During
the second quarter of 2004, Eersteling Gold Mining Company Limited completed a
share redemption &nbsp;arrangement for those shares which traded on the
Johannesburg Stock Exchange ("JSE"), thus making it 100% owned by Caledonia.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Caledonia
completed the private placement financing which commenced during the first
quarter. &nbsp;In total the Corporation raised $14.2 million, net of financing
costs, during the first six months of 2004 through the financing program and the
exercise of warrants. &nbsp;</p>
<br>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>Quarterly
Unaudited Financial Results - $ Thousands</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:TimesNewRoman"><br>
</p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="306.4"><font size="2">&nbsp;</font></td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Q2-2004</u></font></b></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;Q2-2003</u></font></b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
      and operating costs</font></b></p>
    </td>
    <td valign="top" width="94.467"><font size="2">&nbsp;</font></td>
    <td valign="top" width="94.533"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
      from sales</font></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$30</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$-</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
      costs</font></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,396</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,240</font></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
      profit (loss)</font></b></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,366)</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,240)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs
      and expenses</font></b></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;69</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;174</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="306.4">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      (loss) for the period</font></b></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($1,435)</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($1,414)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2"><br>
</font></p>
<table cellspacing="0">
  <tr>
    <td valign="top" width="306.4">
      <p style="margin-top:5pt; margin-bottom:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      (loss) per share</font></b></p>
    </td>
    <td valign="top" width="94.467"><font size="2">&nbsp;</font></td>
    <td valign="top" width="94.533"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top" width="306.4">
      <p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic
      and fully diluted</font></p>
    </td>
    <td valign="top" width="94.467">
      <p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($0.005)</font></p>
    </td>
    <td valign="top" width="94.533">
      <p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="center"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($0.006)</font></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>&nbsp;General
Update</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><i>Production
Activities</i></b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; text-indent:57.3pt; font-family:Times New Roman"><b><br>
</b></p>
<p style="text-indent: 0pt; font-family: Times New Roman; margin: 0pt; padding-left: -21.3pt; padding-right: -28.7pt"><b>Gold</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Modifications
to the metallurgical plant at the Barbrook Mine were completed in May when
re-commissioning commenced. &nbsp;Fine tuning of the plant revisions continued
into June. The plant operated sporadically during the month, treating 3,986
tonnes in June. &nbsp;As no significant quantity of gold was recovered it was
apparent that further changes were necessary to the Aachen oxygenation and
Resin-in-Leach (RIL) sections.These plant changes were in progress at the
quarter's end. &nbsp;There have been improvements in gold recovered in July
and August and gold &nbsp;recovery and production now appear to be improving.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Caledonia
continues to evaluate 'ultra-fine milling' and 'whole-plant Biox(r)'
metallurgical processes to determine whether further recovery improvements and
improved economics can be attained. As ongoing test work and the in-house
feasibility are completed, further revisions and additions to the metallurgical
plant may be expected.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">The
focus of underground mining remained on development during the quarter.
&nbsp;Development advance has been restricted by the need to re-establish
services, particularly electric power for ventilation fans, in those areas
remote from the main Taylors block. &nbsp;In the Taylors ore zone, the main
emphasis was on the development of a double compartment decline shaft which will
provide access to the Taylors zone below the 10 level elevation. &nbsp;The hoist
room has been established as has the access to the shaft location on 10 level.</p>
<p style="margin:0pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><b><i>Exploration
Activities</i></b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="text-indent: 0pt; font-family: Times New Roman; margin: 0pt; padding-left: -21.3pt; padding-right: -28.7pt"><b>Platinum
Group Metals</b></p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">At
the Rooipoort Platinum Exploration Project near Mokopane, South Africa, a total
of 1,880 meters was drilled during the quarter. &nbsp;The final hole in the
Phase 1 stratigraphic drilling program was being drilled at the end of the
quarter. &nbsp;To date 6,879 meters have been drilled in this 23-hole Phase 1
program which covers the full 6km strike-length of the property. &nbsp;Platinum
group mineralisation has been intersected in virtually all of the holes. The
information provided continues to define the stratigraphy of the Rooipoort
target area and will be used to focus the next drilling phase, which is intended
to define an initial resource at Rooipoort. This resource-definition drilling
program is currently scheduled to commence in the third quarter of 2004.</p>
<p style="margin-top:0pt; margin-bottom:6pt; padding-right:-28.7pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<br>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">During
the quarter mineral rights were negotiated over portions of Grasvally 293KR
which is immediately adjacent to the Southern boundary of the Rooipoort
property. &nbsp;A total of 342 hectares of additional exploration property was
either purchased or optioned. &nbsp;Further land negotiations in this area are
ongoing. &nbsp;A soil-sampling program was completed at Grasvally during May and
June. &nbsp;In total 672 samples were collected. Results from the initial
samples taken in May are &nbsp;being analysed and prepared for plotting.</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-right:-28.7pt; font-family:Times New Roman"><b>Gold</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Eersteling
has identified a near-surface gold exploration prospect ("Roodepoort").
Testing is ongoing and will continue throughout 2004. Results from the 2003/4
sampling program have been received and are being evaluated. During the quarter,
336 soil grid samples were collected, as were 155 chip samples from outcrops of
favorable host rock within the targeted area and a number of old workings and
adits were sampled. &nbsp;The samples have been sent for assaying and results
are awaited. The open pit potential for Roodepoort for a large low-grade
operation has never previously been evaluated. Drilling is planned &nbsp;in the
third quarter of 2004 on targets generated from the results of this sampling
program and previous data of Roodepoort.</p>
<p style="margin:0pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="text-indent: 0pt; font-family: Times New Roman; margin: 0pt; padding-left: -21.3pt; padding-right: -28.7pt"><b>Diamonds</b></p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><b>Kikerk
Lake Joint Venture</b> -<b>Canada</b>. &nbsp;&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:6pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman">Processing
of heavy mineral follow-up samples collected from six separate areas on the
property during the 2003 summer season by the operator of the joint venture,
Ashton Mining of Canada ("Ashton"), continued in Ashton's laboratory
during the quarter. &nbsp;</p>
<p style="margin-top:0pt; margin-bottom:6pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Ashton
has proposed a heavy mineral sampling program and renewal of the 15 Kikerk
mineral leases for 2004. The sampling program which involves the collection of
~350 samples will increase the sample density across the property in those areas
removed from the core Potentilla and Stellaria occurrences. &nbsp;Caledonia's
share of this $300,000 program is funded by Ashton. &nbsp;</p>
<p style="margin-top:0pt; margin-bottom:6pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align="justify"><b>Base
Metals</b></p>
<p style="text-indent: 0pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 5pt; padding-right: -28.7pt" align="justify"><b>Nama
Cobalt Project - Zambia</b></p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Nine
kilometres of access road were upgraded to allow heavy equipment to reach the
sample site on the Nama cobalt project. &nbsp;Equipment was mobilized to the
site and sampling commenced during July. &nbsp;This bulk sample will be shipped
to Johannesburg, South Africa and after blending and splitting will be tested in
South Africa and Canada to determine whether &nbsp;an economically viable
concentrate can be produced for sale. &nbsp;Test results should &nbsp;be
available by year end.</p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.3pt; padding-right:-28.7pt; font-family:Times New Roman" align="justify">Caledonia's
Second quarter report has been posted on SEDAR and is available on the
Corporation's website at http://www.caledoniamining.com</p>
<p style="margin:0pt; padding-left:-21.3pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:-21.3pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:-21.3pt; font-family:Times New Roman" align="center">For
further information please contact Caledonia Mining Corporation:</p>
<p style="margin:0pt; text-indent:-21.3pt; font-family:Times New Roman" align="center">&nbsp;</p>
<p style="margin:0pt; text-indent:-21.3pt; font-family:Times New Roman" align="center">&nbsp;</p>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0>
<TR>
   <TD width="39%" align="center"><B><FONT size=2>S. E. Hayden</FONT></B></TD>
   <TD width="31%" align="center"><B><FONT size=2>James Johnstone</FONT></B></TD>
   <TD width="30%" align="center"><B><FONT size=2>Chris Harvey</FONT></B></TD>
</TR>
<TR>
   <TD width="39%" align="center"><FONT size=2>Chairman, President and CEO</FONT></TD>
   <TD width="31%" align="center"><FONT size=2>V-P Operations and COO</FONT></TD>
   <TD width="30%" align="center"><FONT size=2>Technical Director</FONT></TD>
</TR>
<TR>
   <TD width="39%" align="center"><FONT size=2>South Africa</FONT></TD>
   <TD width="31%" align="center"><FONT size=2>Canada</FONT></TD>
   <TD width="30%" align="center"><FONT size=2>Canada</FONT></TD>
</TR>
<TR>
   <TD width="39%" align="center"><FONT size=2>Tel: (011-27-11) 447-2499</FONT></TD>
   <TD width="31%" align="center"><FONT size=2>Tel: (1-905) 607-7543</FONT></TD>
   <TD width="30%" align="center"><FONT size=2>Tel: (1-905) 607-7543</FONT></TD>
</TR>
<TR>
   <TD width="39%" align="center"><FONT size=2>Fax: (011-27-11) 447-2554</FONT></TD>
   <TD width="31%" align="center"><FONT size=2>Fax: (1-905) 607-9806</FONT></TD>
   <TD width="30%" align="center"><FONT size=2>Fax: (1-905) 607-9806</FONT></TD>
</TR>
</TABLE>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.25pt; font-family:Times New Roman" align="center">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.25pt; font-family:Times New Roman" align="center">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:5pt; padding-left:-21.25pt; font-family:Times New Roman" align="center">Further
information regarding Caledonia's exploration activities and operations along
with its latest financials may be found on the Corporation's website <font COLOR="#0000FF"><u>http://www.caledoniamining.com</u></font></p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>Form
52-109FT2 - Certification of Interim Filings</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">I,
Stefan E. Hayden, CEO of Caledonia Mining Corporation, certify that:</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">1.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">I
have reviewed the interim filings (as this term is defined in Multilateral
Instrument 52-109 <i>Certification of Disclosure in Issuers Annual and Interim
Filings</i>) of Caledonia Mining Corporation, (the issuer) for the interim
period ending June 30<sup>th</sup>, 2004;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">2.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Based
on my knowledge, the interim filings do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under
which it was made, with respect to the period covered by the interim filings;
and</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">3.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Based
on my knowledge, the interim financial statements together with the other
financial information included in the interim filings fairly present in all
material respects the financial condition, results of operations and cash flows
of the issuer, as of the date and for the periods presented in the interim
filings;</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Date:__13
August 2004</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;("signed")</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">______________________</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">[Signature]</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">S.E.
Hayden, Chairman, President</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
Chief Executive Officer.</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
&nbsp;
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>Form
52-109FT2 - Certification of Interim Filings</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">I,
Michael D. Tombs, CFO of Caledonia Mining Corporation, certify that:</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">1.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">I
have reviewed the interim filings (as this term is defined in Multilateral
Instrument 52-109 <i>Certification of Disclosure in Issuers Annual and Interim
Filings</i>) of Caledonia Mining Corporation, (the issuer) for the interim
period ending June 30<sup>th</sup>, 2004;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">2.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Based
on my knowledge, the interim filings do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under
which it was made, with respect to the period covered by the interim filings;
and</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:54pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">3.</p>
<p style="margin:0pt; padding-left:54pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Based
on my knowledge, the interim financial statements together with the other
financial information included in the interim filings fairly present in all
material respects the financial condition, results of operations and cash flows
of the issuer, as of the date and for the periods presented in the interim
filings;</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">Date:__13
August 2004_______</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;("signed")</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">______________________</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">[Signature]</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">M.D.
Tombs, Vice President Finance</p>
<p style="margin:0pt; padding-left:18pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
Chief Financial Officer.</p>
<p><br>
</p>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>cal6k1.gif
<TEXT>
begin 644 cal6k1.gif
M1TE&.#EAO0"<`/<``!@8$&-:6O___P``````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"'Y!```````+`````"]`)P```C^``4('$BPH,&#
M"!,J7,BPH<.'$"-*G$BQHL6*`3)JW,AQX\6/($.*',FPH\F3)TFJ7,F2),J7
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M^'GGZW>KU[Y1T?7MMU]^O!4E7'\")A@74D0=2&"""H9&VU\`$@;AA0&0QN!-
M%3*&X8>-.243@B"6R-EA(UIHXHJEK=0A7"S&V.)(+[XEXXW:@52CA#CVB)Z.
M,9&X(H\^P@1DD"I&F%V1+UV&I(<#SH8=`,%5]>2"\XT&951$>F4E3$F2Q1=B
M6KJGG(9C>78EC"^Q>6:99N)G(UT3K3EGFUC*":=T>MZ99D0IYBGFEG;RN=%N
M@8;9UVF)^JG;@WA&MJ-\'<7Y%:-@$FJ2I8=R^J:0G2[Y)U>%CCDHI89>9:FD
MHY:4J:#^CXH:*J1C@9KA<%Z2&JF;IZ9Z*ZSF`4L@K58Y5"J5NP+'$;#M$2DD
ML2$J=.RK>=K:I7=H0JMHL0D=BVRLL`9X([3\,5M9M]0ZNNRVXK)(KFSFGGM0
MJ>E>"^^V%]I:J:;1&E0OFNOR.ZO`4>*[;[PS^M:KO>7RNK##`KZ[J<$;^OOO
MMQ,3?+#&UTD,KKKR$G0QQAN#G"S"N>GK[:(*9PSQP`P_;'+*'I\,\(DB7VRS
MJ>/5K)K/,I,<LD`C[RQTP!^CK"K00><Z4-%)WPRST.W6RK3.+!N'==0\N^QH
MU7==#75A3V]=<LR_,@LVF10[-W/%6C?-]=%3=UTWVCUS[#;^W@42O;/19GNM
M=*.#<_<R:V7+_#?@WMK=Y]N8Z>U?W%PO+G?C=#<>[.$S!A[PVVU_+KGHG$=7
M^'M^*Z[ZW(:'WO#HD9<^X=AG.W[WWDJO;;7LS-%.NNWW\CZWU*^?SC;DO3,N
M./#%,X_YT2JW!3M.J;->N>5)M:O[YGS;YWO=GN/.YO;<$[_A]\&C/;W1LG:\
M?DS5+P\\Q^^S'SW-QJ.'?OKFUV]__C\#H)$H)[_,I2UFKGM<`J7G/[7$KW8&
MI)\`GP>A!5+O@;^+(,H:.#+GT8>#)DG<]:Q'P@`*+S@6O"`!(1@^_IDO=B_$
M%@@[DK/5C?"&7NG>!T\XN?TUSX#^!]3A<4HT0QJ*$(<9U.`$F72[K-%+>?)C
M(@R1ER,?!K%_1>Q1"E6(P29>#H(>E&(!6[5"%D(QB4`4(QC3.*$CCO&+:U2C
M@W@X.3<FL84NC*$<Q<9%.V;0BO>3XQ7#V,8:PA&,]A/D\,AHR#<&38E+C-$6
M^]C(*%IQD(3T$1\IZ4<O+I)]BLQC)G-4R3B>L8"C#%;K(MDD:5W28^1KEA`Q
MR4:XV>:5>J.4+*GXPU36\9:G-.4C]1BV!$Z2D\`\I#"'Q\OL><J33G,5+D/G
MJRG&DI:QP50PT<C&:HK/=9O\);JFU<%:LHIPST1C;@!%SG).:D_I5.<ZV0G*
ME<T1GKK^9.8\Z5E///X/GY_R9=\D@DY"-I.9<#I>+1%7)WL^R73X7&B*JO2E
M?F9)2X*\R#LERL#EA/)(B0RE%$524&**%$./<>=)<>0BS:U41BPIJ4!?FAP4
MN92F'ZK)1F>*TU`Q5$28ZZDS3;H4GNR4IR]=GX%D2E2<!K*H/CDJ1T6:SQ#^
MYYZL9&)5C6@7K&851_&$:E>]>E`IAE4J\%$@';6X5:ZF1ZUE'5+[X%>751X3
M0W.E*W7L>E?]>+.5EOEF7U'X5P?61K"#+:9'45><,CXOBWP]JUB+$]"\YA!7
MA6QL%Q\KV6%:%IF:_4Q$1SO+R6K68D,E;4)_>EK7B%:UJ\%-66MUE5K8+C9A
ML]7F:VV;Q=Q65+%[2HMO05J^IW)KN"$1JF&12R/E9H6Y-L4I=*/ZT>E.A8G6
9K>N-LNN8%7&W-PGZ+G2S)M[RFA<D`0$`.S\_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>3
<FILENAME>cal6k2.gif
<TEXT>
begin 644 cal6k2.gif
M1TE&.#EA2``[`/<``````"E*_S%2_S%:_SE:_SEC_SEK_T)K_T)S_TI[_TJ$
M_U*$_U*,_U*4_UJ4_UJ<_V.E_V.M_VNM_VNU_VN]_W.]_W/&_WO._WO6_X36
M_X3>_X3G_XSG_XSO_Y3W_Y3______P``````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"'Y!```````+`````!(`#L```C^`$$('$BPH,&#
M"!,J7,BP(<,`$"-*=$BQXD.(`C)JW+@QHL6/#B-R'$"RI$F.$T&J'(@QH\D!
M!&(6*`"@0$P"+S5"7/FQI4N2!``('4JT*`"<)74&X-FP94FC4*,.39IQ*5.$
M`322G"D5@=>O7Z46(*GS*D&G,*&"19"@K=NV:Z$BK6J5:5:708M^??M6@0*^
M;L,6G2M@ITJT>8?N=>NW\8+'"QK[?2MXZ-@!=$&BI4G4:UO)"QB('DU:=.3&
M@1$4)5NX+L6[:3LS]AMZ=(/;N'.3/OT7KNJ:-C&WK@@[L5"V"1J3ONV@^8/G
MT)L[N$T:=0*O!PP8"%[U-5[.`#S^)U=@NX$#Z.@A0$`?G;KHR=<19-\^MOO#
M[XJ1*ZAMWOES]0`&""!ZS35@6F_8T8>3?0II!9YX?HEF'G0!2@5`@.T=Z%MV
M,RU8F$+%Y3>>4`Q,^`"`%AHUX`/3,2#49`G.))QK!6$4VW&?%?4?!%!1X../
M4*GWG`-%;;C=@H89E-56BN6H(H]$35#!E%16.4%1*!:%X`$'=(A9DBSA):("
M1!$Y5`02"$7!E!:TZ>:;5`HE0010"M7`4%L>.:.2+LF60)G/13G!FFY>8.BA
MAKHYY003I#D4BT3!Q:6,7]:X9&*>D?GHB74*5:BA&(0JZJ&*8CDDGI+JR2`(
ML/FI*0#^YZF'9E&'AII!!AKDFD&HI$9)YWK3#96JC*NVVN2KYYT(`)I2$G4!
M!KCF*JVNO`HZYWJ0OAA?EY=]&"9)8PX5:YV$$A4M!^BF2RU1%5#0Z*_9"C4L
MDF<)<"-R@*HW%)L7$+4!!QT$+#`'&V@PU`46+#I!!'0^=Z>\UW'H85V7-OFG
MG?^QV^:S177@P<<>!$P4!@@G["[#V#X,@&_T[<FJ2P^V)6[&:E:P,;1%>?#!
M!Q\3I0')"+?[+K9F`O"75RW;!UO,%\-*,P"$@IHK!T3M_,%0'.0*M,E#GZHM
MTL1ZN[3%,RM;LP52:X!NU4-UD/7/B0I]K==&QY>TV#"3+53^LN3:C#:T&OS;
M@5%N%[QKW.[.'>_1"-Q-L;V8RKQIG5)N_.S4`+?M]MN\MBDTRH$*:W?8C]_K
MI-/Z"L7OL]'^FRZZ!6MP>-`5,`KZ`ZA&K*JW+X-['%O(<CH4H6BS/NT&L5.;
M*-?7`IN[?*JZ9BR.30/P-`!L%F_KM-1NG7#M7>.N[;:4\OZRO:[.G/K9Q3\K
MZONDMNFN[4(6G2?I9U7\>W+Y4DY\^XB*W_<8U;S0C0]ZW#'?^0:0OKWMB"AK
M\MN;)OB]"@!@:-@BRI:X118:+1!3P`N>\"!8I0E2B0)8(AJ>[C>Q@RQI`$Q[
ME=-&6)0?V1"%3Z(;?.3#+21YD%7^^J/>?LJ6I12E4(7/0Z`/$Q*B_?$/`"5*
MU@.->"$A#<E`!T1@?11H$`>):#RA88X4!43&%;%H.@9B0&2,Y*55N1`_3DQ.
M>:28'C,2R#T,V*$66W@?R($G/"$DSQS]PYXSHK$Z>IQ/`G^(%3'Y:3S[64YN
M)HE'-5KG.I99I$5@PT"]Z,<QI0GE:'C3F_@0I5O#(0XG_PA(Y'S&,9")I60H
MXY6BH!),K^&D<7[G2KY(II2T_$TF68/+36HE)D992R\!$Q>CQ(28C#3F3[@2
M%64V$RJHY*)=..D[*EHH.-`TBPOO8B^@[-*(-D&*<-PH3CYIQ20WF8D\TZE.
HUF2FG1<@(><[7\)/E!03GPN1"$<&ZL]_`G23$DEH2@[*T(8:)"``.S\_
`
end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
