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<SEC-DOCUMENT>0001137171-09-000376.txt : 20090522
<SEC-HEADER>0001137171-09-000376.hdr.sgml : 20090522
<ACCEPTANCE-DATETIME>20090519150819
ACCESSION NUMBER:		0001137171-09-000376
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20090518
FILED AS OF DATE:		20090519
DATE AS OF CHANGE:		20090519

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:		09839368

	BUSINESS ADDRESS:	
		STREET 1:		SUITE 1201 - 67 YONGE STREET
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M5E 1J8
		BUSINESS PHONE:		4163699835

	MAIL ADDRESS:	
		STREET 1:		SUITE 1201 - 67 YONGE STREET
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M5E 1J8

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDEN NORTH RESOURCE CORP
		DATE OF NAME CHANGE:	19920302
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>caledonia6k051809.htm
<DESCRIPTION>CALEDONIA MINING 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 May, 2009</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>1710 - 1177 West Hastings Street</b></P>
<P style="margin:0pt" align=center><b>Vancouver</b></P>
<P style="margin:0pt" align=center><b>British Columbia&nbsp; V6E 2L3</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/ Carl Jonsson</P>
<P style="margin:0pt; padding-left:360pt">Name: Carl Jonsson</P>
<P style="margin:0pt; padding-left:360pt">Title: Director and Secretary</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt">Dated: &nbsp;&nbsp;May 18, 2009<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-top: 0pt; margin-bottom: -12pt">99.1</P>
<p style="margin: 0pt; padding-left: 216pt"><a href="financials.htm">Financial
Statements</a></p>
<p style="margin-top: 0pt; margin-bottom: -12pt">99.2</p>
<p style="margin: 0pt; padding-left: 216pt"><a href="mda.htm">Management's
Discussion &amp; Analysis</a></p>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>financials.htm
<DESCRIPTION>FINANCIALS
<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="##">
<META NAME="date" CONTENT="05/15/2009">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin-top:13.333px; margin-bottom:3.333px" align=justify><BR></P>
<P style="margin-top:13.333px; margin-bottom:3.333px" align=justify><BR></P>
<P style="margin-top:13.333px; margin-bottom:3.333px; text-indent:28.8px" align=justify><B>Management&#146;s Responsibility for Financial Reporting </B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" 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; padding-left:28.4px; text-indent:0.4px" 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; padding-left:28.4px; text-indent:0.4px" 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, all 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="margin:0px; padding-left:28.4px; text-indent:0.4px" 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; text-indent:28.8px" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Signed &#147;S E Hayden&#148;</P>
<P style="margin:0px; text-indent:432px" align=justify>Signed &#147;S R Curtis&#148;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><B>S. E. Hayden</B></P>
<P style="margin:0px; text-indent:432px" align=justify><B>S.R. Curtis</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify>President and</P>
<P style="margin:0px; text-indent:432px" align=justify>Vice-President Finance</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Chief Executive Officer</P>
<P style="margin:0px; text-indent:432px" align=justify>and Chief Financial Officer</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:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=648.933></TD></TR>
<TR><TD style="border-top:2px solid #000000" valign=top width=648.933><P style="margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD valign=top width=648.933><P style="margin:0px" align=right><B>Consolidated Balance Sheets</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=648.933><P style="margin:0px" align=right><B>(in thousands of Canadian Dollars)</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=right><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=434.733></TD><TD width=94.467></TD><TD width=94.533></TD></TR>
<TR><TD valign=top width=434.733><P>&nbsp;</P></TD><TD valign=top width=94.467><P style="margin:0px; padding-right:1.333px" align=right><B>March 31</B></P>
</TD><TD valign=top width=94.533><P style="margin:0px; padding-right:1.333px" align=right>December 31</P>
</TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; padding-right:1.333px"><B>Unaudited</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px; padding-right:1.333px" align=right><B>2009</B></P>
</TD><TD valign=top width=94.533><P style="margin:0px; padding-right:1.333px" align=right>2008</P>
</TD></TR>
</TABLE>
<P style="margin: 0px; padding-bottom: 4px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=425.267></TD><TD width=102.733></TD><TD width=96></TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Assets</B></P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>Current</P>
</TD><TD valign=top width=102.733><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>2,550</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>3,652</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>161</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>132</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Inventories</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>1,120</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1,059</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>19</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>27</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Assets held for sale </P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>109</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>106</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>3,959</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>4,976</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD valign=top width=102.733><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Capital Assets and Mineral properties held for sale</B> </P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>680</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>681</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Accounts receivable (Note 7)</B></P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>2,890</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>2,890</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Investments</B> (Note 1)</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>19</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>12</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Capital assets</B> (Note 2)</P>
</TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>155</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>173</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Mineral properties</B> (Note 3)</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>14,857</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>14,566</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>18,601</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>18,322</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=102.733><P style="margin:0px; text-indent:28.8px" align=right><B>22,560</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>23,298</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=434.733></TD><TD width=93.267></TD><TD width=96></TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify><B>Liabilities and Shareholders&#146; Equity</B></P>
</TD><TD valign=top width=93.267><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify>Current</P>
</TD><TD valign=top width=93.267><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Bank overdraft</P>
</TD><TD valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>95</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable </P>
</TD><TD valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>1,195</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>933</P>
</TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>13</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>16</P>
</TD></TR>
<TR><TD valign=top width=434.733><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>1,303</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>949</P>
</TD></TR>
<TR><TD valign=top width=434.733><P>&nbsp;</P></TD><TD valign=top width=93.267><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify><B>Asset retirement obligation </B>(Note 4)</P>
</TD><TD valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>843</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>839</P>
</TD></TR>
<TR><TD valign=top width=434.733><P style="margin:0px; text-indent:28.8px" align=justify><B>Asset retirement obligation &nbsp;- held for sale </B>(Note 4)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>317</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>314</P>
</TD></TR>
<TR><TD valign=top width=434.733><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=93.267><P style="margin:0px; text-indent:28.8px" align=right><B>2,463</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>2,102</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=425.267></TD><TD width=103.933></TD><TD width=94.8></TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify><B>Shareholders&#146; Equity</B></P>
</TD><TD valign=top width=103.933><P>&nbsp;</P></TD><TD valign=top width=94.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Share capital (Note 5)</P>
</TD><TD valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>196,125</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>196,125</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Contributed surplus </P>
</TD><TD valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>1,910</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>1,902</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income/(loss)</P>
</TD><TD valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>(265)</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>3</P>
</TD></TR>
<TR><TD valign=top width=425.267><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Deficit</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>(177,673)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:20.4px" align=right>(176,834)</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>20,097</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>21,196</P>
</TD></TR>
<TR><TD valign=top width=425.267><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=103.933><P style="margin:0px; text-indent:28.8px" align=right><B>22,560</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>23,298</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify>On behalf of the Board:</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px" align=justify>&#147;S E Hayden&#148; </P>
<P style="margin:0px; text-indent:192px" align=justify>&nbsp;Director</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:48px" align=justify>&#147;G R Pardoe&#148;</P>
<P style="margin:0px; text-indent:192px" align=justify>&nbsp;Director</P>
<P style="margin:0px">The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>2</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=649.8></TD></TR>
<TR><TD style="border-top:2px solid #000000" valign=top width=649.8><P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD valign=top width=649.8><P style="margin:0px; text-indent:28.8px" align=right><B>Consolidated Statements of Changes in Shareholders&#146; Equity</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=649.8><P style="margin:0px; text-indent:28.8px" align=right><B>(in thousands of Canadian Dollars )</B></P>
</TD></TR>
</TABLE>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><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;</B></P>
<P style="margin:0px; text-indent:240px" align=justify><B>&nbsp;</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=671></TD></TR>
<TR><TD valign=top width=671><P style="margin:0px" align=right><B>For the periods ended March 31 2009,December 31 2008 and 2007</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px; text-indent:28.8px" align=justify><B>&nbsp;&nbsp;&nbsp;</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=239.067></TD><TD width=55.8></TD><TD width=57.733></TD><TD width=78.133></TD><TD width=98.133></TD><TD width=66.733></TD><TD width=53.333></TD></TR>
<TR><TD valign=top width=239.067><P>&nbsp;</P></TD><TD valign=bottom width=55.8><P>&nbsp;</P></TD><TD valign=bottom width=57.733><P>&nbsp;</P></TD><TD valign=bottom width=78.133><P>&nbsp;</P></TD><TD valign=bottom width=98.133><P style="margin:0px" align=right>Accumulated </P>
</TD><TD valign=bottom width=66.733><P>&nbsp;</P></TD><TD valign=bottom width=53.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=239.067><P>&nbsp;</P></TD><TD valign=bottom width=55.8><P>&nbsp;</P></TD><TD valign=bottom width=57.733><P>&nbsp;</P></TD><TD valign=bottom width=78.133><P>&nbsp;</P></TD><TD valign=bottom width=98.133><P style="margin:0px" align=right>&nbsp;Other</P>
</TD><TD valign=bottom width=66.733><P>&nbsp;</P></TD><TD valign=bottom width=53.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=239.067><P>&nbsp;</P></TD><TD valign=bottom width=55.8><P>&nbsp;</P></TD><TD valign=bottom width=57.733><P style="margin:0px" align=right>Share</P>
</TD><TD valign=bottom width=78.133><P style="margin:0px" align=right>Contributed</P>
</TD><TD valign=bottom width=98.133><P style="margin:0px" align=right>Comprehensive</P>
</TD><TD valign=bottom width=66.733><P>&nbsp;</P></TD><TD valign=bottom width=53.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px" align=justify><B>Unaudited</B></P>
</TD><TD valign=bottom width=55.8><P style="margin:0px" align=right>Note</P>
</TD><TD valign=bottom width=57.733><P style="margin:0px" align=right>Capital</P>
</TD><TD valign=bottom width=78.133><P style="margin:0px" align=right>Surplus</P>
</TD><TD valign=bottom width=98.133><P style="margin:0px" align=right>&nbsp;Income</P>
</TD><TD valign=bottom width=66.733><P style="margin:0px" align=right>Deficit</P>
</TD><TD valign=bottom width=53.333><P style="margin:0px" align=right>Total</P>
</TD></TR>
<TR><TD valign=top width=239.067><P>&nbsp;</P></TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=78.133><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=98.133><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=66.733><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=53.333><P style="margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="border-top:2px solid #000000" valign=top width=239.067><P style="margin:0px" align=justify>Balance at December 31, 2007</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=55.8><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=57.733><P style="margin:0px" align=right>195,006</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=78.133><P style="margin:0px" align=right>1,040</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=98.133><P style="margin:0px" align=right>(57)</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=66.733><P style="margin:0px" align=right>(171,894)</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=53.333><P style="margin:0px" align=right>24,095</P>
</TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify>Shares issued</P>
</TD><TD valign=top width=55.8><P style="margin:0px; font-family:Times" align=justify>5(b)(i)</P>
</TD><TD valign=top width=57.733><P style="margin:0px; font-family:Times" align=right>1,119</P>
</TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P>&nbsp;</P></TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right>1,119</P>
</TD></TR>
<TR><TD valign=bottom width=239.067><P style="margin:0px; font-family:Times" align=justify>Equity-based compensation expense</P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P style="margin:0px; font-family:Times" align=right>862</P>
</TD><TD valign=top width=98.133><P>&nbsp;</P></TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right>862</P>
</TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify>Investments revaluation to fair value</P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P style="margin:0px; font-family:Times" align=right>(10)</P>
</TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right>(10)</P>
</TD></TR>
<TR><TD width=239.067><P style="margin:0px; font-family:Times" align=justify>Reclassification adjustment for other than temporary decline in value</P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; font-family:Times" align=right>70</P>
</TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; font-family:Times" align=right>70</P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify>Net loss for the year</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=55.8><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=57.733><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=78.133><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=98.133><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=66.733><P style="margin:0px; font-family:Times" align=right>(4,940)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=53.333><P style="margin:0px; font-family:Times" align=right>(4,940)</P>
</TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify>Balance at December 31, 2008</P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P style="margin:0px; font-family:Times" align=right>196,125</P>
</TD><TD valign=top width=78.133><P style="margin:0px; font-family:Times" align=right>1,902</P>
</TD><TD valign=top width=98.133><P style="margin:0px; font-family:Times" align=right>3</P>
</TD><TD valign=top width=66.733><P style="margin:0px; font-family:Times" align=right>(176,834)</P>
</TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right>21,196</P>
</TD></TR>
<TR><TD valign=bottom width=239.067><P style="margin:0px; font-family:Times" align=justify><B>Equity-based compensation expense</B></P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P style="margin:0px; font-family:Times" align=right><B>8</B></P>
</TD><TD valign=top width=98.133><P>&nbsp;</P></TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right><B>8</B></P>
</TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify><B>Investments revaluation to fair value</B></P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P style="margin:0px; font-family:Times" align=right><B>7</B></P>
</TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right><B>7</B></P>
</TD></TR>
<TR><TD valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify><B>Translation loss from Blanket Mine</B></P>
</TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P style="margin:0px; font-family:Times" align=right><B>(275)</B></P>
</TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P style="margin:0px; font-family:Times" align=right><B>(275)</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify><B>Net loss for the quarter</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=55.8><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=57.733><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=78.133><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=98.133><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=66.733><P style="margin:0px; font-family:Times" align=right><B>(839)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=53.333><P style="margin:0px; font-family:Times" align=right><B>(839)</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=239.067><P style="margin:0px; font-family:Times" align=justify><B>Balance at March 31, 2009</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=55.8><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=57.733><P style="margin:0px; font-family:Times" align=right><B>196,125</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=78.133><P style="margin:0px; font-family:Times" align=right><B>1,910</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=98.133><P style="margin:0px; font-family:Times" align=right><B>(265)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=66.733><P style="margin:0px; font-family:Times" align=right><B>(177,673)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=53.333><P style="margin:0px; font-family:Times" align=right><B>20,097</B></P>
</TD></TR>
<TR><TD valign=top width=239.067><P>&nbsp;</P></TD><TD valign=top width=55.8><P>&nbsp;</P></TD><TD valign=top width=57.733><P>&nbsp;</P></TD><TD valign=top width=78.133><P>&nbsp;</P></TD><TD valign=top width=98.133><P>&nbsp;</P></TD><TD valign=top width=66.733><P>&nbsp;</P></TD><TD valign=top width=53.333><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>3</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=right><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=330.8></TD><TD width=103.933></TD><TD width=94.467></TD><TD width=94.533></TD></TR>
<TR><TD style="border-top:2px solid #000000" valign=top width=623.733 colspan=4><P style="margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD valign=bottom width=623.733 colspan=4><P style="margin:0px" align=right><B>Consolidated Statements of Operations and Comprehensive Income/ (Loss)</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=bottom width=623.733 colspan=4><P style="margin:0px" align=right><B>(in thousands of Canadian Dollars except share and per share amounts)</B></P>
</TD></TR>
<TR><TD valign=top width=330.8><P>&nbsp;</P></TD><TD valign=top width=292.933 colspan=3><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=330.8><P>&nbsp;</P></TD><TD valign=top width=292.933 colspan=3><P style="margin:0px" align=center><B>For the three months ended March 31</B></P>
</TD></TR>
<TR><TD valign=top width=330.8><P style="margin:0px" align=justify><B>Unaudited</B></P>
</TD><TD valign=top width=103.933><P style="margin:0px" align=right><B>2009</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px" align=right>2008</P>
</TD><TD valign=top width=94.533><P style="margin:0px" align=right>2007</P>
</TD></TR>
</TABLE>
<P style="margin: 0px; padding-bottom: 4px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=334.8></TD><TD width=97.2></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Revenue and operating costs</B></P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Revenue from sales</P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>2,504</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>3,318</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Operating costs</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>1,088</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1,259</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>4,394</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Gross profit (loss)</B></P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(1,088)</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1,245</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(1,076)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=334.8></TD><TD width=97.2></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Costs and expenses</B></P>
</TD><TD valign=top width=97.2><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative</P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>392</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>410</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>393</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense/(income) </P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(36)</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>43</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>11</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Amortization</P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>98</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>101</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>8</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Exchange loss/(gain)</P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(739)</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(100)</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>2,427</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Other expense/(income) </P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(4)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(9)</P>
</TD></TR>
<TR><TD valign=top width=334.8><P>&nbsp;</P></TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(289)</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>454</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>2,830</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=334.8></TD><TD width=97.2></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Income (loss) before discontinued operations</B></P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(799)</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>791</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(3,906)</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Current Income Tax </B></P>
</TD><TD valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(1)</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin:0px; text-indent:28.8px" align=justify><B>Net income(loss) before discontinued operations</B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(799)</B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>791</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>(3,907)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=334.8></TD><TD width=97.2></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=334.8><P style="margin-top:6.667px; margin-bottom:0px; text-indent:28.8px"><B>Discontinued operations (loss)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(40)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>(70)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>(255)</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin-top:6.667px; margin-bottom:0px; padding-left:29.8px; text-indent:-1px" align=justify><B>Net (loss) after discontinued operations</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(839)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>721</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>(4,162)</P>
</TD></TR>
<TR><TD valign=top width=334.8><P style="margin-top:6.667px; margin-bottom:0px; text-indent:28.8px" align=justify><B>Revaluation of Investments to fair value (Note 1)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>7</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD></TR>
<TR><TD width=334.8><P style="margin-top:6.667px; margin-bottom:0px; text-indent:28.8px" align=justify><B>Comprehensive Income/(Loss) </B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=97.2><P style="margin:0px; text-indent:28.8px" align=right><B>(832)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>721</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=96><P style="margin:0px; text-indent:28.8px" align=right>(4,162)</P>
</TD></TR>
<TR><TD width=334.8><P>&nbsp;</P></TD><TD valign=top width=97.2><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD width=334.8><P style="margin-top:0px; margin-bottom:6.667px; padding-left:29.8px" align=justify>Income/(loss) per share</P>
</TD><TD valign=top width=97.2><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD width=334.8><P style="margin-top:0px; margin-bottom:6.667px; padding-left:29.8px" align=justify>Basic and diluted from continuing operations</P>
</TD><TD width=97.2><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right><B>($0.002)</B></P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>$0.001</P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>($0.009)</P>
</TD></TR>
<TR><TD width=334.8><P style="margin-top:0px; margin-bottom:6.667px; padding-left:29.8px" align=justify>Basic and diluted from discontinued operations</P>
</TD><TD width=97.2><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>-</P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>($0.001)</P>
</TD></TR>
<TR><TD width=334.8><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=justify>Basic and diluted for the quarter</P>
</TD><TD width=97.2><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right><B>($0.002)</B></P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>$0.001</P>
</TD><TD width=96><P style="margin-top:0px; margin-bottom:6.667px; text-indent:28.8px" align=right>($0.010)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.</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>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>4</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=85.067></TD><TD width=94.467></TD><TD width=94.533></TD></TR>
<TR><TD style="border-top:2px solid #000000" valign=bottom width=623.733 colspan=4><P style="margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD valign=bottom width=623.733 colspan=4><P style="margin:0px" align=right><B>Consolidated Statements of Cash Flows</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=bottom width=623.733 colspan=4><P style="margin:0px" align=right><B>(in thousands of Canadian Dollars)</B></P>
</TD></TR>
<TR><TD valign=top width=623.733 colspan=4><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD valign=top width=274.067 colspan=3><P style="margin:0px" align=center><B>For the three months ended March 31</B></P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Unaudited</B></P>
</TD><TD valign=top width=85.067><P style="margin:0px" align=right><B>2009</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px" align=right>2008</P>
</TD><TD valign=top width=94.533><P style="margin:0px" align=right>2007</P>
</TD></TR>
</TABLE>
<P style="margin: 0px; padding-bottom: 4px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=96.4></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Cash provided by (used in)</B></P>
</TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=96.4><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=96.4></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify><B>Operating activities</B></P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>$</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>$</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify>&nbsp;&nbsp;Income(loss) before discontinued operations</P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(799)</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>790</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>(3,907)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=94.6></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Adjustments to reconcile net cash from operations (Note 8) </P>
</TD><TD valign=top width=83.333><P style="margin:0px" align=right><B>(158)</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px" align=right>134</P>
</TD><TD valign=top width=94.6><P style="margin:0px" align=right>(50)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=94.6></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Changes in non-cash working capital balances (Note 8)</P>
</TD><TD valign=top width=83.333><P style="margin:0px" align=right><B>174</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px" align=right>(1,254)</P>
</TD><TD valign=top width=94.6><P style="margin:0px" align=right>3,127</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=94.6></TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(783)</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(330)</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(830)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=96.4></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify><B>Investing activities</B></P>
</TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=96.4><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify>&nbsp;&nbsp;&nbsp;Expenditures on capital assets and mineral properties</P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(386)</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(231)</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>(684)</P>
</TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(386)</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(231)</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>(684)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=96.4></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify><B>Financing activities</B></P>
</TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=96.4><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify>&nbsp;&nbsp;&nbsp;Bank overdraft</P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>95</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(13)</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>599</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:1.467px" align=justify>&nbsp;&nbsp;&nbsp;Issue of share capital net of issue costs </P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>1,119</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:9.467px" align=justify>&nbsp;&nbsp;&nbsp;</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(95)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>1,106</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>599</P>
</TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=96.4><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:9.467px" align=justify>Cash flow from discontinued operations</P>
</TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=96.4><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:9.467px" align=justify>Operating activities</P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(26)</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(65)</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>(255)</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px; text-indent:9.467px" align=justify>Financing activities</P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>-</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(2)</P>
</TD><TD valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(26)</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(67)</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=96.4><P style="margin:0px; text-indent:9.467px" align=right>(255)</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=349.667></TD><TD width=83.333></TD><TD width=94.6></TD><TD width=94.6></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Increase (decrease) in cash for the period</B></P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>(1,100)</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>478</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(1,170)</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Cash and cash equivalents, beginning of period</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>3,652</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>76</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>1,298</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Cash and cash equivalents, end of period</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>2,552</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>554</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>128</P>
</TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Cash and cash equivalents at end of period relate to:</B></P>
</TD><TD valign=top width=83.333><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD><TD valign=top width=94.6><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Continuing operations</B></P>
</TD><TD valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>2,550</B></P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>562</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>126</P>
</TD></TR>
<TR><TD valign=top width=349.667><P style="margin:0px" align=justify><B>Discontinued operations</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>2</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>(8)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>2</P>
</TD></TR>
<TR><TD valign=top width=349.667><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=83.333><P style="margin:0px; text-indent:9.467px" align=right><B>2,552</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>554</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:9.467px" align=right>128</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>5</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="margin:0px; padding-bottom:4px; text-indent:28.8px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;&nbsp;</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Nature of Business</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>The Corporation is engaged in the acquisition, exploration and development of mineral properties for the exploitation of base and precious metals. &nbsp;The ability of the Corporation 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 Corporation 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" align=justify><BR></P>
<P style="margin:0px; padding-left:30px; text-indent:-1.2px" align=justify>The Corporation operates in a number of operating segments but its assets located in Zimbabwe, including its interests in gold properties, may be subject to sovereign risks, including political and economic instability, government regulations relating to mining, currency fluctuations and inflation, all or any of which may impede the Corporation's activities in this country or may result in the impairment or loss of part or all of the Corporation's interest in the properties<B>.</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Basis of Presentation and Going Concern</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:28.4px" align=justify>These unaudited interim consolidated financial statements of Caledonia Mining Corporation (&#147;Caledonia&#148; or the &#147;Corporation&#148;) have been prepared by management in accordance with accounting principles generally accepted in Canada (&quot;Canadian GAAP&quot;) for interim financial statements. Certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with Canadian GAAP have been condensed or excluded. As a result, these unaudited interim consolidated financial statements do not contain all disclosures required to be included in the annual consolidated financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements and notes thereto for the year ended December 31, 2008. </P>
<P style="margin:0px; padding-left:28.333px" align=justify>These unaudited consolidated financial statements have been prepared on the basis of a going concern, which contemplates that the Corporation will be able to realize assets and discharge liabilities in the normal course of business. &nbsp;The Corporation&#146;s ability to continue as a going concern is dependent upon attaining profitable operations, realising proceeds from the disposal of mineral properties 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" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.667px; text-indent:28.4px" align=justify><B>Significant Accounting Policies: </B></P>
<P style="margin:0px; padding-left:28.4px" align=justify>These unaudited interim consolidated financial statements are prepared following accounting policies consistent with the Corporation's audited annual consolidated financial statements and notes thereto for the year ended December 31, 2008, except for the following changes in accounting policies:</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:23.867px" align=justify><B>Adoption of New Accounting Standards </B></P>
<P style="margin:0px; padding-left:28.4px; text-indent:0.4px; font-family:Times" align=justify><B>a. </B><FONT style="font-family:Times New Roman"><B>Goodwill and intangible assets</B></FONT></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px; text-indent:0.4px" align=justify>In February 2008, the Canadian Institute of Chartered Accountants (&#147;CICA&#148;) issued Section 3064 Goodwill and intangible assets, replacing Section 3062, Goodwill and other intangible assets.&nbsp; The new Section will be applicable to financial statements relating to fiscal years beginning on or after October 1, 2008.&nbsp; Accordingly, the Corporation has adopted the new standards for its fiscal year beginning January 1, 2009.&nbsp; It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises.&nbsp; Standards concerning goodwill are unchanged from the standards included in the previous Section 3062.&nbsp; The adoption of this standard is not expected to have an effect on the Corporation&#146;s consolidated financial statements.</P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>6</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="margin:0px; padding-bottom:4px; text-indent:28.8px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;&nbsp;</B></P>
<P style="margin:0px; padding-left:28.4px" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin:0px; padding-left:28.8px" align=justify><B>Recently issued accounting pronouncements issued and not yet effective</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:28.333px" align=justify><B>International Financial Reporting Standards (&#147;IFRS&#148;) </B></P>
<P style="margin-top:0px; margin-bottom:12.8px; padding-left:28.333px" align=justify>In 2006, the Canadian Accounting Standards Board (&quot;AcSB&quot;) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008 the AcSB announced that 2011 is the changeover date for public accountable companies to use IFRS, replacing Canada's own GAAP. The transition date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Corporation for the year ended December 31, 2010. While the Corporation has begun assessing the adoption of IFRS for 2011, or sooner if possible, the financial reporting impact of the transition to IFRS cannot be reasonably estimate
d at this time. </P>
<P style="margin:0px; padding-left:28.4px; text-indent:0.4px" align=justify><B>Business Combinations</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px; text-indent:0.4px" align=justify>In January 2009, the CICA issued Handbook Sections 1582 &#150; Business Combinations, 1601 &#150; Consolidated Financial Statements and 1602 &#150; Non-controlling Interests which replace CICA Handbook Sections 1581 &#150; Business Combinations and 1600 &#150; Consolidated Financial Statements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under International Financial Reporting Standards (&#147;<B>IFRS</B>&#148;). Section 1582 is applicable for the Corporation&#146;s business combinations with acquisition dates on or after January 1, 2011. Early adoption of this Section is permitted. Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements. Section 1601 is applicable for the Corporation&#146;s interim and annual consolidated financial statements for its fiscal year beginni
ng January 1, 2011. Early adoption of this Section is permitted. If the Corporation chooses to early adopt any one of these Sections, the other two sections must also be adopted at the same time.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify><B>Other Existing Accounting Policies</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Inventories</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:30px" align=justify>These include gold in circuit (WIP) and bulk consumable stores. &nbsp;WIP is valued at the lower of the cost of production, on an average basis, 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" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Capital Assets</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B><I>Producing Assets</I></B></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Producing assets are recorded at cost less grants, accumulated amortization and write-downs. &nbsp;Producing plant and equipment assets 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" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Other producing assets are amortized using the straight line method basis on the estimated useful lives of the assets. &nbsp;The estimated 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 </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>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>7</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="margin:0px; padding-bottom:4px; text-indent:28.8px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>amortized over the remaining useful life of that asset. &nbsp;Eersteling Gold Mine remains for sale and is thus presented as an asset for sale in these consolidated financial statements. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B><I>Non-Producing Assets</I></B></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Non-producing assets are recorded at cost less write downs. &nbsp;At the time of commercial production, the assets are reclassified as producing. &nbsp;During non-producing periods, no amortization is recorded on plant and equipment but vehicles and computer equipment continue to be amortized.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify><B><I>Assets held for sale and discontinued operations</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>In 2007 the decision was taken to sell Eersteling Gold Mining Corporation that had been on care and maintenance since 1997.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify>The components held for sale are as follows: </P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=210></TD><TD width=102></TD><TD width=102></TD></TR>
<TR><TD valign=top width=210><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=204 colspan=2><P style="margin:0px" align=center>Eersteling Gold Mine</P>
</TD></TR>
<TR><TD valign=top width=210><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=102><P style="margin:0px" align=right><B>March 31</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=102><P style="margin:0px" align=right>December 31</P>
</TD></TR>
<TR><TD valign=top width=210><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=top width=102><P style="margin:0px" align=right><B>2009</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=102><P style="margin:0px" align=right>2008</P>
</TD></TR>
<TR><TD valign=top width=210><P>&nbsp;</P></TD><TD valign=top width=102><P style="margin:0px" align=right><B>$</B></P>
</TD><TD valign=top width=102><P style="margin:0px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=210><P style="margin:0px" align=justify>Capital Assets and mineral properties</P>
</TD><TD valign=top width=102><P style="margin:0px" align=right><B>680</B></P>
</TD><TD valign=top width=102><P style="margin:0px" align=right>681</P>
</TD></TR>
<TR><TD valign=top width=210><P style="margin:0px" align=justify>Current Assets</P>
</TD><TD valign=top width=102><P style="margin:0px" align=right><B>109</B></P>
</TD><TD valign=top width=102><P style="margin:0px" align=right>106</P>
</TD></TR>
<TR><TD valign=top width=210><P style="margin:0px" align=justify>Current Liabilities</P>
</TD><TD valign=top width=102><P style="margin:0px" align=right><B>13</B></P>
</TD><TD valign=top width=102><P style="margin:0px" align=right>(16)</P>
</TD></TR>
<TR><TD valign=top width=210><P style="margin:0px" align=justify>Asset Retirement obligation</P>
</TD><TD valign=top width=102><P style="margin:0px" align=right><B>317</B></P>
</TD><TD valign=top width=102><P style="margin:0px" align=right>(314)</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>As a consequence of this decision Eersteling Mine&#146;s results for 2009 and preceding years are disclosed under discontinued operations. Revenue from discontinued operations is Nil ($Nil in 2008 and $60 in 2007). There is no tax applicable to discontinued operations.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Mineral Properties</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B><I>Producing Properties</I></B></P>
<P style="margin:0px; padding-left:28.4px" align=justify>When and if properties are placed in production, the applicable capitalized costs are amortized using the unit-of-production method as described above. Blanket Mine was acquired during 2006 and has been consolidated into these results from July 1, 2006 and, as such, has been presented as a producing asset in these consolidated financial statements. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B><I>Non-Producing Properties</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px; text-indent:0.4px" align=justify>Costs relating to the acquisition, exploration and development of non-producing resource properties which are held by the Corporation 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.</P>
<P style="margin:0px; padding-left:28.4px" align=justify>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 Corporation 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" 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>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>8</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="margin:0px; padding-bottom:4px; text-indent:28.8px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>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" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Foreign Currency Translation</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Balances of the Corporation denominated in foreign currencies and the accounts of its foreign subsidiaries, except Blanket Mine, are translated into Canadian Dollars using the temporal method as follows:</P>
<P style="line-height: 14pt; text-indent: -48px; margin-top: 0px; margin-bottom: -18.667px; padding-left: 96.4px" align=justify>(i)</P>
<P style="text-indent: -0.4px; margin: 0px; padding-left: 96.4px" align=justify>monetary assets and liabilities at period end rates;</P>
<P style="line-height: 14pt; text-indent: -48px; margin-top: 0px; margin-bottom: -18.667px; padding-left: 96.4px" align=justify>(ii)</P>
<P style="text-indent: -0.4px; margin: 0px; padding-left: 96.4px" align=justify>all other assets and liabilities at historical rates, and</P>
<P style="line-height: 14pt; text-indent: -48px; margin-top: 0px; margin-bottom: -18.667px; padding-left: 96.4px" align=justify>(iii)</P>
<P style="text-indent: -0.4px; margin: 0px; padding-left: 96.4px" align=justify>revenue and expense transactions at the average rate of exchange prevailing during the period.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Exchange gains or losses arising on these translations are reflected in income in the year incurred. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Blanket is a self-sustaining operation and operates in Zimbabwe in what was a hyper inflationary economy. Due to the dollarization of the economy in February, 2009 the hyper inflationary environment no longer exists. Accordingly the results of these operations are now translated into Canadian Dollars using the current rate method. On January 1, 2009 Blanket&#146;s functional currency also changed to US Dollars following the Monetary Policy announcement introducing the use of foreign currency in Zimbabwe for all forms of trade and business. The assets and liabilities of a self-sustaining foreign operation are translated at the rate in effect at the balance sheet date for purposes of incorporation in the financial statements of Caledonia and, therefore, an exchange gain or loss will arise when the exchange rate changes. This exchange gain or loss has no direct effect on the activities of Caledonia. It is inappropriate to incorporate this exchange gain or
 loss in net income of Caledonia in the period in which it arises; rather, it is reported in the financial statements as a separate component of shareholders' equity and is disclosed as a separate component of accumulated other comprehensive income during the period. In summary the current rate method is as follows:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96.4px; text-indent:-48px" align=justify>(i)</P>
<P style="margin:0px; padding-left:96.4px; text-indent:-0.4px" align=justify>all assets and liabilities at rates at balance sheet date;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96.4px; text-indent:-48px" align=justify>(ii)</P>
<P style="text-indent: -0.4px; margin: 0px; padding-left: 96.4px" align=justify>revenue and expense transactions at the average rate of exchange prevailing during the period.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>Foreign exchange loss or profit arising on the translation of revenue and expense items is disclosed in income in the period incurred.</P>
<P style="margin:0px; padding-left:28.4px" align=justify>Included in the statement of operations is an exchange gain of $498 (loss $405 &#150; 2008 and gain $1,203 - 2007) relating to the translation of Blanket Mine expense items and a loss of $275 (Nil 2008) which has been disclosed under accumulated other comprehensive income.</P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>9</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; text-indent:28.8px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:28.8px" align=justify><B>1.</B></P>
<P style="margin:0px; padding-left:28.8px; text-indent:67.2px" align=justify><B>Investments</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:56.733px" align=justify>On May 9, 2002, the Corporation participated in a private placement of the purchase of shares of Motapa Diamonds Inc. (&#147;Motapa&#148;) at a cost of $79. &nbsp;The shares of Motapa are listed on the TSX Venture Exchange in Canada. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:56.733px" align=justify>The adoption of CICA Handbook Sections 3855 and 1530, retrospectively from January 1, 2007, determines that the Corporation records its investments in Motapa Diamonds Inc. and in Old Mutual Plc as financial instruments &#147;available for sale&#148; and they are thus recorded at fair value. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:56.733px" align=justify>The fair value of the investment in Motapa Diamonds Inc is $16 ($20 -2008 and $20 &#150; 2007) and the fair value of the shares held in Old Mutual Plc is $3 ($2 &#150; 2008 and $2- 2007). </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:28.8px" align=justify><B>2.</B></P>
<P style="margin:0px; padding-left:28.8px; text-indent:67.2px" align=justify><B>Capital Assets</B></P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=180></TD><TD width=96></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD valign=top width=288 colspan=3><P style="margin:0px" align=center><B>March 31, 2009</B></P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><U>Cost</U> <SUP>(1)</SUP></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=center><U>Accumulated</U></P>
<P style="margin:0px" align=center><U>Amortization</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=center><U>Net Book Value</U></P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Land &#150; plant sites</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>12</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>12</B></P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Plant and equipment</P>
</TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- producing <SUP>(2)</SUP></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>24</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>5</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>19</B></P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- non-producing <SUP>(3)</SUP> </P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>229</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>229</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Office equipment</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>908</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>865</B></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>43</B></P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Vehicles</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>387</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>306</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>81</B></P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>1,560</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>1,405</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right><B>155</B></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px; text-indent:288px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=180></TD><TD width=96></TD><TD width=96></TD><TD width=96></TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD valign=top width=288 colspan=3><P style="margin:0px" align=center>March 31, 2008</P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><U>Cost</U> <SUP>(1)</SUP></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=center><U>Accumulated</U></P>
<P style="margin:0px" align=center><U>Amortization</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=96><P style="margin:0px" align=center><U>Net Book Value</U></P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Land - plant sites</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>12</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=center>-</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>12</P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Plant and equipment</P>
</TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD><TD valign=top width=96><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- producing <SUP>(2)</SUP></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>24</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>23</P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- non-producing <SUP>(3)</SUP></P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>229</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>229</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Office equipment</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>887</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>843</P>
</TD><TD valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>44</P>
</TD></TR>
<TR><TD valign=top width=180><P style="margin:0px" align=justify>Vehicles</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>387</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>267</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>120</P>
</TD></TR>
<TR><TD valign=top width=180><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1,539</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>1,340</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=96><P style="margin:0px; text-indent:28.8px" align=right>199</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height: 14pt; margin-top: 0px; margin-bottom: -18.667px; padding-left: 48px" align=justify><SUP>(1)</SUP></P>
<P style="text-indent: 20.4px; margin: 0px; padding-left: 75.6px" align=justify>Cost is comprised of the original cost of the asset, less write-downs, removal of cost for disposals and government grants.</P>
<P style="line-height: 14pt; margin-top: 0px; margin-bottom: -18.667px; padding-left: 48px" align=justify><SUP>(2)</SUP></P>
<P style="text-indent: 20.4px; margin: 0px; padding-left: 75.6px" align=justify>The producing plant and equipment relates to the Blanket operation.</P>
<P style="line-height: 14pt; margin-top: 0px; margin-bottom: -18.667px; padding-left: 48px" align=justify><SUP>(3)</SUP> </P>
<P style="margin:0px; padding-left:75.6px; text-indent:20.4px" align=justify>The net book value of non-producing plant and equipment represents Zambian operations. </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><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>10</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; text-indent:28.8px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><B>3.</B></P>
<P style="margin:0px; text-indent:56.733px" align=justify><B>Mineral Properties</B></P>
<P style="margin:0px; text-indent:384px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=260.6></TD><TD width=79></TD><TD width=110></TD><TD width=94.467></TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD valign=top width=283.467 colspan=3><P style="margin:0px" align=center><B>March 31, 2009</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=79><P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=center><U>Cost</U> <SUP>(1)</SUP></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=110><P style="margin:0px" align=center><U>Accumulated</U></P>
<P style="margin:0px" align=center><U>Amortization</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=94.467><P style="margin:0px" align=center><U>Net Book Value</U></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>Producing:</P>
</TD><TD valign=top width=79><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Blanket, Zimbabwe - gold property </P>
</TD><TD valign=top width=79><P style="margin:0px" align=right><B>5,011</B></P>
</TD><TD valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>379</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>4,632</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>Non-producing - exploration:</P>
</TD><TD valign=top width=79><P>&nbsp;</P></TD><TD valign=top width=110><P>&nbsp;</P></TD><TD valign=top width=94.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Rooipoort , South Africa</P>
</TD><TD valign=top width=79><P style="margin:0px" align=right><B>4,377</B></P>
</TD><TD valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>4,377</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Goedgevonden, South Africa<SUP>(3)</SUP></P>
</TD><TD valign=top width=79><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Nama, Zambia</P>
</TD><TD valign=top width=79><P style="margin:0px" align=right><B>5,848</B></P>
</TD><TD valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>5,848</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Mulonga, Zambia<SUP>(2)</SUP></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=79><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD style="border-bottom:2px solid #000000" valign=top width=79><P style="margin:0px" align=right><B>15,236</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=110><P style="margin:0px; text-indent:28.8px" align=right><B>379</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=94.467><P style="margin:0px; text-indent:28.8px" align=right><B>14,857</B></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=260.6></TD><TD width=85></TD><TD width=94.533></TD><TD width=91.467></TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD valign=top width=271 colspan=3><P style="margin:0px" align=center>March 31, 2008</P>
</TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=85><P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=center><U>Cost</U> <SUP>(1)</SUP></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=94.533><P style="margin:0px" align=center><U>Accumulated</U></P>
<P style="margin:0px" align=center><U>Amortization</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=91.467><P style="margin:0px" align=center><U>Net Book Value</U></P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>Producing:</P>
</TD><TD valign=top width=85><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Blanket, Zimbabwe - gold property </P>
</TD><TD valign=top width=85><P style="margin:0px" align=right>4,981</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>82</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>4,899</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>Non-producing - exploration:</P>
</TD><TD valign=top width=85><P>&nbsp;</P></TD><TD valign=top width=94.533><P>&nbsp;</P></TD><TD valign=top width=91.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Rooipoort , South Africa</P>
</TD><TD valign=top width=85><P style="margin:0px; text-indent:28.8px" align=right>4,245</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>4,245</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Goedgevonden, South Africa</P>
</TD><TD valign=top width=85><P style="margin:0px" align=right>111</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>111</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Nama, Zambia</P>
</TD><TD valign=top width=85><P style="margin:0px" align=right>3,288</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>3,288</P>
</TD></TR>
<TR><TD valign=top width=260.6><P style="margin:0px" align=justify>&nbsp;&nbsp;&nbsp;Mulonga, Zambia</P>
</TD><TD valign=top width=85><P style="margin:0px" align=right>1,044</P>
</TD><TD valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>1,044</P>
</TD></TR>
<TR><TD valign=top width=260.6><P>&nbsp;</P></TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=85><P style="margin:0px" align=right>14,419</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=94.533><P style="margin:0px; text-indent:28.8px" align=right>832</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=91.467><P style="margin:0px; text-indent:28.8px" align=right>13,587</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:61.8px; text-indent:-24px; font-size:8pt" align=justify><SUP>(1)</SUP></P>
<P style="margin:0px; padding-left:61.8px" align=justify>Cost is comprised of the original cost of the asset, less write-downs, removal of cost for disposals and government grants, and includes the capitalized value of the estimated asset retirement obligations.</P>
<P style="margin:0px; padding-left:37.8px; text-indent:28.8px" align=justify>&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:61.8px; text-indent:-24px; font-size:8pt" align=justify><SUP>(2)</SUP></P>
<P style="margin:0px; padding-left:61.8px" align=justify>The Corporation had entered into strategic alliances with a third party on a Zambian property (Mulonga) valued at $0 ($1,044 &#150; 2008). &nbsp;The Zambian strategic alliance partner, Motapa Diamonds Inc., has terminated the strategic alliance agreement. The Corporation has applied for a retention licence over the properties. &nbsp;All interest in the strategic alliance will be transferred to the Corporation by Motapa Diamonds Inc. As a consequence of the current economic climate, lack of exploration in the past 2 years and no planned expenditure for 2009 the Mulonga property was fully written down to $Nil at December 31, 2008. It is still the Corporation&#146;s intention to form a joint venture with a new strategic partner.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:61.8px; text-indent:-24px; font-size:8pt" align=justify><SUP>(3)</SUP></P>
<P style="margin:0px; padding-left:61.8px" align=justify>Due to the current economic climate, lack of exploration expenditure in the past 2 years, no planned expenditure for 2009 and the fact that prospecting licences are still to be granted, the Goedgevonden property was written down to $Nil at December 31, 2008.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px">The recoverability of the carrying amount of the South African and Zambian mineral properties is dependent upon the availability of sufficient funding to bring the properties into commercial production, the price of the products to be recovered, the exchange rate of the local currency relative to the US Dollar and the undertaking of profitable mining operations. As a result of these uncertainties, the actual amount recovered may vary significantly from the carrying amount. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>11</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; text-indent:28.8px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><B>4.</B></P>
<P style="margin:0px; text-indent:66.2px" align=justify><B>Asset Retirement Obligation</B></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR height=0 style="font-size:0"><TD width=287.133></TD><TD width=103.933></TD><TD width=118.333></TD></TR>
<TR><TD valign=top width=287.133><P>&nbsp;</P></TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B><U>March 31</U></B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right><U>December 31</U></P>
</TD></TR>
<TR><TD valign=top width=287.133><P>&nbsp;</P></TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B><U>2009</U></B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right><U>2008</U></P>
</TD></TR>
<TR><TD valign=top width=287.133><P>&nbsp;</P></TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B>$</B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px">Continuing operation </P>
</TD><TD valign=bottom width=103.933><P>&nbsp;</P></TD><TD valign=bottom width=118.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px">Opening balance </P>
</TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B>839</B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>732</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px">Accretion expense</P>
</TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B><U>5</U></B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>19</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px">Foreign exchange loss (gain)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=103.933><P style="margin:0px" align=right><B><U>(1)</U></B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=118.333><P style="margin:0px" align=right>88</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px"><B>Closing balance &#150; continuing operations </B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=103.933><P style="margin:0px" align=right><B><U>843</U></B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=118.333><P style="margin:0px" align=right>839</P>
</TD></TR>
<TR><TD valign=top width=287.133><P>&nbsp;</P></TD><TD valign=bottom width=103.933><P>&nbsp;</P></TD><TD valign=bottom width=118.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify>Discontinued operation</P>
</TD><TD valign=bottom width=103.933><P>&nbsp;</P></TD><TD valign=bottom width=118.333><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify>Opening balance </P>
</TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B>314</B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>311</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify>Accretion expense</P>
</TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B>4</B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>20</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify>Sale of Barbrook</P>
</TD><TD valign=bottom width=103.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=bottom width=118.333><P style="margin:0px" align=right>(107)</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify>Foreign exchange loss (gain)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=103.933><P style="margin:0px" align=right><B>(1)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=118.333><P style="margin:0px" align=right>90</P>
</TD></TR>
<TR><TD valign=top width=287.133><P style="margin:0px" align=justify><B>Closing balance &#150; held for sale</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=103.933><P style="margin:0px" align=right><B>317</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=118.333><P style="margin:0px" align=right>314</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify>The asset retirement obligations relate to Blanket Mine $843 ($831 &#150; 2008), and Eersteling Gold Mine $317 ($178 &#150; 2008) and are estimates of costs of rehabilitation at the end of the mine life, increased annually for accretion expense at a rate of 5%. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><B>5.</B></P>
<P style="margin:0px; text-indent:66.2px" align=justify><B>Share Capital</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:66.2px; text-indent:-28.4px" align=justify>(a) </P>
<P style="margin:0px; padding-left:66.2px" align=justify>Authorized</P>
<P style="margin:0px; padding-left:66.2px" align=justify>An unlimited number of common shares</P>
<P style="margin:0px; padding-left:66.2px" align=justify>An unlimited number of preference shares.</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:65.8px; text-indent:-28px" align=justify>(b)</P>
<P style="margin:0px; padding-left:65.8px" align=justify>Issued</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=311.133></TD><TD width=132.267></TD><TD width=113.4></TD></TR>
<TR><TD valign=top width=311.133><P>&nbsp;</P></TD><TD valign=top width=132.267><P style="margin:0px"><U>Number of Shares</U></P>
</TD><TD valign=top width=113.4><P style="margin:0px; padding-right:1.467px; text-indent:48.733px" align=justify><U>Amount</U></P>
</TD></TR>
<TR><TD valign=top width=311.133><P style="margin:0px; text-indent:0.733px" align=justify>Common shares</P>
</TD><TD valign=top width=132.267><P>&nbsp;</P></TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=311.133><P style="margin:0px">Balance - December 31 , 2007</P>
</TD><TD style="border-top:1.333px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>487,869,280</P>
</TD><TD style="border-top:1.333px solid #000000" valign=top width=113.4><P style="text-indent: 28.8px; margin: 0px" align=right>195,006</P>
</TD></TR>
<TR><TD valign=top width=311.133><P style="margin:0px">Issued pursuant to a private placement (i)</P>
</TD><TD valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>12,300,000</P>
</TD><TD valign=top width=113.4><P style="text-indent: 28.8px; margin: 0px" align=right>1,119</P>
</TD></TR>
<TR><TD valign=top width=311.133><P style="margin:0px">Balance - December 31, 2008</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>500,169,280</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=113.4><P style="text-indent: 28.8px; margin: 0px" align=right>196,125</P>
</TD></TR>
<TR><TD valign=top width=311.133><P style="margin:0px"><B>Balance - March 31, 2009</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right><b>500,169,280</b></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=113.4><P style="text-indent: 28.8px; margin: 0px" align=right><b>196,125</b></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px; padding-left:66.2px; text-indent:-28.4px" align=justify><B>&nbsp;</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:66.2px; text-indent:-28.4px" align=justify>&nbsp;(i)</P>
<P style="margin:0px; padding-left:66.2px" align=justify>In February 2008 the Corporation commenced a private placement to raise additional funds. This placement raised $1,119 after expenses from the sale of 12,300,000 units. &nbsp;Each unit consists of one common share and one share purchase warrant. </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></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>12</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right>&nbsp;<B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; text-indent:28.8px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:37.8px" align=justify>(c) </P>
<P style="margin:0px; padding-left:37.8px; text-indent:18.933px" align=justify>Stock Option Plans and Stock-Based Compensation</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The Corporation has established incentive stock option plans (the &quot;Plans&quot;) for employees, officers, directors, consultants and other service providers. Under the Plans, as at March 31, 2009, the Corporation has the following options outstanding:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR height=0 style="font-size:0"><TD width=136.533></TD><TD width=113.4></TD><TD width=145></TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px" align=right><U>Number of Options</U></P>
</TD><TD valign=top width=113.4><P style="margin:0px" align=right><U>Exercise Price</U></P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right><U>Expiry Date</U></P>
</TD></TR>
<TR><TD valign=top width=136.533><P>&nbsp;</P></TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=145><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>9,950,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>&nbsp;&nbsp;0.235</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>April 24, 2012</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>150,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>&nbsp;&nbsp;0.345</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>June 2, 2012</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>410,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>&nbsp;&nbsp;0.260</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>April 29, 2014</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>4,000,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>&nbsp;&nbsp;0.110</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>February 15, 2015</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>1,000,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>&nbsp;0.140</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>July 10, 2010</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>300,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.125</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>May 11,2016</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>200,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.110</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>January 23, 2017</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>1,300,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.113</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>May 31, 2012</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>1,000,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.155</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>July 1, 2013</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>15,820,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.155</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>Mar 18, 2013</P>
</TD></TR>
<TR><TD valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>500,000</P>
</TD><TD valign=top width=113.4><P style="margin:0px; text-indent:28.8px" align=right>0.100</P>
</TD><TD valign=top width=145><P style="margin:0px; text-indent:28.8px" align=right>Mar 23, 2014</P>
</TD></TR>
<TR><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=136.533><P style="margin:0px; text-indent:28.8px" align=right>34,630,000</P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=113.4><P>&nbsp;</P></TD><TD valign=top width=145><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The continuity of the options granted, exercised, cancelled and expired under the Plans during 2009, 2008 and 2007 are as follows:</P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=255.2></TD><TD width=122.8></TD><TD width=179.6></TD></TR>
<TR><TD valign=top width=255.2><P>&nbsp;</P></TD><TD valign=top width=122.8><P style="margin:0px" align=center><U>Number of Options</U></P>
</TD><TD valign=top width=179.6><P style="margin:0px"><U>Weighted Avg. Exercise Price</U></P>
</TD></TR>
<TR><TD valign=top width=255.2><P>&nbsp;</P></TD><TD valign=top width=122.8><P>&nbsp;</P></TD><TD valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center>$</P>
</TD></TR>
<TR><TD valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify>Options outstanding at December 31, 2007</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=122.8><P style="margin:0px" align=right>18,588,000</P>
</TD><TD style="border-top:2px solid #000000" valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center>0.198</P>
</TD></TR>
<TR><TD valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify>Forfeited or expired</P>
</TD><TD valign=top width=122.8><P style="margin:0px" align=right>(1,778,000)</P>
</TD><TD valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center>(0.28)</P>
</TD></TR>
<TR><TD valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify>Granted</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=122.8><P style="margin:0px" align=right>17,320,000</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center>0.155</P>
</TD></TR>
<TR><TD valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify>Options outstanding at December 31, 2008</P>
</TD><TD valign=top width=122.8><P style="margin:0px" align=right>34,130,000</P>
</TD><TD valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center>0.173</P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify><B>Granted</B></P>
</TD><TD valign=top width=122.8><P style="margin:0px" align=right><B>500,000</B></P>
</TD><TD valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center><B>0.10</B></P>
</TD></TR>
<TR><TD style="border-bottom:2px solid #000000" valign=top width=255.2><P style="margin:0px; text-indent:1.467px" align=justify><B>Options outstanding at March 31, 2009</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=122.8><P style="margin:0px" align=right><B>34,630,000</B></P>
</TD><TD style="border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=179.6><P style="margin:0px; text-indent:28.8px" align=center><B>0.1716</B></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:36px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; padding-left:75.6px" align=justify>The options to purchase common shares noted above, have been granted to directors, officers, employees and service providers at exercise prices determined by reference to the market value of the common shares on the date of grant. &nbsp;The vesting of options is made at the discretion of the board of directors at the time the options are granted. </P>
<P style="margin:0px" align=justify><BR><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>13</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:28.8px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; text-indent:28.8px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:37.8px" align=justify>(d)</P>
<P style="margin:0px; padding-left:37.8px; text-indent:37.8px" align=justify>Warrants &nbsp;</P>
<P style="line-height:10pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The Corporation has no warrants pursuant to private placements which are outstanding as of March 31, 2009:</P>
<P style="line-height:10pt; margin:0px" align=justify><BR></P>
<P style="line-height:1.35pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:75.6px" align=justify>The continuity of warrants issued and outstanding is as follows:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR height=0 style="font-size:0"><TD width=226.8></TD><TD width=132.267></TD></TR>
<TR><TD valign=top width=226.8><P>&nbsp;</P></TD><TD valign=top width=132.267><P style="margin:0px" align=center><U>Number of Warrants</U></P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify>Outstanding December 31, 2007</P>
</TD><TD valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>15,437,626</P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify>Expired</P>
</TD><TD valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>(15,437,626)</P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify>Issued pursuant to private placements</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>12,300,000</P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify>Outstanding December 31, 2008</P>
</TD><TD valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right>12,300,000</P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify><B>Expired</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right><B>(12,300,000)</B></P>
</TD></TR>
<TR><TD valign=top width=226.8><P style="margin:0px" align=justify><B>Outstanding March 31, 2009</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=132.267><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:28.8px" align=justify><B>6.</B></P>
<P style="margin:0px; text-indent:75.6px" align=justify><B>Net Income/ (Loss) Per Share</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The net income/ (loss) per share figures have been calculated using the weighted average number of common shares outstanding during the respective quarter which amounted to 500,169,280 (2008 &#150; 493,199,280 and 2007 - 457,981,021). &nbsp;Fully diluted income/ (loss) per share have not been calculated as it would be anti-dilutive. &nbsp;&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-47.2px" align=justify><B>7.</B></P>
<P style="margin:0px; padding-left:75.6px" align=justify><B>Accounts Receivable</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>Included in accounts receivable is an amount owing by the Reserve Bank of Zimbabwe (&#147;RBZ&#148;) of $2,890 ($1,780 &#150; 2007) for gold sold, plus interest accrued, during 2008. In the monetary policy statement announced by the Governor of the RBZ in February 2009, this debt was converted into a Special Tradeable Gold-Backed Foreign Exchange Bond, with a term of 12 months and an 8% interest rate. This bond can be sold to any interested party locally, regionally or internationally at an agreed to time maturity discount. This bond plus interest is guaranteed by RBZ on maturity.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The Corporation has disclosed this receivable as a long term asset at its estimated fair value. The receivable was written down to the estimated fair value at December 31, 2008. Due to the subsequent conversion of the receivable into a bond, the fair value was estimated by applying a risk premium of 18% to the bond value as if converted at the year end. Although it is the intention of the Corporation to sell the bond within the next 12 months but due to a lack of a market in these bonds, the Corporation has classified the receivable as long term based on the legal term of the bond to January 31, 2010.</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><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>14</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px; padding-top:4px; border-top:2px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="line-height:1.35pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-47.2px" align=justify><B>8.</B></P>
<P style="margin:0px; padding-left:75.6px" align=justify><B>Statement of Cash Flows</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px; text-indent:37.8px" align=justify>Items not involving cash are as follows:</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=293></TD><TD width=66.133></TD><TD width=93.267></TD><TD width=93.267></TD></TR>
<TR><TD valign=top width=293><P>&nbsp;</P></TD><TD valign=top width=66.133><P style="margin:0px" align=right><B><U>2009</U></B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right><U>2008</U></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right><U>2007</U></P>
</TD></TR>
<TR><TD valign=top width=293><P>&nbsp;</P></TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>$</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=293><P style="margin:0px" align=justify>Amortization</P>
</TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>98</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>83</P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>8</P>
</TD></TR>
<TR><TD valign=top width=293><P style="margin:0px" align=justify>Rehabilitation accretion net of foreign exchange</P>
</TD><TD valign=top width=66.133><P style="margin:0px; text-indent:20.333px" align=right><B>7</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px; text-indent:20.333px" align=right>11</P>
</TD><TD valign=top width=93.267><P style="margin:0px; text-indent:20.333px" align=right>(19)</P>
</TD></TR>
<TR><TD valign=top width=293><P style="margin:0px" align=justify>Blanket long term liability</P>
</TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>(11)</P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>(28)</P>
</TD></TR>
<TR><TD valign=bottom width=293><P style="margin:0px; font-family:Times" align=justify>Equity-based compensation expense</P>
</TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>8</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=293><P style="margin:0px" align=justify>Translation loss Blanket Mine</P>
</TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>(275)</B></P>
</TD><TD valign=top width=93.267><P>&nbsp;</P></TD><TD valign=top width=93.267><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=293><P style="margin:0px" align=justify>Other</P>
</TD><TD valign=top width=66.133><P style="margin:0px" align=right><B>4</B></P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>51</P>
</TD><TD valign=top width=93.267><P style="margin:0px" align=right>(11)</P>
</TD></TR>
<TR><TD valign=top width=293><P>&nbsp;</P></TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=66.133><P style="margin:0px" align=right><B>(158)</B></P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=93.267><P style="margin:0px" align=right>134</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=93.267><P style="margin:0px" align=right>(50)</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:75.6px" align=justify>The net changes in non-cash working capital balances for operations are as follows:</P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=263></TD><TD width=94.6></TD><TD width=94.8></TD><TD width=94.8></TD></TR>
<TR><TD valign=top width=263><P>&nbsp;</P></TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B><U>2009</U></B></P>
</TD><TD valign=top width=94.8><P style="margin:0px" align=right><U>2008</U></P>
</TD><TD valign=top width=94.8><P style="margin:0px" align=right><U>2007</U></P>
</TD></TR>
<TR><TD valign=top width=263><P>&nbsp;</P></TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Accounts payable</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>259</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>(1,246)</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>2,166</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Accounts receivable</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>(29)</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>(785)</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>190</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Inventories</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>(61)</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>758</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>622</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Prepaid expenses</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>8</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>2</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>18</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Assets held for sale</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>(3)</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>17</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>131</P>
</TD></TR>
<TR><TD valign=top width=263><P>&nbsp;</P></TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>174</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>(1,254)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>3,127</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:75.6px" align=justify>Supplemental cash flow Information:</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=263></TD><TD width=94.6></TD><TD width=94.8></TD><TD width=94.8></TD></TR>
<TR><TD valign=top width=263><P>&nbsp;</P></TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B><U>2009</U></B></P>
</TD><TD valign=top width=94.8><P style="margin:0px" align=right><U>2008</U></P>
</TD><TD valign=top width=94.8><P style="margin:0px" align=right><U>2007</U></P>
</TD></TR>
<TR><TD valign=top width=263><P>&nbsp;</P></TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Interest paid </P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>9</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>43</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>11</P>
</TD></TR>
<TR><TD valign=top width=263><P style="margin:0px" align=justify>Interest received</P>
</TD><TD valign=top width=94.6><P style="margin:0px; text-indent:28.8px" align=right><B>45</B></P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=94.8><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-37.8px" align=justify><B>9. </B></P>
<P style="margin:0px; padding-left:75.6px" align=justify><B>Segmental Information</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:213.867px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the three months ended March 31, 2009</B></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=214></TD><TD width=75.267></TD><TD width=76.8></TD><TD width=85.467></TD><TD width=60.467></TD><TD width=54.933></TD></TR>
<TR><TD valign=top width=214><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=75.267><P style="margin:0px" align=center><B><U>Corporate</U></B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=76.8><P style="margin:0px" align=center><B><U>Zimbabwe</U></B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=85.467><P style="margin:0px" align=center><B><U>South Africa</U></B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=60.467><P style="margin:0px" align=center><B><U>Zambia</U></B></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=center><B><U>Total</U></B></P>
</TD></TR>
<TR><TD valign=top width=214><P>&nbsp;</P></TD><TD valign=top width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>$</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>$</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>$</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD valign=top width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD valign=top width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>(887)</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>(201)</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>(1,088)</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD valign=top width=75.267><P style="margin:0px" align=right><B>(343)</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>(18)</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>(31)</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>(392)</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Interest</P>
</TD><TD valign=top width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>45</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>(10)</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>1</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>36</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD valign=top width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>(91)</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>(7)</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>(98)</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Foreign exchange gains/(loss)</P>
</TD><TD valign=bottom width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>(15)</B></P>
</TD><TD valign=bottom width=76.8><P style="margin:0px" align=right><B>498</B></P>
</TD><TD valign=bottom width=85.467><P style="margin:0px" align=right><B>258</B></P>
</TD><TD valign=bottom width=60.467><P style="margin:0px" align=right><B>(2)</B></P>
</TD><TD valign=bottom width=54.933><P style="margin:0px" align=right><B>739</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Other income (expense) </P>
</TD><TD valign=bottom width=75.267><P style="margin:0px; text-indent:28.8px" align=right><B>-</B></P>
</TD><TD valign=bottom width=76.8><P style="margin:0px" align=right><B>4</B></P>
</TD><TD valign=bottom width=85.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=bottom width=60.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=bottom width=54.933><P style="margin:0px" align=right><B>4</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=75.267><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><B>(313)</B></P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=76.8><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><B>(504)</B></P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=85.467><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><B>20</B></P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=60.467><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><B>(2)</B></P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><B>(799)</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD valign=top width=75.267><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=76.8><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=85.467><P style="margin:0px" align=right><B>(40)</B></P>
</TD><TD valign=top width=60.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right><B>(40)</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=75.267><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=76.8><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=85.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=60.467><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=214><P style="margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=75.267><P style="margin:0px" align=right><B>(313)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=76.8><P style="margin:0px" align=right><B>(504)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=85.467><P style="margin:0px" align=right><B>(20)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=60.467><P style="margin:0px" align=right><B>(2)</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right><B>(839)</B></P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>15</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; padding-left:28.4px; padding-top:4px; border-top:2px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px" align=justify><BR>
&nbsp;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:213.867px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the three months ended March 31, 2008</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=241.267></TD><TD width=69.333></TD><TD width=73.067></TD><TD width=71.6></TD><TD width=56.733></TD><TD width=54.933></TD></TR>
<TR><TD valign=top width=241.267><P>&nbsp;</P></TD><TD style="border-top:2px solid #000000" valign=top width=69.333><P style="margin:0px" align=center><U>Corporate</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=73.067><P style="margin:0px" align=center><U>Zimbabwe</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=71.6><P style="margin:0px" align=center><U>South Africa</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=56.733><P style="margin:0px" align=center><U>Zambia</U></P>
</TD><TD style="border-top:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=center><U>Total</U></P>
</TD></TR>
<TR><TD valign=top width=241.267><P>&nbsp;</P></TD><TD valign=top width=69.333><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>$</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>$</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>$</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD valign=top width=69.333><P style="margin:0px; text-indent:28.8px" align=right>3</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>2,501</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>2,504</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD valign=top width=69.333><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>(1,161)</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>(98)</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>(1,259)</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD valign=top width=69.333><P style="margin:0px" align=right>(328)</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>(13)</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>(69)</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>(410)</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Interest</P>
</TD><TD valign=top width=69.333><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>(43)</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>(43)</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD valign=top width=69.333><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>(98)</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>(3)</P>
</TD><TD valign=top width=56.733><P style="margin:0px; text-indent:28.8px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>(101)</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Other income (expense) incl. foreign exchange gains/(loss)</P>
</TD><TD valign=bottom width=69.333><P style="margin:0px; text-indent:28.8px" align=right>(23)</P>
</TD><TD valign=bottom width=73.067><P style="margin:0px" align=right>(165)</P>
</TD><TD valign=bottom width=71.6><P style="margin:0px" align=right>289</P>
</TD><TD valign=bottom width=56.733><P style="margin:0px" align=right>(1)</P>
</TD><TD valign=bottom width=54.933><P style="margin:0px" align=right>100</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=69.333><P style="margin:0px" align=right>(348)</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=73.067><P style="margin:0px" align=right>1,021</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=71.6><P style="margin:0px" align=right>119</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=56.733><P style="margin:0px" align=right>(1)</P>
</TD><TD style="border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right>791</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD valign=top width=69.333><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=73.067><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=71.6><P style="margin:0px" align=right>(70)</P>
</TD><TD valign=top width=56.733><P style="margin:0px" align=right>-</P>
</TD><TD valign=top width=54.933><P style="margin:0px" align=right>(70)</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=69.333><P style="margin:0px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=73.067><P style="margin:0px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=71.6><P style="margin:0px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=56.733><P style="margin:0px" align=right>-</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=241.267><P style="margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=69.333><P style="margin:0px" align=right>(348)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=73.067><P style="margin:0px" align=right>1,021</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=71.6><P style="margin:0px" align=right>49</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=56.733><P style="margin:0px" align=right>(1)</P>
</TD><TD style="border-bottom:2px solid #000000" valign=top width=54.933><P style="margin:0px" align=right>721</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:213.867px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; text-indent:37.8px" align=justify><B>10.</B></P>
<P style="margin:0px; text-indent:75.6px" align=justify><B>Contingent Liability</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>In the Share Sale Agreement dated May 12, 2006 pursuant to which the Corporation purchased 100% of the shares of Blanket, the Corporation agreed that it would, as soon as reasonably practicable after the Closing of the Agreement, cause Blanket to implement a share incentive scheme considered by the Directors to be in the best interests of Blanket, pursuant to which a percentage of the shares of Blanket will be deposited in a Trust for the benefit of the management and employees of Blanket. &nbsp;As at March 31, 2009 no scheme had been established, nor were any shares of Blanket deposited in a Trust for the purposes of such a scheme. &nbsp;The Corporation and the Board of Directors of Blanket have<BR>
delayed the establishment of the required scheme pending clarity of the anticipated Zimbabwe laws relating to the indigenization of the mining industry, as it is recognized that the Zimbabwean laws will likely have a material impact on the structure of the proposed scheme and the percentage of the issued shares of Blanket required to be put into trust for the purposes of the scheme.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=justify><B>&nbsp;&nbsp;&nbsp;11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long Term Liability</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>Blanket Mine established the Service Bonus Fund relating to employees at Blanket Mine in Zimbabwe. The fund was established in 1975 to provide a gratuity to permanent employees of Blanket Mine on cessation of employment at Blanket Mine for any reason apart from dismissal or resignation. The provision will be built up by providing 15% of an employee&#146;s basic salary per year up to a specified maximum. The maximum payout to any employee is the equivalent of six months salary in terms of the current rules.</P>
<P style="margin:0px; padding-left:75.6px" align=justify>No provision currently exists as the previous Zimbabwe Dollar provision was erased when 12 zeros were removed by RBZ in the February Monetary Policy announcement. With the advent of dollarization this provision will be re-instated.</P>
<P style="margin:0px; padding-left:75.6px" align=justify>This fund represents a defined contribution future employee benefit fund for which the funds have not been segregated by the Corporation. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>16</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:16pt; margin-top:0px; margin-bottom:-21.333px; padding-left:75.6px; text-indent:-37.8px" align=justify><B>12.</B></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify><B>Fair Value of Financial Instruments </B></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The Corporation has various financial instruments comprising of cash and cash equivalents, trade receivables, investments, accounts payable, bank overdrafts, accrued liabilities and long-term debts.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The various assets and liabilities were classified as follows on adoption:</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:122.867px; text-indent:-47.267px" align=justify>(i) &nbsp;</P>
<P style="margin:0px; padding-left:122.867px" align=justify>Cash and cash equivalents are classified as &#147;assets held for trading&#148;. They are stated at fair value and any gains/losses arising on revaluation at the end of each period are included in the statement of operations. We have no derivative financial instruments that would have been classified on a similar basis.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:123.6px; text-indent:-48px" align=justify>(ii)</P>
<P style="margin:0px; padding-left:123.6px" align=justify>Investments are classified as &#147;assets available for sale&#148;. They are presented at fair value and the gains/losses arising from their revaluation at the end of each quarter will be included in other comprehensive income. When a decline in fair value is other than temporary, the accumulated loss that had been recognized directly in other comprehensive income is removed from accumulated other comprehensive income and recognized in net income even though the financial asset has not been derecognized.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:123.6px; text-indent:-48px" align=justify>(iii)</P>
<P style="margin:0px; padding-left:123.6px" align=justify>Trade receivables are classified under &#147;loans and receivables&#148;. They are recorded at their original cost which is deemed their fair value at that time. Subsequent measurement will be at amortized cost using the effective interest rate method.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:123.6px; text-indent:-48px" align=justify>(iv)</P>
<P style="margin:0px; padding-left:123.6px" align=justify>Bank overdraft is classified as a &#147;financial liability held for trading&#148; as there is a contractual obligation to deliver cash. It is measured at fair value which is book value plus accrued interest. It is stated at fair value and any gains/losses arising on revaluation at the end of each period are included in the statement of operations.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:123.6px; text-indent:-48px" align=justify>(v)</P>
<P style="margin:0px; padding-left:123.6px; text-indent:-0.733px" align=justify>Accounts payable and accrued liabilities and long term debt are classified under &#147;other financial liabilities&#148;. They are recorded at their fair value at that time. Subsequent measurement will be at amortized cost using the effective interest rate method.</P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-37.8px" align=justify><B>13.</B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify><B>Financial Risk Exposure and Risk Management </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation is exposed in varying degrees to a variety of financial instrument related risks by virtue of its activities. The overall financial risk management program focuses on preservation of capital, and protecting current and future Corporation assets and cash flows by reducing exposure to risks posed by the uncertainties and volatilities of financial markets. &nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Board of Directors has responsibility to ensure that an adequate financial risk management policy is established and to approve the policy. The Corporation&#146;s Audit Committee oversees management&#146;s compliance with the Corporation&#146;s financial risk management policy. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The types of risk exposure and the way in which such exposures are managed are as follows: </P>
<P style="margin-top:0px; margin-bottom:6.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:6.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:6.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:6.133px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>17</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:56.733px; text-indent:18.867px" align=justify><B>i) Currency Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>As the Corporation operates in an international environment, some of the Corporation&#146;s financial instruments and transactions are denominated in currencies other than the Canadian Dollar. The results of the Corporation&#146;s operations are subject to currency transaction risk and currency translation risk. The operating results and financial position of the Corporation are reported in Canadian Dollars in the Corporation&#146;s consolidated financial statements. </P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The fluctuation of the Canadian Dollar in relation to other currencies will consequently have an impact upon the profitability of the Corporation and may also affect the value of the Corporation&#146;s assets and the amount of shareholders&#146; equity. &nbsp;&nbsp;</P>
<P style="margin:0px; padding-left:75.6px" align=justify>A significant portion of the Corporation&#146;s assets and liabilities are denominated in South African Rand and United States Dollars. &nbsp;Management do not consider that the fluctuation of the value of these currencies to the Canadian Dollar could have a significant impact on the results of operations. Blanket Mine operations are now transacted using the United States Dollar as the functional currency. As a result of the introduction of the US Dollar as legal tender in Zimbabwe the hyperinflationary environment has decreased dramatically. The shareholder loan account in Zimbabwe is denominated in US Dollars and will generate foreign exchange losses for Blanket Mine depending on the exchange rate between the US dollar and the Canadian Dollar. The fair values of these financial instruments approximate their carrying values, unless otherwise noted. &nbsp;The Corporation does not use any derivative instruments to reduce its foreign currency risks.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>Below is a summary of the cash or near cash items denominated in a currency other than the Canadian Dollar that would be affected by changes in exchanges rates relative to the Canadian Dollar. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=140></TD><TD width=77.533></TD><TD width=75.6></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=140><P style="margin:0px" align=justify>$000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="margin:0px" align=justify>US Dollars</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="margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Cash</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px; text-indent:8.6px" align=right>(76)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>8,429</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Receivable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>2,626</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>862</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Payable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>612</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>2,701</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The table below illustrates by how much a 1% change in the rate of exchange between the Canadian Dollar and the currencies above will affect net income.</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=140></TD><TD width=77.533></TD><TD width=75.6></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=140><P style="margin:0px" align=justify>$000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="margin:0px" align=justify>US Dollars</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="margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Cash</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px; text-indent:8.6px" align=right>-</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>11</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Receivable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>21</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>1</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Payable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>5</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>3</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px" align=justify><BR><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>18</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px; text-indent:75.6px" align=justify><B>ii) Interest Rate Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. </P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>Unless otherwise noted, it is the opinion of management that the Corporation is not exposed to significant interest rate risk as it is debt free and only utilizes overdraft facilities for short periods if necessary. As a result of Blanket Mine being brought back into production (see Note 16) working capital borrowings will increase in Zimbabwe. The working capital loans will be US Dollar denominated and will attract interest rates of approximately 6% pa. It is the intention of Blanket to borrow further funds to complete the No 4 shaft expansion project. No term sheet has been received for these loans and thus the interest rate is unknown. The Corporation&#146;s cash and cash equivalents include highly liquid investments that earn interest at market rates. The Corporation manages its interest rate risk by endeavoring to maximize the interest income earned on excess funds while maintaining the liquidity necessary to conduct op
erations on a day-to-day basis. The Corporation&#146;s policy focuses on preservation of capital and limits the investing of excess funds to liquid term deposits in &#147;A&#148; grade financial institutions. </P>
<P style="margin:0px; padding-left:75.6px" align=justify>Fluctuations in market interest rates have not had a significant impact on the Corporation&#146;s results of operations due to the short-term to maturity of the investments held.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:29.2px; text-indent:46.4px" align=justify><B>iii) Concentration of Credit Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>Credit risk is the risk of a financial loss to the Corporation if a gold sales customer fails to meet its contractual obligation. Credit risk arises principally from the Corporation&#146;s receivables from the Reserve Bank of Zimbabwe (&#147;RBZ&#148;) who was the sole buyer of gold produced in Zimbabwe, in terms of legislation. &nbsp;</P>
<P style="margin:0px; padding-left:75.6px" align=justify>At December 31, 2008 the RBZ owed Blanket US$2,400,000 (at fair value). The amount owed to Blanket was converted into a Special Tradeable Gold-backed Foreign Exchange Bond (&#147;Bond&#148;) by RBZ following the Monetary Policy announcement on February 2, 2009 that has the following features;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="font-family: Symbol; margin-top: 0px; margin-bottom: -16px; padding-left: 72px" align=justify>&#183;</P>
<P style="margin: 0px; padding-left: 96px" align=justify>Term of 12 months</P>
<P style="font-family: Symbol; margin-top: 0px; margin-bottom: -16px; padding-left: 72px" align=justify>&#183;</P>
<P style="margin: 0px; padding-left: 96px" align=justify>Interest at 8% pa on maturity</P>
<P style="font-family: Symbol; margin-top: 0px; margin-bottom: -16px; padding-left: 72px" align=justify>&#183;</P>
<P style="margin: 0px; padding-left: 96px" align=justify>Bond may be sold locally, regionally or internationally at an agreed price</P>
<P style="font-family: Symbol; margin-top: 0px; margin-bottom: -16px; padding-left: 72px" align=justify>&#183;</P>
<P style="margin: 0px; padding-left: 96px" align=justify>RBZ will honour the full principal plus interest on maturity</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>&nbsp;The lack of foreign currency in Zimbabwe affects all business sectors and management maintains close relations with RBZ to ensure payments are made whenever necessary, to sustain operations, within the capabilities of the RBZ.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin:0px; padding-left:75.6px; font-size:12pt" align=justify><B>&nbsp;</B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:38.333px; text-indent:37.267px" align=justify><B>iv) Liquidity Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. </P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation manages its liquidity by ensuring that there is sufficient capital to meet short and long </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>19</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px">term business requirements, after taking into account cash flows from operations and the Corporation&#146;s holdings of cash and cash equivalents. The Corporation believes that these sources will be sufficient to cover the likely short and long term cash requirements. Senior management is also actively involved in the review and approval of planned expenditures by regularly monitoring cash flows from operations and anticipated investing and financing activities. </P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify><B>v) Commodity Price Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The value of the Corporation&#146;s mineral resource properties is related to the price of gold, platinum and cobalt, and the outlook for these minerals. In addition, adverse changes in the price of certain raw materials can significantly impair the Corporation&#146;s cash flows. </P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>Gold prices historically have fluctuated widely and are affected by numerous factors outside of the Corporation's control, including, but not limited to, industrial and retail demand, central bank lending, forward sales by producers and speculators, levels of worldwide production, short-term changes in supply and demand because of speculative hedging activities, and macro-economic variables, and certain other factors related specifically to gold. </P>
<P style="margin:0px; padding-left:75.6px">In the Monetary Policy Announcement made by RBZ on February 2, 2009, Blanket became eligible to export its gold to a refiner of its choice and to receive 100% of the proceeds in US Dollars paid into its foreign currency account at a Zimbabwean commercial bank. As a result of this announcement, Blanket resumed mining operations on April 7, 2009 after receiving all the necessary licenses from the Ministry of Finance and the RBZ.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:76.267px; text-indent:-29px" align=justify><B>14.</B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:76.267px" align=justify><B>Capital Management </B></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation&#146;s objectives when managing capital are to safeguard its ability to continue as a going concern in order to pursue the mining operations and exploration potential of the mineral properties. </P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation&#146;s capital includes, short-term debt, long-term debt and equity, comprising issued common shares, contributed surplus and retained earnings.</P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation&#146;s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to maintain its ongoing operations, to provide returns for shareholders and benefits for other stakeholders and to pursue growth opportunities. &nbsp;To secure additional capital to pursue these plans, the Corporation may attempt to raise additional funds through borrowing and/or the issuance of equity, debt or by securing strategic partners. </P>
<P style="margin:0px; padding-left:75.6px">In order to maximize ongoing exploration efforts, the Corporation does not pay dividends.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>As at March 31, 2009, the Corporation is not subject to externally imposed capital requirements and there has been no change with respect to the overall capital risk management strategy. </P>
<P style="margin:0px"><BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=179.6></TD><TD width=198.4></TD><TD width=188.133></TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px">$000</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=198.4><P style="margin:0px" align=right>As at March 31, 2009</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=188.133><P style="margin:0px" align=right>As at December 31, 2008</P>
</TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px; text-indent:2.267px">Issued common shares</P>
</TD><TD valign=top width=198.4><P style="margin:0px" align=right>196,125</P>
</TD><TD valign=top width=188.133><P style="margin:0px" align=right>196,125</P>
</TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px; text-indent:2.267px">Contributed surplus</P>
</TD><TD valign=top width=198.4><P style="margin:0px" align=right>1,910</P>
</TD><TD valign=top width=188.133><P style="margin:0px" align=right>1,902</P>
</TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px; text-indent:2.267px">Other comprehensive income</P>
</TD><TD valign=top width=198.4><P style="margin:0px" align=right>(265)</P>
</TD><TD valign=top width=188.133><P style="margin:0px" align=right>3</P>
</TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px; text-indent:2.267px">Deficit</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=198.4><P style="margin:0px" align=right>(177,673)</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=188.133><P style="margin:0px" align=right>(176,834)</P>
</TD></TR>
<TR><TD valign=top width=179.6><P style="margin:0px; text-indent:2.267px">Total</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=198.4><P style="margin:0px" align=right>20,097</P>
</TD><TD style="border-bottom:1px solid #000000" valign=top width=188.133><P style="margin:0px" align=right>21,196</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>20</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>
<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=179.6></TD><TD width=198.4></TD><TD width=188.133></TD></TR>
</TABLE>
<P style="margin:0px; padding-left:28.4px; padding-top:4px; border-top:2px solid #000000" align=right><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:28.4px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:28.4px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-28.333px" align=justify><B>15</B>.</P>
<P style="margin:0px; padding-left:75.6px" align=justify><B>Comparative Figures</B></P>
<P style="margin:0px; padding-left:75.6px" align=justify>The prior period figures have been reclassified to conform to the current presentation.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:75.6px; text-indent:-28.333px" align=justify><B>16.</B></P>
<P style="margin:0px; padding-left:75.6px" align=justify><B>Subsequent Events</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>Subsequent to the Monetary Policy announcement by the RBZ on February 2, 2009 Blanket Mine applied for all the necessary permissions and licenses to be allowed to export and market its gold production at a refinery of its choice. Blanket received the various licences on April 3, 2009 and announced its intention to resume mining operations. On April 7, 2009 mining operations resumed and gold production of approximately 766 fine ounces was recorded during April 2009. Blanket received the proceeds on May 8, 2009 for the first bar delivered in April. </P>
<P style="margin:0px" align=justify><BR></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></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>21</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>
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<HR style="margin-top:9.6px; margin-bottom:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=324.467></TD><TD width=324.467></TD></TR>
<TR><TD width=648.933 colspan=2><P style="line-height:18pt; margin:0px; font-family:Times; font-size:16pt"><B>Directors and Management at March 31, 2009</B><FONT style="color:#FFFFFF"><B> </B></FONT></P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><B>BOARD OF DIRECTORS</B></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><B>OFFICERS</B></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>G.R. Pardoe (1) (2) (3) (4) (5)</P>
</TD><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=right>G.R. Pardoe (1) (2) (3) (4) (5)</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Chairman of the Board,</I></P>
</TD><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=right><I>Chairman of the Board,</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>S. E. Hayden(3) (4) (5)</P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>S. E. Hayden(3) (4) (5)</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>President and Chief Executive Officer</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>President and Chief Executive Officer</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>J. Johnstone</P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>S. R. Curtis (5)</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Retired Mining Engineer</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Vice-President Finance and Chief Financial officer</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Gibsons, British Columbia, Canada</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Johannesburg, South Africa &nbsp;</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>&nbsp;</P>
</TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>F C. Harvey </P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>Dr. &nbsp;T. Pearton</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Retired Executive</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Vice President Exploration</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Oakville, Ontario, Canada</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD width=324.467><P style="margin:0px; font-family:Times">C. R. Jonsson &nbsp;(2) (3) (5)</P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>J.M. Learmonth</P>
</TD></TR>
<TR><TD width=324.467><P style="margin:0px; font-family:Times"><I>Principal of Tupper Jonsson&amp; Yeadon</I></P>
</TD><TD width=324.467><P style="margin:0px; text-indent:28.8px; font-family:Times" align=right><I>Vice-President Business Development</I></P>
</TD></TR>
<TR><TD width=324.467><P style="margin:0px; font-family:Times"><I>Barristers &amp; Solicitors</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD width=324.467><P style="margin:0px; font-family:Times"><I>Vancouver, British Columbia,</I></P>
</TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD width=324.467><P style="margin:0px; font-family:Times"><I>Canada</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right><B>BOARD COMMITTEES</B></P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>(1) &nbsp;Audit Committee</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>R. Liverant (1)</P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>(2) &nbsp;Compensation Committee</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Chartered Accountant &#150; Retired</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>(3) &nbsp;Corporate Governance Committee</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Vancouver, British Columbia, Canada</I></P>
</TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>(4) &nbsp;Nominating Committee</P>
</TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD width=324.467><P style="margin:0px; font-family:Times" align=right>(5) &nbsp;Disclosure Committee</P>
</TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>R. W. Babensee (1) (2)</P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Chartered Accountant &#150; Retired</I></P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Toronto, Ontario, Canada</I></P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify>S. R. Curtis (5)</P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Vice-President Finance and Chief Financial officer</I></P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P style="margin:0px; font-family:Times" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
<TR><TD valign=top width=324.467><P>&nbsp;</P></TD><TD valign=top width=324.467><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
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<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>22</P>
<P style="margin:0px" align=justify><BR></P>
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<P style="margin:0px; padding-left:28.4px"><B>Corporate Directory</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>CORPORATE OFFICES</B></P>
<P style="margin:0px; text-indent:372px" align=justify><B>SOLICITORS</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Canada - Head Office</B></P>
<P style="margin:0px; text-indent:372px" align=justify><B>Borden Ladner Gervais LLP</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; text-indent:372px" align=justify>Suite 4100, Scotia Plaza</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:9.467px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Suite 1201, 67 Yonge Street</P>
<P style="margin:0px; text-indent:372px" align=justify>40 King Street West</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Toronto, Ontario M5E 1J8 Canada</P>
<P style="margin:0px; text-indent:372px" align=justify>Toronto, Ontario M5H 3Y4 Canada</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Tel:(1)(416) 369-9835 Fax:(1)(416) 369-0449</P>
<P style="margin:0px; text-indent:372px" align=justify><B>Tupper, Jonsson &amp; Yeadon</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px; color:#0000FF" align=justify><U>info@caledoniamining.com</U><FONT style="font-family:Times; color:#000000"></FONT></P>
<P style="margin:0px; text-indent:372px" align=justify>1710-1177 West Hastings St, Vancouver,</P>
<P style="margin:0px; text-indent:372px">British Columbia V6E 2L3 Canada</P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>South &#193;frica &#150; &#193;frica Office</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Greenstone Management Services (Pty) Ltd.</B></P>
<P style="margin:0px; text-indent:372px" align=justify><B>AUDITORS &nbsp;</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>P.O. Box 834</P>
<P style="margin:0px; text-indent:372px" align=justify><B>BDO Dunwoody LLP</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Saxonwold 2132</P>
<P style="margin:0px; text-indent:372px" align=justify><B>Chartered Accountants</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>South Africa</P>
<P style="margin:0px; text-indent:372px" align=justify>Suite 3300, 200 Bay Street</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Tel: (27)(11) 447-2499 Fax: (27)(11) 447-2554</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:336px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; text-indent:372px" align=justify>Royal Bank Plaza, South Tower</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:192px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; text-indent:372px" align=justify>Toronto, Ontario M5J 2J8 Canada</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Zambia</B></P>
<P style="margin:0px; text-indent:372px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Caledonia Mining (Zambia) Limited</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:368.6px" align=justify><B>REGISTRAR &amp; TRANSFER AGENT</B></P>
<P style="margin:0px; text-indent:624px" align=justify><B>&nbsp;</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>P.O. Box 36604</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:144px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:336px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0px; text-indent:372px" align=justify><B>Equity Transfer Services Inc</B>.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:38.4px; text-indent:-38.4px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lusaka, Zambia</P>
<P style="margin:0px; padding-left:38.4px; text-indent:333.6px" align=justify>Suite 400 200 University Ave</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify>Tel:(260)(1) 29-1574 Fax(260)(1) 29-2154</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:336px" align=justify>&nbsp;&nbsp;</P>
<P style="margin:0px; text-indent:372px" align=justify>Toronto, Ontario M5H 4H1 Canada</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:192px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; text-indent:336px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tel: (416) 361-0152 Fax:(416) 361-0470</P>
<P style="margin-top:0px; margin-bottom:-16px; text-indent:28.8px" align=justify><B>Zimbabwe</B></P>
<P style="margin:0px; text-indent:288px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify><B>Caledonia Holdings Zimbabwe (Limited)</B></P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify><B>BANKERS</B></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>P.O. Box CY1277</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify><B>Canadian Imperial Bank of Commerce</B></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Causeway, Harare</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>6266 Dixie Road</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Zimbabwe</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>Mississauga, Ontario L5T 1A7 Canada</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Tel:</P>
<P style="margin-top: 0px; margin-bottom: 0px; padding-left: 67.2px" align=justify>(263)(4) 701 151/4 Fax:(263)(4) 702 248<B> &nbsp;</B></P>
<P style="text-indent: 304.8px; margin: 0px; padding-left: 67.2px" align=justify><B>NOMADS AND BROKERS (AIM)</B></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify><B>CAPITALIZATION </B>at May 10, 2009</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify><B>RBC Capital Markets</B></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Authorised: Unlimited</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>71 Queen Victoria Street</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify><B>Shares, Warrants and Options Issued:</B></P>
<P style="text-indent: 304.8px; margin: 0px; padding-left: 67.2px" align=justify>London EC4V 4DE</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:372px; text-indent:-343.6px" align=justify>Common Shares: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;500,169,280 </P>
<P style="margin:0px; padding-left:372px" align=justify>Tel: +44 20 7653 4000</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Warrants:</P>
<P style="margin:0px; padding-left:67.2px; text-indent:76.8px" align=justify>Nil</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>Options:</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:76.8px" align=justify>34,630,000</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify><B>SHARES LISTED</B></P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>Toronto Stock Exchange Symbol &#147;CAL&#148;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:-38.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:67.2px; text-indent:124.8px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>NASDAQ OTC BB Symbol &quot;CALVF&quot;</P>
<P style="margin:0px; padding-left:67.2px; text-indent:304.8px" align=justify>London &#147;AIM&#148; Market Symbol &#147;CMCL&#148;</P>
<P style="margin:0px; padding-left:372px" align=justify><B>Web Site: </B><U>http://www.caledoniamining.com</U><FONT style="font-family:Times"></FONT></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:576px; font-family:Shruti" align=justify>&nbsp;&nbsp;&nbsp;<FONT style="font-family:Bookman Old Style">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="Stefan Hayden">
<META NAME="date" CONTENT="05/15/2009">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
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<P style="margin-top:0px; margin-bottom:-16px; padding-left:192px; text-indent:-192px" align=justify><B>CALEDONIA MINING CORPORATION</B></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:192px; text-indent:96px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0px; padding-left:192px; text-indent:288px" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May 08, 2009</B></P>
<P style="line-height:16.15pt; margin-top:0px; margin-bottom:11.133px; padding-right:165.533px" align=justify><B>Management&#146;s Discussion and Analysis </B></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:12.8px" align=justify>This discussion and analysis of the consolidated operating results and financial condition of Caledonia Mining Corporation (&quot;the Corporation&#148;) for the quarters ended March 31, 2009, March 31, 2008 and March 31, 2007 should be read in conjunction with the Unaudited Consolidated Financial Statements as at March 31, 2009 and the Annual Report for the year ended December 31, 2008, all of which are available from the System for Electronic Data Analysis and Retrieval at <FONT style="color:#0000FF"><U>www.sedar.com</U></FONT> or from the Corporation&#146;s website at <FONT style="color:#0000FF"><U>www.caledoniamining.com</U></FONT>. &nbsp;The Unaudited Consolidated Financial Statements and related notes have been prepared in accordance with Canadian Generally Accepted Accounting Principles (&#147;GAAP&#148;). </P>
<P style="margin:0px" align=justify><B>Note that all currency references in this document are to Canadian Dollars. </B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>Listings</B></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify>The Corporation is listed on the Toronto Stock Exchange as &#147;CAL&#148;, on NASDAQ-OTCBB as &#147;CALVF&#148;, and on London&#146;s AIM as &#147;CMCL&#148;. </P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify><B>1.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:48px" align=justify><B>OPERATIONAL REVIEW AND RESULTS OF OPERATIONS</B></P>
<A NAME="OLE_LINK4"></A><A NAME="OLE_LINK5"></A><P style="margin-top:0px; margin-bottom:-16px" align=justify><B>1.1 </B></P>
<P style="margin-top:0px; margin-bottom:6.667px; text-indent:37.8px" align=justify><B>Gold Production </B></P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify><B>Blanket Mine &#150; Zimbabwe</B></P>
<P style="margin:0px" align=justify>In October 2008 gold production was suspended at Blanket Mine due to the shortage of foreign currency caused by the Reserve Bank of Zimbabwe&#146;s (&#147;RBZ&#148;) failure to pay for gold delivered to Fidelity Printers and Refiners (&#147;FPR&#148;). &nbsp;On April 4, 2009, Blanket having received all the necessary licenses and permissions to export and market its gold, announced that Blanket would resume production. Mining operations resumed on April 7, and milling commenced on April 8, 2009. There were 3 days of power outages during the 10 day period commencing April 13. The impact on production was however proportionately greater due to the unscheduled nature of the outages and the subsequent additional time it then takes to re-start operations. &nbsp;Despite this Blanket manage to deliver its April production of approximately 766 fine ounces of gold to Rand Refineries in South Africa. Returning a mine to production after a forced 6 month production hiatus is extremel
y complex and requires very detailed planning in order to co-ordinate the numerous factors and operations, all of which, by necessity, are &nbsp;interlinked. Blanket has performed very well under the testing circumstances that continue to prevail in Zimbabwe at present. </P>
<P style="margin:0px" align=justify>Blanket received the proceeds on May 8, 2009 for the first bar delivered in April. </P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify>As a result of the above no production statistics are available for the 1<SUP>st</SUP> quarter of 2009.</P>
<P style="margin-top: 0px; margin-bottom: 13.333px" align=justify><B>Safety, Health and Environment (&#147;SHE&#148;)</B></P>
<P style="margin:0px" align=justify>Despite suspended gold production, maintenance activities both above and below ground continued and the following safety statistics were recorded:</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Only one restricted work activity and one first aid incident were recorded. In all there were 6 (12 &#150; 2008) incidents and 4 (8 &#150; 2008) near misses during the quarter. Ongoing safety training was undertaken by management and this included the following:</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-24px; font-family:Courier New" align=justify>o</P>
<P style="margin:0px; padding-left:96px" align=justify>Induction training for 68 returning employees, 110 new employees, 1 casual worker and 2 change of occupation employees.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-24px; font-family:Courier New" align=justify>o</P>
<P style="margin:0px; padding-left:96px" align=justify>22 SHE representatives were trained.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-24px; font-family:Courier New" align=justify>o</P>
<P style="margin:0px; padding-left:96px" align=justify>15 senior underground supervisors are on full blasting license courses.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-24px; font-family:Courier New" align=justify>o</P>
<P style="margin:0px; padding-left:96px" align=justify>29 employees passed first aid training, and</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:96px; text-indent:-24px; font-family:Courier New" align=justify>o</P>
<P style="margin:0px; padding-left:96px" align=justify>52 senior managerial staff members attended SHE programs.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>&nbsp;One new case of HIV/AIDS was identified, but the severe economic conditions have negatively affected AIDS funding and education continues but confidentiality restricts management&#146;s ability to identify suspected cases.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>There were no adverse environmental issues during the quarter and positive results continue to be obtained from underground water testing.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
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<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Even though the economic situation in Zimbabwe continues to be challenging the number of dismissals due to desertion has decreased dramatically. The number of employees who go AWOL has also decreased since the economy was &#147;dollarized&#148; from February 2, 2009.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>Capital Projects</B></P>
<P style="margin:0px" align=justify><B><I>Number 4 Shaft Expansion Project</I></B></P>
<P style="margin:0px" align=justify>Due to the acute shortage of foreign currency caused by the conversion of the Reserve Bank of Zimbabwe&#146;s indebtedness to Blanket into a Special Gold Backed Bond maturing on January 31<SUP>st</SUP> 2010, no further developments on the No 4 shaft project occurred and the anticipated future expenditure remains at $2,250,000. Gold production resumed in April 2009 and provided the No.4 shaft expansion is completed as planned production of 1,000 tonnes per day is only expected within a 12 month period which would generate approximately 40,000 ounces of gold per annum.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B><I>Operations</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Having resumed mining and gold production activities, the operation continues to be hampered by:</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Continuing power disruptions; and </P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Limited foreign currency working capital. Local banks have provided some working capital but this remains a restriction due to the delays in receiving the various gold export licenses and permissions and the fact that all gold has to be delivered to FPR for assaying before it is exported, thereby delaying the receipt of gold sale proceeds.</P>
<P style="margin:0px; text-indent:48px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>The above factors have contributed largely to the 50% drop in production since the start of the No 4 shaft expansion project. </P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR height=0 style="font-size:0"><TD width=219.467></TD><TD width=94.533></TD><TD width=71.933></TD><TD width=71.933></TD><TD width=71.933></TD></TR>
<TR><TD style="border:1px solid #000000" valign=bottom width=314 colspan=2><P style="margin:0px"><B>Production results for the Quarter ended March 31</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=71.933><P style="margin:0px" align=right><B>2009</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=71.933><P style="margin:0px" align=right>2008</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=71.933><P style="margin:0px" align=right>April 2009</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=219.467><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=94.533><P style="margin:0px" align=justify>Tonnes</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>24,700</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>7,990</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=219.467><P style="margin:0px" align=justify>Ore Gold Grade milled</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="margin:0px" align=justify>Grams/tonne</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>3.3</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>4.79</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=219.467><P style="margin:0px" align=justify>Recovery %</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="margin:0px" align=justify>Per cent</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>91.4</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>89.2</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=219.467><P style="margin:0px">Gold produced</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="margin:0px" align=justify>Ounces</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>2,395</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>766</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=219.467><P style="margin:0px" align=justify>Gold Sold</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=94.533><P style="margin:0px" align=justify>Ounces</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right><B>-</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>4,352</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=71.933><P style="margin:0px" align=right>766</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B><I>Outlook</I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>A healthy and stable economic future depends on the success of the Unity Government in Zimbabwe. Continued gold production is dependent primarily on the availability of uninterrupted electricity supply and the efficient implementation of the prevailing regulations that permits Blanket to export the gold produced to a refiner of its choice. Short term challenges include:</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Availability of sufficient working capital until gold production stabilizes at the planned higher levels.</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Continued recruitment and retention of key staff based on market related affordable US Dollar remuneration packages.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>In a press release on 6 May 2009, the Corporation indicated that Blanket is targeting to achieve an annualized production rate of approximately 24,000 ounces of gold per annum by the end of the third quarter 2009.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Subsequent to the dollarization of the economy Blanket has reinstated relevant public liability insurance cover and will assess the necessity and affordability of other forms of insurance cover in due course.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>1.2 &nbsp;&nbsp;&nbsp;&nbsp;Exploration and Project Development</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>1.2.1 COBALT AND BASE METALS</B></P>
<P style="margin:0px" align=justify><B>&nbsp;</B></P>
<P style="line-height:11.55pt; margin:0px" align=justify><B>Nama Cobalt Project &#150; Zambia</B></P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The January to March quarter coincides with the peak of the rainy season in Zambia, a time when light vehicle access to the field is very limited and heavy vehicles such as drilling rigs cannot operate. &nbsp;Exploration activities during this period have been focused on soil sampling and consolidating much of the information gained during the previous season and preparing for the 2009 field season.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>2</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Two main styles of mineralization occur in the Nama area, the &#145;D&#146;-type iron oxide bodies which are enriched in cobalt, and the more common Ore Shale hosted Cu-Co mineralization which is being exploited by neighbouring mines. &nbsp;Work carried out during exploration for these styles of mineralization is presented separately below.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>&#145;D&#146;-Type iron oxide Co bodies</B></P>
<P style="margin:0px" align=justify>The 2008 exploration programme focused predominantly on this style of mineralization. &nbsp;The developments and outcome of this work is summarised in the MD&amp;A for the 2008 annual report. &nbsp;The metallurgical plant required to treat these ores are capital intensive and therefore requires that a resource substantially larger than that which has been estimated by management, be in place before a feasibility can be completed. &nbsp;In addition, the current high cost of debt funding, the current low commodity prices and the difficulties in marketing the high volume products make this type of mineral exploitation less attractive at present. &nbsp;Therefore, the exploration is now focused on other sources of cobalt mineralization while the modeling of the drill intersections and resource estimation for this type of mineralization is finalised. An inventory of all sources of &#145;D&#146;-type mineralization will continue to be compiled in anticipation of improved market c
onditions and local infrastructure.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>Ore Shale hosted Cu-Co deposits</B></P>
<P style="margin:0px" align=justify>Mineralization of this type is currently being exploited immediately east of the Nama License and is known to extend into the license area for some 2,000 meters. &nbsp;As part of the broader coverage of the 2008 field program, exploration was carried out to establish the existence and extent of the Ore Shale along the western margin of the Konkola Dome. &nbsp;A shale unit approximately 100 meters wide containing anomalous values of Co and Cu has been located in the area but is covered by very deep soils. &nbsp;In addition, the unit appears to be disrupted and trends towards the known &#145;A&#146; Resource Body. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>In view of the deep soil cover, the structural link between the Co-Cu shale and the &#145;A&#146; body needed to be explored with either deep soil sampling or drilling. &nbsp;A test exercise conducted using samples taken from very large termite mounds (5 to 7 meters high) proved highly successful in defining the zone of Co-Cu enrichment. &nbsp;This exercise has now been extended over the areas for which detailed geological structure are required. Based on the outcome of this work specific deep sampling holes are planned and will be followed up by diamond drilling if warranted.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>The 2009 Exploration Season</B></P>
<P style="margin:0px" align=justify>Only seven of the initial geochemical anomalies found at Nama have been followed up to date. The remaining ten anomalies remain to be examined and prioritised so that those with the greatest potential can be followed up first. This work is currently in progress. &nbsp;In determining the nature of the anomalies, they are ranked according to style of mineralisation and structure which will enable the exploration team to select the most appropriate targets for the 2009 exploration programs, and selected targets will be drilled during the latter period of the 2009 exploration season. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:12.8px; padding-left:3.533px; text-indent:-3.533px" align=justify><B>1.2.2 Rooipoort PGE/Ni/Cu Project (including Grasvally) - South Africa</B></P>
<P style="line-height:11.55pt; margin:0px" align=justify><B><I>Property</I></B></P>
<P style="margin:0px" align=justify><B>Rooipoort</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The joint venture Shareholders Agreement with Mitsubishi Corporation has been drafted. The final requirement prior to signing the Shareholder Agreement relates to the Department of Minerals and Energy&#146;s (&#147;DME&#148;) requirement for Caledonia to conclude an acceptable BEE agreement to secure the prospecting licenses granted to Maid O&#146; The Mist and Mapochs Exploration. Although the conclusion of this Broad-based Black Economic Empowerment (&#147;BEE&#148;) agreement is not a legally enforceable requirement Caledonia and Mitsubishi have chosen to comply with the DME&#146;s request. These discussions are at an advanced stage.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:12.8px" align=justify><B>1.2.3 GOLD</B></P>
<P style="margin-top: 0px; margin-bottom: 13.333px" align=justify><B>Zimbabwe Exploration &#150; Gold</B></P>
<P style="margin-top:0px; margin-bottom:6.667px" align=justify>Due to the lack of foreign currency no exploration work has taken place during the quarter and resources will be allocated primarily to the resumption of gold production, thereafter exploration activities will be reviewed. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:28.4px; text-indent:-28.4px" align=justify><B>2. </B></P>
<P style="margin:0px; padding-left:28.4px" align=justify><B>SUMMARY OF QUARTERLY RESULTS </B></P>
<P style="margin:0px; padding-left:28.4px" align=justify><BR></P>
<P style="margin:0px" align=justify>The following information is provided for each of the 8 most recently completed quarters of the Corporation - ending on the dates specified - in thousands of Canadian Dollars. The figures are extracted from underlying financial </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>3</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>statements that have been prepared according to Canadian GAAP.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=186.8></TD><TD width=56.667></TD><TD width=66.133></TD><TD width=56.733></TD><TD width=56.667></TD><TD width=56.733></TD><TD width=56.667></TD><TD width=57.733></TD><TD width=55.8></TD></TR>
<TR><TD style="border:1px solid #000000" valign=bottom width=186.8><P style="line-height:11pt; margin:0px; padding-left:28.4px; text-indent:-28.4px; font-size:9pt" align=justify>($000&#146;s-except per share amounts.)</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px" align=center><B>Mar 31/09</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=66.133><P style="margin:0px" align=center><B>Dec</B></P>
<P style="margin:0px" align=center><B>31/08</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="margin:0px" align=center><B>Sept 30/08</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px" align=center><B>June 30/08</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="margin:0px" align=center><B>Mar</B></P>
<P style="margin:0px" align=center><B>30/08</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px" align=center><B>Dec</B></P>
<P style="margin:0px" align=center><B>31/07</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=57.733><P style="margin:0px" align=center><B>Sept 30/07</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=55.8><P style="margin:0px" align=center><B>June 30/07</B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=186.8><P style="margin:0px">Sales from continuing operations</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>29</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>2,280</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>2,883</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>2,504</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>3,231</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=57.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>1,950</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=55.8><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>1,539</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=186.8><P style="margin:0px">Income/(loss) for continuing operations</P>
<P style="margin:0px">-per share basic and diluted </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(799)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0016)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=66.133><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(2,066)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0041)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(2,749)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0055)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(261)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0005)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>791</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.0016</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>494</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.001</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=57.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(855)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.002)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=55.8><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>364</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.001</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=186.8><P style="margin:0px">Discontinued operations (loss)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(40)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(531)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(30)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(24)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(70)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(249)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=57.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(80)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=55.8><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(126)</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=186.8><P style="margin:0px">Net Income/ (loss) after discontinued operations</P>
<P style="margin:0px">- per share basic and diluted </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(839)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0017)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(2,597)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0052)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(2,779)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0056)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(285)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.0006)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>721</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.0015</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>245</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.001</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=57.733><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(935)</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>(0.002)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=55.8><P style="margin:0px" align=right><BR></P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>238</P>
<P style="line-height:11pt; margin:0px; font-size:9pt" align=right>0.0005</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=186.8><P style="margin:0px">No of shares basic &#145;000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>500,169</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>500,169</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>500,169</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>500,169</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>493,199</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>487,869</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=57.733><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>487,869</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=55.8><P style="line-height:11pt; margin:0px; font-size:9pt" align=right>487,869</P>
</TD></TR>
</TABLE>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="line-height:13.55pt; margin-top:0px; margin-bottom:-18.067px" align=justify><I>Note:</I></P>
<P style="line-height:11.55pt; margin:0px; text-indent:48px" align=justify><I>&nbsp;The effect of the dilution on the earnings per share has not been calculated as the result for 2009, 2008 and 2007 was a loss and the diluted earnings per share would be anti-dilutive.</I></P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin:0px" align=justify>The discontinued operations relate to Barbrook and Eersteling Mines up to Q1 2008, thereafter Eersteling is the only discontinued operation. The loss on sale of Barbrook Mine was reclassified to discontinued operations in the fourth quarter 2008. All foreign exchange gains or losses are reported in the results before discontinued operations. &nbsp;Gold sales for the 1<SUP>st</SUP> quarter at Blanket Mine were Nil (2,809 - 2008) ounces. Included in the loss for continuing operations is the unrealized foreign exchange gain of $739,000 ($100,000 &#150; 2008). As there was no gold production during the quarter, Blankets operational costs included wages of $403,000 ($282,000 - 2008), consumables of $270,000 ($683,000 - 2008) and mine administration costs of $206,000 ($185,000). The dollarization of the economy has impacted on remuneration rates as illustrated above, management is monitoring this closely to ensure we are paying affordable and market related 
rates to ensure the scarce skills are retained.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px">As the amount owing by RBZ was converted into a Special Tradable Gold Backed Bond by RBZ in February 2009, no funds have been received during Quarter 1, 2009 by Blanket from the RBZ.</P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Blanket is a self-sustaining operation and operates in Zimbabwe in what was a hyper inflationary economy. Due to the dollarization of the economy in February, 2009 the hyper inflationary environment no longer exists. Accordingly the results of these operations are now translated into Canadian Dollars using the current rate method. On January 1, 2009 Blanket&#146;s functional currency also changed to US Dollars following the Monetary Policy announcement introducing the use of foreign currency in Zimbabwe for all forms of trade and business. The assets and liabilities of a self-sustaining foreign operation are translated at the rate in effect at the balance sheet date for purposes of incorporation in the financial statements of Caledonia and, therefore, an exchange gain or loss will arise when the exchange rate changes. This exchange gain or loss has no direct effect on the activities of Caledonia. It is inappropriate to incorporate this exchange gain or loss in net income i
n the period in which it arises; rather, it is reported in the financial statements as a separate component of shareholders' equity and is disclosed as a separate component of accumulated other comprehensive income during the period. In summary the current rate method is as follows:</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96.4px; text-indent:-48px" align=justify>(i)</P>
<P style="margin:0px; padding-left:96.4px; text-indent:-0.4px" align=justify>all assets and liabilities at rates at balance sheet date;</P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:96.4px; text-indent:-48px" align=justify>(ii)</P>
<P style="margin:0px; padding-left:96.4px" align=justify>revenue and expense transactions at the average rate of exchange prevailing during the period.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Foreign exchange loss or profit arising on the translation of revenue and expense items is disclosed in income in the period incurred.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Included in the statement of operations is an exchange gain of $498,000 (Loss $405,000 &#150; 2008) relating to the translation of Blanket Mine expense items and a loss of $275,000 (Nil 2008) has been disclosed under accumulated other comprehensive income.</P>
<P style="line-height:11.55pt; margin:0px" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify><B>3.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:48px" align=justify><B>INVESTING </B></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify>During the first quarter 2009 the Corporation invested $386,000 in capital assets and mineral properties ($231,000 in 2008 and $684,000 in 2007). &nbsp;Of the amount invested in 2009, $384,000 was spent at Nama. </P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>4</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify><B>4.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:48px" align=justify><B>FINANCING </B></P>
<P style="margin:0px" align=justify>The Corporation financed its operations using the funds received from the sale of Barbrook in May 2008. No capital raising is currently intended during 2009 and funds available from the sale of Barbrook are expected to be sufficient to finance the Corporation&#146;s activities. Working capital loans of US$600,000 have been secured by Blanket for the start up of production but additional working capital loans will be required. These loans have been obtained in Zimbabwe at an interest cost of approximately 6% pa. Additional funding of US$2,250,000 is required for the completion of the No. 4 shaft expansion and it is the intention to obtain this funding in Zimbabwe. Various financial institutions have recently been approached with detailed submissions to obtain this funding but as yet no viable term sheets have been received.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify><B>5.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:48px" align=justify><B>LIQUIDITY AND CAPITAL RESOURCES </B></P>
<P style="line-height:11.55pt; margin:0px" align=justify>As of March 31, 2009, the Corporation had a working capital surplus of $2,657,000 (surplus of $4,027,000 at December 31, 2008). Current assets of $3,960,000 ($4,976,000 &#150; December 2008) decreased due to a decrease in cash. The amount of $2,890,301 (shown at fair value) owing to Blanket by RBZ is classified as a long term loan as the gold bond is redeemable only in February 2010. </P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Blanket Mine continues to be self funding. Very limited amounts are currently being spent on capital development due to a lack of foreign currency but this will increase as production ramps up in the months ahead.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin:0px" align=justify>During 2009, it is expected that the cash requirements of the Corporation will be met from the proceeds of the sale of Barbrook Mine and gold sales from Blanket Mine. </P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify>Anticipated cash inflows in 2009 will be used mainly by the Corporation on returning Blanket&#146;s production back up to 24,000 ounces pa and then 40,000 ounces pa provided Blanket can secure the required funding.</P>
<P style="line-height:11.55pt; margin:0px" align=justify>The Corporation does not have any significant long-term contractual obligations or commercial commitments other than the payment of its current liabilities and its four cobalt sales agreements. &nbsp;The Corporation has minor obligations in respect of license fees for its exploration and mining properties some of which are paid in full by the Corporation&#146;s joint venture partners. &nbsp;&nbsp;Now that Motapa has withdrawn from its JV on Mulonga Plain, the Corporation will be responsible for maintaining the licenses. &nbsp;&nbsp;As of March 31, 2009 the Corporation had potential/contingent liabilities to do rehabilitation work on the Blanket and Eersteling Mines - if and when those Mines are permanently closed - at an estimated cost of $1,160,000. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><B>6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OFF-BALANCE SHEET ARRANGEMENTS</B></P>
<P style="margin:0px" align=justify>There are no off balance sheet arrangements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:37.8px; text-indent:-37.8px" align=justify><B>7.</B></P>
<P style="margin:0px; padding-left:37.8px" align=justify><B>RELATED PARTY TRANSACTIONS</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-28.333px" align=justify>The Corporation had the following related party transactions: &nbsp;&nbsp;</P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=432.667></TD><TD width=47.2></TD><TD width=47.267></TD><TD width=58.8></TD></TR>
<TR><TD style="border-right:1px solid #000000" valign=top width=432.667><P>&nbsp;</P></TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=153.267 colspan=3><P style="margin:0px" align=center><U>Quarter ended</U></P>
<P style="margin:0px" align=center><U>March 31</U></P>
</TD></TR>
<TR><TD style="border-right:1px solid #000000" valign=top width=432.667><P>&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="margin:0px" align=center><B><U>2009</U></B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.267><P style="margin:0px" align=center><U>2008</U></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=58.8><P style="margin:0px" align=center><U>2007</U></P>
</TD></TR>
<TR><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=432.667><P>&nbsp;</P></TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=47.2><P style="margin:0px" align=right><B>$&#146;000</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=47.267><P style="margin:0px" align=right><B>$&#146;000</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=58.8><P style="margin:0px" align=right><B>$&#146;000</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=432.667><P style="margin:0px" align=justify>Management, and allowances paid or accrued to a company which provides the services of the &nbsp;Corporation&#146;s President</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="margin:0px" align=right><B>141</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.267><P style="margin:0px" align=right>128</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=58.8><P style="margin:0px" align=right>131</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=432.667><P style="margin:0px" align=justify>Rent paid to a Company owned by members of the President&#146;s family</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="margin:0px" align=right><B>11</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.267><P style="margin:0px" align=right>11</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=58.8><P style="margin:0px" align=right>12</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=432.667><P style="margin:0px" align=justify>Fees paid to the Chairman of the Board </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.2><P style="margin:0px" align=right><B>50</B></P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=47.267><P style="margin:0px" align=right>-</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=58.8><P style="margin:0px" align=right>-</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><B>8. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRITICAL ACCOUNTING POLICIES</B></P>
<P style="margin:0px" align=justify>There are two major areas where accounting estimates are made, asset impairment and asset retirement obligation. As significant impairment provisions have already been made against the assets and there is a reasonable level of certainty around the estimate it is considered unlikely that any change in estimate would result in a material impact on the results of the Corporation. The asset retirement obligations are also considered to be estimated with a reasonable degree of certainty, although the original estimations were calculated some years ago. The estimations are accreted annually at 5% and thus any change in circumstances is considered unlikely to have a material impact on the results of the Corporation or its operations.</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>5</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" 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>The following accounting policy changes have been adopted as of January 1, 2009 and are more fully described in the Interim Consolidated Financial Statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><B>a. Goodwill and intangible assets</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>In February 2008, the Canadian Institute of Chartered Accountants (&#147;CICA&#148;) issued Section 3064 Goodwill and intangible assets, replacing Section 3062, Goodwill and other intangible assets.&nbsp; The new Section will be applicable to financial statements relating to fiscal years beginning on or after October 1, 2008.&nbsp; Accordingly, the Corporation will adopt the new standards for its fiscal year beginning January 1, 2009.&nbsp; It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises.&nbsp; Standards concerning goodwill are unchanged from the standards included in the previous Section 3062.&nbsp; The adoption of this standard is not expected to have an effect on the Corporation&#146;s consolidated financial statements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-18.667px; padding-left:28.4px; text-indent:-28.4px" align=justify><B>9</B>. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:13.333px; padding-left:28.4px" align=justify>&nbsp;&nbsp;&nbsp;<B>FINANCIAL RISK EXPOSURE AND RISK MANAGEMENT </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The Corporation is exposed in varying degrees to a variety of financial instrument related risks by virtue of its activities. The overall financial risk management program focuses on preservation of capital, and protecting current and future Corporation assets and cash flows by reducing exposure to risks posed by the uncertainties and volatilities of financial markets. &nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The Board of Directors has responsibility to ensure that an adequate financial risk management policy is established and to approve the policy. The Corporation&#146;s Audit Committee oversees management&#146;s compliance with the Corporation&#146;s financial risk management policy. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The types of risk exposure and the way in which such exposures are managed are as follows: </P>
<P style="margin-top:0px; margin-bottom:6.133px" align=justify><B>i) Currency Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>As the Corporation operates in an international environment, some of the Corporation&#146;s financial instruments and transactions are denominated in currencies other than the Canadian Dollar. The results of the Corporation&#146;s operations are subject to currency transaction risk and currency translation risk. The operating results and financial position of the Corporation are reported in Canadian Dollars in the Corporation&#146;s consolidated financial statements. </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The fluctuation of the Canadian Dollar in relation to other currencies will consequently have an impact upon the profitability of the Corporation and may also affect the value of the Corporation&#146;s assets and the amount of shareholders&#146; equity. &nbsp;&nbsp;</P>
<P style="margin:0px" align=justify>A significant portion of the Corporation&#146;s assets and liabilities are denominated in South African Rand and United States Dollars. &nbsp;Management do not consider that the fluctuation of the value of these currencies to the Canadian Dollar could have a significant impact on the results of operations. Blanket Mine operations are now transacted using the United States Dollar as the functional currency. As a result of the introduction of the US Dollar as legal tender in Zimbabwe the hyperinflationary environment has decreased dramatically. The shareholder loan account in Zimbabwe is denominated in US Dollars and will generate foreign exchange losses for Blanket Mine depending on the exchange rate between the US Dollar and the Canadian Dollar. The fair values of these financial instruments approximate their carrying values, unless otherwise noted. &nbsp;The Corporation does not use any derivative instruments to reduce its foreign currency risks.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>Below is a summary of the cash or near cash items denominated in a currency other than the Canadian Dollar that would be affected by changes in exchanges rates relative to the Canadian Dollar.<BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=140></TD><TD width=77.533></TD><TD width=75.6></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=140><P style="margin:0px" align=justify>$000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="margin:0px" align=justify>US Dollars</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="margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Cash</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>(76)</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>8,429</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Receivable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>2,626</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>862</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Payable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>612</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>2,701</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The table below illustrates by how much a 1% change in the rate of exchange between the Canadian Dollar and the currencies above will affect net income.</P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>6</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR>
<BR></P>
<div align="center">
  <center>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=140></TD><TD width=77.533></TD><TD width=75.6></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=140><P style="margin:0px" align=justify>$000</P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="margin:0px" align=justify>US Dollars</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="margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Cash</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>-</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>11</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Receivable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>21</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>1</P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="margin:0px">Accounts Payable</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="margin:0px" align=right>5</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="margin:0px" align=right>3</P>
</TD></TR>
</TABLE>
  </center>
</div>
<P style="line-height:14pt; margin-top:0px; margin-bottom:15.267px" align=justify><B>ii) Interest Rate Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>Unless otherwise noted, it is the opinion of management that the Corporation is not exposed to significant interest rate risk as it is debt free and only utilizes overdraft facilities for short periods if necessary. As a result of Blanket Mine being brought back into production (see Note 16) working capital borrowings will increase in Zimbabwe. The working capital loans will be US Dollar denominated and will attract interest rates of approximately 6% pa. It is the intention of Blanket to borrow further funds to complete the No 4 shaft expansion project. No term sheet has been received for these loans and thus the interest rate is unknown. The Corporation&#146;s cash and cash equivalents include highly liquid investments that earn interest at market rates. The Corporation manages its interest rate risk by endeavoring to maximize the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-
day basis. The Corporation&#146;s policy focuses on preservation of capital and limits the investing of excess funds to liquid term deposits in &#147;A&#148; grade financial institutions. </P>
<P style="margin:0px" align=justify>Fluctuations in market interest rates have not had a significant impact on the Corporation&#146;s results of operations due to the short-term to maturity of the investments held.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><B>iii) Concentration of Credit Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>Credit risk is the risk of a financial loss to the Corporation if a gold sales customer fails to meet its contractual obligation. Credit risk arises principally from the Corporation&#146;s receivables from the Reserve Bank of Zimbabwe (&#147;RBZ&#148;) who was the sole buyer of gold produced in Zimbabwe, in terms of legislation and regulations that prevailed until February 1, 2009. </P>
<P style="margin:0px" align=justify>At December 31, 2008 the RBZ owed Blanket US$2,400,000 (at fair value). The amount owed to Blanket was converted into a Special Tradable Gold-backed Foreign Exchange Bond (&#147;Bond&#148;) by RBZ following the Monetary Policy announcement on February 2, 2009 that has the following features;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Term of 12 months</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Interest at 8% pa on maturity</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>Bond may be sold locally, regionally or internationally at an agreed price</P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:48px; text-indent:-24px; font-family:Symbol" align=justify>&#183;</P>
<P style="margin:0px; padding-left:48px" align=justify>RBZ will honour the full principal plus interest on maturity</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;The lack of foreign currency in Zimbabwe affects all business sectors and management maintains close relations with RBZ to ensure payments are made whenever necessary, to sustain operations, within the capabilities of the RBZ.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><B>iv) Liquidity Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The Corporation manages its liquidity by ensuring that there is sufficient capital to meet short and long term business requirements, after taking into account cash flows from operations and the Corporation&#146;s holdings of cash and cash equivalents. The Corporation believes that these sources will be sufficient to cover the likely short and long term cash requirements. Senior management is also actively involved in the review and approval of planned expenditures by regularly monitoring cash flows from operations and anticipated investing and financing activities. </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><B>v) Commodity Price Risk </B></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>The value of the Corporation&#146;s mineral resource properties is related to the price of gold, platinum and cobalt, and the outlook for these minerals. In addition, adverse changes in the price of certain raw materials can significantly impair the Corporation&#146;s cash flows. </P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>7</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px" align=justify>Gold prices historically have fluctuated widely and are affected by numerous factors outside of the Corporation's control, including, but not limited to, industrial and retail demand, central bank lending, forward sales by producers and speculators, levels of worldwide production, short-term changes in supply and demand because of speculative hedging activities, and macro-economic variables, and certain other factors related specifically to gold. </P>
<P style="margin:0px">In the Monetary Policy Announcement made by RBZ on February 2, 2009, Blanket became eligible to export its gold to a refiner of its choice and to receive 100% of the proceeds in US Dollars paid into its foreign currency account at a Zimbabwean commercial bank. As a result of this announcement, Blanket resumed gold production on April 7, 2009 after receiving all the necessary licenses from the Ministry of Finance and the RBZ.</P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify><BR></P>
<P style="margin-top: 0px; margin-bottom: 13.333px" align=justify><B>10. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITIES OUTSTANDING</B></P>
<P style="margin:0px; padding-right:208.333px" align=justify>As at March 31, 2009 the following securities were outstanding: &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13.55pt; margin-top:0px; margin-bottom:-18.067px" align=justify>(1)</P>
<P style="line-height:11.55pt; margin:0px; text-indent:48px" align=justify>500,169,280 common shares;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px" align=justify>(2)</P>
<P style="margin:0px; text-indent:48px" align=justify>Options and warrants as follows:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=96></TD><TD width=228></TD><TD width=132></TD><TD width=177.2></TD></TR>
<TR><TD style="border:1px solid #000000" valign=top width=96><P style="margin:0px" align=justify><B>Number</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=228><P style="margin:0px" align=justify><B>&nbsp;Description</B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=132><P style="margin:0px" align=justify><B>&nbsp;Exercise Price </B></P>
</TD><TD style="border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=177.2><P style="margin:0px" align=justify><B>Validity </B></P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=96><P style="margin:0px" align=justify>34,630,000</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=228><P style="margin:0px" align=justify>Common share purchase options </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=132><P style="margin:0px" align=justify>Average $0.1716</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=177.2><P style="margin:0px" align=justify>Various until May 11, 2016 </P>
</TD></TR>
<TR><TD style="border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=96><P style="margin:0px" align=justify>Nil</P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=228><P style="margin:0px" align=justify>Common share purchase warrants </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=132><P style="margin:0px" align=justify>- </P>
</TD><TD style="border-right:1px solid #000000; border-bottom:1px solid #000000" width=177.2><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify>As the Corporation&#146;s Option Plan allows the granting of options on a number of shares equal to 10% of the issued shares, the Corporation could grant options on 50,016,928 shares. &nbsp;This figure includes any options previously exercised and the current unexercised options. </P>
<P style="margin-top:0px; margin-bottom:13.333px" align=justify><B>11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONTROLS</B></P>
<P style="margin:0px" align=justify>Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Corporation's President and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. Management of the Corporation, with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Corporation's disclosure controls and procedures as at December 31, 2008 and March 31, 2009 as required by Canadian securities laws pursuant to the certification requirements of Multilateral Instrument 52-109. </P>
<P style="margin:0px; text-indent:28.8px" align=justify>The Corporation's internal controls over financial reporting (&#147;ICFR&#148;) are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable Canadian GAAP. </P>
<P style="margin:0px; text-indent:28.8px" align=justify>Because of its inherent limitations, the Corporation's ICFR may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.</P>
<P style="margin:0px; text-indent:28.8px" align=justify>Management, including the Chief Executive Officer and Chief Financial Officer, carried out an assessment of the effectiveness of the Corporation's internal controls over financial reporting using a framework designed by management and considered appropriate to the conditions of the various operating environments, and concluded that the following disclosable material weaknesses still exist, as at March 31, 2009.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify><B>Segregation of duties</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify>Due to limited resources, adequate segregation of duties within the accounting group was not achieved. &nbsp;This creates a risk that inaccurate entries could be made and not corrected on a timely basis. The result is that the Corporation is highly reliant on the performance of mitigating procedures during its financial close processes in order to ensure the financial statements present fairly in all material respects. The Corporation continues to enhance and monitor this process to ensure that its financial accounting reporting system is able to prevent and detect potential significant errors.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px" align=justify>Management has concluded, and the Audit Committee has agreed that taking into account the present stage of the Corporation's development, the Corporation does not have sufficient size and scale to warrant the hiring of additional staff to correct the segregation of duties weakness at this time. There were no changes in the Corporation&#146;s internal </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>8</P>
<P style="margin:0px" align=justify><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>controls over financial reporting since the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>The Corporation has a Disclosure Committee consisting of four Directors, and has disclosure<FONT style="font-family:Times"> </FONT>controls and procedures which it follows in an attempt to ensure that it complies with all required disclosures on an adequate and timely basis. &nbsp;The Corporation&#146;s Directors and Management, and the Disclosure Committee, are making all reasonable efforts to ensure that the Corporation&#146;s disclosures are made in full compliance with the applicable rules and requirements. &nbsp;All reasonable efforts are also being made to ensure that the Corporation&#146;s disclosure controls and procedures provide reasonable assurance that material information relating to the Corporation, including its consolidated subsidiaries, is made known to the Corporation&#146;s Certifying Officers by others within those entities.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><B>12. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FORWARD LOOKING STATEMENTS</B></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:12.8px" align=justify>This Management Discussion and Analysis contains certain forward-looking statements relating but not limited to the Corporation&#146;s expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as &#147;anticipate&#148;, &#147;believe&#148;, &#147;expect&#148;, &#147;goal&#148;, &#147;plan&#148;, &#147;intend&#148;, &#147;estimate&#148;, &#147;could&#148;, &#147;should&#148;, &#147;may&#148; and &#147;will&#148; or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factor
s that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. </P>
<P style="margin:0px" align=justify>Potential shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Shareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. The Corporation undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:56.733px; text-indent:-56.733px" align=justify><B>13.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; padding-left:56.733px" align=justify><B>QUALIFIED PERSONS</B></P>
<P style="margin:0px" align=justify>Dr. Trevor Pearton, BSc Eng (Mining Geology), PhD (Geology) FGSSA, VP Exploration is a qualified person as defined by NI 43-101. Dr. Pearton is responsible for the technical information provided on this MD&amp;A except where otherwise stated. He was assisted where appropriate by outside consultants and/or qualified persons for joint-ventured projects. Mr. David Grant, is the Independent Qualified Person &nbsp;for the NI 43-101 report on the D resource area of the Nama Property, prepared by Applied Geology and Mining (Proprietary)Limited whose Managing Director is Mr. Grant .</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-16px; padding-left:56.733px; text-indent:-56.733px" align=justify><B>14.</B></P>
<P style="margin-top:0px; margin-bottom:11.133px; padding-left:56.733px" align=justify><B>BOARD AND SENIOR MANAGEMENT CHANGES</B></P>
<P style="margin:0px" align=justify>There were no Board or senior management appointments since the year ended December 31, 2008.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times" align=right>9</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
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