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<SEC-DOCUMENT>0001137171-05-000769.txt : 20050517
<SEC-HEADER>0001137171-05-000769.hdr.sgml : 20050517
<ACCEPTANCE-DATETIME>20050517142515
ACCESSION NUMBER:		0001137171-05-000769
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20050516
FILED AS OF DATE:		20050517
DATE AS OF CHANGE:		20050517

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:		05838249

	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>caledonia6k0516.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="05/16/2005">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<BR>
<BR>
<BR>
<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><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><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">For the month of May 2005<U> </U></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><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)
</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><BR>
</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: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">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">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">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-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: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-top:0pt; margin-bottom:-12pt; padding-left:360pt; font-family:Times New Roman">&nbsp;</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:360pt; text-indent:252pt; font-family:Times New Roman">&nbsp;
</P>
<P style="margin:0pt; padding-left:324pt; text-indent:36pt; font-family:Times New Roman">By:&nbsp;
/s/ James Johnstone</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;May 16, 2005</P>
<P style="margin:0pt; text-indent:180pt; font-family:Times New Roman"><BR></P>
<BR>
<BR>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<p><br>
<br>
<p style="page-break-before:always; 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">Exhibit</p>
<p style="margin:0pt; text-indent:216pt; font-family:Times New Roman">Description</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-12pt; padding-left:216pt; text-indent:-216pt; font-family:Times New Roman"><u>1.1</u></p>
<p style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><u>First
Quarter &nbsp;Report 2005</u></p>
<br>
<br>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<p><br>
</p>
<br>
<br>
<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" align="center">&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;&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>
<div align="center">
  <center>
  <table style="font-size:10pt" cellspacing="0">
    <tr>
      <td style="background-color:#00007F; border:0.5pt solid #FFFFFF" valign="top" width="828">
        <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"><br>
        </p>
        <p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center"><br>
        </p>
        <p style="margin:0pt; padding-left:120.6pt; line-height:28pt; font-family:Times New Roman; font-size:26pt" align="center"><font FACE="Arial Black" COLOR="#FFFFFF"><i>Caledonia
        Mining Corporation</i></font></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"><br>
        </p>
      </td>
    </tr>
  </table>
  </center>
</div>
<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:Arial Black; font-size:24pt" align="center"><br>
</p>
<p style="margin:0pt; line-height:26pt; font-family:Arial Black; font-size:24pt" align="center">First
Quarter Report: 2005</p>
<br>
<br>
<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">
<br>
<br>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>2005
      FIRST QUARTER HIGHLIGHTS</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b>Barbrook
Gold Mine</b></p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Production
    improvements were evident during first quarter and have continued through
    April.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Planned
    enhancements to the metallurgical plant have been substantially completed.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Mineral
    structures in Crescent and Victory zones intersected by development on 10
    level.</font></li>
</ul>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b>Exploration</b></p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">New
    order Prospecting Permit for Grasvally property granted by the South African
    Department of Minerals and Energy.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Three
    drill programs completed with 3,653 meters drilled at Rooipoort platinum
    project.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Airborne
    geophysical survey completed over Eersteling gold project.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Geochemical
    soil sampling program of 3,389 samples completed at Eersteling gold project.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Metallurgical
    testing of trench sample from Nama cobalt project continues to assist pilot
    plant design.</font></li>
</ul>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b>Corporate/Financial</b></p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Mr.
    Rupert Pardoe appointed to Board of Directors and elected as non-executive
    Chairman.</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Caledonia
    continues to pursue listing on the London Stock Exchange Alternative
    Investment Market ("AIM") in conjunction with a financing, forecast to take
    place in June 2005</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Strengthened
    public and investor relations functions by directing all Investor Relations
    matters from the office of the President and contracting a specialist
    financial communications firm.</font></li>
</ul>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>2005
      OBJECTIVES</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt">&nbsp;</p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Return
    the Barbrook Gold Mine in South Africa to economic gold production</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Continue
    developing additional reserves/resources at the Barbrook Mine</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Complete
    the feasibility studies of installing a Biox(r) bacterial leach and/or
    ultra-fine milling and/or Dense Media Separation circuit at Barbrook and
    commence construction</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Obtain
    the prospecting licence for the Grasvally portions of the Rooipoort Platinum
    Exploration Project</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Identify
    the platinum resource on the farms Rooipoort and Grasvally which form the
    Rooipoort Platinum Exploration Project in South Africa</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">From
    the existing exploration information together with the recently completed
    high resolution airborne Geophysics and Soil Chemical Programs identify and
    drill possible &nbsp;extensions to the known ore zones on the Eersteling and
    Zandrivier Mining Licence areas</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Confirm
    the feasibility of producing an economic cobalt concentrate from the Nama
    property in Zambia. Construct a pilot plant at Nama to produce a cobalt
    concentrate for testing</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Conclude
    an agreement with a cobalt end producer to purchase cobalt concentrate
    produced at Nama or possibly form a strategic alliance to achieve this
    objective</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Seek
    a joint-venture partner to commence an exploration program at the Kadola
    copper/cobalt and the Eureka copper/gold properties in Zambia</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Expand
    the Board of Directors to address ongoing Corporate Governance requirements</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Implement
    succession plans for senior executive and operational staff</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">Strengthen
    the Investor Relations and Public Relations functions</font></li>
  <li>
    <p style="margin:0pt; padding-left:36pt; text-indent:-9pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><font FACE="Shruti">List
    Caledonia on the London Stock Exchange Alternative Investment Market ("AIM")
    with an issue of new shares to support the activities required to meet these
    objectives</font></li>
</ul>
<p><br>
<br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">2</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">
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><b>Management's
Responsibility for Financial Reporting</b></p>
<i>
<p style="margin:0pt; text-indent:360pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</i></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>To
the Shareholders of Caledonia Mining Corporation:</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" 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; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" 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, none of whom are 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; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">The
consolidated financial statements have not been reviewed by Caledonia's
auditors.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-13pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">("signed")</p>
<p style="margin:0pt; text-indent:288pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">("signed")</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;<b>S.
E. Hayden</b></p>
<b>
<p style="margin:0pt; text-indent:288pt; font-family:Shruti; font-size:11pt" align="justify">M.D.
Tombs</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;President
and</p>
<p style="margin:0pt; text-indent:288pt; font-family:Shruti; font-size:11pt" align="justify">Vice-President
Finance</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Shruti; font-size:11pt" align="justify">Chief
Executive Officer</p>
<p style="margin:0pt; text-indent:252pt; font-family:Shruti; font-size:11pt" align="justify">and
Chief Financial Officer</p>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" 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">
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:144pt; text-indent:-144pt; line-height:13pt; font-family:Shruti; font-size:11pt"><b>CALEDONIA
MINING CORPORATION</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:144pt; text-indent:108pt; line-height:13pt; font-family:Shruti; font-size:11pt">&nbsp;&nbsp;</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:144pt; text-indent:216pt; line-height:13pt; font-family:Shruti; font-size:11pt">March
31, 2005 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<b>
<p style="margin:0pt; padding-left:144pt; text-indent:396pt; font-family:Shruti; font-size:11pt"><br>
</b></p>
<p style="margin:0pt; padding-left:144pt; text-indent:-144pt; line-height:13pt; font-family:Shruti; font-size:11pt"><b>Management's
Discussion and Analysis</b></p>
<p style="margin:0pt; padding-left:144pt; text-indent:-144pt; line-height:13pt; font-family:Shruti; font-size:11pt">Expressed
in Canadian Dollars</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">This
discussion provides updated information to the Management Discussion and
Analysis contained in Caledonia's Annual Report for 2004. &nbsp;Where no
comments are made, there are no updates to report since the publication of the
Annual Report on March 29, 2005.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>OPERATIONAL
      REVIEW</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Barbrook
Mines Limited</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Gradual
production improvements were evident during first quarter and have continued
through April. However, tonnage milled at 14,695 was still below expectations.
&nbsp;The improvements continued through April when a total of 6,548 tonnes was
treated in the plant. &nbsp;Planned enhancements to the metallurgical plant
including a wet-screening system have been substantially completed.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">Caledonia
is continuing to evaluate 'ultra-fine milling' and 'whole-plant Biox(r)'
metallurgical processes to determine whether further recovery improvements and
improved economics can be attained. A decision is expected during the second
quarter. &nbsp;As ongoing test work and the in-house feasibility are completed,
further revisions and additions to the metallurgical plant may be expected.
&nbsp;</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">A
number of senior staff, including the Mine Manager, left Barbrook's employ
during April to pursue other interests and certain of the positions are in the
process of being filled.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">Underground
development is continuing in the Taylors, French Bob, Victory and Crescent
zones. &nbsp;The structure at Crescent has been intersected and development is
now continuing to follow the structure. &nbsp;At Victory some 30 meters of
payable strike length has been exposed on 10 level.</p>
<p style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;</p>
<div align="center">
  <center>
  <table style="font-size:10pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><u>Barbrook
        mine - Q1 -2005 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:Shruti; font-size:11pt" 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:Shruti; font-size:11pt" 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:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;&nbsp;&nbsp;&nbsp;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; line-height:13pt; font-family:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">15,340</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;&nbsp;&nbsp;&nbsp;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; line-height:13pt; font-family:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">445</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; line-height:13pt; font-family:Shruti; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;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; line-height:13pt; font-family:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">14,354</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;&nbsp;&nbsp;&nbsp;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; line-height:13pt; font-family:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">14,695</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;&nbsp;&nbsp;&nbsp;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; line-height:13pt; font-family:Shruti; font-size:11pt" 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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">4.50</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;&nbsp;&nbsp;&nbsp;Gold
        sold</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">Ounces</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; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">1,082</p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align="justify">&nbsp;</p>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">4</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>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="page-break-before:always; margin:0pt; text-indent:21.6pt; font-family:Shruti" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>CONSOLIDATED
      FINANCIAL RESULTS</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">For
the quarter ended March 31, 2005 Caledonia recorded a net loss of $1.8 million
($0.007 per share) compared to a net loss of $1.7 million ($0.007 per share)
during the same period in 2004 and a net loss of $0.2 million ($0.001 per share)
in the first quarter of 2003. &nbsp;The loss in 2005 results from operations at
Barbrook during the quarter, ongoing exploration and assay costs, Nama test work
costs and the normal administration expenses.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Financing</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">Although
no financing activities took place during the quarter, Caledonia has indicated
its intention to list on the UK's Alternative Investment Market in the second
quarter, in conjunction with a financing. The funds raised will be primarily
utilised to fund ongoing exploration at Rooipoort, Grasvally, Eersteling,
Zandrivier, Roodepoort, Marabastad and Goedgevonden, together with capital
expenditures and routine operating costs.</p>
<br>
<br>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p style="margin:0pt; line-height:14pt; 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">
<br>
<br>
<br>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>EXPLORATION
      AND PROJECT DEVELOPMENT</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Roodepoort
Gold Exploration Project, South Africa</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">A
series of plans integrating the airborne geophysics, geological and
topographical features and the results of the 2004 soil sampling program are
being prepared for analysis. It is planned to drill targets generated from this
analysis later this year.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Eersteling
Gold Exploration Project, South Africa</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">A
geochemical soil sampling program, consisting of 3,389 samples was completed
during the first quarter. &nbsp;Assays were received in April and are now being
analysed. &nbsp;&nbsp;</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">A
high-resolution airborne (helicopter) geophysical survey was completed over the
Eersteling and Zandrivier Mining Licence areas in January and the results are
currently being interpreted for target generation purposes.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Rooipoort
Platinum Exploration Project, South Africa</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">The
third phase of drilling has been completed with a total of 3,653 meters drilled
so far in 2005. &nbsp;A fourth phase has commenced and is focused on the
northern part of the property, where recent results show that the mineralisation
is closer to surface.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Grasvally
Platinum Exploration Project, South Africa</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">On
May 11, 2005, the Department of Minerals and Energy issued a three year "new
order" Prospecting Right for the Grasvally property, which forms the southern
extension of the Rooipoort Platinum Project. This permit can be renewed for a
further period of three years.</p>
<p style="margin:0pt; padding-left:27pt; padding-right:51.25pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">The
Grasvally property directly adjoins the southern boundary of the Rooipoort
property and drilling has commenced on the 341.9 hectares property. Four drill
rigs will be mobilised to the property and it is envisaged that drilling of an
initial mineral resource on the Grasvally portion of the Rooipoort Project area
will be complete by end September 2005.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">The
Grasvally property overlies the southern end of the Rooipoort synform and
effectively provides an additional 3,000 metres of potential strike of the
prospective PGE mineralized zones discovered on the Rooipoort property and
delineated by drilling over the last 15 months.</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify">Drilling
results along the southern boundary of Rooipoort have intersected a thicker
sequence of the more mafic, chromite bearing Lower Unit (LU) that is believed to
be equivalent to the Platreef and which is the major economic PGE unit in the
northern limb of the Bushveld complex. &nbsp;Mineralisation intersected in the
LU to date contains widespread, PGE enriched, sulphide related mineralisation
that spans the thinner and discontinuous chromitite horizons. &nbsp;In addition,
the overlying anorthositic, Middle Unit (MU) contains three PGE enriched zones
and hole RP03-01 on the southern boundary of Rooipoort contains the best PGE
values in one of these zones intersected to date. &nbsp;Nickel and Copper are
also present in the mineralization. &nbsp;The Grasvally property is expected to
host an even shallower mineralization than that already identified on the
adjacent Rooipoort property<font FACE="Times New Roman">.</font></p>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">6<br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify"><b><i>Nama
Cobalt Project, Zambia</i></b></p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">Metallurgical
testwork on the cobalt sample recovered from the "A" anomaly at the Nama Cobalt
property in Northern Zambia is ongoing. &nbsp;A number of concentration methods
are being tested including magnetic separation, heavy media separation and
flotation. &nbsp;Results to date are encouraging and indicate that an economic
cobalt concentrate can be produced. Caledonia is now planning to take bulk
samples from anomalies "B", "C" and "D".</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">An amendment
to Nama's environmental brief has been submitted to the Zambian authorities
seeking approval for a large scale sample and pilot plant at anomaly "A".</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="background-color:#000000; border:0.5pt solid #000000" valign="top" width="638.4">
      <p style="margin-top:4pt; margin-bottom:4pt; line-height:14pt; font-family:Shruti; font-size:12pt; color:#FFFFFF"><b>SUPPLEMENT
      TO THE FINANCIAL STATEMENTS</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">As
at April 30, 2005 the following items were outstanding:</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">301,112,286
common shares.</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">16,498,000
common share purchase options at an average &nbsp;price of $0.21 maturing at
various dates until February 1, 2015.</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">22,694,091
common share purchase warrants exercisable at a price of $0.55 per share until
October 26, 2005.</p>
<p style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align="justify">4,538,818
financing agents' common share purchase warrants exersable at a price of $0.55
until October 26, 2005</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Shruti; font-size:11pt"><br>
</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; font-family:Times New Roman; font-size:12pt" align="center"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="center"><br>
</p>
<p style="margin:0pt; padding-left:27pt; padding-right:51.25pt; font-family:Times New Roman" align="center"><br>
</p>
<p align="center"><br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">7</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"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<br>
<p style="page-break-before:always; 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-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>(Unaudited)</b></p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="432"></td>
    <td valign="top" width="96" align="right"><b>March 31,</b></td>
    <td valign="top" width="96" align="right">December 31,</td>
  </tr>
  <tr>
    <td valign="top" width="432"></td>
    <td valign="top" width="96" align="right"><b>2005</b></td>
    <td valign="top" width="96" align="right">2004</td>
  </tr>
  <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">
      <p style="margin:0pt; font-family:Times New Roman"><b>Assets</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">Current</p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Cash
      and short term deposits</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>$3,390</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$6,470</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      receivable</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>248</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">316</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Inventories</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>479</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">508</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Prepaid
      expenses</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>272</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">187</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>4,389</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">7,481</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Investment at cost</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>79</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">79</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Capital assets</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>7,005</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">7,158</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Mineral properties</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>10,286</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">8,948</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>$21,759</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$23,666</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Liabilities and
      Shareholders' Equity</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">Current</p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      payable</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>$907</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$1,062</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Provision for site
      restoration</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>423</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">423</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>1,330</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,485</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Non-controlling
      interest</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>0</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">0</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</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>1,330</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">1,485</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman"><b>Shareholders' Equity
      </b>(Note 1)</p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Share
      capital</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>173,304</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">173,304</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Contributed
      surplus</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>674</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">480</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Compensation
      warrants</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>161</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">321</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Deficit</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>(153,710)</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">(151,924)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="432">&nbsp;</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>20,429</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">22,181</p>
    </td>
  </tr>
  <tr>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="432">&nbsp;</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>$21,759</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">$23,666</p>
    </td>
  </tr>
</table>
<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-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">&nbsp;&nbsp;&nbsp;("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;&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"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><u>&nbsp;&nbsp;&nbsp;("signed")
&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>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">8</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>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<p style="page-break-before:always; 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>
<b>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman">&nbsp;</p>
</b>
<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>
<p style="margin:0pt; line-height:0.65pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; line-height:0.65pt; font-family:Times New Roman">&nbsp;</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="334.8"></td>
    <td valign="top" width="288" align="center" colspan="3"><b>&nbsp;</b>For the
      three months ended March 31,</td>
  </tr>
  <tr>
    <td valign="top" width="334.8" style="border-bottom: 2 solid #000000"></td>
    <td valign="top" width="97.2" align="center" style="border-bottom: 2 solid #000000"><b>2005</b></td>
    <td valign="top" width="95.6" align="center" style="border-bottom: 2 solid #000000">2004</td>
    <td valign="top" width="96.4" align="center" style="border-bottom: 2 solid #000000">2003</td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Deficit</b>,
      beginning of period</p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(151,924)</p>
    </td>
    <td valign="top" width="95.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(141,945)</p>
    </td>
    <td valign="top" width="96.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(127,449)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Net (loss) for the
      period</b></p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,786)</p>
    </td>
    <td valign="top" width="95.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,725)</p>
    </td>
    <td valign="top" width="96.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(208)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Deficit</b>, end of
      period</p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>($153,710</b>)</p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="95.6">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($143,670)</p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="96.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($127,657)</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:3pt 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 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-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>(Unaudited)</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:0.65pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; line-height:0.65pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="334.8"></td>
    <td valign="top" width="288" align="center" colspan="3"><b>&nbsp;</b>For the
      three months ended March 31,</td>
  </tr>
  <tr>
    <td valign="top" width="334.8" style="border-bottom: 2 solid #000000"></td>
    <td valign="top" width="97.2" align="center" style="border-bottom: 2 solid #000000"><b>2005</b></td>
    <td valign="top" width="95.6" align="center" style="border-bottom: 2 solid #000000">2004</td>
    <td valign="top" width="96.4" align="center" style="border-bottom: 2 solid #000000">2003</td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Revenue and
      operating costs</b></p>
    </td>
    <td valign="top" width="97.2">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Revenue
      from sales</p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>$481</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$140</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$53</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Operating
      costs</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>1,748</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">1,315</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">72</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Gross profit (loss)</b></p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>(1,267)</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">(1,175)</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">(19)</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Costs and expenses</b></p>
    </td>
    <td valign="top" width="97.2">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;General
      and administrative</p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>496</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">299</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">370</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Other
      expense (income) (Note 3)</p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>23</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">264</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(181)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">&nbsp;</td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>519</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">563</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">189</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>(Loss) before
      non-controlling interest</b></p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>(1,786)</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,738)</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(208)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling
      interest</p>
    </td>
    <td valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>-</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">-</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="334.8">
      <p style="margin:0pt; font-family:Times New Roman"><b>Net (loss) for the
      period</b></p>
    </td>
    <td style="border-top:1.5pt solid #000000" valign="top" width="97.2">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>($1,786)</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">(1,725)</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">($208)</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="border-top:3pt solid #000000" valign="top" width="334.8">
      <p style="margin-top:6pt; margin-bottom:0pt; font-family:Times New Roman"><b>Net
      (loss) per share (Note 2)</b></p>
    </td>
    <td style="border-top:3pt solid #000000" valign="top" width="97.2">&nbsp;</td>
    <td style="border-top:3pt solid #000000" valign="top" width="96">&nbsp;</td>
    <td style="border-top:3pt solid #000000" valign="top" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-bottom:3pt solid #000000" valign="top" width="334.8">
      <p style="margin-top:0pt; margin-bottom:6pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Basic
      and fully diluted</p>
    </td>
    <td style="border-bottom:3pt solid #000000" valign="top" width="97.2">
      <p style="margin-top:0pt; margin-bottom:6pt; font-family:Times New Roman" align="right"><b>($0.007)</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">($0.007)</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">($0.001)</p>
    </td>
  </tr>
</table>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">9</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>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; 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-top:0pt; margin-bottom:-11pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><b>(Unaudited)</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:0.65pt; font-family:Times New Roman">&nbsp;</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="334.8"></td>
    <td valign="top" width="288" align="center" colspan="3"><b>&nbsp;</b>For the
      three months ended March 31,</td>
  </tr>
  <tr>
    <td valign="top" width="334.8" style="border-bottom: 2 solid #000000"></td>
    <td valign="top" width="97.2" align="center" style="border-bottom: 2 solid #000000"><b>2005</b></td>
    <td valign="top" width="95.6" align="center" style="border-bottom: 2 solid #000000">2004</td>
    <td valign="top" width="96.4" align="center" style="border-bottom: 2 solid #000000">2003</td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Cash provided by
      (used in)</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="60">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Operating activities</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="60">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Net (loss)
      for the period</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>($1,786</b>)</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($1,725)</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($208)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Adjustments
      to reconcile net cash from</p>
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;operations
      &nbsp;</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>192</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right">90</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right">26</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;Changes
      in non-cash working capital</p>
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balances</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>(143)</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right">12</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="right">(277)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">&nbsp;</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>(1,737)</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">(1,623)</p>
    </td>
    <td style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(459)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Investing activities</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="60">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Expenditures
      on capital assets</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>(187)</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(187)</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(184)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Expenditures
      on mineral properties</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>(1,156)</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">(183)</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,036)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">&nbsp;</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>(1,343)</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">(370)</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,220)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Financing activities</b></p>
    </td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="96">&nbsp;</td>
    <td valign="top" width="60">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Loan
      payable</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>-</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">-</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(39)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Issue of
      share capital net of issue costs</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>-</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">9,282</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">2,511</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</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>-</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">9,282</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">2,472</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Increase (decrease)
      in cash for the period</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>(3,080)</b></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">7,289</p>
    </td>
    <td valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">793</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Cash and cash
      equivalents, beginning of period</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>6,470</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">4,179</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,864</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324">
      <p style="margin:0pt; font-family:Times New Roman"><b>Cash and cash
      equivalents, end of period</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>$3,390</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">$11,468</p>
    </td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="60">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$2,657</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="324"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="96"></td>
    <td valign="top" width="60"></td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
<br>
</p>
<p align="center">10</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">
<br>
<br>
<p style="page-break-before:always; 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: 108pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005, 2004 and 2003</b></p>
<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; font-size:12pt"><b>Nature of
Business</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">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 disposition of such capital assets and mineral properties.</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"><b>Basis of
Presentation</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">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; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><b>Measurement
Uncertainties</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">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; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><b>Principles
of Consolidation</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">The
consolidated financial statements include the accounts of the Company together
with all its subsidiaries. &nbsp;All significant inter-company balances and
transactions have been eliminated on consolidation.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">The
Company's consolidated (all 100% owned) subsidiaries are Barbrook Mines Limited
(&quot;Barbrook&quot;), Eersteling Gold Mining Company Limited (100% owned since
June 2004) (&quot;Eersteling&quot;) Greenstone Management Services (Proprietary)
Limited, Fintona Investments (Proprietary) Limited, Maid O' Mist (Proprietary)
Limited, Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia
Nama Limited and Caledonia Western Limited.</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p align="center"><br>
11
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; 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: 108pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005, 2004 and 2003</b></p>
<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; font-size:12pt"><b>Cash and
Cash Equivalents</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">Cash and cash
equivalents represent cash on hand in operating bank accounts and money market
funds</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"><b>Inventories</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">Inventories
are stated at the lower of cost, which is determined on the first-in, first-out
basis, and net realizable value.</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><b>Revenue
Recognition</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">Revenue from
the sale of precious metals is recognized when the benefits of ownership is
transferred and the receipt of proceeds is substantially assured.</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><b>Capital
Assets</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"><b><i>Producing
Assets</i></b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">Producing
assets are recorded at cost less grants, accumulated amortization and
write-downs. &nbsp;Producing assets are amortized using the straight line method
basis on the estimated useful lives of the assets. &nbsp;The estimated useful
life of the producing assets range up to 10 years. Repairs and maintenance
expenditures are charged to operations; major improvements and replacements
which extend the useful life of an asset are capitalized and amortized over the
remaining useful life of that asset. &nbsp;Barbrook continues to undertake
activities to re-establish commercial operations and has been presented as a
producing asset in these financial statements for 2005, 2004 and 2003.</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"><b><i>Non-Producing
Assets</i></b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">Non-producing
assets are recorded at cost less write downs. &nbsp;During non-producing
periods, no amortization is recorded.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">At
the time of commercial production, the assets are reclassified as producing and
amortized in the manner described above.</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"><b>Mineral
Properties</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><b><i>Producing
Properties</i></b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">When
and if properties are placed in production, the applicable capitalized costs are
amortized using the unit-of-production method on the ratio of tonnes of ore
mined or processed to the estimated proven and probable mineral reserves as
defined by the Canadian Institute of Mining, Metallurgy and Petroleum. &nbsp;Barbrook
continues to undertake activities to re-commence commercial operations and has
been presented as a producing asset in these financial statements for 2005, 2004
and 2003.</p>
<br>
<br>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="center">12</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; 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: 108pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005, 2004 and 2003</b></p>
<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; font-size:12pt"><b><i>Non-Producing
Properties</i></b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">Costs
relating to the acquisition, exploration and development of non-producing
resource properties which are held by the Company or through its participation
in joint ventures are capitalized until such time as either economically
recoverable reserves are established, or the properties are sold or abandoned.
&nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">A
decision to abandon, reduce or expand activity on a specific project is based
upon many factors including general and specific assessments of mineral
reserves, anticipated future mineral prices, anticipated costs of developing and
operating a producing mine, the expiration date of mineral property leases, and
the general likelihood that the Company will continue exploration on the
project. &nbsp;However, based on the results at the conclusion of each phase of
an exploration program, properties that are not suitable as prospects are
re-evaluated to determine if future exploration is warranted and that carrying
values are appropriate.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">The
ultimate recovery of these costs depends on the discovery and development of
economic ore reserves or the sale of the properties or the mineral rights.
&nbsp;The amounts shown for non-producing resource properties do not necessarily
reflect present or future values.</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"><b>Strategic
Alliances</b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">The
Company has entered into various agreements under which the participants earn a
right to participate in the mineral property by incurring exploration
expenditures in accordance with the conditions of the agreements. Upon
satisfaction of the conditions of any agreement a joint venture may be formed
with customary joint venture terms and provisions and then accounted for on a
proportionate consolidation basis. Until a joint venture is formed only
expenditures on the properties incurred by the Company are reflected in these
financial statements.</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"><b>Foreign
Currency Translation</b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">Balances
of the Company denominated in foreign currencies and the accounts of its foreign
subsidiaries are translated into Canadian dollars as follows:</p>
<p style="margin:0pt; padding-left:63.8pt; text-indent:-42.5pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:85.05pt; text-indent:-35.4pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">(i)</p>
<p style="margin:0pt; padding-left:85.05pt; font-family:Times New Roman; font-size:12pt">monetary
assets and liabilities at period end rates;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:85.05pt; text-indent:-35.4pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">(ii)</p>
<p style="margin:0pt; padding-left:85.05pt; font-family:Times New Roman; font-size:12pt">all
other assets and liabilities at historical rates; and</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:81pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">(iii)</p>
<p style="margin:0pt; padding-left:81pt; font-family:Times New Roman; font-size:12pt">revenue
and expense transactions at the average rate of exchange prevailing during the
period.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">Exchange
gains or losses arising on these translations are reflected in income in the
period incurred. &nbsp;Gains and losses arising on translation of long term
foreign currency denominated liabilities at each year end are reflected in
income.</p>
<br>
<br>
<p style="line-height: 14pt; font-family: Times New Roman; font-size: 12pt; margin: 0pt" align="center">13</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; 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: 108pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005, 2004 and 2003</b></p>
<p style="margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin-top:11pt; margin-bottom:2.75pt; font-family:Arial; font-size:11pt"><b>Asset
Retirement Obligation</b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">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..</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"><b>Income
Taxes</b></p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt">The
Company accounts for income taxes using the asset and liability method.
&nbsp;Under the asset and liability method, future tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. &nbsp;Future tax assets and
liabilities are measured using enacted or substantively enacted tax rates
expected to apply when the asset is realized or the liability settled. &nbsp;The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that substantive enactment or enactment
occurs</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:12pt"><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"><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"><br>
</p>
<p align="center"><br>
14<br>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; 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>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: 216pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005</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"><b>1.</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:0pt; text-indent:36pt; font-family:Times New Roman">Authorised:</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman">An
unlimited number of common shares</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman">An
unlimited number of preference shares&nbsp;</p>
<p style="text-indent: 36pt; line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0pt"><br>
</p>
<p style="text-indent: 36pt; line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="margin:0pt; padding-left:49.65pt; text-indent:-21.3pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Issued
- - Common Shares</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="288">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><u>Number
      of Shares</u></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"><u>Amount
      (000's)</u></p>
    </td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="288">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Balance,
      December 31, 2004 and March 31, 2005</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">301,112,286</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">$173,304</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:49.5pt; text-indent:-49.5pt; line-height:14pt; font-family:Times New Roman" align="justify"><sup>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</sup>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued
- - Preference Shares</p>
<p style="margin:0pt; padding-left:49.5pt; text-indent:238.5pt; font-family:Times New Roman" align="justify">Nil</p>
<p style="margin:0pt; padding-left:49.5pt; text-indent:-49.5pt; 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; padding-left:49.65pt; text-indent:-21.3pt; 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 March 31, 2005,
the Company has 16,908,700 common share options exercisable at an average price
of $0.23 maturing at various dates until February 1, 2015</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">Share
Purchase Warrants</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 27,232,909 share purchase warrants outstanding exercisable at an
average price of $0.55 maturing at various dates until October 6, 2005</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman" align="justify"><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>2.</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 first quarter which amounted to
301,112,286. &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 2005. &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>3.</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 exchange translation gains of $134,000
(2004 - loss of $234,000, 2003 - gain of $185,000) and an amortisation charge of
$158,000. The amortisation charge relates to Barbrook, where increasing
production levels lead to increasing amortisation charges in terms of the
accounting policies detailed under "Mineral Properties' on page 12 above.</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
</p>
<br>
<br>
<p style="line-height: 14pt; font-family: Times New Roman; font-size: 12pt; margin: 0pt" align="center">15</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 align="center">&nbsp;
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
&nbsp;
<p style="page-break-before:always; 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>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: 216pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March 31, 2005</b></p>
<p style="margin:0pt; font-family:Times New Roman" 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>4.</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:</p>
<p style="margin:0pt; padding-left:28.35pt; font-family:Times New Roman"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="228">&nbsp;</td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><u>2005</u></b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><u>2004</u></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><u>2003</u></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Accretion asset
      retirement obligation</p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>$0</b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$4</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">$8</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Non-controlling
      interest</p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>-</b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(13)</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">-</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Other</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>192</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">99</p>
    </td>
    <td style="border-bottom:1pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">18</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">&nbsp;</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>$192</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">$90</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">$26</p>
    </td>
  </tr>
</table>
<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>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td valign="top" width="228">&nbsp;</td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b><u>2005</u></b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><u>2004</u></p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><u>2003</u></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Accounts payable</p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>($155)</b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($229)</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">($218)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Accounts receivable</p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>68</b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right">31</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(50)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Inventories</p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right"><b>29</b></p>
    </td>
    <td valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman" align="right">86</p>
    </td>
    <td valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">-</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">
      <p style="margin:0pt; font-family:Times New Roman">Prepaid expenses</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>(85)</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">124</p>
    </td>
    <td style="border-bottom:1pt solid #000000" valign="top" width="96">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(9)</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="228">&nbsp;</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>($143)</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">$12</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">($277)</p>
    </td>
  </tr>
</table>
<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 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"><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; 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"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p align="center">16</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">
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Corporate
Directory</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>&nbsp;</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>CORPORATE
OFFICES</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">SOLICITORS</b></p>
<b>
<p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Canada
- - Head Office</b></p>
<b>
<p style="margin:0pt; text-indent:252pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Borden
Ladner Gervais LLP</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Caledonia
Mining Corporation</b></p>
<b>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"></b>Suite
4100, Scotia Plaza</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Unit
9, 2145 Dunwin Drive</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">40
King Street West</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Mississauga,
Ontario</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Toronto,
Ontario M5H 3Y4 Canada</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">L5L
4L9 Canada</p>
<p style="margin:0pt; text-indent:279pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Tel:</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">(905)
607-7543</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Tupper,
Jonsson &amp; Yeadon</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Fax:</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">(905)
607-9806</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">1710-1177
West Hastings Street</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Vancouver,
British Columbia</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>South
Africa</b></p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"></b>V6E
2L3 Canada</p>
<b>
<p style="margin:0pt; text-indent:396pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Greenstone
Management Services (Pty) Ltd.</b></p>
<b>
<p style="margin:0pt; text-indent:396pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">P.O.
Box 587</p>
<b>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">AUDITORS
&nbsp;</b></p>
<b>
<p style="margin:0pt; text-indent:432pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Johannesburg
2000</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>BDO
Dunwoody LLP</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">South
Africa</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Chartered
Accountants</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Tel:</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">(27)(11)
447-2499</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Suite
3200, 200 Bay Street</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Fax:</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">(27)(11)
447-2554</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Royal
Bank Plaza, South Tower</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Toronto,
Ontario M5J 2J8 Canada</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>Zambia</b></p>
<b>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt"><b>Caledonia
Mining (Zambia) Limited</b></p>
<b>
<p style="margin:0pt; text-indent:252pt; font-family:Times New Roman; font-size:12pt">REGISTRAR
&amp; TRANSFER AGENT</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:28.8pt; text-indent:-28.8pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">P.O.
Box 36604</p>
<b>
<p style="margin:0pt; padding-left:28.8pt; text-indent:232.2pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Equity
Transfer Services Inc</b>.</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Lusaka,
Zambia</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Suite
420 120 Adelaide Street West</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Tel:
(260)(1) 29-1574</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Toronto,
Ontario M5H 4C3 Canada</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Fax:
(260)(1) 29-2154</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Tel:
&nbsp;(416) 361-0152</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Fax:
(416) 361-0470</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:50.4pt; text-indent:-50.4pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>SHARES
LISTED</b></p>
<p style="margin:0pt; padding-left:50.4pt; text-indent:309.6pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">The
Toronto Stock Exchange Symbol "CAL"</p>
<p style="margin:0pt; text-indent:252pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>BANKERS</b></p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">NASDAQ
OTC BB Symbol &quot;CALVF&quot;</p>
<p style="margin:0pt; text-indent:261pt; font-family:Times New Roman; font-size:12pt"><b>Canadian
Imperial Bank of Commerce</b></p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">6266
Dixie Road</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>CAPITALIZATION
</b>at March 31, 2005</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Mississauga,
Ontario</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Authorised:
Unlimited</p>
<p style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">L5T
1A7 Canada</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Shares,
Warrants and Options Issued:</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Common
Shares: 301,112,286</p>
<p style="margin:0pt; text-indent:288pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Warrants:
27,232,909</p>
<p style="margin:0pt; text-indent:279pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify">Options:
16,908,700</p>
<p style="margin:0pt; text-indent:279pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; text-indent:279pt; 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>Web
Site: </b><u>http://www.caledoniamining.com</u></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; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:14pt; font-family:Bookman Old Style; font-size:12pt" align="justify"><b>C</b><font FACE="Times New Roman"><b>aledonia
Mining Corporation</b></font></p>
<p style="margin:0pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">Unit
# 9</p>
<p style="margin:0pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">2145
Dunwin Drive</p>
<p style="margin:0pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">Mississauga,
Ontario, Canada</p>
<p style="margin:0pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">L5L
4L9</p>
<p style="margin:0pt; font-family:Shruti; font-size:12pt" align="justify">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">Tel:</p>
<p style="margin:0pt; padding-left:36pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">(905)
607-7543</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">Fax:</p>
<p style="margin:0pt; padding-left:36pt; line-height:14pt; font-family:Shruti; font-size:12pt" align="justify">(905)
607-9806</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="justify"><font COLOR="#0000FF"><u>info@caledoniamining.com</u></font></p>
<br>
<br>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">&nbsp;</p>
<p style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">17<br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
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