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<SEC-DOCUMENT>0001137171-06-002093.txt : 20061116
<SEC-HEADER>0001137171-06-002093.hdr.sgml : 20061116
<ACCEPTANCE-DATETIME>20061115173640
ACCESSION NUMBER:		0001137171-06-002093
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20061115
FILED AS OF DATE:		20061116
DATE AS OF CHANGE:		20061115

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:		061220970

	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>caledonia6k111606.htm
<DESCRIPTION>CALEDONIA MINING CORP. FORM 6-K
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="rszczype">
<META NAME="date" CONTENT="08/04/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin-top:4.15pt; margin-bottom:4.15pt" 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" align=center><B>Report of Foreign Private Issuer </B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" 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">For the month of
November&nbsp; 2006<U> </U></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">Commission File Number: <FONT COLOR=#3F3F3F>000-13345</FONT></P>
<P style="margin:0pt" align=center><B>Caledonia Mining Corporation</B> <BR>
(Translation of registrant's name into English)</P>
<P style="margin:0pt" align=center><B>Unit #9, 2145 Dunwin Drive</B></P>
<P style="margin:0pt" align=center><B>Mississauga</B></P>
<P style="margin:0pt" align=center><B>Ontario L5L 4L9</B></P>
<P style="margin:0pt" align=center><B>Canada<BR>
</B>(Address of principal executive offices)<BR>
</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">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" align=center>Form 20-F _X__ Form 40-F_____</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">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">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">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" align=center>Yes <U>____</U> No <U>__X___</U></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">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" align=center><B>Signatures</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">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"><B>Caledonia Mining Corporation<BR>
</B>(Registrant)</P>
<P style="margin:0pt; padding-left:360pt; text-indent:144pt">&nbsp;<BR>
</P>
<P style="margin:0pt; padding-left:324pt; text-indent:36pt">By:_/s/ James Johnstone</P>
<P style="margin:0pt; padding-left:360pt">Name: James Johnstone</P>
<P style="margin:0pt; padding-left:360pt">Title: Vice President Operations</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt">Dated: &nbsp;&nbsp;November 15,&nbsp; 2006</P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always" align=center><B>Exhibit Index</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt">Exhibit</P>
<P style="margin:0pt; text-indent:216pt">Description</P>
<P style="margin:0pt"><BR></P>
<P style="margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: -14pt">99.1</P>
<p style="margin: 0pt; padding-left: 216pt"><u><a href="quarterly.htm">Report
for Quarter ended September 30, 2006</a></u></p>
<P style="margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: -14pt">99.2</P>
<P style="margin: 0pt; padding-left: 216pt"><a href="mda.htm">Management's <u>Discussion</u>
&amp; Analysis</a><BR>
<BR></P>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>quarterly.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="wfong">
<META NAME="date" CONTENT="11/14/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:69.333px; margin:0px; font-size:66.667px" align=center><B>Report for</B></P>
<P style="line-height:69.333px; margin:0px; font-size:66.667px" align=center><B>&nbsp;Quarter ended September 30, 2006 </B></P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px" align="center"><img src="quarterly002.gif" alt="[quarterly002.gif]" align=top height=144 width=144></P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:16px" align=center>&nbsp;</P>
<P style="margin:0px; font-size:40px" align=center>&nbsp;</P>
<P style="line-height:66.667px; margin:0px; font-size:64px" align=center><B>CALEDONIA</B></P>
<P style="line-height: 66.667px; font-size: 64px; margin: 0px" align=center><B>Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:11px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">2</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=595.6></TD></TR>
<TR><TD style="background-color:#000000; border:1px solid #000000" valign=top width=595.6><P style="line-height:18.667px; margin-top:5.333px; margin-bottom:5.333px; font-family:Shruti; font-size:16px; color:#FFFFFF"><FONT FACE="Shruti">HIGHLIGHTS FOR THE QUARTER ENDED SEPTEMBER 30, 2006 (Q3)</FONT></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><FONT FACE="Times New Roman"><B>Barbrook Gold Mine &#150; South Africa</B></FONT></P>
<P style="line-height: 17.333px; text-indent: -24px; font-family: Wingdings; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px; padding-left: 48px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">Following the completion of the plant expansion in late January from a capacity of 6,000 tonnes per month to a projection of 15,000 tonnes per month, plant throughput has increased steadily reaching 12,397 tonnes in June, 13,292 tonnes in July, 12,500 tonnes in August but only 3,300 tonnes in September. Production was disrupted during September when contract labourers embarked on a legal strike over a wage dispute with the labour broker who supplies labour to the mine. As a result 29,092 tonnes (32,133 tonnes in quarter ended June 30</FONT><SUP>th</SUP>, 2006) were treated in the plant during the quarter.</P>
<P style="line-height: 17.333px; text-indent: -24px; font-family: Wingdings; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px; padding-left: 48px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">Gold production totaled 1,548 ounces (1,749 ounces in quarter ended June 30</FONT><SUP>th</SUP> 2006) during the quarter and only 88 ounces in October due to the industrial action at the mine.</P>
<P style="line-height: 17.333px; text-indent: -24px; font-family: Wingdings; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px; padding-left: 48px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">In October workers embarked on illegal activities that resulted in severe damage to the offices and security buildings at Barbrook. No damage was caused to the metallurgical plant or underground workings, the Barbrook operations have now been placed on &#147;care and maintenance&#148;.</FONT></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>Blanket Gold Mine - Zimbabwe</B></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:normal; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Acquired a 100% interest in</FONT> the Blanket Gold Mine in Zimbabwe from Kinross Gold Corporation of Toronto with effect from 1 April 2006.</P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Gold production during the three months ending June 30, 2006 totaled 6,045 ounces, 6,475 ounces were produced in the 3 months ended September 30</FONT><SUP>, </SUP>2006 and 2,109 ounces in October, 2006.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>Corporate/Financial</B></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Consideration given for the Blanket Mine purchase was a payment of US$1 million and the issue of 20,000,000 Caledonia shares.</FONT></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Completed a private placement in July 2006 and raised $2,160,000 after expenses through the issue of 17,000,000 common shares and 17,000,000 share purchase warrants. </FONT></P>
<P style="margin:0px"><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=641.333></TD></TR>
<TR><TD style="background-color:#000000; border:1px solid #000000" valign=top width=641.333><P style="line-height:18.667px; margin-top:5.333px; margin-bottom:5.333px; font-size:16px; color:#FFFFFF">2006 OBJECTIVES</P>
</TD></TR>
</TABLE>
<P style="margin-top:3.667px; margin-bottom:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Subsequent to the industrial action at Barbrook Mine and the extent of the damaged caused to certain buildings a decision around the future of Barbrook Mine must be taken. On the assumption that Barbrook continues in operation:</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Improve safety awareness at Barbrook Mine and further develop necessary programs to ensure a safe operation.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Optimise gold production at Barbrook Mine in South Africa by treating at least 15,000 tonnes per month. </P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Continue developing additional reserves/resources at Barbrook Mine.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Complete metallurgical studies to confirm viability of economic gold recovery from Daylight &amp; Victory zones at Barbrook Mine.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Continue with negotiations to conclude agreements with cobalt refiners to purchase cobalt concentrate produced at Nama and/or form strategic alliances to achieve this objective.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Seek a joint-venture partner to commence an exploration program at the Kadola copper/cobalt and the Eureka copper/gold properties in Zambia.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Further explore the polymetallic resource on the Rooipoort and Grasvally properties which form the Rooipoort PGE/Ni/Cu Exploration Project in South Africa.</FONT></P>
<P style="margin-top:3.667px; margin-bottom:0px" align=justify><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">3</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Increase the land holdings around the Rooipoort Exploration property.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Drill identified extensions to the known ore zones on the Eersteling and Zandrivier Mining Licence areas.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Pursue possible acquisitions and/or strategic partnerships to expand Caledonia&#146;s portfolio of properties.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Expand the Board of Directors to address ongoing Corporate Governance requirements. </FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Implement succession plans for senior executive and operational staff.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Strengthen the Investor Relations and Public Relations functions within Caledonia.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Conclude necessary agreements to satisfy the South African Black Economic Empowerment (&#147;BEE&#148;) requirements. </FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Arrange necessary financing to support the activities required to meet these objectives.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Expedite the Number 4 shaft expansion project at the newly acquired Blanket Gold Mine to increase gold production to 50,000 ounces per annum. </FONT></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">4</P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>President&#146;s Message</B></P>
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<P style="line-height:17.333px; margin-top:0px; margin-bottom:7.333px; font-size:14.667px">The acquisition of the Blanket Gold Mine in Zimbabwe is a significant step towards Caledonia&#146;s goal of developing the asset base into a significant diversified international mining company. &nbsp;Gold has been mined in the Blanket area for close to 100 years. As of 2005 Blanket&#146;s reported historic life-time gold production exceeded one million ounces. With the reported proven and probable ore reserves exceeding 3 million tonnes Blanket should continue to produce gold for many years to come. &nbsp;I am delighted to welcome the Blanket management team and staff to Caledonia where I am sure they will make a significant positive impact on Caledonia&#146;s future revenue. &nbsp;</P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:7.333px; font-size:14.667px">The Number 4 shaft expansion project at Blanket is currently well underway and should be completed by third quarter 2007 (originally second quarter 2007) due to delays beyond Blanket&#146;s control. The new shaft should allow Blanket to progressively increase gold production to 40,000 ounces per year. &nbsp;The latest monetary policy in Zimbabwe allows mines to retain 67.5% of their foreign exchange proceeds (increased from 40%) - which will have a positive impact on Blanket together with the cost cutting program which is rapidly being implemented. &nbsp;The metallurgical tests proposed by Caledonia have been completed and the circuit changes are being finalized. These should result in increased gold recoveries, lower reagent consumption and costs..</P>
<P style="font-size: 14.667px; line-height: 14pt; margin: 0px" align=justify>The accompanying Highlights and 3<SUP>rd</SUP> quarter MD&amp;A contain information with respect to the Barbrook Mine<B>.&nbsp;
</B>Further samples from the &#147;A&#148; anomally on the Nama property in Zambia were taken and shipped to China for confirmatory testwork. &nbsp;Samples where also sent for furnance testing in South Africa. Negotiations regarding long term cobalt sales agreements with a number of large cobalt refiners are advancing. Technical and economic studies related to the production of saleable cobalt carbonates and hydroxides at Nama are presently underway in South Africa and China.</P>
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<P style="margin:0px; padding-left:336px; font-size:14.667px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;S. E. Hayden</B></P>
<P style="margin:0px; padding-left:384px; font-size:14.667px" align=justify>President and Chief Executive Officer</P>
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<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B>CALEDONIA MINING CORPORATION </B></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:11px; text-indent:480px; font-size:14.667px" align=right><B>November 14<SUP>th</SUP>, 2006 </B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify><B>Management&#146;s Discussion and Analysis </B></P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>This Interim MD &amp; A covers the Company&#146;s third fiscal quarter from July 1, 2006 to September 30, 2006 - and the period thereafter to November 6, 2006. &nbsp;It is to be read in conjunction with the Company&#146;s Annual Management Discussion and Analysis for the fiscal year ended December 31, 2005, the audited financial statements of the Company prepared to December 31, 2005, the Company&#146;s 2005 Annual Report and with the Interim MD&amp;As and unaudited financial statements contained in the Interim Quartely Reports for the first and second quarters. &nbsp;All of these documents have been filed on SEDAR and are available at <FONT COLOR=#0000FF><U>www.sedar.com</U></FONT> or on the Corporation&#146;s website at www.caledoniamining.com<FONT COLOR=#0000FF><U></U></FONT>.</P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px"><B>Note that all currency references in this document are to Canadian dollars</B>.</P>
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<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B>1.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px" align=justify><B>OPERATIONAL REVIEW, OVERALL PERFORMANCE AND RESULTS OF </B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px" align=justify><B>OPERATIONS</B></P>
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<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B><I>(a)</I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px" align=justify><B><I>Barbrook Mine South Africa</I></B></P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>Barbrook Mine is temporarily on &#147;care and maintenance&#148;.</P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>In early August metallurgical testing by Mintek of South Africa identified operating parameters which successfully reduced the previously unexplained gold losses in the oxidation circuit in the laboratory. &nbsp;Efforts were commenced to modify the plant to duplicate these parameters in the full scale operation, but before these changes could be fully tested during continuous operations the contractor&#146;s labour commenced a legal strike on August 28<SUP>th</SUP> . &nbsp;Some replacement workers were supplied by the contractor but due to intimidation there was a high turnover, which when coupled with necessary safety training, adversely affected productivity. &nbsp;</P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px">The strike was terminated on October 13<SUP>th</SUP> and employees were requested to return to work on October 16th. &nbsp;&nbsp;However, following a re-organisation and reduction of the workforce there were significant disruptions on site and several surface buildings and facilities were destroyed. All facilities at Barbrook are uninsured and a claim has been lodged against the labour contractor in terms of the contract with them.</P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The reduction in Gold Sales Revenue for the quarter compared with that in the second quarter is due to the lack of production in September resulting from the labour strike. &nbsp;</P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>Underground work continued in the Taylors, French Bob and Twalas &nbsp;zones to develop additional resources in these zones, but was stopped in late August when limited manpower was redeployed in production areas.</P>
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<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=139.533></TD><TD width=82.667></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=666.733 colspan=6><P style="margin:0px" align=center><B><U>Barbrook Mine &#150; 2006 Production Results</U></B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1<SUP>st</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>2<SUP>nd</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3<SUP>rd</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>October</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jan - 31 Mar</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Apr &#150; 30 Jun</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jul &#150; 30 Sept</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Oct &#150; 31 Oct</U></P>
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<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Ore Mined</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>27,565</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>29,886</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>30,134</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>0</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Development Advance</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Meters</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>795</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>737</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>378</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>0</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Ore Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>19,357</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>32,133</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>29,092</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,700</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Grade Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>g/t</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>3.78</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.37</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.79</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.20</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Gold Recovered</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Ounces</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>902</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,749</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,548</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>88</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify>&nbsp;</P>
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<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">6</P>
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<P style="line-height:18.667px; margin:0px; font-size:16px">The table below summarizes the Reserve and Resource data as at September 30, 2006.</P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESERVES </P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=310.133></TD><TD width=95.067></TD><TD width=50.267></TD><TD width=69.733></TD><TD width=87.733></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Classification</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Mineral</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>(Tonnes)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Grade</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Au</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>kg</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Ounces</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Proven Ore </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>256,500</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.88</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,508</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>48,490</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Probable Ore</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>53,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>6.11</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>324</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>10,410</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height: 20px; font-size: 14.667px; margin: 0px" align=center><SUB>TOTAL PROVEN &amp; PROBABLE ORE</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height: 20px; font-size: 14.667px; margin: 0px" align=center><SUB>309,500</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height: 20px; font-size: 14.667px; margin: 0px" align=center><SUB>5.92</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height: 20px; font-size: 14.667px; margin: 0px" align=center><SUB>1,832</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height: 20px; font-size: 14.667px; margin: 0px" align=center><SUB>58,900</SUB></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESOURCES *</P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=311.067></TD><TD width=94.533></TD><TD width=47.2></TD><TD width=75.6></TD><TD width=85.067></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Measured</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>495,000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2.96</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,465</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>47,100</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Indicated</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,196,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.29</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>6,330</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>203,400</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Inferred</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,400,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.91</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD></TR>
</TABLE>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>*</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>The mineral resources figures are not included in the mineral reserve figures. </I></P>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>**</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>In keeping with the requirements of NI 43-101 Inferred Resources are reported without estimates of metal quantities.</I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Dr Trevor Pearton, PhD, FGSSA., Technical Director of Barbrook, is Caledonia&#146;s &quot;Qualified Person&quot; with respect to the Barbrook Mine property for the purposes of National Instrument 43-101 and has approved this property description. &nbsp;The above Reserve and Resource data is compiled using Caledonia&#146;s internal standards and National Instrument 43-101 compliant Reserve and Resource data will be made available as soon as practicable.</P>
<P style="line-height:17.333px; margin:0px; padding-left:24px; font-size:14.667px" align=justify>.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(b) </I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Blanket Mine Zimbabwe</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">In July 2006 Caledonia completed the purchase of the Blanket Gold Mine in Zimbabwe &#150; the purchase being effective as of April 1, 2006. The Blanket mine is an underground gold mine which currently mines and processes approximately 550 tonnes per day. &nbsp;Recent average gold production has been approximately 2,100 ounces per month.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>A variety of mining methods are employed to suit the changing ore zones at Blanket. &nbsp;Methods used include underhand stoping, shrinkage stoping and long-hole stoping.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The ROM (run-of-mine underground ore) metallurgical process consists of three stage crushing with a feed size of 350mm producing a final product of 80% passing 8mm. This product is fed into an open circuit Rod mill at a rate of 24 metric tph. &nbsp;&nbsp;From the Rod mill the discharge combines with the regrind mill product and is pumped to the Knelson Concentrators. Three different sized mills operating in closed circuit with a hydro cyclone and two 30&#148; CD Knelson Concentrators comprise the regrind circuit. Knelson concentrates are further treated on the Gemini table to produce a much cleaner concentrate, which is calcined before smelting on-site.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Dewatering of the hydro cyclone overflow to 50% solids is undertaken before feeding it into the CIL head tank. Six contact tanks make up the CIL.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Tailings from the CIL stream are pumped to the tailings dam with the effluent recycled to the plant. . These tailings are partially &nbsp;treated to reduce the free cyanide levels before pumping to the tailings deposition area.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
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<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">7</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Production results for the Blanket Mine from April 1, 2006 &#150; the effective date of the acquisition &#150; are given in the table below.</P>
<P style="margin:0px"><BR></P>
<A NAME="OLE_LINK3"></A><A NAME="OLE_LINK4"></A><TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=149></TD><TD width=73.2></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=666.733 colspan=6><P style="margin:0px" align=center><B><U>Blanket Mine &#150; 2006 Production Results since the April 1, 2006 acquisition date</U></B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px; color:#FF0000" align=center><FONT COLOR=#FF0000>Information only</FONT></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><FONT COLOR=#000000><B>1</FONT><SUP>st</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>2<SUP>nd</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>3<SUP>rd</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>October</B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jan - 31 Mar</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Apr &#150; 30 Jun</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jul &#150; 30 Sept</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Oct &#150; 31 Oct</U></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px; color:#FF0000" align=center><FONT COLOR=#FF0000>Not Consolidated</FONT></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify><FONT COLOR=#000000>Ore Mined and Hoisted</FONT></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>54,100</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>50,700</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>52,146</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>15,713</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Development Advance</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Meters</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>395</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>772</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>903</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>300</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Ore Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>47,800</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>51,500</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>53,375</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>17,789</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Grade Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>g/t</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>4.15</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.86</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Gold Recovered</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Ounces</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>5,653</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>6,045</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>6,475</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>2,109</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">&nbsp;&nbsp;</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">As announced in June, a US$2.5 million project to complete &nbsp;the new #4 shaft and increase the milling throughput to 1000 tpd and gold production to 40,000 ounces per year is underway and is proposed to be completed during Q3 2007.. The slyping of the shaft from the 630 meter level to the 750 meter level, the blind sinking to the 810 meter level, the establishment of the bin loading arrangements on 780 meter level, and the equipping of the shaft with steel ladders and platforms from the 630 meter level to the 810 meter level have all been completed. The mining of the ore and waste bins from 765 meter level to 750 meter level and the crusher chamber are in progress.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px">The table below summarizes the Reserve and Resource data as at June 30, 2006.</P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESERVES </P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=310.133></TD><TD width=95.067></TD><TD width=50.267></TD><TD width=69.733></TD><TD width=87.733></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Classification</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Mineral</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>(Tonnes)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Grade</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Au</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>kg</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Ounces</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Proven Ore </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,310,400</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>3.82</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5,002</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>160,820</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Probable Ore</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,326,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>9,540</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>306,700</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>TOTAL PROVEN &amp; PROBABLE ORE</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>3,636,400</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.00</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>14,542</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>467,500</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESOURCES *</P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=311.067></TD><TD width=94.533></TD><TD width=47.2></TD><TD width=75.6></TD><TD width=85.067></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Indicated</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>380,000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.12</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,600</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>51,000</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Inferred</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,400,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.91</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD></TR>
</TABLE>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>*</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>The mineral resources figures are not included in the mineral reserve figures. </I></P>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>**</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>In keeping with the requirements of NI 43-101 Inferred Resources are reported without estimates of metal quantities.</I></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>A Report on the Blanket Mine, dated August 4th, 2006 as required by National Instrument 43-101 was prepared by Applied Geology Services cc of South Africa. Mr. David Grant, Pr.Sci.Nat. is the Independent Qualified Person responsible for the report. &nbsp;The Technical Report has been filed on SEDAR and is available at <FONT COLOR=#0000FF><U>www.sedar.com</U></FONT> or on the Corporation&#146;s website at www.caledoniamining.com<FONT COLOR=#0000FF><U></U></FONT>. The Reserve and Resource information above has been taken from that NI 43-101 compliant report.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(c) </I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Nama Cobalt Project, Zambia</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">During the quarter work continued on the preparation of a NI 43-101 statement on anomalies &#147;A&#148;, &#147;C&#148; &amp; &#147;D&#148; which is expected to be available during December 2006. A detailed geological interpretation has revealed a hitherto unknown geological structure and has facilitated the interpretation of the mineralisation model and likely areas of extension. A follow-up drilling program is planned for the first half of 2007 dependant on the access to the sites as permitted by the rainy season.</P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">8</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Follow-up geochemical work is being carried out across the Nama &#147;A&#148; anomaly in order to test continuity of potentially mineralized zones in the lower soil profile.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The results of the further two stage Wet High Intensity Magnetic Separation (WHIMS) test work show cobalt recoveries of over 70% and the amenability of the cobalt mineralization to further concentration by flotation has been confirmed, despite previous test work findings.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Further samples were collected from the same bulk sample site &nbsp;and &nbsp;screened to +5mm and &#150;5mm fraction sizes on site. The samples were then shipped for metallurgical testing in South Africa and in China. The weight of the combined sample was 2 tonnes. Results of this testwork are expected before year end. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Current and immediate future funding is provided from available working capital. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Caledonia has been granted an extension to its exploration licences at Nama in the form of a &#147;Retention Licence&#148;. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(d)</I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Financing</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>In July 2006 the company completed a private placement to raise additional funds. This placement of </P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>17 million units, each consisting of one common share and one share purchase warrant, was completed in July 2006 and raised $2.16 million after expenses. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.533px; margin-top:0px; margin-bottom:-17.533px; padding-right:25.533px; font-size:14.667px" align=justify><B>2.</B></P>
<P style="line-height:14.867px; margin-top:0px; margin-bottom:22.933px; padding-right:25.533px; text-indent:48px; font-size:14.667px" align=justify><B>SUMMARY OF QUARTERLY RESULTS &nbsp;</B>The following information is provided for each of the eight most recently completed quarters of the company - ending on the dates specified - in thousands of Canadian dollars and using the same principles as used to produce the annual financial statements.</P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=80.733></TD><TD width=73.8></TD><TD width=75.333></TD><TD width=76.133></TD><TD width=73.533></TD><TD width=73.8></TD><TD width=75.333></TD><TD width=64.533></TD><TD width=73.533></TD></TR>
<TR><TD style="border:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>C$000&#146;s</P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Sept 30/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>June 30/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Mar. 31/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Dec. 31/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Sept 30/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>June 30/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Mar </B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>31/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Dec. 31/04</B></P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=80.733><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000;
 border-bottom:1.2px solid #000000" width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Net Sales or </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Total </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$5,637</P>
</TD><TD style="border-right:1.2px solid #000000" width=75.333><P style="line-height: 17.333px; font-size: 14.667px; margin: 0px" align="center">$1,304</P>
</TD><TD style="border-right:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$418 </P>
</TD><TD style="border-right:1.333px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$453 </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$743 </P>
</TD><TD style="border-right:1.333px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$965 </P>
</TD><TD style="border-right:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$481 </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$469 </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Revenues </P>
</TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style=
"border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Net (loss) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- total </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($3,074)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,893)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,266) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,054) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($2,564) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($3,276) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($1,786) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($4,569) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- per share </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.006)</P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0,006) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.008) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.011) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0,015) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">undiluted </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- per share </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="margin:0px" align=center><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" width=75.333><P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.006)</P>
</TD><TD style="border-right:1.333px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0,006) </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.008) </P>
</TD><TD style="border-right:1.333px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.011) </P>
</TD><TD style="border-right:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007) </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0,015) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">diluted </P>
</TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style=
"border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="line-height:15.4px; margin:0px; font-size:14.667px" align=justify><I>Note: &nbsp;As there are no extraordinary items the disclosed net losses per share are identical to the total loss before extraordinary items. </I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:15.4px; margin-top:0px; margin-bottom:14.067px; font-size:14.667px" align=justify>For the period ended September 30, 2006 Caledonia had a net loss of $3.074 million ($0.007 per share) compared to a net loss of $2.564 million ($0.008 per share) during the same period in 2005 and a net loss of $2.25 million ($0.008 per share) in the same period 2004. </P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">At an operating profit level Caledonia had a profit of $1.524 million for the period ended September 30, 2006 &nbsp;</P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">9</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">( loss of $1.309 million in 2005 and loss of $1.852 million in 2004) and a year to date operating loss of $1.982 million in 2006 ( loss $4.004 million in 2005 and loss $4.393 million in 2004) </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The results for the quarter ended September 30<SUP> </SUP>, 2006 are affected by the inclusion of Blanket Mine results, and the lower results for Barbrook Mine due to the industrial action that took place during the quarter. Net sales for Barbrook Mine for the quarter ended September 30<SUP> </SUP>, 2006 were $1.098 million ($1.303 million quarter ended June 30<SUP>th</SUP> and $417 for quarter ended Mar 31<SUP>st</SUP>). Net sales for Blanket Mine for the quarter ended September 30<SUP> &nbsp;</SUP>, 2006 &nbsp;were $4.538 million. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Included in the loss for the quarter is an unrealized exchange loss of $1.659 million (profit of $125 in quarter ended June 30<SUP> </SUP>, 2006 and profit of $104 in quarter ended March 31<SUP> </SUP>, 2006) of which Blanket Mine&#146;s contribution to this loss amounted to $1.595 million due to the devaluation of the Zimbabwe dollar in August 2006.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Also included in the loss for the quarter is an amortization charge of $1.846 million ($965 quarter ended June 30, 2006 and $181 for quarter ended March 31, 2006 ). The amortization charge has increased as the Barbrook Mine plant expansion started to be amortised during quarter ended June 30, 2006 and the amortization rate at Barbrook has increased from 13% pa to 16,5% pa based on life of mine calculations.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:15.4px; margin-top:0px; margin-bottom:14.067px; font-size:14.667px" align=justify>The loss in 2006 results from mining operations at Barbrook and Blanket, the normal administration expenses and ongoing exploration costs during the quarter. </P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; font-size:16px"><B>3.</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:15.333px; text-indent:48px; font-size:16px"><B>LIQUIDITY</B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Blanket Mine is financially self sufficient relating to working capital resources and the costs of the #4 shaft expansion project.. The future of Barbrook Mine will determine the future cash needs of Caledonia. Settlement of current working capital liabilities will continue to be funded via the receipt of funds from shareholders as and when necessary. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>4.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>CAPITAL RESOURCES</B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The only commitments towards capital expenditure are related to the completion of #4 shaft expansion project at Blanket Mine. This project will continue to be internally funded by Blanket Mine.There are no other capital projects associated with any Caledonia operations that require funding.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>5.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>CRITICAL ACCOUNTING ESTIMATES</B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">There are no critical accounting estimates made by Caledonia that would materially affect the financial condition or results of the company if the basis of the estimate was changed. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>6.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>ADDITIONAL INFORMATION</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify>(a)</P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:14.067px; text-indent:48px; font-size:14.667px" align=justify>As at October 31, 2006 the following securities of the Company were outstanding: </P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; text-indent:48px; font-size:14.667px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">457,981,021 common shares. </P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,238,000 common share purchase options at an average price of $0.21 maturing at various dates until May 11, 2016.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,850,000 common share purchase warrants exercisable at a price of $0.20 per share until December 28, 2007</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px">&nbsp;</P>
<P style="line-height: 17.333px; text-indent: 48px; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px">10,000,000 common share purchase warrants exercisable at a price of $0.20 per share until January 31, 2008</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">5,437,626 common share purchase warrants exercisable at a price of $0.20 per share until </P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">10</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px">February 3, 2008.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">22,890,000 share purchase warrants exercisable at a price of $0.15 per share until April 28, 2007. </P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">9,748,259 share purchase warrants exercisable at a price of $0.15 per share until May 12, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; text-indent: 48px; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">2,190,000 share purchase warrants exercisable at a price of $0.18 per share until May 12, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,000,000 share purchase warrants exercisable at a price of $0.16 per share until July 27, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-48px; font-size:14.667px">(b)</P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px">For further information about Caledonia reference is also made to its 2005 20F Annual Registration Statement dated March 31, 2006 filed with the U.S. Securities and Exchange Commission on its EDGAR .</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">11</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:21.333px; margin-top:18.667px; margin-bottom:4.667px; font-size:18.667px"><B>Management&#146;s Responsibility for Financial Reporting </B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:16px" align=justify><B><I>To the Shareholders of Caledonia Mining Corporation:</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:14.667px" align=justify>The accompanying unaudited consolidated financial statements of Caledonia were prepared by management in accordance with accounting principles generally accepted in Canada, consistently applied and within the framework of the summary of significant accounting policies in these consolidated financial statements. &nbsp;Management is responsible for all information in the quarterly report. &nbsp;All financial and operating data in the quarterly report is consistent, where appropriate, with that contained in the consolidated financial statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:14.667px" align=justify>The Board of Directors discharges its responsibilities for the consolidated financial statements primarily through the activities of its Audit Committee composed of three directors, two of whom are not members of management. This Committee meets with management to assure that it is performing its responsibility to maintain financial controls and systems and to approve the quarterly consolidated financial statements of Caledonia. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The consolidated financial statements have not been reviewed by Caledonia&#146;s auditors.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px" align=justify>&nbsp;<B>S. E. Hayden</B></P>
<P style="margin:0px; text-indent:384px" align=justify><B>S.R. Curtis</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px" align=justify>President and</P>
<P style="margin:0px; text-indent:384px" align=justify>Vice-President Finance</P>
<P style="margin-top:0px; margin-bottom:-16px">Chief Executive Officer</P>
<P style="margin:0px; text-indent:384px">and Chief Financial Officer</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">12</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=27% nowrap colspan=3>
<B><FONT size=2 face="Arial">Caledonia Mining Corporation</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=27% nowrap colspan=3>
<B><FONT size=2 face="Arial">Consolidated Balance Sheets</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=54% nowrap colspan=5>
<B><FONT size=2 face="Arial">(in thousands of Canadian dollars)</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">September 30,</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">December 31,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Current Assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Cash and short term deposits</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">1,076</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Accounts Receivable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">2,514</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">768</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">361</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Inventories</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">2,306</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">90</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">621</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Prepaid expenses</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">302</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">330</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">168</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">6,028</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,264</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,244</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Investment at cost</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">79</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Capital assets</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">8,427</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">9,156</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">6,897</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Mineral properties</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">13,087</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">10,839</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">11,452</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">21,593</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">20,074</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">18,428</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Total assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">27,621</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">22,338</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,672</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Liabilities and Shareholder Equity</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Current Liabilities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Bank overdraft</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">-</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">197</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">0</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Accounts payable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">4,768</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,392</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,066</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Long term debt</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">45</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Prov for site restoration</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,043</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">377</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">407</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">5,856</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,966</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,473</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Shareholders equity</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Share capital</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">190,626</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">180,053</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">176,539</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Contributed surplus</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">975</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">923</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">742</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Compensation warrants</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">468</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Deficit</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(161,604</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">21,765</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,372</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">18,199</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Total Capital and liabilities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">27,621</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">22,338</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,672</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px">&nbsp;</P>
<P style="line-height:18.667px; margin:0px; padding-left:48px; text-indent:-48px; font-size:16px">On behalf of the Board:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:-48px; font-size:16px">------------------------------</P>
<P style="line-height:18.667px; margin:0px; padding-left:48px; text-indent:336px; font-size:16px">----------------------------------</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:-48px; font-size:16px">J Johnstone</P>
<P style="line-height:18.667px; margin:0px; padding-left:48px; text-indent:336px; font-size:16px">C R Jonsson</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:-48px; font-size:16px">Director</P>
<P style="line-height:18.667px; margin:0px; padding-left:48px; text-indent:336px; font-size:16px">Director</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">13</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<B><FONT size=2 face="Arial">Caledonia Mining Corporation</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=40% nowrap colspan=10>
<B><FONT size=2 face="Arial">Consolidated Statement of Deficit</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=40% nowrap colspan=10>
<B><FONT size=2 face="Arial">(in thousands of Canadian dollars)</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Deficit</FONT></B><FONT size=2 face="Arial">, beginning</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(166,763</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(156,986</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(145,180</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(161,604</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(151,924</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(141,945</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Net(loss) for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(5,485</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">Deficit, </FONT></B><FONT size=2 face="Arial">end of period</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(147,430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(147,430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<B><FONT size=2 face="Arial">Caledonia Mining Corporation</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<B><FONT size=2 face="Arial">Consolidated Statement of Operations</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=51% nowrap colspan=13>
<B><FONT size=2 face="Arial">(in thousands of Canadian dollars except per share amounts)</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;&nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Revenue and operating costs</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Revenue from sales</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">5,637</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">743</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">202</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">7,359</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">2,189</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">372</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Operating costs</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">4,114</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,052</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,054</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">9,342</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">6,193</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">4,765</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Operating profit (loss)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">1,524</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(1,309</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(1,852</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">(1,982</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(4,004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(4,393</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Costs and expenses</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Gen and admin</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">987</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">341</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">365</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,719</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">1,565</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">1,324</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Interest</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(3</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">4</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(10</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">9</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">53</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Unrealised forex loss(gain)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,659</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">284</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,433</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">979</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">334</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Other expenses (income)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,955</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">43</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">3,098</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">1,069</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(681</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">4,597</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">1,255</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">398</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">6,250</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">3,622</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">1,030</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">(Loss) before non controlling interest</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(5,423</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">non controlling interest</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(13</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">Net (loss) for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(5,410</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Operating profit/(loss) per share (Note 2)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.0033</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.006</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.005</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.013</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.015</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Basic and fully diluted</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Net (loss) per share (Note 2)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.007</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.008</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.008</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.020</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.024</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.019</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">Basic and fully diluted</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">14</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=31% nowrap colspan=5>
<B><FONT size=2 face="Arial">Caledonia Mining Corporation</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=31% nowrap colspan=5>
<B><FONT size=2 face="Arial">Consolidated Statement of Cash Flows</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=31% nowrap colspan=5>
<B><FONT size=2 face="Arial">(in thousands of Canadian dollars)</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap colspan=5>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=31% nowrap colspan=5>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Cash provided by (used in)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Operating activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Operating gain/(loss) for the period</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">1,523</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,309</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,852</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(1,982</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(4,004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(4,393</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Other costs and expenses and non-controlling interests</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(4,597</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,255</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(398</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(6,250</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(3,622</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(1,017</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Adjustments to reconcile net cash from operations</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">(note 4)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">373</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">690</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">162</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">1,558</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">1,208</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Changes in non-cash working capital</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">balances (note 4)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,175</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">107</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(203</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,513</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(135</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(360</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,527</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,767</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,291</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(8,188</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(6,553</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(6,200</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Investing activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Capital expenditure</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(518</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(451</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(1,305</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(335</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(1,565</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Expenditures on mineral properties</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(523</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(611</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(563</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,053</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,723</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,242</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,041</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(690</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,014</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(2,358</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(3,058</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,807</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Financing activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Reduction of overdraft</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(197</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Issue of share capital net of costs (note 1)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">2,160</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">69</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">10,573</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">3,235</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">14,167</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">2,160</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">69</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">10,376</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">3,235</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">14,167</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Increase(decrease) in cash for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(408</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(2,388</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(3,305</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(170</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(6,376</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">5,160</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Cash beginning period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,314</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,482</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">12,644</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,076</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">6,470</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">4,179</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Net Cash end period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">9,339</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">9,339</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">15</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Nature of Business</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Basis of Presentation</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Measurement Uncertainties</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Principles of Consolidation</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">The Company&#146;s consolidated subsidiaries (all 100% owned) are Barbrook Mines Limited (&quot;Barbrook&quot;), Blanket (Barbados) Holdings Limited (&#147;Barbados&#148;), Blanket Mine (1983) (Private) Limited (&#147;Blanket&#148;), Caledonia (Africa) Holdings Limited (&#147;CAH&#148;), Caledonia Holdings Zimbabwe Limited (&#147;CHZ&#148;), Caledonia Kadola Limited (&#147;Kadola&#148;), Caledonia Mining Services Limited (&#147;CMS&#148;), Caledonia Mining (Zambia) Limited (&#147;CMZ&#148;), Caledonia Nama Limited (&#147;Nama&#148;), Eersteling Gold Mining Company Limited (100% owned since June 2004) (&quot;Eersteling&quot;), Fintona Investments (Proprietary) Limited (&#147;Fintona&#148;), Greenstone Management Services (Proprietary) Limited (&#147;Greenstone&#148;), and Maid O&#146; Mist (Proprietary) Limited (&#147;MOM&#148;).</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">&nbsp;</P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">16</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Cash and Cash Equivalents</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:14.667px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents represent cash on hand in operating bank accounts and money market funds</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Inventories</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:24px; font-size:14.667px">These include gold in circuit (WIP), gold in ore stockpiles and bulk consumable stores. &nbsp;WIP and gold in ore stock piles are valued at the &nbsp;lower of the cost of production at the various stages of production or net realisable value if the cost of production exceeds the current gold price. &nbsp;Bulk consumable stores are valued at the lower of cost or net realisable value on an average basis. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Revenue Recognition</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:18.933px; font-size:14.667px">Revenue from the sale of precious metals is recognized when the metal is delivered to the respective &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;refineries, benefits of ownership are transferred and the receipt of proceeds is substantially assured. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Capital Assets</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B><I>Producing Assets</I></B></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Producing assets are recorded at cost less grants, accumulated amortization and write-downs. &nbsp;Producing assets are amortized using the unit-of-production method on the ratio of tonnes of ore mined or processed to the proven and probable mineral reserves as defined by the Canadian Institute of Mining, Metallurgy and Petroleum.</P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Other 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. <A NAME="OLE_LINK1"></A><A NAME="OLE_LINK2"></A>&nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Barbrook re-commenced commercial operations during 2003 and, as such has been presented as a producing asset in these financial statements.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B><I>Non-Producing Assets</I></B></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Non-producing assets are recorded at cost less write downs. &nbsp;During non-producing periods, no amortization is recorded. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">At the time of commercial production, the assets are reclassified as producing and amortized in the manner described above.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">17</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Mineral Properties</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B><I>Producing Properties</I></B></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">When and if properties are placed in production, the applicable capitalized costs are amortized using the unit-of-production method on the ratio of tonnes of ore mined or processed to the estimated proven and probable mineral reserves as defined by the Canadian Institute of Mining, Metallurgy and Petroleum. &nbsp;</P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Barbrook re-commenced commercial operations during 2003 and, as such has been presented as a producing asset in these financial statements.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B><I>Non-Producing Properties</I></B></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Costs relating to the acquisition, exploration and development of non-producing resource properties which are held by the Company or through its participation in joint ventures are capitalized until such time as either economically recoverable reserves are established, or the properties are sold or abandoned. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:16px"><B>Asset Impairment</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">Long-lived assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If changes in circumstances indicate that the carrying amount of an asset an entity expects to hold and use may not be recoverable, future cash flows expected to result from the use of the asset and it&#146;s disposition must be estimated. If the undiscounted value of the future cash flows is less than the carrying amount of the asset, impairment is recognised based on the fair value of the assets.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Strategic Alliances</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">The Company has entered into various agreements under which the participants earn a right to participate in a particular 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:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">18</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Foreign Currency Translation</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:113.4px; text-indent:-47.2px; font-size:14.667px">(i)</P>
<P style="margin:0px; padding-left:113.4px; font-size:14.667px">monetary assets and liabilities at period end rates;</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:113.4px; text-indent:-47.2px; font-size:14.667px">(ii)</P>
<P style="margin:0px; padding-left:113.4px; font-size:14.667px">all other assets and liabilities at historical rates; and</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:108px; text-indent:-48px; font-size:14.667px">(iii)</P>
<P style="margin:0px; padding-left:108px; font-size:14.667px">revenue and expense transactions at the average rate of exchange prevailing during the period.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin-top:16px; margin-bottom:4px; font-size:16px"><B>Asset Retirement Obligation</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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 for retirement obligations to be settled as a result of an existing law, regulation or contract be recognized.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:16px"><B>Income Taxes</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px; font-size:14.667px">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:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=justify>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">19</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px"><B>1.</B></P>
<P style="margin:0px; text-indent:37.8px; font-size:16px"><B>Share Capital</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:14.667px">Authorised:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:14.667px">An unlimited number of common shares</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; text-indent:48px; font-size:14.667px">An unlimited number of preference shares</P>
<P style="margin:0px; text-indent:720px; font-size:14.667px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:66.2px; text-indent:-28.4px; font-size:14.667px">&nbsp;&nbsp;&nbsp;&nbsp;Issued &#150; Common Shares</P>
<div align="center">
  <center>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=324></TD><TD width=119.4></TD><TD width=122.867></TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right><U>Number of Shares</U></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right><U>Amount (000&#146;s)</U></P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Balance, December 31, 2005</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>370,715,136</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$180,053</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Issued pursuant to private placement</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>15,437,626</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>1,475</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Balance, March 31, 2006</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>386,152,762</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$181,528</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Issued pursuant to a private placement</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>34,828,259</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$3,924</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Issued pursuant to acquisition &nbsp;</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>20,000,000</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$3,014</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Balance , June 30 , 2006</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>440,981,021</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$188,466</P>
</TD></TR>
<TR><TD style="border-bottom:1px solid #000000" valign=top width=324><P style="margin:0px; font-size:14.667px">Issued pursuant to a private placement</P>
<P style="margin:0px; font-size:14.667px">Balance ,September 30 , 2006</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=119.4><P style="margin:0px; font-size:14.667px" align=right>17,000,000</P>
<P style="margin:0px; font-size:14.667px" align=right>457,981,021</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=122.867><P style="margin:0px; font-size:14.667px" align=right>$2,160</P>
<P style="margin:0px; font-size:14.667px" align=right>$190,626</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:-48px; font-size:14.667px" align=justify><SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SUP>&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; padding-left:48px; text-indent:48px; font-size:14.667px" align=justify>&nbsp;&nbsp;Issued &#150; Preference Shares</P>
<P style="margin:0px; padding-left:48px; text-indent:432px; font-size:14.667px" align=justify>Nil</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:66.2px; text-indent:-28.4px; font-size:14.667px">Stock Option Plans</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify>The Company has established incentive stock option plans for employees, officers, directors, consultants and other service providers. &nbsp;As at September 30, 2006, the Company has 17,238,000 common share options exercisable at an average price of $0.21 maturing at various dates until May 11, 2016.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px; font-size:14.667px" align=justify>Share Purchase Warrants</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px; font-size:14.667px" align=justify>The Company has 85,115,885 share purchase warrants outstanding exercisable at an average price of $0.175 maturing at various dates until February 3, 2008</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:1.8px; margin:0px; padding-bottom:4px; border-bottom:3px solid #000000"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; font-size:16px"><B>2.</B></P>
<P style="margin:0px; text-indent:37.8px; font-size:16px"><B>Net (Loss) Per Share</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:37.8px; font-size:14.667px" align=justify>The net (loss) per share figures have been calculated using the weighted average number of common shares outstanding during the third quarter which amounted to 455,209,281 and year to date which amounted to 412,981,020. &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 2006.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">20</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-top:4px; font-size:18.667px; border-top:4px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:18.667px; margin:0px; font-size:18.667px" align=right><B>Summary of Significant Accounting Policies</B></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-14.667px; border-bottom:1.333px solid #000000"><B>(Unaudited)</B></P>
<P style="text-indent: 144px; margin: 0px; padding-bottom: 4px" align="right"><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;For the nine months ended September 30, 2006, 2005 and 2004</B></P>
<P style="line-height:1.2px; margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px"><B>3.</B></P>
<P style="margin:0px; text-indent:37.8px; font-size:16px"><B>Other Expenses (Income)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:36px; font-size:14.667px">Included in other expenses (income) is an amortisation charge of $2,992 (2005 - $815, 2004 - $ nil). 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;Capital Assets&#148; page 16.</P>
<P style="margin:0px"><BR></P>

<P style="line-height: 18.667px; margin-top: 0px; margin-bottom: -18.667px">
<B><FONT face="serif">4</FONT>.<FONT face="serif">&nbsp;</FONT></B></P>

<P style="text-indent: 37.8px; font-size: 16px; margin: 0px">
<B> Supplemental<FONT face="serif"> cash flow info</FONT></B></P>
<P style="font-size: 14.667px; margin: 0px; padding-left: 36px">
&nbsp;</P>
<P style="font-size: 14.667px; margin: 0px; padding-left: 36px">
<FONT face="serif">Items not </FONT> involving
<FONT face="serif"> cash are as follows:</FONT></P>
<P style="margin:0px"><BR></P>
<div align="center">
  <center>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Acretion asset retirement obligation</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">- Blanket</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">737</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
 &nbsp;<FONT size=2 face="Arial">-Other</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">(71</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">16</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Non controlling interest</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">0</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">(13</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Stock option benefit expense</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">0</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">103</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">167</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Compensation warrant expense</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">0</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">307</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">147</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Gain on acqusition of non-controlling</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">interest of subsidiary company</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">-</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">(724</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Amortization</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">2,992</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">815</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Blanket assets - opening balance</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">(2,174</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Other</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">74</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(17</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(23</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">1,558</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">1,208</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(430</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Net changes in non cash working capital</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>

	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Accounts Payable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">2,421</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">4</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">(340</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Accounts Receivable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">(1,746</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">(45</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">(193</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Inventories</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap>
<B><FONT size=2 face="Arial">(2,216</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap>
<FONT size=2 face="Arial">(113</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap>
<FONT size=2 face="Arial">47</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
<FONT size=2 face="Arial">Prepaid expenses</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">28</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">126</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=45% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=19% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">(1,513</FONT></B>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=15% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(135</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=10% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(360</FONT>
	</TD>
	<TD valign=bottom align=left width=3% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
</TABLE></center>
</div>
<P style="margin:0px; padding-left:36px; text-indent:-36px">&nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="text-indent: 37.8px; font-size: 16px; margin: 0px"><B>Subsequent Events</B></P>
<P style="margin:0px"><BR></P>
<P style="font-size: 14.667px; margin: 0px; padding-left: 36px">&nbsp;Barbrook Mine is temporarily on &#147;care and maintenance&#148; until further notice.</P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:18.667px; margin:0px; font-size:16px; page-break-before:always" align="center">21</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:21.333px; margin:0px; font-size:18.667px" align=justify><B>Corporate Directory</B></P>
<P style="margin:0px" align=justify><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0 width="633">
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<B><FONT size=2>BOARD of DIRECTORS</FONT></B>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<B><FONT size=2>OFFICERS</FONT></B>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>G.R Pardoe</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<FONT size=2>S.E. Hayden</FONT>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>S.E. Hayden</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<I><FONT size=2>President and Chief Executive Officer</FONT></I>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>R.G. Fasel</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>W.I.L. Forrest</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<FONT size=2>J. Johnstone</FONT>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>F.C. Harvey</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<I><FONT size=2>Chief Operating Officer</FONT></I>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>J. Johnstone</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
<FONT size=2>C.R. Jonsson</FONT>&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<FONT size=2>S. R. Curtis</FONT>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<I><FONT size=2>Vice President Finance and</FONT></I>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<I><FONT size=2>Chief Financial Officer</FONT></I>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<FONT size=2>J. Smith</FONT>&nbsp;</font>
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=304 nowrap>
<font face="Times New Roman">
&nbsp;</font>
	</TD>
	<TD valign=bottom align=left width=325 nowrap>
<font face="Times New Roman">
<I><FONT size=2>Vice President Exploration</FONT></I>&nbsp;</font>
	</TD>
</TR>
</TABLE>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>mda.htm
<DESCRIPTION>MD&A
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="wfong">
<META NAME="date" CONTENT="11/14/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="line-height:26px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:18.667px" align=center><FONT FACE="Arial"><B>Caledonia Mining Corporation</B></FONT></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:26px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:18.667px" align=center><B>3<SUP>rd</SUP> Quarter Results 2006</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px" align=justify><B>Toronto, Ontario &#150; November 14, 2006:</B> Caledonia Mining Corporation (&#147;Caledonia&#148;) (TSX: CAL, NASDAQ-OTCBB: CALVF and AIM:CMCL) is pleased to announce its key financial and operating results for the third quarter ended September 30, 2006. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px"><B>Operational Highlights</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; padding-left:-48px; padding-right:14.2px; font-size:16px" align=justify><FONT FACE="Times New Roman"><B><U>Barbrook Gold Mine &#150; South Africa</U></B></FONT></P>
<P style="line-height:17.333px; margin-top:7.333px; margin-bottom:-17.333px; padding-left:24px; padding-right:14.333px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:24px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Gold production totaled 1,548 ounces during the quarter (Q3 2005: 1,497 ounces).</FONT></P>
<P style="line-height:17.333px; margin-top:7.333px; margin-bottom:-17.333px; padding-left:24px; padding-right:14.333px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:24px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Plant throughput rose steadily during July (13,292 tonnes) and August (12,500 tonnes) until production was disrupted in September by a legal strike between contract labourers and the labour broker resulting in total of 29,092 tonnes (Q3 2005: 20,451 tonnes) for the quarter.</FONT></P>
<P style="line-height:17.333px; margin-top:7.333px; margin-bottom:-17.333px; padding-left:24px; padding-right:14.333px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:24px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Industrial action at the mine during October impacts on gold production, with only 88 ounces produced, culminating in illegal activities which severely damaged the offices and security buildings. &nbsp;The mine has now been placed on &#145;care and maintenance&#146; until further notice, whilst a compensation claim is being pursued against the mine&#146;s labour broker.</FONT></P>
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<P style="line-height:18.667px; margin:0px; padding-left:-48px; padding-right:14.2px; font-size:16px" align=justify><FONT FACE="Times New Roman"><B><U>Blanket Gold Mine - Zimbabwe</U></B></FONT></P>
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<P style="line-height:17.333px; margin:0px; padding-left:48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Gold production for the third quarter totaled 6,475 ounces. &nbsp;</FONT></P>
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<P style="line-height:18.667px; margin:0px; padding-left:-48px; padding-right:14.2px; font-size:16px" align=justify><FONT FACE="Times New Roman"><B><U>Corporate/Financial</U></B></FONT></P>
<P style="line-height:17.333px; margin-top:7.333px; margin-bottom:-17.333px; padding-left:48px; padding-right:14.333px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Consideration given for the Blanket Mine purchase was a payment of US$1 million and the issue of 20,000,000 Caledonia shares to Kinross.</FONT></P>
<P style="line-height:17.333px; margin-top:7.333px; margin-bottom:-17.333px; padding-left:48px; padding-right:14.333px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify><FONT FACE="Arial">Completed a private placement in July 2006 and raised $2.160 million after expenses through the issue of 17,000,000 common shares and 17,000,000 share purchase warrants. </FONT></P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px" align=justify>For the quarter ended September 30, 2006 Caledonia recorded a net loss of $3.074 million ($0.007 per share) compared to a net loss of $2.564 million ($0.008 per share) during the same period in 2005. The loss in 2006 results from ongoing exploration costs, operations at Barbrook, and the normal administration expenses during the quarter. &nbsp;&nbsp;Included in the loss for the quarter is an unrealized foreign exchange loss of $1.659 million (profit of $125,000 in quarter ended June 30, 2006 and a profit of $104,000 for the quarter ended March 30, 2006) of which Blanket Mine contributed a loss a $1.595 million due to the devaluation of the Zimbabwe dollar in August 2006. </P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px" align=justify>At an operating profit level, Caledonia recorded a profit of $1.524 million for the period ended September 30, 2006 (loss of $1.309 million for the same period in 2005) and a year to date operating loss of $1.982 million in 2006 (loss of $ 4.004 million for the same period in 2005).</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify>Reviewing the quarter, Stefan Hayden, President and CEO, said &#147;The group&#146;s gold production for the quarter began well, with the Barbrook plant nearing the planned throughput target of 15,000 tonnes a month and on target to match the second quarter&#146;s production. However an industrial dispute between the contract labourers and the labour broker impacted on Barbrook&#146;s production in September and unfortunately continued into October. Furthermore the dispute resulted in illegal activities in late October which led to the mine being placed on &#145;care and maintenance&#146; in November. &nbsp;We are, of course, pursuing a claim for compensation against the labour broker. &nbsp;</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify>The Blanket Mine in Zimbabwe has had a good quarter, with gold production up by 400 ounces and net sales of $4.538 million. &nbsp;The mine is on track to meet the fourth quarter target. &nbsp;The expansion project, at </P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.333px; font-family:Arial; font-size:14.667px; page-break-before:always" align=justify>shaft 4, is progressing and due for completion in Q3 2007. &nbsp;This will almost double gold production to 40,000 ounces.</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.333px; font-family:Arial; font-size:14.667px" align=justify>At the Nama cobalt deposit in Zambia, work is progressing well towards producing a NI 43-101 statement on anomalies &#147;A&#148;, &#147;C&#148; &amp; &#147;D&#148; which is expected to be available during December 2006.&#148;</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px" align=justify>Caledonia Management&#146;s Discussion and Analysis was published on November 14, 2006 and is available on the company&#146;s website: <FONT COLOR=#0000FF><U>www.caledoniamining.com</U></FONT>.</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px"><B>For more information, please contact:</B></P>
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<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=326.933></TD><TD width=282.467></TD></TR>
<TR><TD valign=top width=326.933><P style="line-height:17.333px; margin:0px; padding-left:-7.2px; padding-right:14.2px; font-family:Arial; font-size:14.667px">Stefan Hayden</P>
<P style="line-height:17.333px; margin:0px; padding-left:-7.2px; padding-right:14.2px; font-family:Arial; font-size:14.667px">President and CEO, Caledonia Mining</P>
<P style="line-height:17.333px; margin:0px; padding-left:-7.2px; padding-right:14.2px; font-family:Arial; font-size:14.667px">Tel: +27 11 447 2499</P>
</TD><TD valign=top width=282.467><P style="line-height:17.333px; margin:0px; padding-right:14.2px; font-family:Arial; font-size:14.667px">Alex Buck / Nick Bias</P>
<P style="line-height:17.333px; margin:0px; padding-right:14.2px; font-family:Arial; font-size:14.667px">buck-bias</P>
<P style="line-height:17.333px; margin:0px; padding-right:14.2px; font-family:Arial; font-size:14.667px">Tel: +44 7932 740 452</P>
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<P style="line-height:17.333px; margin:0px; padding-left:-48px; padding-right:14.2px; font-family:Arial; font-size:14.667px">Further information regarding Caledonia&#146;s exploration activities and operations along with its latest financials may be found at <B><U>www.caledoniamining.com</U></B>.</P>
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<P style="margin-top:0px; margin-bottom:6.667px; padding-left:-48px; padding-right:14.333px; font-family:Arial"><I>Certain statements included herein are &quot;forward-looking statements&quot;.&nbsp; Management cautions that forward-looking statements are not guarantees and that actual result 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 programs, or the financial condition of the Company, to differ include, but are not necessarily limited to, the risks and uncertainties discussed in documents filed by the Company with the various regulatory authorities having jurisdiction.</I></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=center><FONT FACE="Times New Roman"><B>CALEDONIA MINING CORPORATION</B></FONT></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center><B>REPORT FOR QUARTER ENDED SEPTEMBER 30, 2006</B></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px"><B>HIGHLIGHTS FOR THE QUARTER ENDED SEPTEMBER 30, 2006 (Q3)</B></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>Barbrook Gold Mine &#150; South Africa</B></P>
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<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">Following the completion of the plant expansion in late January from a capacity of 6,000 tonnes per month to a projection of 15,000 tonnes per month, plant throughput has increased steadily reaching 12,397 tonnes in June, 13,292 tonnes in July, 12,500 tonnes in August but only 3,300 tonnes in September. Production was disrupted during September when contract labourers embarked on a legal strike over a wage dispute with the labour broker who supplies labour to the mine. As a result 29,092 tonnes (32,133 tonnes in quarter ended June 30</FONT><SUP>th</SUP>, 2006) were treated in the plant during the quarter.</P>
<P style="line-height: 17.333px; text-indent: -24px; font-family: Wingdings; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px; padding-left: 48px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">Gold production totaled 1,548 ounces (1,749 ounces in quarter ended June 30</FONT><SUP>th</SUP> 2006) during the quarter and only 88 ounces in October due to the industrial
<font face="Times New Roman"> action</font> at the mine.</P>
<P style="line-height: 17.333px; text-indent: -24px; font-family: Wingdings; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px; padding-left: 48px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height: normal; font-size: 14.667px; margin: 0px; padding-left: 48px" align=justify><FONT FACE="Times New Roman">In October workers embarked on illegal activities that resulted in severe damage to the offices and security buildings at Barbrook. No damage was caused to the metallurgical plant or underground workings, the Barbrook operations have now been placed on &#147;care and maintenance&#148;.</FONT></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>Blanket Gold Mine - Zimbabwe</B></P>
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<P style="line-height:normal; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Acquired a 100% interest in</FONT> the Blanket Gold Mine in Zimbabwe from Kinross Gold Corporation of Toronto with effect from 1 April 2006.</P>
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<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Gold production during the three months ending June 30, 2006 totaled 6,045 ounces, 6,475 ounces were produced in the 3 months ended September 30</FONT><SUP>, </SUP>2006 and 2,109 ounces in October, 2006.</P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>Corporate/Financial</B></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Consideration given for the Blanket Mine purchase was a payment of US$1 million and the issue of 20,000,000 Caledonia shares.</FONT></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Completed a private placement in July 2006 and raised $2,160,000 after expenses through the issue of 17,000,000 common shares and 17,000,000 share purchase warrants. </FONT></P>
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<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:0px; font-size:14.667px" align=justify><B>2006 OBJECTIVES</B></P>
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<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Subsequent to the industrial action at Barbrook Mine and the extent of the damaged caused to certain buildings a decision around the future of Barbrook Mine must be taken. On the assumption that Barbrook continues in operation:</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Improve safety awareness at Barbrook Mine and further develop necessary programs to ensure a safe operation.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Optimise gold production at Barbrook Mine in South Africa by treating at least 15,000 tonnes per month. </P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Continue developing additional reserves/resources at Barbrook Mine.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:96px; text-indent:-24px; font-size:14.667px" align=justify>-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px" align=justify>Complete metallurgical studies to confirm viability of economic gold recovery from Daylight &amp; Victory zones at Barbrook Mine.</P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Continue with negotiations to conclude agreements with cobalt refiners to purchase cobalt concentrate produced at Nama and/or form strategic alliances to achieve this objective.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Seek a joint-venture partner to commence an exploration program at the Kadola copper/cobalt and the Eureka copper/gold properties in Zambia.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Further explore the polymetallic resource on the Rooipoort and Grasvally properties which form the Rooipoort PGE/Ni/Cu Exploration Project in South Africa.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Increase the land holdings around the Rooipoort Exploration property.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Drill identified extensions to the known ore zones on the Eersteling and Zandrivier Mining Licence areas.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Pursue possible acquisitions and/or strategic partnerships to expand Caledonia&#146;s portfolio of properties.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Expand the Board of Directors to address ongoing Corporate Governance requirements. </FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Implement succession plans for senior executive and operational staff.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Strengthen the Investor Relations and Public Relations functions within Caledonia.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Conclude necessary agreements to satisfy the South African Black Economic Empowerment (&#147;BEE&#148;) requirements. </FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Arrange necessary financing to support the activities required to meet these objectives.</FONT></P>
<P style="line-height:17.333px; margin-top:3.667px; margin-bottom:-17.333px; padding-left:48px; text-indent:-24px; font-family:Wingdings; font-size:14.667px" align=justify><FONT FACE="Wingdings">&#167;</FONT></P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; text-indent:-12px; font-size:14.667px" align=justify><FONT FACE="Times New Roman">Expedite the Number 4 shaft expansion project at the newly acquired Blanket Gold Mine to increase gold production to 50,000 ounces per annum. </FONT></P>
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<P style="line-height:18.667px; margin:0px; font-size:16px" align=justify><B>PRESIDENT&#146;S MESSAGE</B></P>
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<P style="line-height:17.333px; margin:0px; font-size:14.667px">The acquisition of the Blanket Gold Mine in Zimbabwe is a significant step towards Caledonia&#146;s goal of developing the asset base into a significant diversified international mining company. &nbsp;Gold has been mined in the Blanket area for close to 100 years. As of 2005 Blanket&#146;s reported historic life-time gold production exceeded one million ounces. With the reported proven and probable ore reserves exceeding 3 million tonnes Blanket should continue to produce gold for many years to come. &nbsp;I am delighted to welcome the Blanket management team and staff to Caledonia where I am sure they will make a significant positive impact on Caledonia&#146;s future revenue. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The Number 4 shaft expansion project at Blanket is currently well underway and should be completed by third quarter 2007 (originally second quarter 2007) due to delays beyond Blanket&#146;s control. The new shaft should allow Blanket to progressively increase gold production to 40,000 ounces per year. &nbsp;The latest monetary policy in Zimbabwe allows mines to retain 67.5% of their foreign exchange proceeds (increased from 40%) - which will have a positive impact on Blanket together with the cost cutting program which is rapidly being implemented. &nbsp;The metallurgical tests proposed by Caledonia have been completed and the circuit changes are being finalized. These should result in increased gold recoveries, lower reagent consumption and costs.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The accompanying Highlights and 3<SUP>rd</SUP> quarter MD&amp;A contain information with respect to the Barbrook Mine. &nbsp;Further samples from the &#147;A&#148; anomally on the Nama property in Zambia were taken and shipped to China for confirmatory testwork. &nbsp;Samples where also sent for furnance testing in South Africa. Negotiations regarding long term cobalt sales agreements with a number of large cobalt refiners are advancing. Technical and </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:17.333px; margin:0px; font-size:14.667px; page-break-before:always" align=justify>economic studies related to the production of saleable cobalt carbonates and hydroxides at Nama are presently underway in South Africa and China. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify><B>S. E. Hayden</B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>President and Chief Executive Officer</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B>CALEDONIA MINING CORPORATION </B></P>
<P style="line-height:17.333px; margin:0px; text-indent:480px; font-size:14.667px" align=justify><B>November 14<SUP>th</SUP>, 2006 </B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify><B>Management&#146;s Discussion and Analysis </B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>This Interim MD &amp; A covers the Company&#146;s third fiscal quarter from July 1, 2006 to September 30, 2006 - and the period thereafter to November 6, 2006. &nbsp;It is to be read in conjunction with the Company&#146;s Annual Management Discussion and Analysis for the fiscal year ended December 31, 2005, the audited financial statements of the Company prepared to December 31, 2005, the Company&#146;s 2005 Annual Report and with the Interim MD&amp;As and unaudited financial statements contained in the Interim Quartely Reports for the first and second quarters. &nbsp;All of these documents have been filed on SEDAR and are available at <FONT COLOR=#0000FF><U>www.sedar.com</U></FONT> or on the Corporation&#146;s website at www.caledoniamining.com<FONT COLOR=#0000FF><U></U></FONT>.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px"><B>Note that all currency references in this document are to Canadian dollars</B>.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B>1.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px" align=justify><B>OPERATIONAL REVIEW, OVERALL PERFORMANCE AND RESULTS OF OPERATIONS</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify><B><I>(a)</I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px" align=justify><B><I>Barbrook Mine South Africa</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>Barbrook Mine is temporarily on &#147;care and maintenance&#148;.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>In early August metallurgical testing by Mintek of South Africa identified operating parameters which successfully reduced the previously unexplained gold losses in the oxidation circuit in the laboratory. &nbsp;Efforts were commenced to modify the plant to duplicate these parameters in the full scale operation, but before these changes could be fully tested during continuous operations the contractor&#146;s labour commenced a legal strike on August 28<SUP>th</SUP> . &nbsp;Some replacement workers were supplied by the contractor but due to intimidation there was a high turnover, which when coupled with necessary safety training, adversely affected productivity. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The strike was terminated on October 13<SUP>th</SUP> and employees were requested to return to work on October 16th. &nbsp;&nbsp;However, following a re-organisation and reduction of the workforce there were significant disruptions on site and several surface buildings and facilities were destroyed. All facilities at Barbrook are uninsured and a claim has been lodged against the labour contractor in terms of the contract with them.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The reduction in Gold Sales Revenue for the quarter compared with that in the second quarter is due to the lack of production in September resulting from the labour strike. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>Underground work continued in the Taylors, French Bob and Twalas &nbsp;zones to develop additional resources in these zones, but was stopped in late August when limited manpower was redeployed in production areas.</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=139.533></TD><TD width=82.667></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=666.733 colspan=6><P style="margin:0px" align=center><B><U>Barbrook Mine &#150; 2006 Production Results</U></B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1<SUP>st</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>2<SUP>nd</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3<SUP>rd</SUP> Qtr</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>October</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jan - 31 Mar</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Apr &#150; 30 Jun</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jul &#150; 30 Sept</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Oct &#150; 31 Oct</U></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Ore Mined</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>27,565</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>29,886</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>30,134</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>0</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Development Advance</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Meters</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>795</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>737</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>378</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>0</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Ore Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>19,357</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>32,133</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>29,092</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,700</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Grade Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>g/t</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>3.78</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.37</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.79</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.20</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=139.533><P style="margin:0px" align=justify>Gold Recovered</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=82.667><P style="margin:0px" align=justify>Ounces</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>902</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,749</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>1,548</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>88</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px">The table below summarizes the Reserve and Resource data as at September 30, 2006.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESERVES </P>
<P style="margin:0px" align=center><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always" align=center><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=310.133></TD><TD width=95.067></TD><TD width=50.267></TD><TD width=69.733></TD><TD width=87.733></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Classification</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Mineral</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>(Tonnes)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Grade</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Au</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>kg</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Ounces</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Proven Ore </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>256,500</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.88</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,508</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>48,490</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Probable Ore</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>53,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>6.11</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>324</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>10,410</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><SUB>TOTAL PROVEN &amp; PROBABLE ORE</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><SUB>309,500</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><SUB>5.92</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><SUB>1,832</SUB></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><SUB>58,900</SUB></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESOURCES *</P>
<P style="margin:0px" align=center><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=311.067></TD><TD width=94.533></TD><TD width=47.2></TD><TD width=75.6></TD><TD width=85.067></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Measured</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>495,000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2.96</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,465</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>47,100</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Indicated</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,196,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.29</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>6,330</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>203,400</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Inferred</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,400,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.91</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD></TR>
</TABLE>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>*</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>The mineral resources figures are not included in the mineral reserve figures. </I></P>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>**</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>In keeping with the requirements of NI 43-101 Inferred Resources are reported without estimates of metal quantities.</I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Dr Trevor Pearton, PhD, FGSSA., Technical Director of Barbrook, is Caledonia&#146;s &quot;Qualified Person&quot; with respect to the Barbrook Mine property for the purposes of National Instrument 43-101 and has approved this property description. &nbsp;The above Reserve and Resource data is compiled using Caledonia&#146;s internal standards and National Instrument 43-101 compliant Reserve and Resource data will be made available as soon as practicable.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(b) </I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Blanket Mine Zimbabwe</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">In July 2006 Caledonia completed the purchase of the Blanket Gold Mine in Zimbabwe &#150; the purchase being effective as of April 1, 2006. The Blanket mine is an underground gold mine which currently mines and processes approximately 550 tonnes per day. &nbsp;Recent average gold production has been approximately 2,100 ounces per month.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>A variety of mining methods are employed to suit the changing ore zones at Blanket. &nbsp;Methods used include underhand stoping, shrinkage stoping and long-hole stoping.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The ROM (run-of-mine underground ore) metallurgical process consists of three stage crushing with a feed size of 350mm producing a final product of 80% passing 8mm. This product is fed into an open circuit Rod mill at a rate of 24 metric tph. &nbsp;&nbsp;From the Rod mill the discharge combines with the regrind mill product and is pumped to the Knelson Concentrators. Three different sized mills operating in closed circuit with a hydro cyclone and two 30&#148; CD Knelson Concentrators comprise the regrind circuit. Knelson concentrates are further treated on the Gemini table to produce a much cleaner concentrate, which is calcined before smelting on-site.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Dewatering of the hydro cyclone overflow to 50% solids is undertaken before feeding it into the CIL head tank. Six contact tanks make up the CIL.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Tailings from the CIL stream are pumped to the tailings dam with the effluent recycled to the plant. &nbsp;These tailings are partially &nbsp;treated to reduce the free cyanide levels before pumping to the tailings deposition area.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Production results for the Blanket Mine from April 1, 2006 &#150; the effective date of the acquisition &#150; are given in the table below.</P>
<P style="margin:0px"><BR></P>
<A NAME="OLE_LINK3"></A><A NAME="OLE_LINK4"></A><TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=149></TD><TD width=73.2></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=666.733 colspan=6><P style="margin:0px" align=center><B><U>Blanket Mine &#150; 2006 Production Results since the April 1, 2006 acquisition date</U></B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=justify>Information only</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>1<SUP>st</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>2<SUP>nd</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>3<SUP>rd</SUP> Qtr</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><B>October</B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jan - 31 Mar</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Apr &#150; 30 Jun</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Jul &#150; 30 Sept</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center><U>1 Oct &#150; 31 Oct</U></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>Not Consolidated</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Ore Mined and Hoisted</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>54,100</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>50,700</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>52,146</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>15,713</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Development Advance</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Meters</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>395</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>772</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>903</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>300</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Ore Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>47,800</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>51,500</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>53,375</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>17,789</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Grade Milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>g/t</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>4.15</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>3.86</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=149></TD><TD width=73.2></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD><TD width=111.133></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=149><P style="margin:0px" align=justify>Gold Recovered</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=73.2><P style="margin:0px" align=center>Ounces</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=111.133><P style="margin:0px" align=center>5,653</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>6,045</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>6,475</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=111.133><P style="margin:0px" align=center>2,109</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">As announced in June, a US$2.5 million project to complete &nbsp;the new #4 shaft and increase the milling throughput to 1000 tpd and gold production to 40,000 ounces per year is underway and is proposed to be completed during Q3 2007. The slyping of the shaft from the 630 meter level to the 750 meter level, the blind sinking to the 810 meter level, the establishment of the bin loading arrangements on 780 meter level, and the equipping of the shaft with steel ladders and platforms from the 630 meter level to the 810 meter level have all been completed. The mining of the ore and waste bins from 765 meter level to 750 meter level and the crusher chamber are in progress.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px">The table below summarizes the Reserve and Resource data as at June 30, 2006.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESERVES </P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=310.133></TD><TD width=95.067></TD><TD width=50.267></TD><TD width=69.733></TD><TD width=87.733></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Classification</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Mineral</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>(Tonnes)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Grade</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Au</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>kg</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Content</P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Ounces</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Proven Ore </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,310,400</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>3.82</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5,002</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>160,820</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Probable Ore</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,326,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.10</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>9,540</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>306,700</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=310.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>TOTAL PROVEN &amp; PROBABLE ORE</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=95.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>3,636,400</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=50.267><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.00</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=69.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>14,542</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=87.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>467,500</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px" align=center>MINERAL RESOURCES *</P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=311.067></TD><TD width=94.533></TD><TD width=47.2></TD><TD width=75.6></TD><TD width=85.067></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>&nbsp;Indicated</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>380,000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>4.12</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>1,600</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>51,000</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=311.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>Inferred</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>2,400,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>5.91</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=85.067><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>**</P>
</TD></TR>
</TABLE>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>*</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>The mineral resources figures are not included in the mineral reserve figures. </I></P>
<P style="line-height:14.667px; margin-top:0px; margin-bottom:-14.667px; padding-left:24px; font-size:12px" align=justify><I>**</I></P>
<P style="line-height:14.667px; margin:0px; padding-left:24px; text-indent:72px; font-size:12px" align=justify><I>In keeping with the requirements of NI 43-101 Inferred Resources are reported without estimates of metal quantities.</I></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>A Report on the Blanket Mine, dated August 4th, 2006 as required by National Instrument 43-101 was prepared by Applied Geology Services cc of South Africa. Mr. David Grant, Pr.Sci.Nat. is the Independent Qualified Person responsible for the report. &nbsp;The Technical Report has been filed on SEDAR and is available at <FONT COLOR=#0000FF><U>www.sedar.com</U></FONT> or on the Corporation&#146;s website at www.caledoniamining.com<FONT COLOR=#0000FF><U></U></FONT>. &nbsp;The Reserve and Resource information above has been taken from that NI 43-101 compliant report.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(c) </I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Nama Cobalt Project, Zambia</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">During the quarter work continued on the preparation of a NI 43-101 statement on anomalies &#147;A&#148;, &#147;C&#148; &amp; &#147;D&#148; which is expected to be available during December 2006. A detailed geological interpretation has revealed a hitherto unknown geological structure and has facilitated the interpretation of the mineralisation model and likely areas of extension. A follow-up drilling program is planned for the first half of 2007 dependant on the access to the sites as permitted by the rainy season.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Follow-up geochemical work is being carried out across the Nama &#147;A&#148; anomaly in order to test continuity of potentially mineralized zones in the lower soil profile.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The results of the further two stage Wet High Intensity Magnetic Separation (WHIMS) test work show cobalt recoveries of over 70% and the amenability of the cobalt mineralization to further concentration by flotation has been confirmed, despite previous test work findings.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Further samples were collected from the same bulk sample site &nbsp;and &nbsp;screened to +5mm and &#150;5mm fraction sizes on site. The samples were then shipped for metallurgical testing in South Africa and in China. The weight of the combined sample was 2 tonnes. Results of this testwork are expected before year end. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Current and immediate future funding is provided from available working capital. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Caledonia has been granted an extension to its exploration licences at Nama in the form of a &#147;Retention Licence&#148;. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B><I>(d)</I></B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B><I>Financing</I></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>In July 2006 the company completed a private placement to raise additional funds. This placement of </P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>17 million units, each consisting of one common share and one share purchase warrant, was completed in July 2006 and raised $2.16 million after expenses. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.533px; margin-top:0px; margin-bottom:-17.533px; padding-right:25.533px; font-size:14.667px" align=justify><B>2.</B></P>
<P style="line-height:14.867px; margin-top:0px; margin-bottom:22.933px; padding-right:25.533px; text-indent:48px; font-size:14.667px" align=justify><B>SUMMARY OF QUARTERLY RESULTS &nbsp;</B>The following information is provided for each of the eight most recently completed quarters of the company - ending on the dates specified - in thousands of Canadian dollars and using the same principles as used to produce the annual financial statements.</P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=80.733></TD><TD width=73.8></TD><TD width=75.333></TD><TD width=76.133></TD><TD width=73.533></TD><TD width=73.8></TD><TD width=75.333></TD><TD width=64.533></TD><TD width=73.533></TD></TR>
<TR><TD style="border:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>C$000&#146;s</P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Sept 30/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>June 30/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Mar. 31/06</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Dec. 31/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Sept 30/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>June 30/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Mar </B></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>31/05</B></P>
</TD><TD style="border-top:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center><B>Dec. 31/04</B></P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=80.733><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000;
 border-bottom:1.2px solid #000000" width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Net Sales or </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Total </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$5,637</P>
</TD><TD style="border-right:1.2px solid #000000" width=75.333><P style="line-height: 17.333px; font-size: 14.667px; margin: 0px" align="center">$1,304</P>
</TD><TD style="border-right:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$418 </P>
</TD><TD style="border-right:1.333px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$453 </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$743 </P>
</TD><TD style="border-right:1.333px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$965 </P>
</TD><TD style="border-right:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align="center">$481 </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>$469 </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Revenues </P>
</TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style=
"border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">Net (loss) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- total </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($3,074)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,893)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,266) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($2,054) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($2,564) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($3,276) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($1,786) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($4,569) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- per share </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.006)</P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0,006) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.008) </P>
</TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.011) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007) </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0,015) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" valign=top width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">undiluted </P>
</TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">- per share </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="margin:0px" align=center><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" width=75.333><P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007)</P>
</TD><TD style="border-right:1.2px solid #000000" width=76.133><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.006)</P>
</TD><TD style="border-right:1.333px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0,006) </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.8><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.008) </P>
</TD><TD style="border-right:1.333px solid #000000" width=75.333><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0.011) </P>
</TD><TD style="border-right:1.2px solid #000000" width=64.533><P style="line-height:17.333px; margin:0px; font-size:14.667px">($0.007) </P>
</TD><TD style="border-right:1.2px solid #000000" width=73.533><P style="line-height:17.333px; margin:0px; font-size:14.667px" align=center>($0,015) </P>
</TD></TR>
<TR><TD style="border-left:1.2px solid #000000; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=80.733><P style="line-height:17.333px; margin:0px; font-size:14.667px">diluted </P>
</TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=76.133><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.8><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=75.333><P style="font-size:2pt">&nbsp;</P></TD><TD style="border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=64.533><P style="font-size:2pt">&nbsp;</P></TD><TD style=
"border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" valign=top width=73.533><P style="font-size:2pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="line-height:15.4px; margin:0px; font-size:14.667px" align=justify><I>Note: &nbsp;As there are no extraordinary items the disclosed net losses per share are identical to the total loss before extraordinary items. </I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>For the period ended September 30, 2006 Caledonia had a net loss of $3.074 million ($0.007 per share) compared to a net loss of $2.564 million ($0.008 per share) during the same period in 2005 and a net loss of $2.25 million ($0.008 per share) in the same period 2004. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">At an operating profit level Caledonia had a profit of $1.524 million for the period ended September 30, 2006 &nbsp;( loss of $1.309 million in 2005 and loss of $1.852 million in 2004) and a year to date operating loss of $1.982 million in 2006 ( loss $4.004 million in 2005 and loss $4.393 million in 2004) </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The results for the quarter ended September 30<SUP> </SUP>, 2006 are affected by the inclusion of Blanket Mine results, and the lower results for Barbrook Mine due to the industrial action that took place during the quarter. Net sales for Barbrook Mine for the quarter ended September 30<SUP> </SUP>, 2006 were $1.098 million ($1.303 million quarter ended June 30<SUP>th</SUP> and $417 for quarter ended Mar 31<SUP>st</SUP>). Net sales for Blanket Mine for the quarter ended September 30<SUP> &nbsp;</SUP>, 2006 &nbsp;were $4.538 million. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Included in the loss for the quarter is an unrealized exchange loss of $1.659 million (profit of $125 in quarter ended June 30<SUP> </SUP>, 2006 and profit of $104 in quarter ended March 31<SUP> </SUP>, 2006) of which Blanket Mine&#146;s contribution to this loss amounted to $1.595 million due to the devaluation of the Zimbabwe dollar in August 2006.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Also included in the loss for the quarter is an amortization charge of $1.846 million ($965 quarter ended June 30, 2006 and $181 for quarter ended March 31, 2006 ). The amortization charge has increased as the Barbrook Mine plant expansion started to be amortised during quarter ended June 30, 2006 and the amortization rate at Barbrook has increased from 13% pa to 16,5% pa based on life of mine calculations.</P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="line-height:15.4px; margin-top:0px; margin-bottom:14.067px; font-size:14.667px" align=justify>The loss in 2006 results from mining operations at Barbrook and Blanket, the normal administration expenses and ongoing exploration costs during the quarter. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin-top:0px; margin-bottom:-18.667px; font-size:16px"><B>3.</B></P>
<P style="line-height:18.667px; margin:0px; text-indent:48px; font-size:16px"><B>LIQUIDITY</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">Blanket Mine is financially self sufficient relating to working capital resources and the costs of the #4 shaft expansion project. &nbsp;The future of Barbrook Mine will determine the future cash needs of Caledonia. Settlement of current working capital liabilities will continue to be funded via the receipt of funds from shareholders as and when necessary. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>4.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>CAPITAL RESOURCES</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">The only commitments towards capital expenditure are related to the completion of #4 shaft expansion project at Blanket Mine. This project will continue to be internally funded by Blanket Mine.There are no other capital projects associated with any Caledonia operations that require funding.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>5.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>CRITICAL ACCOUNTING ESTIMATES</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px">There are no critical accounting estimates made by Caledonia that would materially affect the financial condition or results of the company if the basis of the estimate was changed. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px"><B>6.</B></P>
<P style="line-height:17.333px; margin:0px; text-indent:48px; font-size:14.667px"><B>ADDITIONAL INFORMATION</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; font-size:14.667px" align=justify>(a)</P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:14.067px; text-indent:48px; font-size:14.667px" align=justify>As at October 31, 2006 the following securities of the Company were outstanding: </P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; text-indent:48px; font-size:14.667px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">457,981,021 common shares. </P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,238,000 common share purchase options at an average price of $0.21 maturing at various dates until May 11, 2016.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,850,000 common share purchase warrants exercisable at a price of $0.20 per share until December 28, 2007</P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px">&nbsp;</P>
<P style="line-height: 17.333px; text-indent: 48px; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height:17.333px; margin:0px; padding-left:96px; font-size:14.667px">10,000,000 common share purchase warrants exercisable at a price of $0.20 per share until January 31, 2008</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">5,437,626 common share purchase warrants exercisable at a price of $0.20 per share until
February 3, 2008. </P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">22,890,000 share purchase warrants exercisable at a price of $0.15 per share until April 28, 2007. </P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">9,748,259 share purchase warrants exercisable at a price of $0.15 per share until May 12, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; text-indent: 48px; font-size: 14.667px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">2,190,000 share purchase warrants exercisable at a price of $0.18 per share until May 12, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="line-height: 17.333px; font-size: 14.667px; text-indent: 48px; margin-top: 0px; margin-bottom: -17.333px">-</P>
<P style="line-height: 17.333px; font-size: 14.667px; margin: 0px; padding-left: 96px">17,000,000 share purchase warrants exercisable at a price of $0.16 per share until July 27, 2007.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:17.333px; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-48px; font-size:14.667px">(b)</P>
<P style="line-height:17.333px; margin:0px; padding-left:48px; font-size:14.667px">For further information about Caledonia reference is also made to its 2005 20F Annual Registration Statement dated March 31, 2006 filed with the U.S. Securities and Exchange Commission on its EDGAR .</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:21.333px; margin-top:18.667px; margin-bottom:4.667px; font-size:18.667px"><B>Management&#146;s Responsibility for Financial Reporting </B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:16px" align=justify><B><I>To the Shareholders of Caledonia Mining Corporation:</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:14.667px" align=justify>The accompanying unaudited consolidated financial statements of Caledonia were prepared by management in accordance with accounting principles generally accepted in Canada, consistently applied and within the framework of the summary of significant accounting policies in these consolidated financial statements. &nbsp;Management is responsible for all information in the quarterly report. &nbsp;All financial and operating data in the quarterly report is consistent, where appropriate, with that contained in the consolidated financial statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:14.667px" align=justify>The Board of Directors discharges its responsibilities for the consolidated financial statements primarily through the activities of its Audit Committee composed of three directors, two of whom are not members of management. This Committee meets with management to assure that it is performing its responsibility to maintain financial controls and systems and to approve the quarterly consolidated financial statements of Caledonia. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:17.333px; margin:0px; font-size:14.667px" align=justify>The consolidated financial statements have not been reviewed by Caledonia&#146;s auditors.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:13.333px" cellspacing=0><TR><TD width=333.333></TD><TD width=333.4></TD></TR>
<TR><TD valign=top width=333.333><P style="margin:0px" align=justify><B>S. E. Hayden</B></P>
<P style="margin:0px" align=justify>President and</P>
<P style="margin:0px">Chief Executive Officer</P>
</TD><TD valign=top width=333.4><P style="margin:0px; padding-left:48px; text-indent:-48px"><B>S.R. Curtis</B></P>
<P style="margin:0px; padding-left:48px; text-indent:-48px">Vice-President Finance</P>
<P style="margin:0px; padding-left:48px; text-indent:-48px">and Chief Financial Officer</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always" align=justify>Consolidated Balance Sheets</P>
<P style="margin:0px" align=justify>(in thousands of Canadian Dollars)</P>
<P style="margin:0px" align=justify><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">September 30,</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">December 31,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Current Assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Cash and short term deposits</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">1,076</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Accounts Receivable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">2,514</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">768</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">361</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Inventories</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">2,306</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">90</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">621</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Prepaid expenses</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">302</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">330</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">168</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">6,028</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,264</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,244</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Investment at cost</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">79</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Capital assets</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">8,427</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">9,156</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">6,897</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Mineral properties</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">13,087</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">10,839</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">11,452</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">21,593</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">20,074</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">18,428</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Total assets</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">27,621</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">22,338</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,672</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Liabilities and Shareholder Equity</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Current Liabilities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Bank overdraft</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">-</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">197</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">0</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Accounts payable</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">4,768</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,392</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,066</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Long term debt</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">45</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Prov for site restoration</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,043</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">377</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">407</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">5,856</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">2,966</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">1,473</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<B><FONT size=2 face="Arial">Shareholders equity</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Share capital</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">190,626</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">180,053</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">176,539</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Contributed surplus</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>
<B><FONT size=2 face="Arial">975</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>
<FONT size=2 face="Arial">923</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">742</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Compensation warrants</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap>
<FONT size=2 face="Arial">468</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
<FONT size=2 face="Arial">Deficit</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(161,604</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">21,765</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,372</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">18,199</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=41% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Total Capital and liabilities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">27,621</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=13% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">22,338</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=12% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">19,672</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height: 18.667px; font-size: 16px; margin: 0px"><FONT FACE="Times New Roman">Consolidated Statement of Deficit</FONT></P>
<P style="line-height: 18.667px; font-size: 16px; margin: 0px">(in thousands of <font face="Times New Roman"> Canadian</font> Dollars)</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Deficit</FONT></B><FONT size=2 face="Arial">, beginning</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(166,763</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(156,986</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(145,180</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(161,604</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(151,924</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(141,945</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">Net(loss) for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">(5,485</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">Deficit, </FONT></B><FONT size=2 face="Arial">end of period</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(147,430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(169,837</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(159,550</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(147,430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="line-height:18.667px; margin:0px; font-size:16px"><FONT FACE="Times New Roman">Consolidated Statement of Operations</FONT></P>
<P style="line-height:18.667px; margin:0px; font-size:16px">(in thousands of Canadian Dollars)</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=30% nowrap colspan=7>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;&nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 1 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Revenue and operating costs</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Revenue from sales</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">5,637</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">743</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">202</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">7,359</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">2,189</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">372</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Operating costs</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">4,114</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,052</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,054</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">9,342</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">6,193</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">4,765</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Operating profit (loss)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">1,524</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(1,309</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(1,852</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">(1,982</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(4,004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(4,393</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">Costs and expenses</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Gen and admin</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">987</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">341</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">365</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,719</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">1,565</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">1,324</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Interest</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(3</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">4</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(10</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">9</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">53</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Unrealised forex loss(gain)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,659</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">284</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">1,433</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">979</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">334</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Other expenses (income)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,955</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">43</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">3,098</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">1,069</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(681</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">4,597</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">1,255</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">398</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">
<B><FONT size=2 face="Arial">6,250</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">3,622</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">1,030</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<B><FONT size=2 face="Arial">(Loss) before non controlling interest</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(5,423</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">non controlling interest</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">(13</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">Net (loss) for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(3,074</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,564</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,250</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(8,233</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(7,626</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom:1px solid #000000;">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(5,410</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Operating profit/(loss) per share (Note 2)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.0033</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.006</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.005</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.013</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.015</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Basic and fully diluted</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=9% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>

	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap>
<FONT size=2 face="Arial">Net (loss) per share (Note 2)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.007</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.008</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.008</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<B><FONT size=2 face="Arial">(&#36;</FONT></B>
	</TD>
	<TD valign=bottom align=right width=9% nowrap>
<B><FONT size=2 face="Arial">0.020</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">0.024</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap>
<FONT size=2 face="Arial">(&#36;</FONT>
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">0.019</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=25% nowrap style="border-bottom: 2 solid #000000">
<FONT size=2 face="Arial">Basic and fully diluted</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=9% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=2% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 2 solid #000000">

    &nbsp;

	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 2 solid #000000">
&nbsp;
&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="line-height: 18.667px; font-size: 16px; margin: 0px"><FONT FACE="Times New Roman">Consolidated Statement of Cashflows</FONT></P>
<P style="line-height: 18.667px; font-size: 16px; margin: 0px"><font face="Times New Roman">(in thousands of
Cana</font>dian Dollars)</P>
<P style="margin:0px"><BR></P>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=25% nowrap colspan=5>
<FONT size=2 face="Arial">Three month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=31% nowrap colspan=5>
<FONT size=2 face="Arial">Nine month period ended September 30,</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">(Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="Arial">2006</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2005</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom: 1 solid #000000">
<FONT size=2 face="Arial">2004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom: 1 solid #000000">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Cash provided by (used in)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Operating activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Operating gain/(loss) for the period</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">1,523</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,309</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,852</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(1,982</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(4,004</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(4,393</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Other costs and expenses and non-controlling interests</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(4,597</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(1,255</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(398</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(6,250</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(3,622</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(1,017</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Adjustments to reconcile net cash from operations</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">(note 4)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">373</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">690</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">162</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">1,558</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">1,208</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(430</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Changes in non-cash working capital</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">balances (note 4)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,175</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">107</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(203</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,513</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(135</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(360</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,527</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,767</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,291</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(8,188</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(6,553</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(6,200</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Investing activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Capital expenditure</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(518</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(79</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(451</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(1,305</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(335</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">(1,565</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Expenditures on mineral properties</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(523</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(611</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(563</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,053</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,723</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,242</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(1,041</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(690</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(1,014</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">(2,358</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(3,058</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">(2,807</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Financing activities</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Reduction of overdraft</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(197</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>

	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<FONT size=2 face="Arial">Issue of share capital net of costs (note 1)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">2,160</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">69</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">10,573</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">3,235</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">14,167</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">2,160</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">69</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">-</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">10,376</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">3,235</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">14,167</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Increase(decrease) in cash for the period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<B><FONT size=2 face="Arial">(408</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(2,388</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap>
<FONT size=2 face="Arial">(3,305</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap>
<B><FONT size=2 face="Arial">(170</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<B><FONT size=2 face="Arial">)</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap>
<FONT size=2 face="Arial">(6,376</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
<FONT size=2 face="Arial">)</FONT>&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap>
<FONT size=2 face="Arial">5,160</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Cash beginning period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,314</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">2,482</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">12,644</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">1,076</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">6,470</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">4,179</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD valign=bottom align=left width=32% nowrap>
<B><FONT size=2 face="Arial">Net Cash end period</FONT></B>&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=7% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">9,339</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=16% nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial">906</FONT></B>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=6% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">94</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD valign=bottom align=right width=5% nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="Arial">9,339</FONT>
	</TD>
	<TD valign=bottom align=left width=2% nowrap style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
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end
</TEXT>
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-----END PRIVACY-ENHANCED MESSAGE-----
