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<SEC-DOCUMENT>0001137171-05-001202.txt : 20050815
<SEC-HEADER>0001137171-05-001202.hdr.sgml : 20050815
<ACCEPTANCE-DATETIME>20050812180816
ACCESSION NUMBER:		0001137171-05-001202
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050812
FILED AS OF DATE:		20050815
DATE AS OF CHANGE:		20050812

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:		051023023

	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>caledonia6k081205.htm
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>FORM 6-K</TITLE>
<META NAME="author" CONTENT="rszczype">
<META NAME="date" CONTENT="08/12/2005">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<P style="margin-top:4.15pt; margin-bottom:4.15pt; font-family:Times New Roman" align=center><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 August 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)<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><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:0pt; margin-bottom:-12pt; padding-left:360pt; font-family:Times New Roman"><B>Caledonia Mining Corporation<BR>
</B>(Registrant)</P>
<P style="margin:0pt; padding-left:360pt; text-indent:50647.235pt; font-family:Times New Roman">&nbsp;<BR>
</P>
<P style="margin:0pt; padding-left:324pt; text-indent:36pt; font-family:Times New Roman">By:_/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;August 12, 2005</P>
<P style="margin:0pt; text-indent:180pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B><BR>
<BR></B></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<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>99.1</U></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><U><a href="q22005pressrelease120805fina.htm">Press Release August 12<SUP>th</SUP> 2005</a></U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:216pt; text-indent:-216pt; font-family:Times New Roman"><U>99.2</U></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><U><a href="f2005q2reportfinal120805.htm">Second Quarter 2005</a></U></P>
<P style="margin:0pt; padding-left:216pt; text-indent:-216pt; font-family:Times New Roman"><BR>
<BR></P>
</BODY>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>q22005pressrelease120805fina.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>Caledonia Mining Granted Prospecting Right for Grasvally and Will Commence the Drilling Program by Mid May 2005</TITLE>
<META NAME="author" CONTENT="Michelle">
<META NAME="date" CONTENT="08/12/2005">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<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"><B><font size="4">Caledonia Mining Second Quarter Results 2005</font></B></P>
<P style="margin:0pt; padding-right:42.25pt; font-family:Arial"><B><BR></B></P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Toronto, Ontario &#150; August 12, 2005: &nbsp;</B>Caledonia Mining Corporation (&quot;Caledonia&quot;) (TSX: CAL, </P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt">NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce its key financial and operating </P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt">results for the second quarter ended June 30, 2005. The financial results are reported in </P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt">Canadian dollars except where otherwise stated. </P>
<P style="margin:0pt; padding-right:48.8pt; font-family:Shruti"><BR></P>
<P style="margin:0pt; padding-right:48.8pt; line-height:14pt; font-family:Shruti; font-size:12pt"><B>Operational Highlights</B></P>
<P style="margin:0pt; padding-right:48.8pt; font-family:Shruti"><BR></P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B><U>Barbrook Gold Mine</U></B></P>
<ul>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Gold production increased by 85% to 1,712 ounces of gold, (Q1: 925 ozs) following continued metallurgical plant improvements.<br>
    <br>
    </FONT></li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Doubling the treatment capacity of the metallurgical plant to 15,000 tonnes per month is currently being designed. &nbsp;Construction is scheduled to start prior to September 30 and expected to take 3 to 4 months.<br>
    <br>
    </FONT></li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Decision on the construction of a Biox&#174; plant deferred until this plant expansion is completed</FONT>
    and has been assessed.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Economic gold grades have been intersected in the Taylors ore body between 10 and 7 levels</FONT>
    in an area previously considered to be barren of gold mineralization.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Senior management changes including the appointment of Patrick Smith as the Mine Manager.<br>
    </FONT></li>
</ul>
<P style="margin:0pt; padding-right:48.8pt; font-family:Shruti; font-size:8pt"><B><BR></B></P>
<p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B><U>Exploration</U></B></p>
<p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt">&nbsp;</p>
<ul>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Drilling commenced on the Grasvally platinum property in May and 3,192 meters drilled
    during the quarter.<br>
    <br>
    <br>
    </FONT></li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">The planned drilling programs on the Rooipoort platinum property have been completed with</FONT>
    1,227 meters drilled during the quarter.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt">Reconnaissance
    mapping commenced at the Eersteling Gold Project in June to follow-up
    results from the recent geophysical survey.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Testing by Mintek of the Nama
    &quot;A&quot; anomaly ore largely completed. Test work to further</FONT> optimize the overall cobalt recoveries and concentrate grades will be completed during the
    third quarter.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">Approval obtained from the Environmental Council of Zambia for an amendment to the</FONT>
    existing Environmental Brief to allow pilot plant operations at the Nama Cobalt Project.<br>
    <br>
    <br>
  </li>
</ul>
<P style="margin:0pt; padding-left:27pt; padding-right:48.8pt; font-family:Shruti; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B><U>Corporate</U></B></P>
<ul>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">In June Caledonia listed on the London Stock Exchange&#146;s AIM Market, ticker symbol</FONT>
    &quot;CMCL&quot;, and placed a small float of shares into the AIM market in
    conjunction with financing.<br>
    <br>
  </li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">The financing on AIM raised &#163;1.57 million (Cdn$3.54 million) before expenses.<br>
    <br>
 </FONT></li>
  <li>
    <p style="margin:0pt; padding-right:48.8pt; line-height:13pt; font-family:Shruti; font-size:11pt"><FONT FACE="Shruti">A Letter of Intent was signed with a cobalt refinery for the long-term supply of cobalt
    concentrate from the Nama Project, on condition that the testwork and
    commercial process is satisfactory.<br>
    <br>
    </FONT></li>
</ul>
<P style="margin-top:2.75pt; margin-bottom:0pt; padding-left:18pt; padding-right:48.8pt; font-family:Shruti; font-size:11pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="page-break-before:always; margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>-2-</B></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>For the quarter ended June 30, 2005 Caledonia recorded an operating loss of $1.4 million ($0.005 per share) compared with an operating loss of $1.4 million ($0.005 per share) in the same quarter of 2004. &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 net loss after all expenses, a change in the application of the accounting policy regarding amortization, ongoing exploration and assay costs, Nama test work costs, and exchange losses was $3.3 million ($0.011 per share) for the quarter ended June 30, 2005. Previously reported results, which excluded amortization, were a net loss of $1.4 million ($0.005 per share) during the same period in 2004. &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>Reviewing the quarter, Stefan Hayden, President and CEO, said,
&quot;I&#146;m pleased to report the performance trend at Barbrook has continued, with gold production up by 85% to 1,712 ounces, despite the mining of a lower grade section. &nbsp;This was necessary due to the geometry of the ore zone and the mining sequence, and the mining of a higher grade area will recommence in August. &nbsp;The doubling of the metallurgical plant capacity to treat 15,000 tonnes per month is currently being designed. &nbsp;The recent completed access of a mineralized zone that was previously considered to be barren should enable Barbrook to effectively double monthly gold production sooner than originally planned. &nbsp;Construction of the plant expansion will start late in the third quarter and is expected to take 3 to 4 months. &nbsp;The cost estimate of the plant expansion will be released once the design has been finalized.</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>At Grasvally, immediately upon receiving the New Order Prospecting Right we mobilized drill rigs to commence a drilling program. &nbsp;To date, 3,192 meters have been drilled and we anticipate reporting drill results to shareholders during the third quarter. &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>At Nama, the testing of
&quot;A&quot; anomaly ore sample was largely completed with Mintek carrying out additional work to optimize the overall cobalt recoveries and concentrate grades. &nbsp;We have also taken the first step towards developing the project with the signing of a Letter of Intent with a large cobalt refinery. &nbsp;The discussions with the refinery are ongoing regarding the next phase of their metallurgical testwork, which is expected to be completed during the third quarter. &nbsp;Provided that a commercial process is satisfactory, the details of the long-term offtake agreement will then be finalised and a pilot plant will be built as soon as practical at Nama with technical assistance from the refinery. &nbsp;In anticipation of this, Caledonia has received approval from the Environmental Council of Zambia for an amendment to the existing Environmental Brief to allow for mining operations to feed the pilot plant. &nbsp;Discussions with a growing number of large end-users continue.</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>Turning to our exploration projects, a number of programs commenced during the quarter at Grasvally, Kirkerk, Nama and Eersteling, which will be completed during the third quarter, the results of which will be reported to shareholders before the year-end.</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>In short, I believe Caledonia has made a good start in the first half of 2005 as we have already achieved a number of our stated 2005 objectives. &nbsp;The second half of the year is expected to be exciting and rewarding for Caledonia. &nbsp;I anticipate a further increase in gold production from Barbrook which should be favourably impacted by the plant expansion. &nbsp;Ongoing development of the Nama Cobalt Project, the Rooipoort Platinum Project, and the Mulonga Plains Diamonds Joint Venture drilling which will commence during the third quarter, should contribute to Caledonia&#146;s further growth and success&quot;.</P>
<P style="margin:0pt; font-family:Shruti; font-size:8pt" align=justify><BR></P>
<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>Caledonia Management&#146;s Discussion and Analysis was published on August 12, 2005 and is available on the company&#146;s website: <FONT COLOR=#0000FF><U>www.caledoniamining.com</U></FONT>.</P>
<P style="margin:0pt; padding-right:2.45pt; font-family:Shruti; font-size:8pt" align=justify><B><BR></B></P>
<P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify><B>For more information, please contact:</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD valign=top width=297.2><P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>Stefan Hayden</P>
<P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>President and CEO, Caledonia Mining</P>
<P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>Tel: +27 11 447 2499</P>
</TD><TD valign=top width=286><P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>Alex Buck / Nick Bias</P>
<P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>buck-bias</P>
<P style="margin:0pt; padding-right:2.45pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>Tel: +44 7932 740 452</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; padding-right:2.45pt; line-height:15.75pt; font-family:Shruti; font-size:11pt" align=justify>Further information regarding Caledonia&#146;s operations, exploration activities, press releases and financials may be found at <FONT COLOR=#0000FF><B><U>www.caledoniamining.com</U></B></FONT><B><U></U></B>.</P>
<P style="margin:0pt; padding-right:2.45pt; font-family:Shruti; font-size:8pt" align=justify><BR></P>
<P style="margin:0pt; padding-right:2.45pt; font-family:Shruti" align=justify><I>Certain statements included herein are
&quot;forward-looking statements&quot;. &nbsp;Management cautions that forward- looking statements are not guarantees, and that actual results could differ materially from those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of operations, exploration or development programmes, or the financial condition of the Corporation, to differ include, but are not necessarily limited to, the risks and uncertainties discussed in documents filed by the Corporation with the various regulatory authorities having jurisdiction.</I></P>
<P style="margin:0pt; padding-right:2.45pt; font-family:Shruti; font-size:11pt" align=justify><BR>
<BR></P>
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<TYPE>EX-2
<SEQUENCE>3
<FILENAME>f2005q2reportfinal120805.htm
<DESCRIPTION>2ND QUARTER REPORT
<TEXT>
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<HEAD>
<TITLE>Corporate Directory</TITLE>
<META NAME="author" CONTENT="Stevep">
<META NAME="date" CONTENT="08/12/2005">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<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>
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<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center>&nbsp;</P>
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<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><I></I><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>
<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>Second Quarter Report: 2005</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR>
<BR></P>
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<P style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt"><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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><B>2005 SECOND QUARTER HIGHLIGHTS</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><B><BR></B></P>
<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">Gold production increased by 85% to 1,712 ounces of gold, (Q1: 925 ozs.) following continued metallurgical plant improvements which have increased gold recoveries by
    25%.<br>
    </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">An expansion of the Metallurgical plant to treat 15,000 tonnes per month is currently being designed. &nbsp;Construction is scheduled to start prior to September 30 and expected to take 3 to 4 months. &nbsp;The cost estimate will be released one the design has been finalized.<br>
    </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">The decision on the construction of a Biox&#174; plant will be deferred until this plant expansion is completed and has been assessed.<br>
    </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">Economic gold grades have been intersected in the Taylors ore body between 10 and 7 levels in an area previously considered not to host
    mineralization.<br>
    </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">Senior Management changes including the appointment of Patrick Smith as the Mine Manager.</FONT></li>
</ul>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><B><BR></B></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">Drilling commenced on the Grasvally platinum property in May, with three drill rigs in operation and 3,192 meters drilled during the quarter.<br>
    </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">The planned drilling programs on the Rooipoort platinum property have been completed with 1,227 meters drilled during the quarter.<br>
    </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">Reconnaissance mapping commenced at the Eersteling Gold Project in June to follow-up results from the recent geophysical survey.<br>
    </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">Testing by Mintek of the ore from the Nama
    &quot;A&quot; anomaly was largely completed; a small amount of test work to optimize the overall cobalt recoveries and concentrate grades will be completed during the third quarter.<br>
    </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">Approval from the Environmental Council of Zambia for an amendment to the existing Environmental Brief to allow pilot plant operations at the Nama Cobalt Project</FONT></li>
</ul>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><B><BR></B></P>
<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Corporate</B></P>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Shruti; font-size: 11pt; text-indent: 0; margin: 0pt"><font face="Shruti">During June Caledonia successfully listed on the London Stock Exchange&#146;s Alternative Investment Market (&quot;AIM&quot;), ticker symbol
    &quot;CMCL&quot;, and placed a small float of shares into the AIM market in conjunction with a financing.<br>
    </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">The financing on AIM raised &#163;1.57 million (Cdn$3.54 million) before expenses.<br>
 </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">A Letter of Intent was signed with a cobalt refinery for the long-term supply of cobalt concentrate from the Nama Project, on condition that the testwork and commercial process is satisfactory.<br>
    </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">Discussions with a number of large cobalt end-users in progress. </FONT></li>
</ul>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><B>2005 OBJECTIVES and ACHIEVEMENTS</B></P>
</TD></TR>
</TABLE>
<P style="margin-top:2.75pt; margin-bottom:0pt; font-family:Shruti; font-size:11pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD style="border:0.5pt solid #000000" valign=top width=324><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>2005 Objectives</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>Achievements to end June 2005</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; 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>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Increased gold production by 85% in the second quarter. Economic gold production expected during third quarter</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Continue developing additional reserves/resources at the Barbrook Mine</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Development during the quarter was focused on opening up the ore bodies for mining, and for the development of additional ore reserves.</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Obtain the Prospecting Rights for the Grasvally portions of the Rooipoort Platinum Exploration Project</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Obtained the Prospecting Rights for Grasvally, drilling commenced in May and 1,227 metres of drilling completed during the second quarter on Grasvally </P>
</TD></TR>
</TABLE>
<P style="margin-top:2.75pt; margin-bottom:0pt; font-family:Shruti; font-size:11pt"><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>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="page-break-before:always; margin-top:3pt; margin-bottom:0pt; font-family:Times New Roman; font-size:12pt"><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0></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:0.5pt solid #000000" valign=top width=324><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>2005 Objectives</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>Achievements to end June 2005</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Complete the feasibility studies of installing a Biox&#174; bacterial leach and/or ultra-fine milling and/or Dense Media Separation circuit at Barbrook and commence construction</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Final Biox testwork ongoing on the
    &quot;carbon free&quot; concentrate. Finalization of this testwork during the third quarter will allow final Plant Design to be completed for the Project costing to be updated. Biox decision will be postponed until the Plant Expansion to 15,000 tonnes per month can be assessed. &nbsp;Ultra fine-milling testwork in progress and results expected during August. &nbsp;DMS proved not to be viable.</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Identify the platinum resource on the Rooipoort and Grasvally properties which form the Rooipoort Platinum Exploration Project in South Africa</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Commenced modeling of the deposit based on the drilling results to produce <FONT FACE="Arial">grade tonnage and percentage waste curves in order to develop insitu mineable values for the various scenarios. This should form the basis for reporting an &quot;inferred resource&quot; i.e. potentially economic based on the mining and processing criteria.</FONT></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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">From the existing exploration information and the recently completed high resolution airborne Geophysics and Soil Chemical Programs identify and drill possible extensions to the known ore zones on the Eersteling and Zandrivier Mining Licence areas</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Geophysical and geochemical programs completed and confirmation reconnaissance mapping commenced in June. Induced polarization survey over identified drill targets will commence during the third quarter.</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; 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>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Further testwork continued at Mintek. Reinterpretation of the airborne geophysical data was commenced and completed during July. &nbsp;A number of as yet untested areas have been identified for follow-up.</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; 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>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Signed Letter of Intent with a Refinery and preliminary testwork commenced by the Refinery. &nbsp;An amendment to the existing Environmental Brief to allow pilot plant operations has been approved by the Environmental Council of Zambia</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; 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>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Discussion ongoing with various interested parties</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; 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>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Rupert Pardoe joined the Board as non-executive Chairman and the various Board Committees were restructured accordingly</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Implement succession plans for senior executive and operational staff</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Succession plan developed and successfully implemented</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=324>
    <ul>
      <li>
        <p style="margin-top:2.75pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; line-height:13pt; font-family:Wingdings; font-size:11pt"><FONT FACE="Shruti">Strengthen the Investor Relations and Public Relations functions</FONT></li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Appointed BuckBias as Caledonia&#146;s IR and PR consultants for all markets.</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=324>
    <ul>
      <li>
        <p style="text-indent: -18pt; line-height: 13pt; font-family: Wingdings; font-size: 11pt; margin: 0pt; padding-left: 36pt"><FONT FACE="Shruti">List Caledonia on the London Stock Exchange Alternative Investment Market with an issue of new shares to support the activities required to meet these objectives</FONT></p>
      </li>
    </ul>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=307.2><P style="margin-top:2.75pt; margin-bottom:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Caledonia successfully listed on AIM on June 27</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Bookman Old Style; font-size:11pt"><B><BR>
<BR></B></P>
<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>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
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<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Management&#146;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 audited 2004 consolidated annual 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 is a member of management. &nbsp;This Committee meets with management to ensure 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&#146;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>&nbsp;<FONT FACE="Times New Roman">(&#147;Signed&#148;)</FONT></P>
<P style="margin:0pt; text-indent:288pt; font-family:Times New Roman" align=justify>(&#147;Signed&#148;)</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>
<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:Shruti; font-size:11pt" align=justify><B><BR></B></P>
<P style="margin-top:0pt; margin-bottom:-13pt; padding-left:144pt; text-indent:-144pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify><B>CALEDONIA MINING CORPORATION</B></P>
<B><P style="margin-top:0pt; margin-bottom:-13pt; padding-left:144pt; text-indent:252pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>June 30, 2005</B></P>
<P style="margin:0pt; padding-left:144pt; text-indent:324pt; font-family:Shruti; font-size:11pt" align=justify><B><BR></B></P>
<P style="margin:0pt; padding-left:144pt; text-indent:-144pt; font-family:Shruti; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; padding-left:144pt; text-indent:-144pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Management&#146;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&#146;s Annual Report for 2004 and in the First Quarter 2005 Report. &nbsp;Where no comments are made, there are no updates to report since the publication of the First Quarter Report on May 16, 2005.</P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><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">Production improvements continued during the second quarter. Tonnage milled during the quarter totaled 18,582 grading 4.80 g/t; (Q1: 12,643 tonnes grading 4.71 g/t). Gold production increased by 85% to 53 Kg (1,712 ounces) compared to 29 Kg (925 ounces) in the first quarter and gold recovery increased by 25% to 60%, compared to 48% in the first quarter. &nbsp;&nbsp;</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">During the quarter the three-deck Deister table was replaced with a newly refurbished unit, modifications were made to the flash-float cells and to the crushing plant to increase throughput, and to the pre-oxidation Aachen units to improve RIL gold recovery. </P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR>
<BR></P>
<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>
<P style="page-break-before:always; margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">The Dense Media Separation (DMS) tests on the Barbrook ore were completed at Mintek during the quarter and the results indicate that DMS processing will not be viable. </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">The mining sequence unfortunately necessitated that a lower than average grade block of ore was mined during June adversely affecting the feed grade to the plant. &nbsp;The mining sequence required that mining continued in this area during July and August when it is expected that better grade material will be recovered.</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 on the west side of the French Bob zone has followed a mineralized structure through an area previously considered not to be payable for approximately 50 meters. &nbsp;A second level is also being developed and is showing economic mineralized continuity both along strike and up dip in this zone. &nbsp;Further west, the development will access an area above a previously mined stoping block and is expected to confirm continuity over the 300 meter strike length.</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>These additional stoping blocks provide the flexibility required to increase the planned mined tonnage. &nbsp;To accommodate this, Caledonia plans to expand the existing metallurgical plant at Barbrook from 7,000 to 15,000 tonnes per month. &nbsp;The design of this expanded facility is being finalized and will incorporate the present circuit and the installed 1,300 kW primary mill. &nbsp;Construction of the plant expansion is expected to start late in the third quarter. &nbsp;In view of this expansion project, the decision on whether further recovery improvements and improved economics can be attained by the construction of a &#145;whole-plant Biox&#174;&#146; metallurgical process has been deferred until after the expanded plant is operational in early 2006 and its recoveries can be quantified. </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">In order to strengthen management in South Africa, various management changes were made. Patrick Smith was appointed Mine Manager at Barbrook at the end of April. &nbsp;Mr. Smith, who is a mining engineer, has experience as mine manager and as project manager in the South African mining industry including several years experience in greenstone mines.</P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD style="border:0.5pt solid #000000" valign=top width=447.733 colspan=4><P style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align=justify><B><U><BR></U></B></P>
<P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B><U>Barbrook Mines Ltd. &#150; Production Results 2<SUP>nd</SUP> Quarter </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=192>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; text-indent:11.85pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>2005</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; padding-right:-102.7pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify><B>2004&nbsp;</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=192><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">&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=96><P style="margin:0pt; text-indent:3.6pt; line-height:13pt; font-family:Shruti; font-size:11pt">Tonnes</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>21,507</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>7,247</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=192><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;Development &nbsp;advance</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:3.6pt; line-height:13pt; font-family:Shruti; font-size:11pt">Meters</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>656</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>476</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=192><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">&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=96><P style="margin:0pt; text-indent:3.6pt; line-height:13pt; font-family:Shruti; font-size:11pt">Tonnes</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>18,582</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>3,986</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=192><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">&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=96><P style="margin:0pt; text-indent:3.6pt; line-height:13pt; font-family:Shruti; font-size:11pt">g/t</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>4.80</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>5.80</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=192><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">&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=96><P style="margin:0pt; text-indent:3.6pt; line-height:13pt; font-family:Shruti; font-size:11pt">Ounces</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=71.067><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>1,777</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=88.667><P style="margin:0pt; text-indent:21.6pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=right>&nbsp;&nbsp;&nbsp;44</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; text-indent:21.6pt; font-family:Shruti; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt">&nbsp;</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD style="border:0.5pt solid #000000" valign=top width=187.2><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">*Not audited by an independent qualified person.</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=228 colspan=3><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B><U>Reserves </U></B></P>
<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>(Proven and Probable)</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=252 colspan=3><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B><U>Resources </U></B></P>
<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center><B>(Measured and Indicated)</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=187.2>&nbsp;</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Tonnes</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Grade</B>(g/t)</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Ounces</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Tonnes</B></P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Grade </B>(g/t)</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt"><B>Ounces</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=187.2><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Reported 31 Dec. 2004</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>236,147</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>5.95</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>45,175</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>1,704,455</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>4.70</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>257,330</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=187.2><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Mined *</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>15,759</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>5.46</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>2,766</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>11,200</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>3.52</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>1,268</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=187.2><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Added *</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>37,880</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>6.05</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>7,368</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>4,800</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>5.50</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>840</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=187.2><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt">Estimated at 30 June 05 *</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>258,268</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>5.99</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>49,777</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>1,698,055</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=96><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>4.71</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=center>256,902</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><BR>
<BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">5</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>
<P style="page-break-before:always; margin:0pt; font-family:Shruti; font-size:12pt"><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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><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 June 30, 2005 Caledonia recorded an operating loss of $1.4 million ($0.005 per share) compared with an operating loss of $1.4 million ($0.005 per share) in the same quarter of 2004 and an operating loss of $1.2 million ($0.006 per share) in the same period in 2003.</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 net loss after all expenses, increased amortization charges as a result of a change in application of the amortization policy (see Note 3), ongoing exploration and assay costs, Nama test work costs, and unrealized exchange losses (see Note 3) was $3.3 million ($0.011 per share) for the quarter ended June 30, 2005. Previously reported results, which excluded amortization, were a net loss of $1.4 million ($0.005 per share) during the same period in 2004 and a net loss of $1.4 million ($0.006 per share) in the same quarter of 2003. </P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><B><BR></B></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>On June 27, 2005 Caledonia listed on the AIM market of the London Stock Exchange, with the ticker symbol
&quot;CMCL&quot;. &nbsp;In conjunction with the listing Caledonia completed a Private Placement of 34,888,888 shares and raised &#163;1.57 million (Cdn$3.54 million) before expenses. The funds raised will primarily fund ongoing exploration at the Rooipoort and Grasvally Platinum Exploration Projects, together with capital expenditures and general operating costs.</P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><B>EXPLORATION AND PROJECT DEVELOPMENT</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; padding-right:-18pt; 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>Reconnaissance confirmation mapping of the Eersteling area commenced in June and is continuing. &nbsp;A number of targets have been identified for follow-up work, particularly to the east along strike of the Doreen reef and west along strike of the Girlie/Pienaar reefs. &nbsp;This work is incorporating results from the airborne geophysical survey completed in January and gold-in-soil geochemistry from samples collected from December 2004 to March 2005, as well as a review of previous work done on the property in the 1980-90&#146;s. </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 and fourth phases of drilling were completed with a total of 1,227 meters drilled during the quarter. &nbsp;As previously reported, the fourth phase was focused on the northern part of the property, where recent results show that the mineralization occurs in an apparently thicker sequence of the Lower Mafic Unit. This drilling has now shown that the apparent thickening is as a result of strike fault duplication as interpreted from the aeromagnetic data.</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>Compilation of data for determination of an initial mineral resource on the Rooiport property is in progress and results of this study and an independent review thereof is scheduled for completion in the third quarter. &nbsp;Assay results for all the holes drilled to date, but not yet reported, will be announced together with this resource announcement.</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>Three drills were mobilized on the 341.9 hectares Grasvally property which directly adjoins the southern boundary of the Rooipoort property in mid-May, soon after the Prospecting Right was received from the Department of Minerals and Energy.</P>
<P style="margin:0pt; font-family:Shruti" align=justify><BR></P>
<P style="margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>In all 3,192 meters were drilled on the Grasvally property during May and June. &nbsp;A total of eight holes will complete this drilling program. &nbsp;Assay results are awaited. It is expected that this </P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify><BR>
<BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">6</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>
<P style="page-break-before:always; margin:0pt; line-height:13pt; font-family:Shruti; font-size:11pt" align=justify>program will be completed during the third quarter, at which time compilation and determination of an initial mineral resource and an independent review of the drilling results will be conducted.</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>Eric Roodt B.Sc (Hons), Pr.Nat.Sci., Senior Geologist is the Qualified Person for the Eersteling, Rooipoort and Grasvally Exploration Projects.</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>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>Testing by Mintek, South Africa, of the higher grade ore from the Nama
&quot;A&quot; anomaly was largely completed during the quarter. &nbsp;A small amount of test work remains to optimize the overall cobalt recoveries and concentrate grades, which will be completed during the third quarter.</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 has signed a Letter of Intent with a large cobalt refinery as the first step towards an agreement for the long-term supply of cobalt concentrates from Nama. The refinery is conducting preliminary metallurgical testwork on ore and concentrate samples recovered from the
&quot;A&quot; anomaly at Nama. &nbsp;This work is expected to be completed during the third quarter. &nbsp;Provided that a commercial process is satisfactory, the details of the long-term offtake agreement will then be finalized and a pilot plant will be built as soon as practical at Nama with technical assistance from the refinery. &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 re-interpretation of the airborne geophysics was completed during July and has identified hitherto untested areas for further exploration and improved the understanding of the structural control over the mineralization on the properties. </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 now planning to take bulk samples from anomalies
&quot;B&quot;, &quot;C&quot; and &quot;D&quot; and is developing an exploration program for the licence area.</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>An amendment to the existing Environmental Brief to allow pilot plant operations has been approved by the Environmental Council of Zambia.</P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt">An independent review of earlier geophysical surveys was commenced during the quarter and is continuing. &nbsp;Results are expected in the third quarter. &nbsp;Following this an independent resource estimate will be initiated.</P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt">Discussions are being held with a number of other large cobalt end-users regarding long terms offtake agreements. </P>
<P style="margin:0pt; font-family:Shruti; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><B><I>Kikerk Lake Diamond Project, Canada</I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt" align=justify>Results from all 361 heavy mineral samples collected in 2004 were received in June. &nbsp;The joint-venture partners have approved a $500,000 exploration program for 2005 which will include heavy mineral sampling, geophysical surveying and diamond drilling. &nbsp;This program will commence during the third quarter.</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:3.35pt; margin-bottom:3.35pt; font-family:Shruti; color:#FFFFFF" align=justify><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 June 30, 2005 the following securities 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>336,001,174 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 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&#146; common share purchase warrants exercisable at a price of $0.55 until October 26, 2005 </P>
<P style="margin:0pt; font-family:Shruti; font-size:11pt"><BR>
<BR></P>
<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"><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>
<P style="page-break-before:always; margin:0pt; 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 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>
<B><P style="margin-top:0pt; margin-bottom:-14pt; text-indent:324pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;June 30,</B></P>
<P style="margin:0pt; text-indent:396pt; font-family:Times New Roman"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</B>December 31,</P>
<P style="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt"><B>(Unaudited)</B></P>
<P style="text-indent: 369pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt"><B>2005</B></P>
<P style="text-indent: 396.9pt; line-height: 100%; font-family: Times New Roman; border-bottom: 1pt solid #000000; margin-top: 0pt; margin-bottom: -11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="text-indent: 441pt; font-family: Times New Roman; line-height: 100%; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2004</P>
<TABLE style="font-size:10pt" cellspacing=0><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>2,482</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>599</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>839</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>3</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>3,923</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>7,141</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>10,859</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>22,002</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&#146; 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>1,252</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>397</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 style="border-bottom:1.5pt solid #000000" valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,649</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&#146; 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">&nbsp;&nbsp;&nbsp;&nbsp;Share capital (note 1)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>176,470</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>548</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>321</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>(156,986)</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>20,353</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>22,002</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">(&#147;Signed&#148;)</P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><U>&nbsp;&nbsp;&nbsp;</U></P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:36pt; 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;</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">(&#147;Signed&#148;)</P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:144pt; line-height:14pt; font-family:Times New Roman">Director</P>
<P style="margin:0pt; text-indent:360pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman">J. Johnstone</P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:8pt"><BR>
<BR></P>
<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>
<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-top:0pt; margin-bottom:-14pt; text-indent:288pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;</B>&nbsp;Three month period ended June 30, </P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;&nbsp;Six month period
ended June 30,</P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-11pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><B>(Unaudited)</B></P>
<B></B><P style="text-indent: 243pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>2005</B></P>
<P style="text-indent: 315pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2004</P>
<P style="text-indent: 387pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2003</P>
<P style="text-indent: 513pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>2005</B></P>
<P style="text-indent: 585pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2004</P>
<P style="text-indent: 657pt; font-family: Times New Roman; line-height: 100%; margin: 0pt; padding-left: 36pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2003</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman"><BR></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>
<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>
<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=319.733><P style="margin:0pt; font-family:Times New Roman"><B>Deficit,</B> beginning</P>
</TD><TD valign=top width=93.4><P style="margin:0pt; font-family:Times New Roman" align=right><B>(153,710)</B></P>
</TD><TD valign=top width=91.867><P style="margin:0pt; font-family:Times New Roman" align=right>(143,670)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(127,657)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(151,924)</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(141,945)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(127,449)</P>
</TD></TR>
<TR><TD valign=top width=319.733><P style="margin:0pt; font-family:Times New Roman"><B>Net (loss) for the period</B></P>
</TD><TD valign=top width=93.4><P style="margin:0pt; font-family:Times New Roman" align=right><B>(3,276)</B></P>
</TD><TD valign=top width=91.867><P style="margin:0pt; font-family:Times New Roman" align=right>(1,435)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(1,406)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(5,062,)</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(3,160)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(1,614)</P>
</TD></TR>
<TR><TD valign=top width=319.733><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=93.4><P style="margin:0pt; font-family:Times New Roman" align=right><B>(156,986</B>)</P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=91.867><P style="margin:0pt; font-family:Times New Roman" align=right>(145,105)</P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(129,063)</P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=74.4>&nbsp;</TD><TD style="border-top:1.5pt solid #000000" valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(156,986)</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>(145,105)</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>(129,063)</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; 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>
<B><P style="margin-top:0pt; margin-bottom:-14pt; text-indent:288pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Three month period ended June 30, </P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;&nbsp;Six month period ended June 30,</P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-11pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><B>(Unaudited)</B></P>
<B></B><P style="text-indent: 243pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;<B>2005</B></P>
<B><P style="text-indent: 315pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;</B>2004</P>
<P style="text-indent: 387pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">2003</P>
<P style="text-indent: 513pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt"><B>2005</B></P>
<P style="text-indent: 585pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;2004</P>
<P style="text-indent: 657pt; font-family: Times New Roman; line-height: 100%; margin: 0pt; padding-left: 36pt; padding-bottom: 3pt">&nbsp;2003</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman"><BR></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>
<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>
<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=320.133><P style="margin:0pt; font-family:Times New Roman"><B>Revenue and operating costs</B></P>
</TD><TD valign=top width=93.467>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Revenue from sales</P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>965</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>30</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,446</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>170</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=320.133><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=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>2,393</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>1,396</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>1,232</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=73.6>&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>4,141</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>2,711</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>1,304</P>
</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman"><B>Operating profit (loss)</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>(1,428)</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,366)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,232)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=73.6>&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>(2,695)</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>(2,541)</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>(1,251)</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=320.133><P style="margin:0pt; font-family:Times New Roman"><B>Costs and expenses</B></P>
</TD><TD valign=top width=93.467>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;General and administrative</P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>728</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>660</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>258</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,224</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>959</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>628</P>
</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Interest </P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>5</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>88</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>44</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>5</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>135</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>64</P>
</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Other expense (income) (Note 3)</P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,115</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(679)</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(128)</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,138</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(462)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(329)</P>
</TD></TR>
<TR><TD valign=top width=320.133>&nbsp;</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>1,848</B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>69</P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>174</P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=73.6>&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>2,367</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>632</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>363</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=320.133><P style="margin:0pt; font-family:Times New Roman"><B>(Loss) before non-controlling interest</B></P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>(3,276)</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,435)</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,406)</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(5,062)</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(3,173)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(1,614)</P>
</TD></TR>
<TR><TD valign=top width=320.133><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interest</P>
</TD><TD valign=top width=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>-</B></P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top width=73.6>&nbsp;</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>(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=320.133><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=93.467><P style="margin:0pt; font-family:Times New Roman" align=right><B>(3,276)</B></P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,435)</P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=92.4><P style="margin:0pt; font-family:Times New Roman" align=right>(1,406)</P>
</TD><TD style="border-top:1.5pt solid #000000" valign=top width=73.6>&nbsp;</TD><TD style="border-top:1.5pt solid #000000" valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(5,062)</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>(3,160)</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>(1,614)</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=320.133><P style="margin-top:6pt; margin-bottom:0pt; font-family:Times New Roman">Operating (loss) per share (Note 2)</P>
</TD><TD style="border-top:3pt solid #000000" valign=top width=93.467>&nbsp;</TD><TD style="border-top:3pt solid #000000" valign=top width=92.4>&nbsp;</TD><TD style="border-top:3pt solid #000000" valign=top width=92.4>&nbsp;</TD><TD style="border-top:3pt solid #000000" valign=top width=73.6>&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><TD style="border-top:3pt solid #000000" valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=320.133><P style="margin-top:0pt; margin-bottom:6pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Basic and fully diluted</P>
</TD><TD valign=top width=93.467><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right><B>($0.005)</B></P>
</TD><TD valign=top width=92.4><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.005)</P>
</TD><TD valign=top width=92.4><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.006)</P>
</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right><B>($0.009)</B></P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.009)</P>
</TD><TD valign=top width=96><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.006)</P>
</TD></TR>
<TR><TD valign=top width=320.133><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman">Net (loss) per share (Note 2)</P>
</TD><TD valign=top width=93.467>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=92.4>&nbsp;</TD><TD valign=top width=73.6>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD style="border-bottom:3pt solid #000000" valign=top width=320.133><P style="margin-top:0pt; margin-bottom:5pt; 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=93.467><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right><B>($0.011)</B></P>
</TD><TD style="border-bottom:3pt solid #000000" valign=top width=92.4><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.005)</P>
</TD><TD style="border-bottom:3pt solid #000000" valign=top width=92.4><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right>($0.006)</P>
</TD><TD style="border-bottom:3pt solid #000000" valign=top width=73.6>&nbsp;</TD><TD style="border-bottom:3pt solid #000000" valign=top width=96><P style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman" align=right><B>($0.017)</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>($0.011)</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></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman"><BR>
<BR></P>
<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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align=right>Caledonia Mining Corporation</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:-14pt; text-indent:288pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Three month period ended June 30, </P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;Six month period ended June 30,</P>
<P style="margin:0pt; text-indent:576pt; font-family:Times New Roman">&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-11pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000"><B>(Unaudited)</B></P>
<B></B><P style="text-indent: 243pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>2005</B></P>
<B><P style="text-indent: 315pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</B>2004</P>
<P style="text-indent: 378pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2003</P>
<P style="text-indent: 513pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;
2005</B></P>
<P style="text-indent: 576pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt; padding-left: 36pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</B>2004</P>
<P style="text-indent: 621pt; font-family: Times New Roman; line-height: 100%; margin: 0pt; padding-left: 36pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;2003</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="margin:0pt; line-height:0.65pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman"><B>Cash provided by (used in)</B></P>
</TD><TD valign=top width=90.8>&nbsp;</TD><TD valign=top width=90.933>&nbsp;</TD><TD valign=top width=92.6>&nbsp;</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96>&nbsp;</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; font-size:12pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman"><B>Operating activities</B></P>
</TD><TD valign=top width=90.8>&nbsp;</TD><TD valign=top width=90.933>&nbsp;</TD><TD valign=top width=92.6>&nbsp;</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Operating (loss) for the period</P>
</TD><TD valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(1,428</B>)</P>
</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>(1,366)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(1,232)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(2,695)</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(2,541)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(1,251)</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;&nbsp;&nbsp;Other costs and expenses and non-controlling interests</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:240pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp; (1,848)</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:324pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(69)</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:396pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(174)</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:504pt; line-height:14pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2,367)</P>
<P style="text-indent: 540pt; line-height: 100%; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -14pt">&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;
( 619)</P>
<P style="text-indent: 612pt; font-family: Times New Roman; line-height: 100%; margin: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<font color="#FFFFFF">(363)&nbsp;&nbsp;</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(363)</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD valign=top width=323.267><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;(note 4)</P>
</TD><TD valign=top width=90.8><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>326</B></P>
</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=right>(682)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=right>0</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman" align=right><B>518</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>(592)</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>18</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 valign=top width=323.267><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 &nbsp;(note 4)</P>
</TD><TD valign=top width=90.8><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>(99)</B></P>
</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=right>(169)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=right>(67)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman" align=right><B>(242)</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>(157)</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>(336)</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 valign=top width=323.267>&nbsp;</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(3,049)</B></P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>(2,286)</P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(1,473)</P>
</TD><TD style="border-top:1.5pt solid #000000; border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>(4,786)</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>(3,909)</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>(1,932)</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=323.267><P style="margin:0pt; font-family:Times New Roman"><B>Investing activities</B></P>
</TD><TD valign=top width=90.8>&nbsp;</TD><TD valign=top width=90.933>&nbsp;</TD><TD valign=top width=92.6>&nbsp;</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Expenditures on capital assets</P>
</TD><TD valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(69)</B></P>
</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>(927)</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(10)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>(256)</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(1,114)</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(194)</P>
</TD></TR>
<TR><TD valign=top width=323.267><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=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(956)</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>(496)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(45)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>(2,112)</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>(679)</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>(1,081)</P>
</TD></TR>
<TR><TD valign=top width=323.267>&nbsp;</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(1,025)</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>(1,423)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(55)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>(2,368)</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>(1,793)</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>(1,275)</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=323.267><P style="margin:0pt; font-family:Times New Roman"><B>Financing activities</B></P>
</TD><TD valign=top width=90.8>&nbsp;</TD><TD valign=top width=90.933>&nbsp;</TD><TD valign=top width=92.6>&nbsp;</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Loan payable</P>
</TD><TD valign=top width=90.8>&nbsp;</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(5)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(44)</P>
</TD></TR>
<TR><TD valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Issue of share capital net of issue costs &nbsp;(Note 1)</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>3,166</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>4,885</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>9</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>3,166</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>14,167</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>2,520</P>
</TD></TR>
<TR><TD valign=top width=323.267><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=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>3,166</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>4,885</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>4</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>3,166</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>14,167</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>2,476</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 valign=top width=323.267><P style="margin:0pt; font-family:Times New Roman"><B>Increase (decrease) in cash for the period</B></P>
</TD><TD valign=top width=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>(908)</B></P>
</TD><TD valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>1,176</P>
</TD><TD valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>(1,524)</P>
</TD><TD valign=top width=74.4>&nbsp;</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right><B>3,988</B></P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>8,465</P>
</TD><TD valign=top width=96><P style="margin:0pt; font-family:Times New Roman" align=right>(731)</P>
</TD></TR>
<TR><TD valign=top width=323.267><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=90.8><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=90.933><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=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>2,657</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>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=96><P style="margin:0pt; font-family:Times New Roman" align=right>1,864</P>
</TD></TR>
<TR><TD valign=top width=323.267><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=90.8><P style="margin:0pt; font-family:Times New Roman" align=right><B>2,482</B></P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=90.933><P style="margin:0pt; font-family:Times New Roman" align=right>12,644</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=92.6><P style="margin:0pt; font-family:Times New Roman" align=right>1,133</P>
</TD><TD style="border-bottom:1.5pt solid #000000" valign=top width=74.4>&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>2,482</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>12,644</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>1,133</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; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:3pt solid #000000"><B><BR></B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">10</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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align=right>Caledonia Mining Corporation</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="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt"><B>(Unaudited)</B></P>
<B><P style="margin-top:0pt; margin-bottom:-11pt; text-indent:108pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000">&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;</B></P>
<B><P style="text-indent: 216pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;
For the six months ended June 30, 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:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Nature of Business</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Basis of Presentation</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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&#146;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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Measurement Uncertainties</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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&#146;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:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Principles of Consolidation</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">The Company&#146;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&#146; 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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Cash and Cash Equivalents</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Inventories</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR>
<BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">11</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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; padding-top:3pt; font-family:Times New Roman; font-size:11pt; border-top:3pt solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height: 14pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: -11pt"><B>(Unaudited)</B></P>
<B><P style="margin-top:0pt; margin-bottom:-11pt; text-indent:108pt; line-height:14pt; font-family:Times New Roman; font-size:11pt; border-bottom:1pt solid #000000">&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;</B></P>
<B><P style="text-indent: 252pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;
For the six months ended June 30, 2005, 2004 and 2003</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Revenue Recognition</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">Revenue from the sale of precious metals is recognized when the benefits of ownership are 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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Capital Assets</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><I>Producing Assets</I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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 ranges 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:11pt"><B><I><BR></I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><I>Non-Producing Assets</I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">Non-producing assets are recorded at cost less write downs. &nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Mineral Properties</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><I>Producing Properties</I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">When and if properties are placed in production, the applicable capitalized costs are amortized using the unit-of-production method on the ratio of reserve 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. (Of the 31,225 tonnes processed during the six month period to June 30, 2005, 15,759 were from published reserves at December 31, 2004 with the balance from other sources, including development.)</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><I>Non-Producing Properties</I></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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 ore reserves are established, or the properties are sold or abandoned. &nbsp;</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR>
<BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">12</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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; padding-top:3pt; font-family:Times New Roman; font-size:11pt; border-top:3pt solid #000000" align=right><B>&nbsp;Caledonia Mining Corporation</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height: 14pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: -11pt"><B>(Unaudited)</B></P>
<B><P style="margin-top:0pt; margin-bottom:-11pt; text-indent:108pt; line-height:14pt; font-family:Times New Roman; font-size:11pt; border-bottom:1pt solid #000000">&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;</B></P>
<B><P style="text-indent: 252pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;
For the six months ended June 30, 2005, 2004 and 2003</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Strategic Alliances</B></P>
<P style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Foreign Currency Translation</B></P>
<P style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-14pt; padding-left:85.05pt; text-indent:-58.05pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">(i)</P>
<P style="margin:0pt; padding-left:85.05pt; text-indent:-31.05pt; font-family:Times New Roman; font-size:11pt">current assets and liabilities at period end rates;</P>
<P style="margin-top:0pt; margin-bottom:-14pt; padding-left:85.05pt; text-indent:-58.05pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">(ii)</P>
<P style="margin:0pt; padding-left:85.05pt; text-indent:-31.05pt; font-family:Times New Roman; font-size:11pt">all other assets and liabilities at historical rates; and</P>
<P style="margin-top:0pt; margin-bottom:-14pt; padding-left:81pt; text-indent:-58.05pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">(iii)</P>
<P style="margin:0pt; padding-left:81pt; text-indent:-27pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Asset Retirement Obligation</B></P>
<P style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">Effective January 1, 2004 the Company adopted the Canadian Institute of Chartered Accountants Standard 3110, &#147;Asset Retirement Obligations&#148;. This standard requires that a liability be recognized for retirement obligations to be settled as a result of an existing law, regulation, or contract.</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt"><B>Income Taxes</B></P>
<P style="margin:0pt; padding-left:21.3pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">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:11pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><B><BR>
<BR></B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">13</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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin:0pt; padding-top:3pt; line-height:14pt; font-family:Times New Roman; font-size:14pt; border-top:1.5pt solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:14pt" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt"><B>&nbsp;(Unaudited) </B></P>
<B><P style="margin-top:0pt; margin-bottom:-11pt; text-indent:216pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<B><P style="text-indent: 288pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;For the six months ended June 30, 2005</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=justify><B><BR></B></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</P>
<P style="margin:0pt; text-indent:51007.235pt; font-family:Times New Roman">a</P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; padding-left:49.65pt; text-indent:-21.3pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;Issued &#150; 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&#146;s)</U></P>
</TD></TR>
<TR><TD valign=top width=288><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Balance, December 31, 2004</P>
</TD><TD valign=top width=120><P style="margin:0pt; font-family:Times New Roman" align=right>301,112,286</P>
</TD><TD valign=top width=120><P style="margin:0pt; font-family:Times New Roman" align=right>$173,304</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;Issued June 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>&nbsp;&nbsp;34,888,888</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>3,166</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 June 30, 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>336,001,174</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>176,470</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman"><B><BR></B></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 &#150; 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 June 30, 2005, the Company had 16,498,000 common share options outstanding at an average price of $0.21 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 26, 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"><B><BR></B></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 second quarter and year to date, which amounted to which amounted to 302,262,469 and 301,687,378 respectively. &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"><B><BR></B></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 expenses (income) are unrealized exchange translation losses of $695,000 (2004 - loss of $334,000, 2003 &#150; gain of $304,000) and an amortization charge of $488,000. The amortization charge relates mainly to Barbrook, where increasing production levels lead to increasing amortization charges in terms of the accounting policies detailed under &#147;Mineral Properties&#146; on page 13 above. Prior to the current fiscal year, due to the low tonnages processed by Barbrook amortization was only calculated at the end of the year. Amortization is now calculated for all of Caledonia&#146;s capital assets and mineral properties on a quarterly basis.</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-bottom:3pt; line-height:1.35pt; font-family:Times New Roman; border-bottom:2.25pt solid #000000"><BR><B><BR>
<BR></B></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">&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">14</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>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; 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>Notes to the Consolidated Financial Statements</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="line-height: 14pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: -11pt"><B>(Unaudited)</B></P>
<B><P style="margin-top:0pt; margin-bottom:-11pt; text-indent:217.1pt; line-height:14pt; font-family:Times New Roman; border-bottom:1pt solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="text-indent: 279pt; font-family: Times New Roman; margin: 0pt; padding-bottom: 3pt"><B>&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the six months ended June 30, 2005</B></P>
<P style="margin:0pt; font-family:Times New Roman"><B><BR></B></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">Amortization</P>
</TD><TD valign=top width=108><P style="margin:0pt; font-family:Times New Roman" align=right><B>488</B></P>
</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=96>&nbsp;</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>30</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>518</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>189</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>(283)</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>(330)</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>182</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>(242)</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; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; 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; padding-right:2.45pt; font-family:Shruti"><I>Certain statements included herein are &#147;forward-looking statements&#148;. &nbsp;Management cautions that forward- looking statements are not guarantees, and that actual results could differ materially from those expressed or implied in the forward-looking statements. &nbsp;Important factors that could cause the actual results of operations, exploration or development programmes, or the financial condition of the Corporation, to differ include, but are not necessarily limited to, the risks and uncertainties discussed in documents filed by the Corporation with the various regulatory authorities having jurisdiction</I></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><B><BR></B></P>
<P style="margin:0pt; font-family:Times New Roman"><B><BR>
<BR></B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" 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>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="page-break-before:always; margin:0pt; line-height:0.9pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.9pt; line-height:5pt; font-family:Times New Roman; font-size:5pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; line-height:16pt; font-family:Shruti; font-size:14pt" 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:Shruti; 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:Shruti; font-size:12pt" align=justify>SOLICITORS</B></P>
<B><P style="margin:0pt; text-indent:468pt; font-family:Shruti; 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: &nbsp;(1) (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: (1) (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></B><FONT FACE="Shruti"><B>AUDITORS</B></FONT><B> &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: &nbsp;(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: (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; line-height:14pt; font-family:Times New Roman; font-size:12pt"></B><FONT FACE="Shruti"><B>REGISTRAR &amp; TRANSFER AGENT</B></FONT></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: &nbsp;(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;(1) (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: (1) (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:Shruti; font-size:12pt" align=justify><B>SHARES LISTED</B></P>
<P style="margin:0pt; padding-left:50.4pt; text-indent:309.6pt; font-family:Shruti; 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 &#147;CAL&#148;</P>
<P style="margin:0pt; text-indent:252pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B></B><FONT FACE="Shruti"><B>BANKERS</B></FONT></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; line-height:14pt; font-family:Times New Roman; font-size:12pt"><B>Canadian Imperial Bank of Commerce</B></P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>London Stock Exchange&#146;s AIM Symbol &#147;CMCL&#148;</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:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman" align=justify>Mississauga, Ontario</P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Shruti; font-size:12pt" align=justify><B>CAPITALIZATION </B><FONT FACE="Times New Roman">at June30, 2005</FONT></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>Authorised: Unlimited</P>
<P style="margin:0pt; text-indent:144pt; 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>Shares, Warrants and Options Issued:</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><FONT FACE="Shruti"><B>NOMINATED ADVISOR &amp; BROKER</B></FONT></P>
<P style="margin:0pt; text-indent:468pt; font-family:Shruti; 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: 336,001,174</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>Seymour Pierce Limited</P>
<P style="margin:0pt; text-indent:396pt; 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:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>Bucklersbury House</P>
<P style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>Options: 16,498,000</P>
<P style="margin:0pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>3 Queen Victoria Street</P>
<P style="margin-top:0pt; margin-bottom:-14pt; text-indent:261pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify>London EC4N 8EL, England</P>
<P style="margin:0pt; text-indent:432pt; 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; line-height:16pt; font-family:Times New Roman; font-size:14pt" align=center><B>Caledonia Mining Corporation</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Unit # 9</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>2145 Dunwin Drive</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Mississauga, Ontario</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Canada L5L 4L9</P>
<P style="margin:0pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Tel: (1) (905) 607 7543</P>
<P style="margin:0pt; padding-left:36pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center>Fax: (1) (905) 607 9806</P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><U>info@caledoniamining.com</U></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR>
<BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center">16</P>
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