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<SEC-DOCUMENT>0001137171-10-000691.txt : 20101117
<SEC-HEADER>0001137171-10-000691.hdr.sgml : 20101117
<ACCEPTANCE-DATETIME>20101117111716
ACCESSION NUMBER:		0001137171-10-000691
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20100930
FILED AS OF DATE:		20101117
DATE AS OF CHANGE:		20101117

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:		101198826

	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>caledonia6k11152010.htm
<DESCRIPTION>CALEDONIA MINING FORM 6-K
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (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>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center><B>FORM 6-K<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center><B>Report of Foreign Private Issuer </B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center><B>Pursuant to Rule 13a-16 or 15d-16 <BR>
of the Securities Exchange Act of 1934</B></P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">For the month of November 2010</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&nbsp;<u>&nbsp;&nbsp;&nbsp;
X&nbsp;&nbsp;&nbsp;&nbsp;</u>&nbsp;&nbsp; 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):
____ </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):
____ </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 ____ No&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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-
_______ </P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt" align=center>&nbsp;</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:4.15pt; margin-bottom:4.15pt">&nbsp;</P>
<P style="margin-top:4.15pt; margin-bottom:4.15pt">&nbsp;</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:&nbsp;<u>&nbsp;&nbsp;&nbsp;
/s/ Carl Jonsson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></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;November 15, 2010<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>&nbsp;</P>
<P style="margin:0pt; page-break-before:always" align=center>&nbsp;</P>
<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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<a href="financials.htm">Financial Statements for the Period ended September 30,
2010</a><br>
99.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<a href="mda.htm">Management's Discussion &amp; Analysis for the Period ended
September 30, 2010</a>
<br>
99.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<a href="ceocert.htm">Form 52-109F2 Certification of&nbsp; Interim Filings -
Chief Executive Officer</a> &nbsp;&nbsp;<br>
99.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<a href="cfocert.htm">Form 52-109F2 Certification of&nbsp; Interim Filings -
Chief Financial Officer</a>&nbsp;&nbsp;&nbsp;<br>
99.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<a href="newsrelease.htm">News Release dated November 12, 2010</a>&nbsp; </P>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<blockquote>
  <p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
</blockquote>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<hr>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>financials.htm
<DESCRIPTION>FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2010
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</title>
<META NAME="author" CONTENT="##">
<META NAME="date" CONTENT="11/12/2010">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
&nbsp;
<p>&nbsp;</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" 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B><I>To the Shareholders of Caledonia Mining Corporation:</I></B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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>&nbsp;</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:-2px; text-indent:28.8px; width:432px; float:left">Signed &#147;S E Hayden&#148;</P>
<P style="margin:0px; text-indent:-2px" align=justify>Signed &#147;S R Curtis&#148;</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:432px; clear:left; float:left"><B>S. E. Hayden</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>S.R. Curtis</B></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:432px; clear:left; float:left">President and</P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify>Vice-President Finance</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:432px; clear:left; float:left">Chief Executive Officer</P>
<P style="margin:0px; text-indent:-2px" align=justify>and Chief Financial Officer</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=648.933 /></TR>
<TR><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=648.933><P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=648.933><P style="line-height:12pt; margin:0px" align=right><B>Consolidated Balance Sheets</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=648.933><P style="line-height:12pt; margin:0px" align=right><B>(in thousands of Canadian Dollars)</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=right><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=434.733 /><TD width=94.467 /><TD width=94.533 /></TR>
<TR><TD style="margin-top:0px" valign=top width=434.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.467><P style="line-height:12pt; margin:0px; padding-right:1.333px" align=right><B>September 30</B></P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px; padding-right:1.333px" align=right>December 31</P>
</TD></TR>
<TR><TD style="border-bottom: 1 solid #000000; margin-top: 0px" valign=top width=434.733><P style="line-height:12pt; margin:0px; padding-right:1.333px"><B>Unaudited</B></P>
</TD><TD style="border-bottom: 1 solid #000000; margin-top: 0px" valign=top width=94.467><P style="line-height:12pt; margin:0px; padding-right:1.333px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 1 solid #000000; margin-top: 0px" valign=top width=94.533><P style="line-height:12pt; margin:0px; padding-right:1.333px" align=right>2009</P>
</TD></TR>
</TABLE>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=425.267 /><TD width=102.733 /><TD width=96 /></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Assets</B></P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>Current</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>1,454</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>1,622</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>1,921</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>1,547</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Inventories (Note 8)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>2,488</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>2,589</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>174</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>57</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Assets held for sale </P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>170</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>102</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>6,207</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>5,917</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Capital Assets and Mineral properties held for sale</B> </P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>704</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>670</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Accounts receivable (</B>Note 7<B>)</B></P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>794</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>810</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Investments</B> (Note 1)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>4</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>59</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Capital assets</B> (Note 2)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>1,672</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>876</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Mineral properties</B> (Note 3)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>16,711</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>13,758</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>19,885</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>16,173</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>26,092</B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>22,090</P>
</TD></TR>
</TABLE>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=425.267 /><TD width=102.733 /><TD width=96 /></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Liabilities and Shareholders&#146; Equity</B></P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>Current</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Bank loan (Note 9)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>1,680</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>588</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable </P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>2,112</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>2,156</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>15</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>3,807</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>2,759</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Future tax liability</B></P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>827</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>859</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Asset retirement obligation </B>(Note 4)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>1,380</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>1,406</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Asset retirement obligation &nbsp;- held for sale </B>(Note 4)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>314</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>324</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>6,328</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>5,348</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Shareholders&#146; Equity</B></P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=96><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Share capital (Note 5)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>196,125</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>196,125</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Contributed surplus </P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>2,305</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>1,951</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>(483)</B></P>
</TD><TD style="margin-top:0px" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>(550)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;Deficit</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>(178,184)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>(180,784)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>19,763</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>16,742</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=425.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=102.733><P style="line-height:12pt; margin:0px" align=right><B>26,092</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=96><P style="line-height:12pt; margin:0px" align=right>22,090</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>On behalf of the Board:</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:48px; width:192px; float:left">&#147;S E Hayden&#148; </P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify>&nbsp;Director<br>
<br>
<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;G R Pardoe&#148;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><br>
<br>
<br>
<br>
<br>
</P>
<P style="line-height:12pt; margin:0px; clear:left">The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial statements.</P>
<P style="line-height:12pt; margin:0px"><BR>
</P>
<P style="line-height:12pt; margin:0px">
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px"><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="987"><TR height=0 style="font-size:0"><TD width=985 /></TR>
<TR><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=987><P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=985><P style="line-height:12pt; margin:0px" align=right><B>Consolidated Statements of Changes in Shareholders&#146; Equity</B></P>
</TD></TR>
<TR><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=987><P style="line-height:12pt; margin:0px" align=right><B>(in thousands of Canadian Dollars )</B></P>
</TD></TR>
</TABLE>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="985"><TR height=0 style="font-size:0"><TD width=983 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=983><P style="line-height:12pt; margin:0px; clear:left" align=right><B>For the periods ended September 30 2010, December 31 2009 and 2008</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>&nbsp;&nbsp;&nbsp;</B></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width=987><TR height=0 style="font-size:0"><TD width="445" /><TD width=48 /><TD width=88 /><TD width=85 /><TD width=103 /><TD width=99 /><TD width=105 /></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right>Accumulated </P>
</TD><TD style="margin-top: 0px" valign=bottom width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right>&nbsp;Other</P>
</TD><TD style="margin-top: 0px" valign=bottom width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=88><P style="line-height:12pt; margin:0px" align=right>Share</P>
</TD><TD style="margin-top: 0px" valign=bottom width=85><P style="line-height:12pt; margin:0px" align=right>Contributed</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right>Comprehensive</P>
</TD><TD style="margin-top: 0px" valign=bottom width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="line-height:12pt; margin:0px" align=justify><B>Unaudited</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=48><P style="line-height:12pt; margin:0px" align=right>Note</P>
</TD><TD style="margin-top: 0px" valign=bottom width=88><P style="line-height:12pt; margin:0px" align=right>Capital</P>
</TD><TD style="margin-top: 0px" valign=bottom width=85><P style="line-height:12pt; margin:0px" align=right>Surplus</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right>&nbsp;Income/(loss)</P>
</TD><TD style="margin-top: 0px" valign=bottom width=99><P style="line-height:12pt; margin:0px" align=right>Deficit</P>
</TD><TD style="margin-top: 0px" valign=bottom width=105><P style="line-height:12pt; margin:0px" align=right>Total</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top: 0px" valign=top width=99><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width="447"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Balance at December 31, 2008</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=50><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>196,125</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>1,902</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>3</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(176,834)</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>21,196</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Equity-based compensation expense</P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>49</P>
</TD><TD style="margin-top: 0px" valign=top width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>49</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Investments revaluation to fair value</P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>47</P>
</TD><TD style="margin-top: 0px" valign=top width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>47</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Translation loss from Blanket </P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(600)</P>
</TD><TD style="margin-top: 0px" valign=top width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(600)</P>
</TD></TR>
<TR><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width="447"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Net loss for the year</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=50><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=90><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(3,950)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(3,950)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Balance at December 31, 2009</P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>196,125</P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>1,951</P>
</TD><TD style="margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(550)</P>
</TD><TD style="margin-top: 0px" valign=top width=99><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(180,784)</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>16,742</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman"><B>Equity-based compensation expense</B></P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>354</B></P>
</TD><TD style="margin-top: 0px" valign=top width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>354</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify><B>Translation gain from Blanket</B></P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>67</B></P>
</TD><TD style="margin-top: 0px" valign=top width=99><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>67</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width="445"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify><B>Net income for the year to date</B></P>
</TD><TD style="margin-top: 0px" valign=top width=48><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=99><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2,600</B></P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2,600</B></P>
</TD></TR>
<TR><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width="447"><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify><B>Balance at September 30, 2010</B></P>
</TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=50><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>196,125</B></P>
</TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2,305</B></P>
</TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>(483)</B></P>
</TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>(177,184)</B></P>
</TD><TD style="border-top: 2px solid #000000; border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>19,763</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>3</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=right><BR>
<BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=198.533 height="17" /><TD width=28.333 height="17" /><TD width=73.4 height="17" /><TD width=68.333 height="17" /><TD width=85.067 height="17" /><TD width=0.867 height="17" /><TD width=74.733 height="17" /><TD width=1.4 height="17" /><TD width=93.133 height="17" /><TD width=94.467 height="17" /></TR>
<TR><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top colspan=10 height="10" align="right"><P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top colspan=10 height="18" align="right"><P style="line-height:12pt; 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; margin-top: 0px" valign=top colspan=10 height="18" align="right"><P style="line-height:12pt; margin:0px" align=right><B>(in thousands of Canadian Dollars except share and per share amounts)</B></P>
</TD></TR>
</TABLE>
<p>&nbsp;</p>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0>
<TR><TD style="margin-top: 0px" valign=top width=198.533 height="18"><P style="line-height:12pt; margin:0px"><B>Unaudited</B></P>
</TD><TD style="margin-top: 0px" valign=top colspan=4 height="18"><P style="line-height:12pt; margin:0px" align="right"><B>For the three months ended September 30</B></P>
</TD><TD style="margin-top: 0px" valign=top colspan=5 height="18"><P style="line-height:12pt; margin:0px" align=right><B>For the nine months ended September 30</B></P>
</TD></TR>
<TR><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>2009</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>2008</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>2009</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>2008</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Revenue and Operating Costs</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Revenue from sales</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>6,331</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>4,932</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>2,280</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>14,975</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>7,295</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>7,668</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Operating Costs (Note 10)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>3,453</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>3,130</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>1,978</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>9,598</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>5,700</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>4,595</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Gross profit(loss)</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>2,878</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>1,802</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>302</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>5,377</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>1,595</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>3,073</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px"><B>Costs and expenses</B></P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">&nbsp;&nbsp;General and administrative (Note 12)</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>869</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>499</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>2,016</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>1,825</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>1,644</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>3,174</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">&nbsp;&nbsp;Interest expense/(income) (Note 12)</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(16)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>(106)</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(24)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>(29)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>(133)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">&nbsp;&nbsp;Amortization</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>107</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>101</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>101</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>519</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>299</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>302</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">&nbsp;&nbsp;Exchange loss/(gain)</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(36)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>231</P>
</TD><TD style="margin-top: 0px" valign=top width=85.067 height="18"><P style="line-height:12pt; margin:0px" align=right>992</P>
</TD><TD style="margin-top: 0px" valign=top width=77 colspan=3 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(321)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=93.133 height="18"><P style="line-height:12pt; margin:0px" align=right>(328)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>1,752</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">&nbsp;&nbsp;Other expense/(income) (Note 11) </P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>282</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>109</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>48</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>695</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>109</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>198</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=73.4 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=68.333 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74.733 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.467 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="34"><P style="line-height:12pt; margin:0px"><B>Income (loss) before discontinued operations</B></P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="34"><P style="line-height:12pt; margin:0px" align=right><B>1,672</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="34"><P style="line-height:12pt; margin:0px" align=right>862</P>
</TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>(2,749)</P>
</TD><TD style="margin-top: 0px" valign=top width=74.733 height="34"><P style="line-height:12pt; margin:0px" align=right><B>2,683</B></P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>(100)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="34"><P style="line-height:12pt; margin:0px" align=right>(2,220)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px"><B>Current Income Tax </B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(1)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(3)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="34"><P style="line-height:12pt; margin:0px"><B>Net income(loss) before discontinued operations</B></P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="34"><P style="line-height:12pt; margin:0px" align=right><B>1,671</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="34"><P style="line-height:12pt; margin:0px" align=right>862</P>
</TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>(2,749)</P>
</TD><TD style="margin-top: 0px" valign=top width=74.733 height="34"><P style="line-height:12pt; margin:0px" align=right><B>2,680</B></P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>(100)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="34"><P style="line-height:12pt; margin:0px" align=right>(2,220)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px"><B>Discontinued operations (loss)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(24)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>(36)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(30)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>(80)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(113)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>(123)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px"><B>Net (loss) after discontinued operations</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>1,647</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>826</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(2,779)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>2,600</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(213)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>(2,343)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=226.867 colspan=2 height="34"><P style="line-height:12pt; margin:0px"><B>Revaluation of Investments to fair value </B>(Note 1)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="34"><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="34"><P style="line-height:12pt; margin:0px" align=right>20</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>(6)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="34"><P style="line-height:12pt; margin:0px" align=right><B>1</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>35</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="34"><P style="line-height:12pt; margin:0px" align=right>2</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px"><B>Comprehensive Income/(Loss) </B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>1,647</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>846</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(2,785)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>2,601</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>(178)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>(2,341)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=73.4 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=68.333 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74.733 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.467 height="17"><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Income/(loss) per share</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74.733 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="34"><P style="line-height:12pt; margin:0px">Basic and diluted from continuing operations</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="34"><P style="line-height:12pt; margin:0px" align=right><B>$0.003</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="34"><P style="line-height:12pt; margin:0px" align=right>$0.002</P>
</TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.005)</P>
</TD><TD style="margin-top: 0px" valign=top width=74.733 height="34"><P style="line-height:12pt; margin:0px" align=right><B>$0.005</B></P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.000)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.004)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="34"><P style="line-height:12pt; margin:0px">Basic and diluted from discontinued operations</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="34"><P style="line-height:12pt; margin:0px" align=right><B>$0.003</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="34"><P style="line-height:12pt; margin:0px" align=right>$0.002</P>
</TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.005)</P>
</TD><TD style="margin-top: 0px" valign=top width=74.733 height="34"><P style="line-height:12pt; margin:0px" align=right><B>$0.005</B></P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.000)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="34"><P style="line-height:12pt; margin:0px" align=right>($0.004)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=226.867 colspan=2 height="18"><P style="line-height:12pt; margin:0px">Basic and diluted for the quarter</P>
</TD><TD style="margin-top: 0px" valign=top width=73.4 height="18"><P style="line-height:12pt; margin:0px" align=right><B>$0.003</B></P>
</TD><TD style="margin-top: 0px" valign=top width=68.333 height="18"><P style="line-height:12pt; margin:0px" align=right>$0.002</P>
</TD><TD style="margin-top: 0px" valign=top width=85.933 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>($0.005)</P>
</TD><TD style="margin-top: 0px" valign=top width=74.733 height="18"><P style="line-height:12pt; margin:0px" align=right><B>$0.005</B></P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 colspan=2 height="18"><P style="line-height:12pt; margin:0px" align=right>($0.000)</P>
</TD><TD style="margin-top: 0px" valign=top width=94.467 height="18"><P style="line-height:12pt; margin:0px" align=right>($0.004)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>4</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="753"><TR height=0 style="font-size:0"><TD width=226 /><TD width=9 /><TD width=75 /><TD width=85 /><TD width=101 /><TD width=69 /><TD width=66 /><TD width=94 /><TD width=10 /></TR>
<TR><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=bottom width=753 colspan=9><P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=751 colspan=9><P style="line-height:12pt; margin:0px" align=right><B>Consolidated Statements of Cash Flows</B></P>
</TD></TR>
<TR><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=753 colspan=9><P style="line-height:12pt; margin:0px" align=right><B>(in thousands of Canadian Dollars)</B></P>
</TD></TR>
</TABLE>
<P style="line-height:0.9pt; margin:0px" align=justify><BR>
<BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="752">
<TR><TD style="margin-top: 0px" valign=top width=226><P style="line-height:12pt; margin:0px" align=justify><B>Unaudited</B></P>
</TD><TD style="margin-top: 0px" valign=top width=276 colspan=4><P style="line-height:12pt; margin:0px" align=right><B>For the three months ended September 30</B></P>
</TD><TD style="margin-top: 0px" valign=top width=244 colspan=3><P style="line-height:12pt; margin:0px" align="right"><B>For the nine months ended September 30</B></P>
</TD></TR>
<TR><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=239 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>2009</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>2008</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>2009</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>2008</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash provided by (used in)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Operating activities</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Income(loss) before discontinued operations</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>1,671</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>862</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>(2,749)</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>2,680</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>(100)</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>(2,220)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Adjustments to reconcile net cash from operations (Note 12) </P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>525</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>(32)</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>835</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>1,169</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>39</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>1,073</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Changes in non-cash working capital balances (Note 12)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>(526)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>(63)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(73)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>(503)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>(642)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>(2,142)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash flows provided from (used for) continuing operations</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>1,670</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>767</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(1,987)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>3,346</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>(703)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>(3,289)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Investing activities</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Expenditures on capital assets and mineral properties</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>(1,136)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>(521)</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>(993)</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>(4,574)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>(1,158)</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>(1,493)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Sale of Barbrook Mine</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(19)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>9,213</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>(1,136)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>(521)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(1,012)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>(4,574)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>(1,158)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>7,720</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Financing activities</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Bank overdraft</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>(675)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>(85)</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>1,092</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>608</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>(13)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Issue of share capital net of issue costs </P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>1,119</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Sale of investments</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>51</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>&nbsp;&nbsp;&nbsp;</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>(675)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>(85)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>1,143</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>608</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>1,106</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash flow from discontinued operations</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Operating activities</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>(24)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>(36)</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>(28)</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>(80)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>(98)</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>(114)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Financing activities</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>(24)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>(36)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(28)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>(80)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>(98)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>(114)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Increase (decrease) in cash for the period</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>(165)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>125</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>(3,027)</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>(165)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>(1,351)</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>5,423</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash and cash equivalents, beginning of period</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>1,622</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>2,176</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>8,526</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>1,622</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>3,652</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>76</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash and cash equivalents, end of period</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>1,457</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>2,301</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>5,499</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>1,457</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>2,301</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>5,499</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Cash and cash equivalents at end of period relate to:</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=85><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=101><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=66><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=105><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Continuing operations</B></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right><B>1,454</B></P>
</TD><TD style="margin-top: 0px" valign=top width=85><P style="line-height:12pt; margin:0px" align=right>2,299</P>
</TD><TD style="margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px" align=right>5,500</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right><B>1,454</B></P>
</TD><TD style="margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px" align=right>2,299</P>
</TD><TD style="margin-top: 0px" valign=top width=105><P style="line-height:12pt; margin:0px" align=right>5,500</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="line-height:12pt; margin:0px" align=justify><B>Discontinued operations</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>3</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>2</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>(1)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>3</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>2</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>(1)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=237 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right><B>1,457</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=87><P style="line-height:12pt; margin:0px" align=right>2,301</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=103><P style="line-height:12pt; margin:0px" align=right>5,499</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right><B>1,457</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=68><P style="line-height:12pt; margin:0px" align=right>2,301</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=107><P style="line-height:12pt; margin:0px" align=right>5,499</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;&nbsp;</B></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Nature of Business</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:12.8px; padding-left:28.4px" align=justify>Caledonia is a mining company with exploration and development activities focused on Africa. &nbsp;The Corporation&#146;s primary assets are a gold production operation in Zimbabwe (Blanket), a base metals exploration project in Zambia (Nama), platinum group and base metals (PGE) exploration projects in South Africa (Rooipoort/Mapochs) and a non-producing gold mine in South Africa (Eersteling) which has been identified for disposal. &nbsp;Caledonia also has diamond exploration opportunities in Zambia and South Africa.</P>
<P style="line-height:12pt; margin:0px; padding-left:28.4px" align=justify>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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:30px; text-indent:-1.2px" align=justify>The Corporation operates in a number of sub Saharan countries, its interests in the various 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 these areas 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Basis of Presentation and Going Concern</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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, 2009. </P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:12.667px; text-indent:28.4px" align=justify><B>Significant Accounting Policies: </B></P>
<P style="line-height:12pt; 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, 2009, except for the following changes in accounting policies:</P>
<P style="margin-top:5.533px; margin-bottom:5.533px; padding-left:28.4px; font-family:Times,Times New Roman"><B>New accounting Policy</B></P>
<P style="margin-top:5.533px; margin-bottom:5.533px; padding-left:28.4px; font-family:Times,Times New Roman">Financial instruments &#151; recognition and measurement, Section 3855</P>
<P style="margin-top:5.533px; margin-bottom:5.533px; padding-left:28.4px; font-family:Times,Times New Roman" align=justify>This Section has been amended to clarify the application of the effective interest method after a debt instrument has been impaired. This amendment is effective for fiscal years beginning on or after July 1, 2009.</P>
<P style="margin:5.533px" align=justify><BR></P>
<P style="margin:5.533px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>6</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;&nbsp;</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:28.4px" align=justify><B>Recently issued accounting pronouncements issued and not yet effective</B><FONT style="font-family:Times,Times New Roman"> </FONT></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:28.4px; font-family:Times,Times New Roman" align=justify>The CICA issued three new accounting standards in January 2009: Section 1582, Business Combinations, Section 1601, <I>Consolidated Financial Statements </I>and Section 1602, <I>Non-Controlling interests. </I>Section 1582 replaces section 1581 and establishes standards for the accounting of a business combination. It provides the Canadian equivalent to IFRS 3 - <I>Business Combinations. </I>The section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:15.267px; padding-left:28.4px" align=justify>Sections 1601 and 1602 together replace section 1600, <I>Consolidated Financial Statements. </I>Section 1601, establishes standards for the preparation of consolidated financial statements. Section 1601 applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Section 1602 establishes standards for accounting of a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS lAS 27 - C<I>onsolidated and Separate Financial Statements </I>and applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011 and all three sections must be applied concurrently. The Corporation does not anticipate that the adoption of these standards will impact its financial results.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px; padding-left:28.4px; font-family:Times,Times New Roman" align=justify>&nbsp;Section 3855 Financial Instruments &#150; Recognition and Measurement has been amended to clarify when an embedded prepayment option is separated from its host debt instrument for accounting purposes. This amendment applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted.<B> </B></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:28.4px; font-family:Times,Times New Roman" align=justify>International Financial Reporting Standards (&#147;IFRS&#148;) </P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:12.8px; padding-left:28.4px" align=justify>The Canadian Accounting Standards Board confirmed in February 2008 plans to converge Canadian GAAP with International Financial Reporting Standards (&#147;IFRS&#148;) over a transition period expected to be effective for interim and annual periods commencing January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes amounts reported by Caledonia for the year ended December 31, 2010. </P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Capital Assets</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B><I>Producing Assets</I></B></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;&nbsp;</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B><I>Non-Producing Assets</I></B></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:28.4px" align=justify><B><I>Assets held for sale and discontinued operations</I></B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify>The components held for sale are as follows: </P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="632"><TR height=0 style="font-size:0"><TD width=29 /><TD width=391 /><TD width=102 /><TD width=102 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=29></TD><TD style="margin-top: 0px" valign=top width=391><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=208 colspan=2><P style="line-height:12pt; margin:0px" align=center>Eersteling Gold Mine</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29></TD><TD style="margin-top: 0px" valign=top width=391><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=104><P style="line-height:12pt; margin:0px" align=right><B>September 30</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=104><P style="line-height:12pt; margin:0px" align=right>December 31</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29></TD><TD style="margin-top: 0px" valign=top width=391><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=104><P style="line-height:12pt; margin:0px" align=right><B>2010</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=104><P style="line-height:12pt; margin:0px" align=right>2009</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29></TD><TD style="margin-top: 0px" valign=top width=391><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29>
</TD><TD style="margin-top: 0px" valign=top width=391><P style="line-height:12pt; margin:0px" align=justify>Capital Assets and mineral properties</P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right><B>704</B></P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right>670</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29>
</TD><TD style="margin-top: 0px" valign=top width=391><P style="line-height:12pt; margin:0px" align=justify>Current Assets</P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right><B>170</B></P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right>102</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29>
</TD><TD style="margin-top: 0px" valign=top width=391><P style="line-height:12pt; margin:0px" align=justify>Current Liabilities</P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right><B>(15)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right>(15)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=29>
</TD><TD style="margin-top: 0px" valign=top width=391><P style="line-height:12pt; margin:0px" align=justify>Asset Retirement obligation</P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right><B>(314)</B></P>
</TD><TD style="margin-top: 0px" valign=top width=102><P style="line-height:12pt; margin:0px" align=right>(324)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:28.4px" align=justify>As a consequence of this decision Eersteling Mine&#146;s results are disclosed under discontinued operations. Revenue from discontinued operations is Nil ($Nil in 2009 and $Nil in 2008). There is no tax applicable to discontinued operations.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Mineral Properties</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B><I>Producing Properties</I></B></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B><I>Non-Producing Properties</I></B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:12pt; margin:0px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Summary of Significant Accounting Policies (continued)</B></P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>(in thousands of Canadian Dollars)<B> &nbsp;</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:28.8px" align=justify><B>Foreign Currency Translation</B></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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:<br>
</P>
<P style="line-height: 12pt; text-indent: 48.4px; width: 96px; float: left; margin-top: 0px; margin-bottom: -2px">(i)</P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px; padding-left: 96.4px" align=justify>monetary assets and liabilities at period end rates;</P>
<P style="line-height: 12pt; text-indent: 48.4px; width: 96px; float: left; margin-top: 0px; margin-bottom: -2px">(ii)</P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px; padding-left: 96.4px" align=justify>all other assets and liabilities at historical rates, and</P>
<P style="line-height: 12pt; text-indent: 48.4px; width: 96px; float: left; margin-top: 0px; margin-bottom: -2px">(iii)</P>
<P style="line-height: 12pt; text-indent: -2px; 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="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; 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:<br>
</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:48.4px; width:96px; float:left">(i)</P>
<P style="line-height:12pt; margin:0px; padding-left:96.4px; text-indent:-2px" align=justify>all assets and liabilities at rates at balance sheet date;</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:48.4px; width:94.533px; clear:left; float:left">(ii)</P>
<P style="line-height:12pt; margin:0px; padding-left:96.4px; text-indent:-2px" align=justify>revenue and expense transactions at the average rate of exchange prevailing during the period.</P>
<P style="line-height:12pt; margin:0px; clear:left" 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="line-height:0.9pt; margin:0px" align=justify><BR></P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:0.9pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>9</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:96px; float:left"><B>1.</B></P>
<P style="line-height:12pt; margin:0px; padding-left:28.8px; text-indent:-2px" align=justify><B>Investments</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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 were listed on the TSX Venture Exchange in Canada prior to Motapa being acquired by Lucara (LUC.V) In terms of the transaction one Motapa share was exchanged for 0.9055 Lucara shares</P>
<P style="line-height:12pt; 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>In March 2010 the Corporation sold its shares in Lucara for $51</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:56.733px" align=justify>The fair value of the investment in Old Mutual Plc. is $4 ($4 &#150; 2009). </P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:96px; float:left"><B>2.</B></P>
<P style="line-height:12pt; margin:0px; padding-left:28.8px; text-indent:-2px" align=justify><B>Capital Assets</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=45 /><TD width=151.2 /><TD width=94.533 /><TD width=91.867 /><TD width=74.6 /><TD width=75.267 /><TD width=89 /><TD width=18.933 /></TR>
<TR><TD valign=top width=196.2 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=444.2 colspan=6><P style="line-height:12pt; margin:0px" align=center><B>COST</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>&nbsp;December 31, 2009</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>Exchange rate difference</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>Additions</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>&nbsp;September 30, 2010</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Land &#150; plant sites</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>9</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>9</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Plant and equipment</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=91.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=74.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- producing </P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>816</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(16)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>1,023</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>1,823</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- non-producing &nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>229</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(5)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>5</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>229</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Office equipment</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>939</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(19)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>30</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>950</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Vehicles</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>365</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(7)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>7</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>365</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>2,358</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(47)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>1,065</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>3,376</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=91.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=74.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=444.2 colspan=6><P style="line-height:12pt; margin:0px" align=center><B>ACCUMULATED AMORTIZATION</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>December 31, 2009</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>Exchange rate difference</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>Additions</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>&nbsp;September 30, 2010</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Land &#150; plant sites</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Plant and equipment</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=91.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=74.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- producing</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>38</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(1)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>167</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>204</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;- non-producing &nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>229</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(5)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>6</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>230</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Office equipment</P>
</TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>886</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(18)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>40</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>908</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Vehicles</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>329</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(7)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>40</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>362</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>1,482</P>
</TD><TD style="margin-top:0px" valign=top width=91.867><P style="line-height:12pt; margin:0px" align=right>(31)</P>
</TD><TD style="margin-top:0px" valign=top width=74.6><P style="line-height:12pt; margin:0px" align=right>252</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>1,704</B></P>
</TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=45><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=151.2><P style="line-height:12pt; margin:0px" align=justify>Net Book Value</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=94.533><P style="line-height:12pt; margin:0px" align=right>876</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=91.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=107.933 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>1,672</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:56.733px; float:left"><B>3.</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>Mineral Properties</B></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="652"><TR height=0 style="font-size:0"><TD width=7 /><TD width=216 /><TD width=69 /><TD width=88 /><TD width=74 /><TD width=75 /><TD width=96 /><TD width=11 /></TR>
<TR><TD valign=top width=225 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=423 colspan=6><P style="line-height:12pt; margin:0px" align=center><B>COST</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>December 31, 2009</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>Exchange rate difference</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>Additions</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>Impairment</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>&nbsp;September 30, 2010</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Producing:</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Blanket, Zimbabwe - gold property </P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>4,940</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>(100)</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>2,841<SUP>(1)</SUP></P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>7,681</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Non-producing - exploration:</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Rooipoort , South Africa</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>4,443</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>(89)</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>105</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>4,459</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Goedgevonden, South Africa</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Nama, Zambia</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>4,956</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>(99)</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>564</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>5,421</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Mulonga, Zambia</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>14,339</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px" align=right>(288)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="line-height:12pt; margin:0px" align=right>3,510</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>17,561</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=423 colspan=6><P style="line-height:12pt; margin:0px" align=center><B>ACCUMULATED AMORTIZATION</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>December 31, 2009</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>Exchange rate difference</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>Additions</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>Disposals</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>&nbsp;September 30, 2010</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Producing:</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Blanket, Zimbabwe - gold property </P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>581</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>(12)</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>281</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>850</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Non-producing - exploration:</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=88><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=74><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=75><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Rooipoort , South Africa</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Goedgevonden, South Africa</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Nama, Zambia</P>
</TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;&nbsp;&nbsp;Mulonga, Zambia</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=69><P style="line-height:12pt; margin:0px" align=right>581</P>
</TD><TD style="margin-top: 0px" valign=top width=88><P style="line-height:12pt; margin:0px" align=right>(12)</P>
</TD><TD style="margin-top: 0px" valign=top width=74><P style="line-height:12pt; margin:0px" align=right>281</P>
</TD><TD style="margin-top: 0px" valign=top width=75><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top: 0px" valign=top width=109 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>850</B></P>
</TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD valign=top width=7><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=216><P style="line-height:12pt; margin:0px" align=justify>Net Book Value</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=71><P style="line-height:12pt; margin:0px" align=right>13,758</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=90><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=76><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=77><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=111 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>16,711</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:52.8px; float:left"><SUP>(1)</SUP></P>
<P style="line-height:12pt; margin:0px; padding-left:52.8px; text-indent:-2px" align=justify>With the commissioning of the No. 4 shaft expansion project completed in October the capital work in progress account , shown as an addition in mineral properties, will be reallocated in the 4<SUP>th</SUP> quarter with $1,130 being transferred to plant and equipment- producing. </P>
<P style="line-height:12pt; margin:0px; text-indent:384px; clear:left" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:37.8px" align=justify>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="line-height:12pt; margin:0px"><BR></P>
<P style="line-height:12pt; margin:0px">
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:66.2px; float:left"><B>4.</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>Asset Retirement Obligation</B></P>
<div align="left">
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="614"><TR height=0 style="font-size:0"><TD width=26 /><TD width=368 /><TD width=103 /><TD width=109 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=26></TD><TD style="margin-top: 0px" valign=top width=368><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B><U>September 30</U></B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right><U>December 31</U></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26></TD><TD style="margin-top: 0px" valign=top width=368><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26></TD><TD style="margin-top: 0px" valign=top width=368><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px">Continuing operation </P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=109><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px">Opening balance </P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B>1,406</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>839</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px">Accretion expense</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B>20</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>25</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px">Increase in asset retirement obligation</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>592</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px">Foreign exchange loss (gain)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=105><P style="line-height:12pt; margin:0px" align=right><B>(46)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=111><P style="line-height:12pt; margin:0px" align=right>(50)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px"><B>Closing balance &#150; continuing operations </B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=105><P style="line-height:12pt; margin:0px" align=right><B>1,380</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=111><P style="line-height:12pt; margin:0px" align=right>1,406</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26></TD><TD style="margin-top: 0px" valign=top width=368><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=109><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px" align=justify>Discontinued operation</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=109><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px" align=justify>Opening balance </P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B>324</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>314</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px" align=justify>Accretion expense</P>
</TD><TD style="margin-top: 0px" valign=bottom width=103><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=109><P style="line-height:12pt; margin:0px" align=right>11</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px" align=justify>Foreign exchange loss (gain)</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=105><P style="line-height:12pt; margin:0px" align=right><B>(10)</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=111><P style="line-height:12pt; margin:0px" align=right>(1)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=26>
</TD><TD style="margin-top: 0px" valign=top width=368><P style="line-height:12pt; margin:0px" align=justify><B>Closing balance &#150; held for sale</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=105><P style="line-height:12pt; margin:0px" align=right><B>314</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=bottom width=111><P style="line-height:12pt; margin:0px" align=right>324</P>
</TD></TR>
</TABLE>
</div>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:28.4px" align=justify>The asset retirement obligations relate to Blanket Mine $1,380 ($1,406 &#150; 2009), and Eersteling Gold Mine $314 ($324 &#150; 2009) 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:66.2px; float:left"><B>5.</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>Share Capital</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:66.2px; float:left">(a) </P>
<P style="line-height:12pt; margin:0px; padding-left:66.2px; text-indent:-2px" align=justify>Authorized</P>
<P style="line-height:12pt; margin:0px; padding-left:66.2px; clear:left" align=justify>An unlimited number of common shares</P>
<P style="line-height:12pt; margin:0px; padding-left:66.2px" align=justify>An unlimited number of preference shares.</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:65.8px; float:left">(b)</P>
<P style="line-height:12pt; margin:0px; padding-left:65.8px; text-indent:-2px" align=justify>Issued</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=311.133 /><TD width=132.267 /><TD width=113.4 /></TR>
<TR><TD style="margin-top:0px" valign=top width=311.133><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=132.267><P style="line-height:12pt; margin:0px" align="right"><U>Number of Shares</U></P>
</TD><TD style="margin-top:0px" valign=top width=113.4><P style="line-height:12pt; margin:0px; padding-right:1.467px; text-indent:48.733px" align=right><U>Amount</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=311.133><P style="line-height:12pt; margin:0px; text-indent:0.733px" align=justify>Common shares</P>
</TD><TD style="margin-top:0px" valign=top width=132.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=113.4><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=311.133><P style="line-height:12pt; margin:0px">Balance - December 31, 2009</P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=132.267><P style="line-height:12pt; margin:0px" align=right>500,169,280</P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=113.4><P style="line-height:12pt; margin:0px; padding-left:20.4px" align=right>196,125</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=311.133><P style="line-height:12pt; margin:0px"><B>Balance &#150; September 30, 2010</B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=132.267><P style="line-height:12pt; margin:0px" align=right><B>500,169,280</B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000; border-bottom:2px solid #000000" valign=top width=113.4><P style="line-height:12pt; margin:0px; padding-left:20.4px" align=right><B>196,125</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px; padding-left:66.2px; text-indent:-28.4px" align=justify><B>&nbsp;</B></P>
<P style="line-height:12pt; 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,Times New Roman" align=center>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>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:56.733px; float:left">(c) </P>
<P style="line-height:12pt; margin:0px; padding-left:37.8px; text-indent:-2px" align=justify>Stock Option Plans and Stock-Based Compensation</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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 September 30, 2010, the Corporation has the following options outstanding:</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<div align="left">
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="538"><TR height=0 style="font-size:0"><TD width=35 /><TD width=237 /><TD width=113 /><TD width=145 /></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><U>Number of Options</U></P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><U>Exercise Price-$</U></P>
</TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><U>Expiry Date</U></P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>9,450,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>April 24, 2012</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>210,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>April 29, 2014</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>4,000,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>February 15, 2015</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>300,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>May 11, 2016</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>1,300,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>May 31, 2012</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>1,000,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>July 1, 2013</P>
</TD></TR>
<TR><TD valign=top width=35>
</TD><TD style="margin-top: 0px" valign=top width=237><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>15,820,000</P>
</TD><TD style="margin-top: 0px" valign=top width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>Mar 18, 2013</P>
</TD></TR>
<TR><TD valign=top width=37>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=239><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>500,000</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=115><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=145><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>Mar 23, 2014</P>
</TD></TR>
<TR><TD valign=top width=37>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=239><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>32,580,000</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=115><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>0.07</P>
</TD><TD style="margin-top: 0px" valign=top width=145><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
</TABLE>
</div>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px" align=justify>The continuity of the options granted, exercised, cancelled and expired under the Plans during 2010, 2009 and 2008 are as follows:</P>
<P style="line-height:12pt; margin:0px; padding-left:36px; text-indent:28.8px" align=justify>&nbsp;&nbsp;&nbsp;</P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="595"><TR height=0 style="font-size:0"><TD width=78 /><TD width=553 /><TD width=119 /><TD width=134 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=78></TD><TD style="margin-top: 0px" valign=top width=553><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=119><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><U>Number of Options</U></P>
</TD><TD style="margin-top: 0px" valign=top width=134><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><U>Exercise Price</U></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78></TD><TD style="margin-top: 0px" valign=top width=553><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=119><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=134><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Options outstanding at December 31, 2007</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=121><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>18,588,000</P>
</TD><TD style="border-top: 2px solid #000000; margin-top: 0px" valign=top width=136><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Forfeited or expired</P>
</TD><TD style="margin-top: 0px" valign=top width=119><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(1,778,000)</P>
</TD><TD style="margin-top: 0px" valign=top width=134><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Granted</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=121><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>17,320,000</P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=136><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=78>
</TD><TD style="margin-top: 0px" width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman">Options outstanding at December 31, 2008</P>
</TD><TD style="margin-top: 0px" valign=top width=119><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>34,130,000</P>
</TD><TD style="margin-top: 0px" valign=top width=134><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Granted</P>
</TD><TD style="margin-top: 0px" valign=top width=119><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>500,000</P>
</TD><TD style="margin-top: 0px" valign=top width=134><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Forfeited or expired</P>
</TD><TD style="margin-top: 0px" valign=top width=119><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>(2,050,000)</P>
</TD><TD style="margin-top: 0px" valign=top width=134><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify>Options outstanding and exercisable at December 31, 2009</P>
</TD><TD style="border-top: 1.333px solid #000000; border-bottom: 1.333px solid #000000; margin-top: 0px" valign=top width=121><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>32,580,000</P>
</TD><TD style="border-top: 1.333px solid #000000; border-bottom: 1.333px solid #000000; margin-top: 0px" valign=top width=136><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=78>
</TD><TD style="margin-top: 0px" valign=top width=553><P style="line-height:12pt; margin:0px; text-indent:1.467px; font-family:Times,Times New Roman" align=justify><B>Options outstanding and exercisable at September 30, 2010</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=121><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>32,580,000</B></P>
</TD><TD style="border-bottom: 2px solid #000000; margin-top: 0px" valign=top width=136><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>0.07 <SUP>(1)</SUP></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:64.8px; width:88.8px; float:left">(1)</P>
<P style="line-height:12pt; margin:0px; padding-left:88.8px; text-indent:-2px" align=justify>Options repriced at 2010 AGM and approved by shareholders</P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px" align=justify>In August 2010 the re-pricing of the above options, as approved at the 2010 AGM in May, became effective. As a result $354 total equity based compensation expense was charged to expense and credited to contributed surplus.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px" align=justify>The fair value of compensation expenses noted above was estimated using the Black-Scholes Option Pricing Model with the following assumptions for the periods ended September 30, 2010; December 31, 2009 and 2008.</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<div align="left">
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="552"><TR height=0 style="font-size:0"><TD width=75 /><TD width=279 /><TD width=66 /><TD width=57 /><TD width=65 /></TR>
<TR><TD valign=top width=75></TD><TD style="border: 1px solid #000000; margin-top: 0px" valign=top width=279><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="border-right: 1px solid #000000; border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=67><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><B>2010</B></P>
</TD><TD style="border-right: 1px solid #000000; border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=58><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>2009</P>
</TD><TD style="border-right: 1px solid #000000; border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>2008</P>
</TD></TR>
<TR><TD valign=top width=75>
</TD><TD style="border-left: 1px solid #000000; border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=279><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Risk-free interest rate</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=67><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><B>1-2%</B></P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=58><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>2%</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>3%</P>
</TD></TR>
<TR><TD valign=top width=75>
</TD><TD style="border-left: 1px solid #000000; border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=279><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Expected dividend yield</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=67><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><B>Nil</B></P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=58><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>Nil</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>Nil</P>
</TD></TR>
<TR><TD valign=top width=75>
</TD><TD style="border-left: 1px solid #000000; border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=279><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Expected stock price volatility</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=67><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><B>45-55%</B></P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=58><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>58-60%</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>55-62%</P>
</TD></TR>
<TR><TD valign=top width=75>
</TD><TD style="border-left: 1px solid #000000; border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=279><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Expected option life in years</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=67><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center><B>1.7- 5.8</B></P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=58><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>5</P>
</TD><TD style="border-right: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=66><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=center>5</P>
</TD></TR>
</TABLE>
</div>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>Option pricing models require the input of highly subjective assumptions including the expected price volatility. &nbsp;Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Corporation&#146;s stock options.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; float:left">(d)</P>
<P style="line-height:12pt; margin:0px; padding-left:37.8px; text-indent:-2px" align=justify>Warrants &nbsp;</P>
<P style="line-height:10pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px" align=justify>The Corporation has no warrants which are outstanding as of September 30, 2010:</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.8px; width:75.6px; float:left"><B>6.</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>Net Income/ (Loss) Per Share</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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 (2009 &#150; 500,169,280 and 2008 &#150; 493,199,280). &nbsp;Fully diluted income/ (loss) per share have not been calculated as it would be anti-dilutive for 2009 and 2008 and the options are &#147;out of the money&#148; as at September 30, 2010. </P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.4px; width:75.6px; float:left"><B>7.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Accounts Receivable</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>In the monetary policy statement announced by the Governor of the Reserve Bank of Zimbabwe (&#147;RBZ&#148;) in February 2009, the debt owing by RBZ to Blanket Mine was converted into a Special Tradable Gold-Backed Foreign Exchange Bond, with a term of 12 months and an 8% interest rate. The principal value of the Gold Bonds at the time of issue was US$2,945. The principal plus accrued interest as at September 30, 2010 is US$3,336</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>The Bond plus interest is guaranteed by RBZ on maturity. The Corporation was unable to sell the Bond at an acceptable discount rate during 2009 and the RBZ has not redeemed the Bond on the maturity dates of February 1, 2010 and July 1, 2010. As a result of the uncertain redemption date of the Bond it has been classified as a long term asset.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>Following further unsuccessful attempts to sell the Bond, the Corporation made a provision against the Bond value to record it at an estimated recoverable amount. &nbsp;In arriving at the recoverable amount the Corporation has considered the likelihood of cash being available to the RBZ to redeem the Bond over a range of periods. The Corporation believes the Bond will be repaid in due course but the timing is uncertain at this time. In arriving at this recoverable amount the Corporation has estimated the weighted average probability of the Bond being redeemed over periods of up to 5 years and applied a discount factor of 43%.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="546"><TR height=0 style="font-size:0"><TD width=75 /><TD width=269 /><TD width=99 /><TD width=95 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=75></TD><TD style="margin-top: 0px" valign=top width=269><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=99><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2010</B></P>
</TD><TD style="margin-top: 0px" valign=top width=95><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2009</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=75></TD><TD style="margin-top: 0px" valign=top width=269><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=99><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=top width=95><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=75>
</TD><TD style="margin-top: 0px" valign=top width=269><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Estimated recoverable amount</P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=101><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>794</B></P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=97><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>810</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>14</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; font-family:Times,Times New Roman; float:left"><B>8.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Inventory<br>
<br>
</B></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman; clear:left" align=justify>Inventory is comprised of gold in circuit at Blanket and consumable stores utilised by Blanket Mine.</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=167.533 /><TD width=19.667 /><TD width=19.667 /><TD width=15.733 /><TD width=4.6 /><TD width=85.333 /><TD width=56.733 /></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=89.933 colspan=2><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>September </B></P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>Dec 31</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Inventory items as at </P>
</TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=20.333 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=85.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2010</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=20.333 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Consumable stores</P>
</TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=20.333 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2,488</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2,092</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Gold in circuit</P>
</TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=20.333 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=85.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>497</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=167.533><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Total</P>
</TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=19.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=20.333 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=85.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2,488</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2,589</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>The Corporation has a provision for slow moving inventory of $716 (2009 - $724) related to its consumable stores at Blanket Mine.</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; font-family:Times,Times New Roman; float:left"><b>9.</b></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Bank loan</B></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=416 /><TD width=75.867 /><TD width=56.267 /></TR>
<TR><TD style="margin-top:0px" valign=top width=416><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify></P>
</TD><TD style="margin-top:0px" valign=top width=75.867><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>September </B></P>
</TD><TD style="margin-top:0px" valign=top width=56.267><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>Dec 31</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=416><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=75.867><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2010</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=56.267><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=416><P style="line-height:12pt; margin:0px; text-indent:30.6px; font-family:Times,Times New Roman" align=justify>The bank loan is granted by a Zimbabwean bank and is repayable</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.867><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>1,680</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=56.267><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>588</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=416><P style="line-height:12pt; margin:0px; padding-left:30.6px; font-family:Times,Times New Roman" align=justify>on demand.</P>
</TD><TD style="margin-top:0px" valign=top width=75.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=56.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=416><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.867><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>1,680</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.267><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>588</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; font-family:Times,Times New Roman; float:left"><b>10.</b></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Operating costs </B></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=382.333 /><TD width=46.667 /><TD width=74.4 /></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>As at September 30</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>2010</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2009<SUP>(1)</SUP></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Wages</P>
</TD><TD style="margin-top:0px" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>3,530</B></P>
</TD><TD style="margin-top:0px" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2,770</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Consumable materials (including amounts written down)</P>
</TD><TD style="margin-top:0px" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>4,343</B></P>
</TD><TD style="margin-top:0px" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>2,045</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Asset retirement obligation</P>
</TD><TD style="margin-top:0px" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>21</B></P>
</TD><TD style="margin-top:0px" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>14</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Exploration</P>
</TD><TD style="margin-top:0px" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>26</B></P>
</TD><TD style="margin-top:0px" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>57 </P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Administration</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>1,678</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>814</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=382.333><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=justify>Total</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=46.667><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right><B>9,598</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=74.4><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman" align=right>5,700</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:61.8px; font-family:Times,Times New Roman; float:left"><SUP>(1)</SUP></P>
<P style="line-height:12pt; margin:0px; padding-left:61.8px; text-indent:-2px; font-family:Times,Times New Roman" align=justify>Production only resumed in April 2009 although fixed costs like wages and administration were paid for the full period. No comparative figures are shown for 2008 as they are not meaningful due to the hyperinflationary environment that existed in Zimbabwe at that time.</P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.4px; width:75.6px; float:left"><B>11.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Other Expense (Income)</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=160.667 /><TD width=14.267 /><TD width=62.2 /><TD width=62.2 /><TD width=62.2 /><TD width=7.067 /><TD width=55.133 /><TD width=62.2 /><TD width=62.2 /></TR>
<TR><TD style="margin-top:0px" valign=top width=160.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=207.933 colspan=5><P style="line-height:12pt; margin:0px" align=right><U>Three months ended September 30</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=179.533 colspan=3><P style="line-height:12pt; margin:0px" align=center><U>YTD September 30</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Royalty paid to the Government of Zimbabwe <SUP>(1)</SUP></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>222</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>109</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>516</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>109</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Increase in RBZ Gold Bond provision</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>60</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>179</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Loss on sale of Barbrook</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>48</P>
</TD><TD style="margin-top:0px" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>198</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=174.933 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right><B>282</B></P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>109</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>48</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>695</B></P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>109</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=62.2><P style="line-height:12pt; margin:0px" align=right>198</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:61.8px; font-family:Times,Times New Roman; float:left"><SUP>(1)</SUP></P>
<P style="line-height:12pt; margin:0px; padding-left:61.8px; text-indent:-2px; font-family:Times,Times New Roman" align=justify>Payable at 3.5% of gross sales value of precious metals as from January 1, 2010</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>15</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:28.4px; width:75.6px; float:left"><B>12.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Statement of Cash Flows</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:37.8px; text-indent:37.8px" align=justify>Items not involving cash are as follows:</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=170.133 /><TD width=7.533 /><TD width=62.333 /><TD width=62.333 /><TD width=62.333 /><TD width=13.333 /><TD width=49 /><TD width=62.333 /><TD width=62.333 /></TR>
<TR><TD style="margin-top:0px" valign=top width=170.133><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=207.867 colspan=5><P style="line-height:12pt; margin:0px"><U>Three months ended September 30</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=173.667 colspan=3><P style="line-height:12pt; margin:0px" align=center><U>YTD September 30</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Amortization</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>107</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>101</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>101</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>519</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>299</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>302</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Rehabilitation accretion net of foreign exchange</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(99)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>8</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>11</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(36)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>22</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>33</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Blanket long term liability</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(11)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px; font-family:Times,Times New Roman">Equity-based compensation expense</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>354</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>8</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>616</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>354</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>23</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>684</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px">Unrealised translation loss/(gain)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>192</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(155)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>361</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(330)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Other</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(29)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>6</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>107</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(29)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>25</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>65</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Total</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>525</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(32)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>835</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>1,169</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>39</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>1,073</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=170.133 /><TD width=7.533 /><TD width=62.333 /><TD width=62.333 /><TD width=62.333 /><TD width=13.333 /><TD width=49 /><TD width=62.333 /><TD width=62.333 /></TR>
<TR><TD style="margin-top:0px" valign=top width=170.133><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=207.867 colspan=5><P style="line-height:12pt; margin:0px"><U>Three months ended September 30</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=173.667 colspan=3><P style="line-height:12pt; margin:0px" align=center><U>YTD September 30</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Accounts payable</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(4)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>683</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(36)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(44)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>1,103</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(1,979)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Accounts receivable</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>82</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(794)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(537)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(374)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(1,370)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(1,359)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Inventories</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(434)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>61</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>613</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>101</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(344)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>1,225</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Prepaid expenses</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(161)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(13)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(11)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(117)</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(4)</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(9)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Assets held for sale</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(9)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(102)</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(68)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(27)</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(20)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(526)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(63)</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(73)</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(503)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(642)</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(2,142)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; text-indent:75.6px" align=justify>Supplemental cash flow Information:</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=170.133 /><TD width=7.533 /><TD width=62.333 /><TD width=62.333 /><TD width=62.333 /><TD width=13.333 /><TD width=49 /><TD width=62.333 /><TD width=62.333 /></TR>
<TR><TD style="margin-top:0px" valign=top width=170.133><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=207.867 colspan=5><P style="line-height:12pt; margin:0px"><U>Three months ended September 30</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=173.667 colspan=3><P style="line-height:12pt; margin:0px" align=center><U>YTD September 30</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B><U>2010</U></B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2009</U></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><U>2008</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Interest paid </P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>45</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>14</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>55</P>
</TD><TD style="margin-top:0px" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>200</B></P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>50</P>
</TD><TD style="margin-top:0px" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Interest received</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>61</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>14</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>161</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>224</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>79</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>233</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=177.667 colspan=2><P style="line-height:12pt; margin:0px" align=justify>Net paid/(received)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right><B>(16)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(106)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333 colspan=2><P style="line-height:12pt; margin:0px" align=right><B>(24)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(29)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=62.333><P style="line-height:12pt; margin:0px" align=right>(133)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=justify>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>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:1.35pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; float:left"><B>13. </B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Segmental Information</B></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:289.467px; width:337.467px; clear:left; float:left"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:-2px" align=justify><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the nine months ended September 30, 2010</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=261.2 /><TD width=75.267 /><TD width=76.8 /><TD width=89 /><TD width=60.467 /><TD width=51 /></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=center><B><U>Corporate</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px" align=center><B><U>Zimbabwe</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=89><P style="line-height:12pt; margin:0px" align=center><B><U>South Africa</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px" align=center><B><U>Zambia</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px" align=center><B><U>Total</U></B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>14,975</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>14,975</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(8,872)</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(726)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(9,598)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1,470)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(202)</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(153)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1,825)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Interest</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>43</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(20)</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>1</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>24</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(501)</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(18)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(519)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Foreign exchange gains/(loss)</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(52)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>59</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>319</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(5)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>321</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Other income (expense) </P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(695)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(695)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1,479)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>4,744</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(577)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(5)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>2,683</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(80)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(80)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=261.2><P style="line-height:12pt; margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1,479)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>4,741</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=89><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(657)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(5)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>2,600</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:289.467px; width:337.467px; float:left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:-2px" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:-2px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:-2px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:-2px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:261.867px; clear:left" align=justify><B>For the three months ended September 30, 2010</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=274.267 /><TD width=75.267 /><TD width=76.8 /><TD width=76.333 /><TD width=60.467 /><TD width=51 /></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=center><B><U>Corporate</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px" align=center><B><U>Zimbabwe</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=76.333><P style="line-height:12pt; margin:0px" align=center><B><U>South Africa</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px" align=center><B><U>Zambia</U></B></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px" align=center><B><U>Total</U></B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>6,331</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>6,331</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3,199)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(254)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3,453)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(732)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(72)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(64)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(868)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Interest</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>15</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>15</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(101)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(6)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(107)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Foreign exchange gains/(loss)</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(38)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(4)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>81</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>36</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Other income (expense) </P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(282)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(282)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(770)</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>2,688</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(243)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3)</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>1,672</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(24)</B></P>
</TD><TD style="margin-top:0px" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(24)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(1)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.267><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(770)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.8><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>2,687</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=76.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(267)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=60.467><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>(3)</B></P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right><B>1,647</B></P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height: 12pt; text-indent: 261.867px; clear: left; margin: 0px; padding-left: 75.6px" align=justify>For the nine months ended September 30, 2009</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=274 /><TD width=75.6 /><TD width=75.6 /><TD width=75.6 /><TD width=56.733 /><TD width=56.667 /></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=center><U>Corporate</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=center><U>Zimbabwe</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=center><U>South Africa</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px" align=center><U>Zambia</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px" align=center><U>Total</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>7,295</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>7,295</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(5,048)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(652)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(5,700)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(1,370)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(170)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(104)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(1,644)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Interest received (paid)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>77</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(50)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>2</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>29</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(280)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(19)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(299)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Foreign exchange gains/(loss)</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>13</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>60</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>274</P>
</TD><TD style="margin-top:0px" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(19)</P>
</TD><TD style="margin-top:0px" valign=bottom width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>328</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Other income (expense) </P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(109)</P>
</TD><TD style="margin-top:0px" valign=bottom width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(109)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(1,280)</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>1,698</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(499)</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(19)</P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-bottom:2px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(100)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(113)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(113)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274><P style="line-height:12pt; margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(1,280)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>1,698</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(612)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(19)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(213)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>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>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px; padding-left:75.6px; text-indent:261.867px" align=justify>For the three months ended September 30, 2009</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=274.267 /><TD width=69.333 /><TD width=73.067 /><TD width=84.533 /><TD width=56.733 /><TD width=51 /></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=69.333><P style="line-height:12pt; margin:0px" align=center><U>Corporate</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=73.067><P style="line-height:12pt; margin:0px" align=center><U>Zimbabwe</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=84.533><P style="line-height:12pt; margin:0px" align=center><U>South Africa</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px" align=center><U>Zambia</U></P>
</TD><TD style="margin-top:0px; border-top:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px" align=center><U>Total</U></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Revenue from sales</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>4,932</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>4,932</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Operating costs</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(2,911)</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(219)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(3,130)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">General and administrative</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(348)</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(116)</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(35)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(499)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Interest</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>12</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(12)</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Amortization</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(96)</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(5)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(101)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Foreign exchange gains/(loss)</P>
</TD><TD style="margin-top:0px" valign=bottom width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(76)</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(172)</P>
</TD><TD style="margin-top:0px" valign=bottom width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>26</P>
</TD><TD style="margin-top:0px" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(9)</P>
</TD><TD style="margin-top:0px" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(231)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Other income (expense) </P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(109)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=bottom width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(109)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income (loss) for continuing operations</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(412)</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>1,516</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(233)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(9)</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>862</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Discontinued operations (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(36)</P>
</TD><TD style="margin-top:0px" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(36)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Income tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=274.267><P style="line-height:12pt; margin:0px; text-indent:1.467px">Net income (loss) for the year</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=69.333><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(412)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=73.067><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>1,516</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=84.533><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(269)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(9)</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=51><P style="line-height:12pt; margin:0px; font-size:9pt" align=right>(826)</P>
</TD></TR>
</TABLE>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; float:left"><B>14.</B></P>
<P style="line-height:12pt; margin:0px; text-indent:-2px" align=justify><B>Contingent Liability</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="line-height:12pt; 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 September 30, 2010 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 Zimbabwean laws and regulations relating to the indigenization of the mining industry, as it is recognized that these laws and regulations 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="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; float:left"><B>15.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Fair Value of Financial Instruments<br>
 </B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:75.6px; clear:left" 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:-2px; text-indent:75.6px; width:122.867px; float:left">(i) &nbsp;</P>
<P style="margin:0px; padding-left:122.867px; text-indent:-2px" 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:-2px; text-indent:75.6px; width:123.6px; clear:left; float:left">(ii)</P>
<P style="margin:0px; padding-left:123.6px; text-indent:-2px" 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:0px; clear:left" 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,Times New Roman" align=center>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>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:75.6px; width:96px; float:left">(iii)</P>
<P style="margin:0px; padding-left:123.6px; text-indent:-2px" 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:-2px; text-indent:75.6px; width:123.6px; clear:left; float:left">(iv)</P>
<P style="margin:0px; padding-left:123.6px; text-indent:-2px" 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:-2px; text-indent:75.6px; width:122.867px; clear:left; float:left">(v)</P>
<P style="margin:0px; padding-left:123.6px; text-indent:-2px" 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:0px; clear:left"><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:75.6px; float:left"><B>16.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Financial Risk Exposure and Risk Management<br>
 </B></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px; clear:left" 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="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; 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 cu
rrency risks.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>19</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:75.6px; font-family:Times,Times New Roman" 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 exchange rates relative to the Canadian dollar. The values are the Canadian dollar equivalent of the respective asset or liability that is denominated in a currency other than the Canadian dollar.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=140 /><TD width=77.533 /><TD width=75.6 /><TD width=75.6 /><TD width=75.6 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=top width=140><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=153.133 colspan=2><P style="line-height:12pt; margin:0px" align=center><B>2010</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=151.2 colspan=2><P style="line-height:12pt; margin:0px" align=center>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=140><P style="line-height:12pt; margin:0px" align=justify>$000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="line-height:12pt; margin:0px" align=justify><B>US Dollars</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify><B>SA &nbsp;Rand</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify>US Dollars</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Cash</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>1,161</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>141</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>2,039</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>159</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Bank overdraft</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>1,679</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>618</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Accounts Receivable</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>1,807</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>181</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>1,348</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>246</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Accounts Payable</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>1,862</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>215</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>1,724</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>56</P>
</TD></TR>
</TABLE>
<P style="margin:0px; padding-left:75.6px" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:75.6px" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:75.6px" align=justify>The table below illustrates by how much a 5% change in the rate of exchange between the Canadian Dollar and the currencies above will affect net income.</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=140 /><TD width=77.533 /><TD width=75.6 /><TD width=75.6 /><TD width=75.6 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=top width=140><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=153.133 colspan=2><P style="line-height:12pt; margin:0px" align=center><B>2010</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=151.2 colspan=2><P style="line-height:12pt; margin:0px" align=center>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=140><P style="line-height:12pt; margin:0px" align=justify>$000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=77.533><P style="line-height:12pt; margin:0px" align=justify><B>US Dollars</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify><B>SA &nbsp;Rand</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify>US Dollars</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=justify>SA &nbsp;Rand</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Cash</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>58</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>7</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>102</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>8</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Bank overdraft</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>84</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>31</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Accounts Receivable</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>90</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>9</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>67</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>12</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=140><P style="line-height:12pt; margin:0px">Accounts Payable</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=77.533><P style="line-height:12pt; margin:0px" align=right><B>93</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=75.6><P style="line-height:12pt; margin:0px" align=right><B>11</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>86</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=75.6><P style="line-height:12pt; margin:0px" align=right>3</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><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="line-height:12pt; 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="line-height:12pt; 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 its only debt is in Zimbabwe where it has a short term loan facility of US$2.50 million. 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="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px; font-family:Times,Times New Roman" 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 Gold Bonds payable by the RBZ as the amount owing by the RBZ is no longer increasing as gold is no longer sold to the RBZ. Future credit exposure to RBZ is limited to the recovery of the value of the Gold Bonds. &nbsp;</P>
<P style="margin:0px; padding-left:75.6px; font-family:Times,Times New Roman">Current gold sales are made to Rand Refineries in South Africa and the payment terms are stipulated in the service delivery contract and are adhered to in all instances.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>20</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:38.333px; text-indent:37.267px" align=justify>&nbsp;</P>
<P style="line-height:12pt; 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="line-height:12pt; 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 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="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify><B>v) Commodity Price Risk </B></P>
<P style="line-height:12pt; 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="line-height:12pt; 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="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>&nbsp; </P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; float:left"><B>17.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Capital Management<br>
 </B></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px; clear:left" 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="line-height:12pt; margin-top:0px; margin-bottom:15.267px; padding-left:75.6px" align=justify>The Corporation&#146;s capital includes equity, comprising issued common shares, contributed surplus and retained earnings.</P>
<P style="line-height:12pt; 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="line-height:12pt; margin:0px; padding-left:75.6px" align=justify>As at September 30, 2010, 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>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=264.6 /><TD width=151.2 /><TD width=150.333 /></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px">$000</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=151.2><P style="margin:0px" align=right><B>As at September 30, 2010</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=150.333><P style="margin:0px" align=right>As at December 31, 2009</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px; text-indent:2.267px">Issued common shares</P>
</TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px" align=right><B>196,125</B></P>
</TD><TD style="margin-top:0px" valign=top width=150.333><P style="margin:0px" align=right>196,125</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px; text-indent:2.267px">Contributed surplus</P>
</TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px" align=right><B>2,305</B></P>
</TD><TD style="margin-top:0px" valign=top width=150.333><P style="margin:0px" align=right>1,951</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px; text-indent:2.267px">Accumulated other comprehensive (loss)</P>
</TD><TD style="margin-top:0px" valign=top width=151.2><P style="margin:0px" align=right><B>(483)</B></P>
</TD><TD style="margin-top:0px" valign=top width=150.333><P style="margin:0px" align=right>(550)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px; text-indent:2.267px">Deficit</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=151.2><P style="margin:0px" align=right><B>(178,184)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=150.333><P style="margin:0px" align=right>(180,784)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=264.6><P style="margin:0px; text-indent:2.267px">Total</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=151.2><P style="margin:0px" align=right><B>19,763</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=150.333><P style="margin:0px" align=right>16,742</P>
</TD></TR>
</TABLE>
<P style="line-height:1.35pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; 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" align=justify>&nbsp;</P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height: 12pt; margin: 0px; padding-top: 4px" align=right><B>Caledonia Mining Corporation</B></P>
<P style="line-height:12pt; margin:0px" align=right><B>Notes to the Consolidated Financial Statements</B></P>
<P style="line-height:12pt; margin:0px" align=right>(in thousands of Canadian Dollars unless otherwise indicated and except for share and per share amounts) </P>
<P style="line-height:12pt; margin:0px; padding-bottom:4px; border-bottom:1.333px solid #000000" align=right>&nbsp;</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; float:left"><B>18.</B></P>
<P style="line-height: 12pt; text-indent: -2px; margin: 0px" align=justify><B>Subsequent events</B></P>
<P style="line-height:12pt; margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>Reserve Bank of Zimbabwe (RBZ) Gold Bonds</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:75.6px" align=justify>As previously reported the redemption date of these Bonds was extended by six months to July 31, 2010. The RBZ however failed to redeem the Bonds and the Mid-Year Monetary Policy Statement issued by the Governor of the RBZ failed to mention the Gold Bonds at all. Blanket continues to try and get clarity on this matter.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</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,Times New Roman" align=center>22</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-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; 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="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=324.467 /><TD width=324.467 /></TR>
<TR><TD style="margin-top:0px" width=648.933 colspan=2><P style="margin:0px; font-family:Times,Times New Roman; font-size:16pt"><B>Directors and Management at September 30, 2010</B><FONT style="color:#FFFFFF"><B> </B></FONT></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><B>BOARD OF DIRECTORS</B></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><B>OFFICERS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>G.R. Pardoe (1) (2) (3) (4)(5)</P>
</TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>G.R. Pardoe (1) (2) (3) (4)(5)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Chairman of the Board,</I></P>
</TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Chairman of the Board,</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>S. E. Hayden(3) (5)</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>S. E. Hayden(3) (5)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>President and Chief Executive Officer</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>President and Chief Executive Officer</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>J. Johnstone</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>S. R. Curtis (5)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Retired Mining Engineer</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Vice-President Finance and Chief Financial officer</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Gibsons, British Columbia, Canada</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Johannesburg, South Africa &nbsp;</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>F C. Harvey (1)</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>Dr. &nbsp;T. Pearton</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Retired Executive</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Vice President Exploration</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Oakville, Ontario, Canada</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman">C. R. Jonsson &nbsp;(2) (3) (5)</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>J.M. Learmonth</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman"><I>Principal of Tupper Jonsson&amp; Yeadon</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Vice-President Business Development</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman"><I>Barristers &amp; Solicitors</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><I>Johannesburg, South Africa</I></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman"><I>Vancouver, British Columbia,</I></P>
</TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman"><I>Canada</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right><B>BOARD COMMITTEES</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>(1) &nbsp;Audit Committee</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>R. W. Babensee (1) (2)</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>(2) &nbsp;Compensation Committee</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Chartered Accountant - Retired</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>(3) &nbsp;Corporate Governance Committee</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Toronto, Ontario, Canada</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>(4) &nbsp;Nominating Committee</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=right>(5) &nbsp;Disclosure Committee</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify>S. R. Curtis (5)</P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Vice-President Finance and Chief Financial officer</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; font-family:Times,Times New Roman" align=justify><I>Johannesburg, South Africa</I></P>
</TD><TD style="margin-top:0px" width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=324.467><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>23</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-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:1.35pt; margin:0px; page-break-before:always" align=justify><BR></P>
<P style="line-height:12pt; margin:0px" align=justify>&nbsp;</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"><B>&nbsp;</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=310.267 /><TD width=310.267 /></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>CORPORATE DIRECTORY</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>SOLICITORS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>CORPORATE OFFICES</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Tupper, Jonsson &amp; Yeadon</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Canada - Head Office</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">1710-1177 West Hastings St, Vancouver,</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Caledonia Mining Corporation</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">British Columbia V6E 2L3 Canada</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Suite 1201, 67 Yonge Street</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Toronto, Ontario M5E 1J8 Canada</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Borden Ladner Gervais LLP</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel:(1)(416) 369-9835 Fax:(1)(416) 369-0449</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Suite 4100, Scotia Plaza</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; color:#0000FF"><U>info@caledoniamining.com</U><FONT style="font-family:Times,Times New Roman; color:#000000"></FONT></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">40 King Street West</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Toronto, Ontario M5H 3Y4 Canada</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>South &#193;frica &#150; &#193;frica Office</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left"><B>Greenstone Management Services (Pty) Ltd.</B></P>
<P style="margin:0px; text-indent:-2px"><B>AUDITORS &nbsp;</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>AUDITORS &nbsp;</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">P.O. Box 834</P>
<P style="margin:0px; text-indent:-2px"><B>BDO Dunwoody LLP</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">BDO Canada LLP</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">Saxonwold 2132</P>
<P style="margin:0px; text-indent:-2px"><B>Chartered Accountants</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Chartered Accountants</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">South Africa</P>
<P style="margin:0px; text-indent:-2px">Suite 3300, 200 Bay Street</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Suite 3300, 200 Bay Street</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel: (27)(11) 447-2499 Fax: (27)(11) 447-2554</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Royal Bank Plaza, South Tower</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Toronto, Ontario M5J 2J8 Canada</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left"><B>Zambia</B></P>
<P style="margin:0px; text-indent:-2px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:240px; font-family:Times,Times New Roman; float:left">Caledonia Mining (Zambia) Limited</P>
<P style="margin:0px; text-indent:-2px; font-family:Times,Times New Roman">&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; font-family:Times,Times New Roman"><B>REGISTRAR &amp; TRANSFER AGENT</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">P.O. Box 36604</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Equity Transfer Services Inc.</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">Lusaka, Zambia</P>
<P style="margin:0px; text-indent:-2px">Suite 400 200 University Ave</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Suite 400&nbsp;200 University Ave.</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel:(260)(1) 29-1574 Fax(260)(1) 29-2154</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Toronto, Ontario M5H 4H1 Canada</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel: (416) 361 0152 Fax: (416) 361 0470</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>BANKERS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Zimbabwe</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Canadian Imperial Bank of Commerce</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Caledonia Holdings Zimbabwe (Limited)</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">6266 Dixie Road</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">P.O. Box CY1277</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Mississauga, Ontario L5T 1A7 Canada</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Causeway, Harare</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Zimbabwe</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>NOMADS AND BROKERS (AIM)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel: (263) (4) 701&nbsp;152/4 Fax: (263)(4) 702 248</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>RBC Capital Markets</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">71 Queen Victoria Street</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:384px; float:left"><B>CAPITALIZATION </B>at November 10, 2010</P>
<P style="margin:0px; text-indent:-2px"><B>RBC Capital Markets</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">London EC4V 4DE</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">Authorised: Unlimited</P>
<P style="margin:0px; text-indent:-2px">71 Queen Victoria Street</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Tel: +44 20 7653 4000</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Shares, Warrants and Options Issued:</B></P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:336px; float:left">Common Shares: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;500,169,280 </P>
<P style="margin:0px; text-indent:-2px">Tel: +44 20 7653 4000</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>SHARES LISTED</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:96px; float:left">Warrants:</P>
<P style="margin:0px; text-indent:-2px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nil &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">Toronto Stock Exchange Symbol &#147;CAL&#148;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin-top:0px; margin-bottom:-2px; width:96px; float:left">Options:</P>
<P style="margin:0px; text-indent:-2px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32,580,000</P>
</TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">NASDAQ OTC BB Symbol &quot;CALVF&quot;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px">London &#147;AIM&#148; Market Symbol &#147;CMCL&#148;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px"><B>Web Site: </B><U>http://www.caledoniamining.com</U><FONT style="font-family:Times,Times New Roman"></FONT></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=310.267><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
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<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>24</P>
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<DESCRIPTION>MANAGEMENT'S DISCUSSION & ANALYSIS FOR THE PERIOD ENDED SEPTEMBER 30, 2010
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   <TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</TITLE>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CALEDONIA MINING CORPORATION</FONT></B></TD></TR></TABLE>
<P style="text-align: left;">
<div align="right">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">November 10, 2010</FONT></B></TD></TR></TABLE>
</div>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Management&#146;s Discussion and Analysis</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This discussion and analysis of the consolidated operating results and financial condition of Caledonia Mining Corporation ("Caledonia&#148;) is for the fiscal period ended September 30, 2010 and the period until November 10, 2010. It should be read in conjunction with the Unaudited Consolidated Financial Statements as at September 30, 2010 and the Annual Report for the year ended December 31, 2009, all of which are available from the System for Electronic Data Analysis and Retrieval at </FONT><U><FONT color="#0000ff" size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">www.sedar.com </FONT></U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">or from Caledonia&#146;s website at </FONT><U><FONT color="#0000ff" size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">www.caledoniamining.com</FONT></U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">. The Unaudited Consolidated Financial Statements and 
related notes have been prepared in accordance with Canadian Generally Accepted Accounting Principles (&#147;GAAP&#148;).</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Note that all currency references in this document are to Canadian Dollars.</FONT></B></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Listings</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Caledonia&#146;s shares are listed on the Toronto Stock Exchange as &#147;CAL&#148;, on London&#146;s AIM as &#147;CMCL&#148; and are also traded on NASDAQ-OTCBB as &#147;CALVF&#148;.</FONT></P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top align=right width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">EXECUTIVE SUMMARY</FONT></B>	</TD>
</TR>
<TR>
	<TD nowrap valign=top align=right width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.1</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Core Business and Strategy</FONT></B>	</TD>
</TR>
</TABLE>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Caledonia is an exploration, development and mining corporation focused on Africa. The Corporation&#146;s primary assets are a gold mine in Zimbabwe (Blanket), a base metals exploration project in Zambia (Nama), platinum group and base metals (PGE) projects in South Africa (Rooipoort/Mapochs) and a non-producing gold mine in South Africa (Eersteling) which has been identified for disposal. Caledonia also has an undeveloped diamond exploration property in South Africa.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Corporation&#146;s business model is to identify and/or acquire properties or projects early in the development cycle which have the potential to become low cost operations, and then add value by developing the asset, either as an operator or through joint venture agreements. The possibility of divestiture in whole or part will be considered at different points in time and will be governed by the benefit to shareholders. Where appropriate, Caledonia will seek strategic alliances through existing or new joint ventures.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Corporation&#146;s main focus has been the completion of the No. 4 Shaft Expansion Project at Blanket in order to achieve approximately 40,000 ounces of gold production per annum. The successful commissioning of the No. 4 Shaft Expansion Project was announced in October 2010. As with any mine there will be the need for on-going expenditure on sustaining capital work, exploration and mine development. This will be funded by a combination of internally generated income and by Zimbabwe-based bank loans.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Activity at the Nama and Rooipoort/Mapochs exploration properties will continue to be determined by available cash resources.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.2 Key Performance Driver</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The positive drivers for the Blanket Mine have been the higher gold price, the successful retention of the vast majority of its skilled workforce and the recruitment of additional skills, the dollarization of the Zimbabwean economy. These have resulted in the elimination of hyperinflation, and the 3</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter commissioning of the No.4 Shaft Expansion project. However operating a mine in Zimbabwe continues to be subject to numerous challenges, the most important being:</FONT></P>
<UL>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">continued uncertainty regarding the implementation of the Indigenisation policy of the Zimbabwean</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Government:</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">unavailability of affordable and sufficient working capital;</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">unrealistic demands and expectations of the labour unions relating to US Dollar based pay increases; and.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">frequent disruptions of the electrical power supplies and the high cost of alternative power sources.</FONT></LI>
</UL>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">On-going and extensive employee safety and training, together with strict environment management provides a safe and efficient working environment for all personnel and continue to upgrade the skills of the mine&#146;s existing and new employees.</FONT></P>

<P style="text-align: left;">
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<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The operating and capital cost containment and budgetary controls in place at Blanket are continually monitored to ensure that the production profile and costs meet the strategic goals set by corporate and mine management.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.3 Capability to Deliver</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The existing short term bank loan facility granted to Blanket in conjunction with internally generated cash flows has generated sufficient funding, and the commissioning of the No.4 Shaft Expansion Project should now enable Blanket to ramp up its gold production to approximately 40,000 ounces per annum by the end of 4</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter 2010.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Electricity supply interruptions still continue to be a significant operating problem. The installation and commissioning in June 2010 of the first 2.5MVA diesel generator (&#147;Genset&#148;) played an essential role in allowing the No.4 Shaft expansion project to be completed in the 3</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter and for normal underground mining and development operations to continue during power disruptions. This Genset will continue to provide sufficient power to Blanket&#146;s underground operations and therefore will allow the increased mining tonnage targets to achieve a 40,000 ounces of gold per annum production rate to be met. As there is some excess production capacity in the metallurgical plant at present Blanket can offset some of the power interruptions when power is available to run the plant 
on a continuous basis. However the frequency and duration of power interruptions recently experienced would not allow the metallurgical plant to produce at the 40,000 per annum gold production rate and three further Gensets and their associated transformers, switchgear and synchronisation panels have been ordered and are expected to be installed and commissioned early in Q1 2011.</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Power supply interruptions tonnage</FONT></B></P>
<DIV align="left">
<TABLE border=0 cellspacing=0 width="300">
<TR>
     <TD width=118></TD>
     <TD width=57></TD>
     <TD width=113></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap width="118">
<font size="2">
&nbsp;</font></TD>
	<TD align=right nowrap width="57">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Production</FONT></B></TD>
	<TD align=right nowrap width="113">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">As % of expected&nbsp;<br>
 available 24</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="text-indent: 5.000000px" style="" width="118">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Month</FONT></B></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">hours Lost</FONT></B></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">hour power</FONT></B></TD>
</TR>
<TR>
	<TD colspan=3 width="235">
<font size="2">
&nbsp;</font></TD>
</TR>
<TR valign="bottom">
	<TD align=center nowrap style="border-bottom: 1px solid #000000" width="120">
<p align="left">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Oct 2009</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">11</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1.6</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Nov 2009</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">133</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">18.5</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Dec 2009</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">67</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">8.9</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Jan 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">75</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">10.1</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Feb 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">152</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">22.6</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Mar 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">212</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">28.5</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">April 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">236</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">32.8</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">May 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">231</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">31.1</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">June 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">202</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">28.0</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">July 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">54</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">7.3</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Aug 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">246</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">33.1</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="120">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Sept 2010</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="59">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">137</FONT></TD>
	<TD align=right nowrap style="border-bottom: 1px solid #000000" width="115">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">19.0</FONT></TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The improvement in the supply of electricity which was experienced in July did not continue into August and September. The power interruptions in August was the worst experienced since the power interruptions started in 2009! In October 2010 Blanket signed an agreement with Zimbabwean Electricity Supply Agency (&#147;ZESA&#148;) whereby Blanket accepted a higher billing rate for the ZESA supplied power in exchange for uninterrupted power supply. The higher billing rate is significantly cheaper than the cost of diesel generated power supply from the Genset. In recent weeks Blanket has experienced a significant reduction in the incidence of power interruptions. However over the medium to long term, management expects that electricity supplies will continue to be at risk of interruption due to the on-going and acknowledged critical shortage of power generating capacity in Zimbabwe and the sub-Saharan region as
a whole.</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.4</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Results and Outlook</FONT></B>	</TD>
</TR>
</TABLE>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Tonnages milled and gold produced since the resumption of production at Blanket in April 2009 are shown in the table below:</FONT></P>
<DIV align="left">
<TABLE border=0 cellspacing=0>
<TR>
     <TD width=18%></TD>
     <TD width=12%></TD>
     <TD width=12%></TD>
     <TD width=16%></TD>
     <TD width=20%></TD>
     <TD width=18%></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap>
<font size="2">
&nbsp;</font></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Year</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Tonnes</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Gold Ounces</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Gold Head (Feed)</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Average USD price</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<font size="2">
&nbsp;</font></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<font size="2">
&nbsp;</font></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Milled</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Produced</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Grade g/t</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">per ounce achieved</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Third quarter</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">41,594</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4,935</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4.04</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,241</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Second quarter</FONT></B></TD>
	<TD align=center nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=center nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30,788</FONT></B></TD>
	<TD align=center nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3,408</FONT></B></TD>
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
<p align="center"><font size="2">
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3.79</FONT><SUP><FONT size=1 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(1)</FONT></SUP></B></font></p>
    </TD>
	<TD align=center nowrap style="border-bottom: 1 solid #000000">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,192</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">First quarter</FONT></B></TD>
	<TD align=center nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=center nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">29,805</FONT></B></TD>
	<TD align=center nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3,129</FONT></B></TD>
	<TD align=center nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3.58</FONT></B></TD>
	<TD align=center nowrap style="border-bottom-style: solid; border-bottom-width: 2">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,109</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Fourth quarter</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<font size="2">
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">45,001</FONT><SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2)</FONT></SUP></font></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,164</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2.96</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1,117</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Third quarter</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">34,266</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,117</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3.63</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">974</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Second quarter</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">24,177</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2,746</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3.53</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">935</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">First quarter</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></TD>
</TR>
</TABLE>
</DIV>
<P align="left">
<SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT></SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Increase in recovered grade is a direct result of discontinuing mining operations above the 510 m level<br>
</FONT><SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2) </FONT></SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">High tonnes milled were as a direct result of low power disruptions.</FONT></P>
<P align="left">
&nbsp;</P>
<P align="left">
<font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">There is a
very clear improvement in the tonnages and the gold head grade being mined and
milled during 2010.</font></P>
<P align="left">
&nbsp;</P>
<P style="text-align: center;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2</FONT></P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>



<!--$$/page=-->
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1.5 Operational Risks</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The recently installed Genset#1 can only supply power to the underground section, compressors and No. 4 Shaft Winder. However, Blanket&#146;s ability to achieve 40,000 ounces of gold production per annum requires a higher uninterrupted electrical power supply to the crushing, milling and CIL plant than has been experienced in recent months. A new ZESA agreement will hopefully contribute to improved overall stable power supply. The Corporation has decided to mitigate the risk of possible future power interruptions by investing in three additional standby generators. The recent strength of the gold price has been positive but the strong Rand/US Dollar exchange rate has increased the cost of consumables and capital items most of which are imported from South Africa and are priced in South African Rands. The recently imposed increase in the royalty from 3.5% to 4% with effect from October 2010 and taxation rate from 15% to 25% with effect from Jan
uary 2010 will reduce Blanket&#146;s profitability and cash flow. Indigenization legislation potentially could make Zimbabwe a very difficult investment environment if it is implemented on the basis currently proposed. However until the Indigenization policy is finally clarified and legislated it will remain impossible to accurately assess its effect on Blanket or Caledonia&#146;s future investment in Blanket or Zimbabwe.</FONT></P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">OPERATIONAL REVIEW AND RESULTS OF OPERATIONS</FONT></B>	</TD>
</TR>
<TR>
	<TD nowrap valign=top width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.1</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Safety, Health and Environment (&#147;SHE&#148;)</FONT></B>	</TD>
</TR>
</TABLE>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The following safety statistics have been recorded at Blanket Mine:</FONT></P>
<DIV align="left">
<TABLE border=0 cellspacing=0>
<TR>
     <TD width=37%></TD>
     <TD width=22%></TD>
     <TD width=21%></TD>
     <TD width=17%></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap>
<font size="2">
&nbsp;</font></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3rd</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">YTD</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">YTD</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="TEXT-INDENT:11.000000px">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Class</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Quarter</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">September</FONT></B></TD>
	<TD align=center nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">September</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<font size="2">
&nbsp;</font></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2009</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Lost time injury</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Occupational illness</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Medical aid</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Restricted work activity</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">6</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">11</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">15</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">First aid</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">7</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">15</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">5</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Total</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">14</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">31</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">23</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<font size="2">
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Incidents </FONT><SUP><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT></SUP></font></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">17</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">42</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">28</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Near misses</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">9</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">28</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">15</FONT></TD>
</TR>
</TABLE>
</DIV>
<P align="left">
<font size="1" face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1) The increase in the number of incidents in 2010 is directly related to the increased activity during 2010 compared to the low level of activity in the 1st quarter and 2nd quarter 2009 as there was no mining or milling operations in 1st quarter 2009. In January 2010 more stringent reporting requirement of Incidents and Near Misses were implemented which has resulted in the expected increase in these statistics, and which now enables the mine to better assess areas of potential concern.&nbsp;<br>
</font></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">There were no adverse environmental issues during the quarter. Water sampling results from the 14 monitoring holes downstream of the tailing dams continue to verify satisfactory environmental controls.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Human Resources</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Chamber of Mines Zimbabwe (&#147;COMZ&#148;) has still been unable to settle a wage dispute with the mining union AMWUZ and negotiations continue.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.2 Gold Production Blanket Mine &#150; Zimbabwe</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Production during the third quarter showed a significant improvement over the 2 previous quarters with milled tonnes being 35% higher and gold production 44.8% higher at 4,935 ounces than the 2nd quarter. The higher gold production is a direct result of management&#146;s revised mining plan as was detailed in the 2</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">nd </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Quarter report.</FONT></P>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3</FONT></P>

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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The mined head grade delivered to the mill improved by a further 0.25 g/t over that achieved in the 2nd quarter and gold recoveries were 91.3% for the quarter. The slight drop in recovery at the higher milling rate can be attributed to the frequent power outages during the quarter which resulted in non-continuous operation of the metallurgical recovery circuits. An additional 4 new CIL mixers with their modified dual-impellor design have been ordered and should be installed before the end of this quarter.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Blanket continues with the establishment of new and additional mining-stope benches in two specific mining areas in order to increase the number of mining production machines in these sections. These will allow for a rapid increase in mined tonnages now that No. 4 Shaft Expansion Project has been completed.</FONT></P>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Underground Operations</FONT></B></P>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Capital Projects</FONT></B></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Number 4 Shaft Expansion:</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As announced previously in a News Release, this project was successfully commissioned early in the 4</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">th </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter despite the frequent power interruptions that necessitated the purchase and installation of a 2.5 Kva Genset. This was a highly commendable and noteworthy performance by Blanket&#146;s management and its contractors. There remains a small amount of work required to complete the upgrade of the gyratory crushing circuits and revised mill feed arrangement. The first of two new Telsmith 38H gyratory crushers has been installed and the second unit is scheduled for installation before the end of January 2011.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">750m AR &#150; Lima Haulage</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This is a new Project to link the Blanket and Lima ore bodies on the primary 22 Level Haulage level. This haulage will also provide a number of crosscuts for drilling platforms from which a drill core evaluation of the ore above and below the 750m development level will be done, and which, if successful will allow for sustained production at the annual targeted level of 40,000 ounces of gold and possibly beyond. The cost of this 2 year project, which will be financed and managed utilizing internal resources, is estimated to be approximately US&#36;2.5 million.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Operations</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">During the 3rd quarter the metallurgical plant suffered a 21.3% down time of 471 hours (Q2 - 814 hours). The composition of this abnormal downtime was 82% for no power, 9% due to no available feed ore occasioned by shaft time being dedicated to installations required by the No4 Shaft Expansion Project, 4% for engineering issues, 5% for planned stoppages and miscellaneous operational issues. If the effect of electricity outages is discounted, Blanket&#146;s operations have been running at over 91% availability.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The secondary and tertiary crusher sections operated well with no major problems although the current tertiary crushing circuit operated at very high cost and will be entirely replaced by the two new Telsmith 38H crushers once they have both been installed and commissioned.</FONT></P>
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     <TD width=21%></TD>
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     <TD width=12%></TD>
     <TD width=15%></TD>
     <TD width=8%></TD>
     <TD width=14%></TD>
     <TD width=9%></TD></TR>
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&nbsp;</TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
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&nbsp;</TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
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&nbsp;</TD>
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	<TD colspan=7>
&nbsp;</TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3rd</FONT></B></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">YTD</FONT></B></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3rd</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">YTD</FONT></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">October</FONT></B></TD>
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	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Production results</FONT></B></TD>
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&nbsp;</TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Quarter</FONT></B></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">September</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Quarter</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">September</FONT></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
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	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Ore milled</FONT></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Tonnes</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">41,594</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">100,893</FONT></B></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">34,266</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">58,443</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">14,304</FONT></B></TD>
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	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Head (feed) Grade</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Grams/tonne</FONT></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4.04</FONT></B></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3.80</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4.1</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4.05</FONT></TD>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4.34</FONT></B></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Recovery %</FONT></TD>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Per cent</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">91.3</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">91.2</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">91</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">90</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">93</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Gold produced</FONT></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Ounces</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4,935</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">11,472</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,117</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">6,860</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,854</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Gold Sold</FONT></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Ounces</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4,935</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">12,234</FONT></B></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,696</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">6,860</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">1,854</FONT></B></TD>
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</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The gold production achieved in October shows the continued improvements. Management expects that subject to there being reasonable power supply continuity that the expected annual gold production level of approximately 40,000 ounces should be achieved by the end of December 2010.</FONT></P>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4</FONT></P>

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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Outlook</FONT></B><BR>
<BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Risks</FONT></B></TD></TR></TABLE>
<UL>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Until additional generators are installed, power interruptions at similar levels to those experienced during</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">this year will significantly affect gold production because the plant will not be able to make up sufficient</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">metallurgical recovery time lost as the mine attains the planned feed ore ramp-up to 1,000 tonnes per day. It</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">is hoped that the recently signed ZESA power agreement will prevent or at least significantly reduce</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">continuing power interruptions. The Corporation&#146;s Board has authorized management to purchase 3</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">additional diesel powered generators to mitigate the future ri
sk of power outages that would be detrimental</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">to achieving the target of 40,000 ounces of gold production and Caledonia has completed the design,</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">engineering and procurement in this regard.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Government actions and the introduction of constraining legislation, such as the introduction of the &#147;use or</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">lose it&#148; policy in the ownership of mining claims. Blanket has commenced exploration on two project areas</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">being the GG Project and the Mascot Project which incorporates the Mascot, Penzance and Eagle Vulture</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">shafts areas.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The recently announced increase in royalty from 3.5% to 4% with effect from October 1, 2010 in</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">conjunction with the increased income tax for mining companies from 15% to 25%, and a range of further</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">taxes and levies imposed by central and local government has substantially increased the taxation burden on</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Zimbabwean mining operations. As the Zimbabwean government attempts to increase its revenue base</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">there is a risk that rates of taxation may be increased further and/or new taxes may be imposed.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">In the absence of being able to raise increased levels of debt funding at realistic rates of interest and tenor</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">locally in Zimbabwe, Blanket relies on internally generated funds to finance its operations and investment</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">program. This situation is further aggravated by the failure of the Zimbabwe Government to repay its</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Special Tradable Gold Bond or instruct that it can be used to offset a range of payments currently being paid</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">on an ongoing basis to the Government such as the royalty, tax, VAT and import duties. It is therefore</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">imperative that there be no disruption of operations and th
at current production plans are met in order to</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">generate the predicted free cash flow required for our current and sustaining capital funding requirement.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Uncertainty regarding Blanket&#146;s obligations in respect of the implementation of indigenization and the</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">general climate of uncertainty that indigenization policies have created in Zimbabwe creates multiple risks</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">which include: investor uncertainty, continued difficulty in raising long term debt both locally and</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">internationally, uncertainty as to the nature and identity of qualifying indigenization partners in terms of the</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">existing regulations and any future revenue obligations that may be required in terms of legislation to offset</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">a requirement for direct equity participation by in
digenous parties.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">A significant fall in the gold price in the near-term would hamper further mine capital work.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Currency exchange rates especially a further strengthening value of the SA Rand against the US&#36;.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Possible operating cost inflation eroding profitability.</FONT></LI>
</UL>
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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Opportunities</FONT></B></TD></TR></TABLE>
<UL>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Following the commissioning of the No. 4 Shaft Expansion, Blanket has considerable opportunities to</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">further expand production to between 1,500 and 1,800 tonnes per day from the existing mine area,</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">especially with the planned development between Blanket and Lima shafts. The estimated current mine ore</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">reserve/resources can support this size of operation, but, significant capital investment and time will be</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">required to achieve these production rates.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Blanket&#146;s cost of production per ounce will reduce as fixed costs and overheads are spread across higher</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">production as gold production is increased from the present levels to approximately 40,000 ounces per</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">annum. This will translate into increased cash generation, which may, depending on the political and</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">legislative environment, be used to fund further mine development and exploration activities.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Blanket holds a number of additional claims in the Gwanda greenstone belt. Most of these are sited on</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">disused mines which were last worked at least thirty years ago. At the current gold prices and with the</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">modern exploration and metallurgical techniques available from Caledonia, the opportunity exists to re-</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">assess the commercial viability of these mines and preliminary exploration work has commenced. Blanket&#146;s</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">initial focus is on those properties that have, from previous and recent exploration work indicated a high</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">potential for economic gold mineralization. Headgears and winders
 have now or are currently being</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">installed on four of these properties of which three are &#147;brownfield &#147;operations with significant mine</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">infrastructure and the fourth property is in the process of sinking a new exploration shaft initially down to</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">120 meters. Shaft rehabilitation and shaft sinking has commenced on the other three properties to enable</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">further underground development exploration work and evaluation work to be carried out.</FONT></LI>
</UL>
<p>&nbsp;</p>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">5</FONT></P>

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<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.3</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">EXPLORATION AND PROJECT DEVELOPMENT</FONT></B>	</TD>
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	<TD nowrap valign=top width="2%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.3.1</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Base Metals</FONT></B>	</TD>
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<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Nama Copper/Cobalt Project &#150; Zambia</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Follow-up investigations of the more important anomalies defined during the 2009 field program have continued.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Office based work including data processing and modeling, together with map compilation has continued to build on the 2009 geological map. This field work continues to support our current understanding of the geological structure, particularly relating to the possible continuation into the Nama Project Area of the Copperbelt style mineralization that exists on neighboring properties.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Tenders have been called for an initial multi-hole deep-level diamond drilling program to explore for Copperbelt style mineralization and this program is expected to commence in 2011 as soon as ground conditions after the rains permit.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2.3.2 Rooipoort/Mapochsgronde PGE/Ni/Cu Project (including Grasvally) - South Africa</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Discussions with the Department of Mineral Resources continue so as to extend the period of the exploration plan previously submitted.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">3. SUMMARY OF QUARTERLY RESULTS</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The following information is provided for each of the 8 most recently completed quarters of Caledonia - ending on the dates specified - in thousands of Canadian Dollars. The figures are extracted from underlying unaudited financial statements that have been prepared according to Canadian GAAP.</FONT></P>
<DIV align="left">
<TABLE border=0 cellspacing=0>
<TR>
     <TD width=28%></TD>
     <TD width=9%></TD>
     <TD width=9%></TD>
     <TD width=9%></TD>
     <TD width=9%></TD>
     <TD width=8%></TD>
     <TD width=9%></TD>
     <TD width=9%></TD>
     <TD width=7%></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap>
<font size="2">
&nbsp;</font></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Sept</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">June</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Mar</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Dec</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Sept</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">June</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Mar</FONT></B></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Dec</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(&#36;000&#146;s-except per share amounts.)</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30/10</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30/10</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">31/10</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">31/09</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30/09</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30/09</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">31/09</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">31/08</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Sales from continuing operations</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">6,331</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,154</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,490</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,263</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,932</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2,364</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></p>
    </TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;" style="TEXT-INDENT:2.000000px">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">29</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Income/(loss) for continuing operations</FONT></TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1,671</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">322</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">688</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2,812)</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">862</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(162)</FONT></p>
    </TD>
	<TD align=center nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(799)</FONT></p>
    </TD>
	<TD align=left nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2,066)</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-per share basic</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.003</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.001</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.001</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.006)</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.0017</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0003)</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0016)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0041)</FONT></p>
    </TD>
</TR>
<TR>
	<TD colspan=9>
<font size="2">
&nbsp;</font></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Discontinued operations (loss)</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(24)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(26)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(29)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(67)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(36)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(37)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(40)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(531)</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Net Income/ (loss) after discontinued</FONT></TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
	<TD align=left nowrap>
<p align="right"><font size="2" face="TimesNewRomanPSMT,Times New Roman,Times,serif">
&nbsp;</font></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">operations</FONT></TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1,647</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">294</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">659</FONT></p>
    </TD>
	<TD align=left nowrap style="TEXT-INDENT:1.000000px">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(3,738)</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">826</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(199)</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(839)</FONT></p>
    </TD>
	<TD align=right nowrap>
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2,597)</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">- per share basic</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.003</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.001</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom: 1 solid #000000">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.001</FONT></p>
    </TD>
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.007)</FONT></p>
    </TD>
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">0.0017</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0004)</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0017)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(0.0052)</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">EBITDA</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1,763</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">644</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">775</FONT></p>
    </TD>
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1,476)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom: 1 solid #000000">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">963</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(55)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(737)</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1,054)</FONT></p>
    </TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">No. of shares basic &#145;000</FONT></TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=center nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<p align="right">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169</FONT></p>
    </TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<DIV align="left">
<TABLE border=0 cellspacing=0 width="1090">
<TR>
     <TD width=44></TD>
     <TD width=1038></TD></TR>
<TR valign="top">
	<TD width=44><P><B><I><FONT size=2 face="TimesNewRomanPS-BoldItalicMT,Times New Roman,Times,serif">Note:</FONT></I></B></P>
</TD>
	<TD width=1038 colspan=1><P><I><FONT size=2 face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">The effect of the dilution on the earnings per share has not been calculated as all outstanding share purchase options were &#147;out of the money&#148; as at September 30, 2010.</FONT></I></P>
</TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">During the quarter Caledonia made a gross operating profit of &#36;2,878,000 (&#36;1,802,000 &#150; 2009) which resulted in a net profit of &#36;1,671,000 (&#36;862,000 &#150; 2009) from continuing operations which included an unrealized foreign exchange gain of &#36;36,000 (&#36;231,000 loss &#150; 2009). The operating profit was achieved from the sale of 4,934 (4,696 &#150; 2009) ounces of gold. The profit of &#36;1,671,000 includes a non-cash equity-based compensation expense of &#36;354,000 (&#36;8,000 &#150; 2009) relating to the re-pricing of the stock options as approved by shareholders at the 2010 AGM in May.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The monthly </FONT><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">operating costs per ounce in US&#36;, for Blanket, during the quarter are as per the ta</FONT></U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">ble below:</FONT></P>
<DIV align="left">
<TABLE border=0 cellspacing=0>
<TR>
     <TD width=46%></TD>
     <TD width=14%></TD>
     <TD width=13%></TD>
     <TD width=13%></TD>
     <TD width=12%></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">st</FONT></SUP></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">nd</FONT></SUP></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">rd</FONT></SUP></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Estimate</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Quarter</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Quarter</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Quarter</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">October</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
&nbsp;</TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2010</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2010</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2010</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2010</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">USD operating cost per ounce</FONT></B></TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Labour costs</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">326</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">324</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">232</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">209</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Consumables</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">306</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">301</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">249</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">263</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Electricity (incl diesel**)</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">108</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">97</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">105</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">99</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Other admin costs</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">67</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">94</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">65</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">61</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Total Cost per ounce produced</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">806</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">816</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">651</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">632</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Ounces produced</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3,148</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3,408</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4,951</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1,854</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Hours of power outages</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">439</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">669</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">426</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">77</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Number of employees</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">744</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">748</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">762</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">759</FONT></TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<P style="text-align: center;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">6</FONT></P>

<P style="text-align: center;">
&nbsp;</P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="text-align: center;">
&nbsp;</P>

<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As can be seen from the table above the cost per ounce is very sensitive to gold ounces produced as fixed costs amounted to 55% of the total operating expenses in the 3</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter. Included in the electricity cost per ounce of &#36;99/ oz. is an amount of &#36;25/ oz. directly attributable to diesel generated power.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The unrealised exchange gain of &#36;36,000 (&#36;231,000 loss &#150; 2009) relates to the translation of the South African operations into C&#36; whilst the translation of Blanket resulted in a YTD gain of &#36;67,000 (&#36;330,000 &#150; 2009) that has been charged to other comprehensive income.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The interest received in the 3</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">rd </FONT></SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">quarter of &#36;61,000 (&#36;14,000 &#150; 2009) is accrued interest on the Special Tradable Gold Bonds from the Reserve Bank of Zimbabwe (&#147;Gold Bonds&#148;), the provision against the Gold Bond receivable has been increased by a similar amount</FONT><FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">. </FONT><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The RBZ Gold Bonds were not redeemed on July 31, 2010 as previously announced by RBZ. Despite a number of enquiries in this regard we have been unable to ascertain what decision has been taken by RBZ or the Ministry of Finance relating to a new redemption date.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">General and administration costs were in line with costs incurred in the 2nd quarter apart from the &#36;354,000 equity-based compensation expense that occurred because of the re-pricing of the share options as approved at the 2010 AGM in May 2010.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Other expenses of &#36;282,000 (&#36;109,000 &#150; 2009) includes an amount of &#36;221,000 (Nil -2009) for gold royalties paid to the Zimbabwe Government in terms of the 3.5% Royalty tax implementation which commenced in January 1, 2010, With effect from October 1, 2010 the Royalty tax has been increased to 4% on gross revenue before deduction of realisation costs</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The discontinued operations relate to the Eersteling Mine in South Africa.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">4. INVESTING</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">During the 3rd quarter 2010 Caledonia invested &#36;1,136,000 (&#36;521,000 &#150; 2009) in capital assets and mineral properties. Of the amount invested in the 3rd quarter 2010, &#36;162,000 (&#36;165,000 &#150; 2009) was spent at Nama and &#36;640,000 (&#36;332,000 &#150; 2009) at Blanket mainly on the No. 4 Shaft Expansion Project, foreign currency adjustments of &#36;244,000 and other projects make up the balance.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">5. FINANCING</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Caledonia financed its operations, except Blanket Mine, using funds on hand. No equity fund raising is currently intended during 2010. Blanket has fully utilised the increased loan facility from its bankers in Zimbabwe which now is set at US&#36;2.5 million, the extent of the amount owing at any one time is dependent on the cash receipts for gold sales. This increased facility was granted in May 2010 and was obtained to assist with the funding of the Genset that has been purchased. Blanket has received confirmation from its bankers that the &#36;2.5 million facility will be renewed under similar terms and conditions.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">6. LIQUIDITY AND CAPITAL RESOURCES</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As of September 30, 2010, Caledonia had a working capital surplus of &#36;2,400,000 (&#36;3,158,000&#150; 2009) excluding the amount due to Blanket by RBZ for the unpaid Gold Bonds which at September 30,2010 totalled US&#36;3,336,000 being the principal and accrued interest. Since December 2009 current assets have remained fairly static with an increase in gold receivables from Rand Refineries and a minor reduction in inventory levels. It is anticipated that inventory levels will increase by a further &#36;400,000 in anticipation of production levels of 1000 tons per day. Short term borrowings from Blanket&#146;s Zimbabwe bankers have increased by &#36;1,092,000 since December 2009, as the facility is generally used in full and the balance varies depending on the timing of gold receipts. The current facility expired on October 31, 2010 and is being extended on similar terms for a further period of 180 days.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Liquidity remains very tight in Zimbabwe and trade credit continues to be difficult to obtain. Working capital planning is in place to ensure the operation is capable of supporting an annualized production rate of 40,000 ounces of gold m and planned investments.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">During quarter 4 2010, it is expected that the cash requirements of Caledonia will be met from the cash on hand, Blanket loan repayments and from any excess cash generated from gold sales by Blanket Mine.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As of September 30, 2010 Caledonia had potential liabilities for rehabilitation work on the Blanket and Eersteling</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: center;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">7</FONT></P>

<P style="text-align: center;">
&nbsp;</P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>



<!--$$/page=--><BR>

<DIV align="left">
<TABLE border=0 cellspacing=0>
<TR>
     <TD width=75%></TD>
     <TD width=6%></TD>
     <TD width=10%></TD>
     <TD width=7%></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap colspan=3>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Mines - if and when those Mines are permanently closed - at an estimated cost of &#36;1,694,000</FONT></TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR>
	<TD colspan=4>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">7. OFF-BALANCE SHEET ARRANGEMENTS</FONT></B></TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR>
	<TD colspan=4>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">There are no off balance sheet arrangements.</FONT></TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR>
	<TD colspan=4>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">8. RELATED PARTY TRANSACTIONS</FONT></B></TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="TEXT-INDENT:1.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Caledonia had the following related party transactions:</FONT></TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap>
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=center nowrap colspan=3>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Nine months ended</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=left nowrap style="border-bottom: 1 solid #000000">
&nbsp;&nbsp;</TD>
	<TD align=center nowrap colspan=2 style="border-bottom: 1 solid #000000">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">September 30</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap>
&nbsp;</TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">2010</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2009</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2008</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
&nbsp;</TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">&#36;&#146;000</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">&#36;&#146;000</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">&#36;&#146;000</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="TEXT-INDENT:3.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Management, and amounts paid or accrued to a company which provides the</FONT></TD>
	<TD align=right nowrap>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">342</FONT></B></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">338</FONT></TD>
	<TD align=right nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">423</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;" style="TEXT-INDENT:3.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">services of the Corporation&#146;s President</FONT></TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
&nbsp;</TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
&nbsp;</TD>
	<TD align=left nowrap style="border-bottom:1px solid #000000;">
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;" style="TEXT-INDENT:3.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Rent paid to a Company owned by members of the President&#146;s family</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">29</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">36</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">32</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;" style="TEXT-INDENT:3.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Fees accrued to the Chairman of the Board</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">30</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">113</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">250</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom:1px solid #000000;" style="TEXT-INDENT:3.000000px">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Legal fees paid to a law firm where a Director is a partner</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">22</FONT></B></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">46</FONT></TD>
	<TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">84</FONT></TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top width="2%">
<SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The 2010 fee payable to the Chairman of the Board has yet to be finalised by the Compensation Committee. Once finalised any arrears payment necessary will be made and recorded accordingly.</FONT>	</TD>
</TR>
</TABLE>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">9. CRITICAL ACCOUNTING POLICIES</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The major areas where accounting estimates are made are asset impairment, asset retirement obligations, future tax liabilities, and the recoverable amount of the Zimbabwe Gold Bonds. 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 Caledonia. 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 asset retirement obligations estimation for Blanket was recalculated before December 31, 2009. The estimations are accreted annually at rates between 1.7% and 5% and thus any change in circumstances is considered unlikely to have a material impact on the results of Caledonia or its operations.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The estimated recoverable amount of the Zimbabwe Bond has been calculated based on the weighted average probability of receiving payment. Based on the circumstances prevailing in Zimbabwe we have considered the probabilities of receiving payment over a number of different time periods ranging from 6 months from original redemption to 60 months. A discount factor of 43% was used in arriving at the estimated recoverable amount. The Corporation still believes the Bond redemption will be honoured by Reserve Bank of Zimbabwe (&#147;RBZ&#148;) but the time period is considered uncertain due to the financial constraints evident in Zimbabwe. The principal and accrued interest to September 30, 2010 of US&#36;3,278,000 was carried on the balance sheet at the depreciated amount of &#36;809,000.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">There have been no accounting policy changes adopted since January 1, 2010.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">9.1. International Financial Reporting Standards</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Canadian Accounting Standards Board confirmed in February 2008 plans to converge Canadian GAAP with International Financial Reporting Standards (&#147;IFRS&#148;) over a transition period expected to be effective for interim and annual periods commencing January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes amounts reported by Caledonia for the year ended December 31, 2010.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Caledonia has assessed the adoption of IFRS for 2011 by using the services of an independent consultant to produce an Impact Assessment Report (&#147;the Report&#148;). The Report sets out the preliminary assessment of the potential impact of Caledonia&#146;s conversion from Canadian GAAP to IFRS and was based on Caledonia&#146;s publicly reported financial information for the year ended 31 December 2008.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The approach followed was:</FONT></P>
<UL>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">A review of Caledonia&#146;s accounting policies and accompanying financial statements for the year ended 31</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">December 2008 and compared them with the requirements of IFRS; and</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Discussions with management to discuss the key differences between IFRS and Canadian GAAP and the</FONT> <FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">applicability to Caledonia.</FONT></LI>
</UL>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This approach provided Caledonia with a clear and concise format for understanding and communicating the effects of implementing IFRS to senior management, the Audit Committee and the Board. Reference to the relevant
standards and other authoritative material will be made and specific advice taken before acting if considered necessary.</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: center;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">8</FONT></P>

<P style="text-align: center;">
&nbsp;</P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>

<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">It should also be noted that the Report primarily focuses on differences between IFRSs and Canadian GAAP from a recognition and measurement perspective and does not deal with disclosure requirements (except for the IFRS 1 disclosures), which will be addressed before implementation is required.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">We have considered all standards and interpretations in issue at the date of the Report that will also be effective for Caledonia&#146;s first IFRS financial statements, being the year ending 31 December 2011. A review of the impact that the IFRS requirements would have on Caledonia&#146;s systems was not performed at this stage as all Caledonia&#146;s subsidiaries are operating in IFRS compliant jurisdictions.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">IFRS 1 states that, if an entity becomes a first-time adopter later than its subsidiaries, the entity shall, in its consolidated financial statements, measure the assets and liabilities of the subsidiary at the same carrying amounts as in the financial statements of the subsidiaries after adjusting for consolidation. Therefore, for the purposes of the transition to IFRS, Caledonia would have to use the financial statements of these subsidiaries and cannot make any adjustments. However, Caledonia will have to assess the consolidation entries made to evaluate whether any IFRS 1 exemptions can be applied to these entries.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The areas that require additional work and quantitative evaluation are:</FONT></P>
<UL>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Business combinations</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Deemed cost on property, plant and equipment and amortization.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Mineral property valuation.</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Decommissioning liabilities</FONT></LI>
<LI>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Exploration and evaluation assets</FONT></LI>
</UL>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As Zimbabwe has emerged from a hyperinflationary environment into a US dollarized economy in 2009, a revaluation exercise has taken place on property, plant, and equipment (&#147;PP&amp;E&#148;) for the 2009 IFRS compliant annual financial statements in Zimbabwe. The residual values and useful remaining lives have also been reviewed. The outcome of this exercise will be evidenced in Caledonia&#146;s financial statements on transition to IFRS in 2011. Initial indications are that PP&amp;E net book value would be approximately &#36;13 million higher and the resulting amortization expense is expected to be approximately &#36;1.9 million higher on an annual basis. It is also expected that the rehabilitation provision for Blanket mine will be higher and initial indications are that an additional provision of approximately &#36;300,000 will be required.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">An annual revision of the revaluation exercise will be conducted during the 3rd quarter of 2010. During 3rd quarter the IFRS compliant consolidated balance sheet for Caledonia as at December 31, 2009 has been prepared and the reconciliations between Canadian GAAP and IFRS will be finalised in November to establish comparative figures for the 2011 quarterly reports that will commence from March 31, 2011.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Management have continued to participate in web training sessions to enhance its knowledge for preparation of the opening IFRS balance sheet in January.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">10</FONT></B><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">. </FONT><B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">FINANCIAL RISK EXPOSURE AND RISK MANAGEMENT</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The types of risk exposure and the way in which such exposures are managed are as follows:</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">i) Currency Risk</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As the Corporation operates in an international environment, some of the Corporation&#146;s financial instruments and
</FONT>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
&nbsp;</P>
<P align="center">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">9</FONT></P>

<P style="text-align: center;">
&nbsp;</P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>

<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">A significant portion of the Corporation&#146;s assets and liabilities are denominated in South African Rand and United States Dollars. Management does 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 United States Dollars as the functional currency. As a result of the introduction of the US Dollar as legal tender in Zimbabwe the hyperinflationary environment has been eliminated. The shareholder loan account in Zimbabwe is denominated in US</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Dollars and may 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. The Corporation does not use any derivative instruments to reduce its foreign currency risks.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">ii) Interest Rate Risk</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Unless otherwise noted, it is the opinion of management that the Corporation is not exposed to significant interest rate risk as its only debt is in Zimbabwe where it has a short term loan facility of US&#36;2.5 million. 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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">iii) Concentration of Credit Risk</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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 Gold Bonds payable by the RBZ as the amount owing by the RBZ is no longer increasing as gold is no longer sold to the RBZ. Future credit exposure to RBZ is limited to the recovery of the value of the Gold Bonds.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Current gold sales are made to Rand Refineries in South Africa.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">iv) Liquidity Risk</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">v) Commodity Price Risk</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: center;">
&nbsp;</P>

<P style="text-align: center;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">10</FONT></P>

<P align="center">
&nbsp;</P>

<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>

<P style="text-align: left;">
&nbsp;</P>

<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Corporation continues to use the long term projected gold price in all its cash flow models developed for strategic planning purposes.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">11. SECURITIES OUTSTANDING</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As at November 10, 2010 the following securities were outstanding:</FONT></P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top width="2%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">500,169,280 common shares;</FONT>	</TD>
</TR>
<TR>
	<TD nowrap valign=top width="2%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(2)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Options and warrants as follows:</FONT>	</TD>
</TR>
</TABLE>
<DIV align="left">
<TABLE border=0 cellspacing=0 width="622">
<TR>
     <TD width=80></TD>
     <TD width=215></TD>
     <TD width=132></TD>
     <TD width=179></TD></TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="82">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Number</FONT></B></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="217">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Description</FONT></B></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="134">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Exercise Price</FONT></B></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="181">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Expiry Date</FONT></B></TD>
</TR>
<TR>
	<TD colspan=4 width="537">
&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="82">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">32,580,000</FONT></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="217">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Common share purchase options</FONT></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="134">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Average &#36;0.07</FONT><SUP><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT></SUP></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="181">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Various until May 11, 2016</FONT></TD>
</TR>
<TR valign="bottom">
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="82">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Nil</FONT></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="217">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Common share purchase warrants</FONT></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="134">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">-</FONT></TD>
	<TD align=left nowrap style="border-bottom: 1px solid #000000" width="181">
&nbsp;</TD>
</TR>
</TABLE>
</DIV>
<P style="MARGIN:0px">&nbsp;</P>
<TABLE border=0 cellspacing=0>
<TR>
	<TD nowrap valign=top width="2%">
<FONT size=1 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(1)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width="98%">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This price is the reduced exercise price approved by shareholders at the 2010 AGM in May and implemented on August 10, 2010</FONT>	</TD>
</TR>
</TABLE>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As Caledonia&#146;s Option Plan allows the granting of options on a number of shares equal to 10% of the issued shares, Caledonia could grant options of 50,016,928 shares.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">12. CONTROLS</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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, 2009 as required by Canadian securities laws pursuant to the certification requirements of Multilateral Instrument 52-109.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Because of its inherent limitations, the Corporation's ICFR may not prevent or detect any or all 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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Corporation has engaged independent consultants to carry out an assessment of the effectiveness of its internal controls over financial reporting using an internationally acceptable framework. Prior to this engagement, Management concluded that the following disclosable material weaknesses existed as at December 31, 2009.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(i) Unaccrued Liabilities</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">An unaccrued 2008 Zambian liability was identified in 2009, as previously reported. Systems have been put in place to ensure that such an under accrual will not reoccur.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">(ii) Segregation of duties</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Due to limited personnel resources at the Corporation&#146;s office in Johannesburg, adequate segregation of duties within the accounting group was not achieved. This creates a risk that inaccurate entries could be made and not identified or 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. Management continues to enhance and monitor this process to ensure that its financial accounting reporting system is able to prevent and detect potentially significant errors.</FONT></P>

<P style="text-align: left;">
&nbsp;</P>
<P align="center">
&nbsp;</P>

<p style="text-align: center">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">11</FONT></p>
<p style="text-align: center">&nbsp;</p>
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<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">As a consequence of the above, an additional accounting member of staff was recruited in November 2009 at the Johannesburg office to improve the segregation of duties and lighten the work load of existing staff.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Management has concluded, and the Audit Committee has agreed that taking into account the present stage of the Corporation&#146;s development, the Corporation does not have sufficient size and scale to warrant the hiring of any more additional staff to correct any further segregation of duties weakness at this time. There were no changes in the Corporation&#146;s internal controls over financial reporting since the year ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">The Corporation has a Disclosure Committee consisting of four Directors, and has disclosure controls and procedures which it follows in an attempt to ensure that it complies with all required disclosures on an adequate and timely basis. 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. 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.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">13. FORWARD LOOKING STATEMENTS</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This Management Discussion and Analysis contains certain forward-looking statements relating but not limited to Caledonia&#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. Factors that could cause act
ual 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.</FONT></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">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. Caledonia 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.</FONT></P>
<P style="text-align: left;">
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">14. QUALIFIED PERSONS</FONT></B></P>
<P style="text-align: left;">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Dr. Trevor Pearton, </FONT><FONT color="#333333" size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BSc Eng (Mining Geology), PhD (Geology) FGSSA, </FONT><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">VP Exploration is the Corporation&#146;s 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.</FONT></P>
<P style="text-align: left;">
&nbsp;</P>
<P style="text-align: left;">
&nbsp;</P>
<P align="center">
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">12</FONT></P>

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<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>ceocert.htm
<DESCRIPTION>FORM 52-109F2 CERTIFICATION OF  INTERIM FILINGS - CHIEF EXECUTIVE OFFICER ??
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</TITLE>
<META NAME="date" CONTENT="11/15/2010">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0px" align=right>&nbsp;</P>
<P style="margin:0px" align=right><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt" align=center><B>Form 52-109F2</B></P>
<P style="margin:0px; font-size:11pt" align=center><B>Certification of interim filings - full certificate</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:14.667px; font-size:11pt">I, <B>Stefan Hayden, </B>President and Chief Executive Officer of <B>Caledonia Mining Corporation,</B> certify the following:</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">1.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Review:</I> </B>I have reviewed the interim financial statements and interim MD&amp;A (together, the &#147;interim filings&#148;) of Caledonia Mining Corporation &nbsp;(the &#147;issuer&#148;) for the interim period ended <B>September 30, 2010.<I> </I></B></P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">2.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>No misrepresentations:</I> </B>Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px"><I><B>3</B></I>.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Fair presentation:</I> </B>Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px"><I><B>4</B></I>.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Responsibility: </I></B>The issuer&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&amp;P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 <I>Certification of Disclosure in Issuers&#146; Annual and Interim Filings,</I> for the issuer.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px"><I><B>5</B></I>.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Design:</I></B> &nbsp;Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer&#146;s other certifying officer and I have, as at the end of the period covered by the interim filings</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(a) </P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">designed DC&amp;P, or caused it to be designed under our supervision, to provide reasonable assurance that </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:11pt; float:left">(i)</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:11pt">material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:11pt; float:left">(ii)</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:11pt">information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(b) </P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer&#146;s GAAP.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">5.1</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Control framework:</I></B> &nbsp;The control framework the issuer&#146;s other certifying officer(s) and I used to design the issuer&#146;s ICFR is a framework we have devised in-house which we consider is adequate and appropriate to the issuer&#146;s situation and organization. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">5.2</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>ICFR &#150; material weakness relating to design: </I></B>The issuer has disclosed in its interim MD&amp;A for each material weakness relating to design existing at the end of the interim period<BR>
<BR></P>
<P style=page-break-before:always;margin-top:0;margin-bottom:-4pt;font-size:4pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(a)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">a description of the material weakness; <BR>
</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; clear:left; float:left">(b)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">the impact of the material weakness on the issuer&#146;s financial reporting and its ICFR; and</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:11pt">5.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>N/A</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">6.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Reporting changes in ICFR:</I> </B>The issuer has disclosed in its interim MD&amp;A that there were not, subsequent to December 31, 2009, any changes in the issuer&#146;s ICFR that have materially affected, or are reasonably likely to materially affect, the issuer&#146;s ICFR. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">Date: &nbsp;November 11, 2010<B><I> </I></B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">______________________________</P>
<P style="margin:0px; font-size:11pt">Stefan Hayden,</P>
<P style="margin:0px; font-size:11pt">President and Chief Executive Officer</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>5
<FILENAME>cfocert.htm
<DESCRIPTION>FORM 52-109F2 CERTIFICATION OF  INTERIM FILINGS - CHIEF FINANCIAL OFFICER
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</TITLE>
<META NAME="date" CONTENT="11/15/2010">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0px" align=right><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt" align=center><B>Form 52-109F2</B></P>
<P style="margin:0px; font-size:11pt" align=center><B>Certification of interim filings - full certificate</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:14.667px; font-size:11pt">I, <B>Steven Curtis, </B>Chief Financial Officer of <B>Caledonia Mining Corporation,</B> certify the following:</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">1.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Review:</I> </B>I have reviewed the interim financial statements and interim MD&amp;A (together, the &#147;interim filings&#148;) of Caledonia Mining Corporation &nbsp;(the &#147;issuer&#148;) for the interim period ended <B>September 30, 2010.<I> </I></B></P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">2.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>No misrepresentations:</I> </B>Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px">3<I><B>.</B></I></P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Fair presentation:</I> </B>Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px">4<I><B>.</B></I></P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Responsibility: </I></B>The issuer&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&amp;P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 <I>Certification of Disclosure in Issuers&#146; Annual and Interim Filings,</I> for the issuer.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="width: 48px; font-size: 11pt; float: left; margin-top: 0px; margin-bottom: -2px">5<I><B>.</B></I></P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Design:</I></B> &nbsp;Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer&#146;s other certifying officer and I have, as at the end of the period covered by the interim filings</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(a) </P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">designed DC&amp;P, or caused it to be designed under our supervision, to provide reasonable assurance that </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:11pt; float:left">(i)</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:11pt">material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:11pt; float:left">(ii)</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:11pt">information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(b) </P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer&#146;s GAAP.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">5.1</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Control framework:</I></B> &nbsp;The control framework the issuer&#146;s other certifying officer(s) and I used to design the issuer&#146;s ICFR is a framework we have devised in-house which we consider is adequate and appropriate to the issuer&#146;s situation and organization. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">5.2</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>ICFR &#150; material weakness relating to design: </I></B>The issuer has disclosed in its interim MD&amp;A for each material weakness relating to design existing at the end of the interim period</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(a)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">a description of the material weakness; <BR>
</P>
<P style=page-break-before:always;margin-top:0;margin-bottom:-4pt;font-size:4pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:11pt; float:left">(b)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt">the impact of the material weakness on the issuer&#146;s financial reporting and its ICFR; and</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:11pt">5.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>N/A</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">6.</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt"><B><I>Reporting changes in ICFR:</I> </B>The issuer has disclosed in its interim MD&amp;A that there were not, subsequent to December 31, 2009, any changes in the issuer&#146;s ICFR that have materially affected, or are reasonably likely to materially affect, the issuer&#146;s ICFR. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">Date: &nbsp;November 11, 2010<B><I> </I></B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">______________________________</P>
<P style="margin:0px; font-size:11pt">Steven Curtis,</P>
<P style="margin:0px; font-size:11pt">Chief Financial Officer</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>6
<FILENAME>newsrelease.htm
<DESCRIPTION>NEWS RELEASE DATED NOVEMBER 12, 2010
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</title>
<META NAME="author" CONTENT="MLEARMONTH">
<META NAME="date" CONTENT="11/12/2010">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align="center"><img border="0" src="caledoniaheader.jpg" width="1013" height="121"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:16.133px; font-family:Arial; font-size:12pt" align=center><B>Caledonia Mining Announces Third Quarter 2010 Results</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:44.2px; font-family:Arial; font-size:11pt" align=justify><B>Toronto, Ontario &#150; November 12, 2010: &nbsp;</B>Caledonia Mining Corporation (&#147;Caledonia&#148;) (TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce its third quarter 2010 operating and financial results. These are available on the Company&#146;s website <FONT style="color:#0000FF"><U>www.caledoniamining.com</U></FONT> and are also filed on www.sedar.com. &nbsp;The financial results below are reported in thousands of Canadian dollars, except where otherwise stated.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:16.133px; font-family:Arial; font-size:11pt" align=justify><B>Financial highlights for the Quarter and the nine months ended September 30</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=300.2 /><TD width=66.133 /><TD width=66.133 /><TD width=66.133 /><TD width=77.867 /></TR>
<TR><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=300.2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; background-color:#FFFFFF; border-top:1.333px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=132.267 colspan=2><P style="margin:0px; font-family:Arial; font-size:11pt" align=center><B>Three months ended &nbsp;&nbsp;September 30</B></P>
</TD><TD style="margin-top:0px; border-top:1.333px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=144 colspan=2><P style="margin:0px; font-family:Arial; font-size:11pt" align=center><B>Nine months ended </B></P>
<P style="margin:0px; font-family:Arial; font-size:11pt" align=center><B>September 30</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=300.2><P style="margin:0px; padding-right:16.133px; font-family:Arial; font-size:11pt"><B>(C$ 000&#146;s)</B></P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000; border-bottom:1.2px solid #000000" width=66.133><P style="margin:0px; font-family:Arial; font-size:11pt" align=center><B>2010</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" width=66.133><P style="margin:0px; font-family:Arial; font-size:11pt" align=center>2009</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=66.133><P style="margin:0px; font-family:Arial; font-size:11pt" align=center><B>2010</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.2px solid #000000" valign=top width=77.867><P style="margin:0px; font-family:Arial; font-size:11pt" align=center>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Sales from continuing operations</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000" valign=bottom width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>6,331</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=bottom width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>4,932</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>14,975</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>7,295</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Operating costs</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000; border-bottom:1.333px solid #000000" valign=bottom width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>3,453</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=bottom width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>3,130</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>9,598</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>5,700</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Gross profit from continuing operations</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>2,878</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>1,802</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>5,377</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>1,595</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">General &amp; Administrative expenses</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right><B>869</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right>499</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>1,825</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=top width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>1,644</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Other costs</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000; border-bottom:1.333px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right><B>337</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right>441</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>869</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>51</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Profit/(loss) after tax before discontinued operations</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right><B>1,671</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right>862</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="line-height:12pt; margin:0px; font-family:Arial; font-size:11pt" align=right><B>2,680</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>(100)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000" valign=bottom width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Net profit/(loss) for the period after discontinued operations</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>1,647</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>826</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>2,600</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000" valign=bottom width=77.867><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>(213)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" valign=top width=300.2><P style="margin:0px; font-family:Arial; font-size:11pt">Net proft/(loss) per share before discontinued operations, basic and fully diluted</P>
</TD><TD style="margin-top:0px; background-color:#FFFFFF; border-right:1.2px solid #000000; border-bottom:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>$0.003</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>$0.002</P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" width=66.133><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right><B>$0.005</B></P>
</TD><TD style="margin-top:0px; border-right:1.333px solid #000000; border-bottom:1.333px solid #000000" width=77.867><P style="margin:0px; padding-left:-24px; font-family:Arial; font-size:11pt" align=right>($0.0002)</P>
</TD></TR>
</TABLE>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:5.333px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial,Times New Roman; font-size:11pt" align=justify>For the quarter ended September 30, 2010 Caledonia generated revenue of $6.331 million from the sale of 4,934 ounces of gold at an average sale price of US$1,241 per ounce and a cash cost of US$651 per ounce, realizing a gross profit of $2.878 million and a net profit of $1.647 million. &nbsp;</P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial,Times New Roman; font-size:11pt" align=justify>Commenting on the quarter&#146;s performance, Stefan Hayden, President and CEO said: &#147;I am pleased to report that gold production at the Blanket mine was 45% higher than in the previous quarter. This was an outstanding and highly commendable performance by the Blanket and Caledonia management teams. This increase in production was also due to the implementation of a revised mine plan, improved recoveries from the metallurgical plant and the installation of the first standby generator in late June. The generator has allowed underground operations to continue during interruptions to the normal electricity supply. &nbsp;</P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial,Times New Roman; font-size:11pt" align=justify>Blanket&#146;s cash costs decreased significantly from US$816 per ounce in the second quarter to US$651 per ounce in the third quarter. &nbsp;We expect that Blanket&#146;s cash costs will continue to decrease as production increases to an annualized level of approximately 40,000 ounces of gold per annum by the end of 2010, following the commissioning of the No. 4 Shaft Expansion Project at the end of third quarter. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
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<BR></P>
<P style="margin:0px; font-size:12pt" align=center>- 1 -</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<p style="margin: 0px">&nbsp;</p>
<p style="margin: 0px">&nbsp;</p>
<p style="margin: 0px">&nbsp;</p>
<P style="line-height: 11.55pt; font-family: Arial; font-size: 11pt; margin-top: 0px; margin-bottom: 7.333px; padding-left: -18.933px; padding-right: 44.2px" align=justify>Provided a satisfactory investment climate is created in Zimbabwe and the Zimbabwean indigenization requirements and obligations are finally clarified and economically viable, Caledonia intends to make the significant capital investments in Blanket, which are required to sustain gold production at 40,000 ounces per annum. </P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial; font-size:11pt" align=justify>At the Nama base metals exploration project in Zambia, the ongoing field work supports our current understanding of the geological structure and the possible continuation into the Nama Project area of the Copperbelt style mineralization that exists on neighboring properties. &nbsp;Tenders have been called for an initial multi-hole, deep-level diamond drilling program to explore for Copperbelt style mineralization. This program is expected to commence in 2011 as soon as the ground conditions permit after the rainy season. &nbsp;&nbsp;</P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:7.333px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial; font-size:11pt" align=justify>Discussions with the South African Department of Mineral Resources continue regarding the extension of the period of the exploration plan previously submitted in respect of the Company&#146;s exploration projects at Rooipoort and Mapochsgronde.&#148;</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:14.067px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:10.2px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial; font-size:11pt" align=justify>Further information is included in this quarter&#146;s MD&amp;A which is available on the Company&#146;s website <FONT style="color:#0000FF"><U>www.caledoniamining.com</U></FONT> and is also filed on www.sedar.com. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:-28.4px; padding-right:6.067px; text-indent:9.467px; font-family:Arial; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:-28.4px; padding-right:6.067px; text-indent:9.467px; font-family:Arial; font-size:11pt" align=justify><B>For more information, please contact:</B></P>
<p style="margin:0px; padding-left:-24px; padding-right:16.133px; font-family:Arial; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0px" align="justify"><b><font size="3">Mark Learmonth&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Alex Buck&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Martin Eales</font></b></p>
<p style="margin:0px" align="justify">Caledonia Mining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
BuckBias&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
RBC Capital Markets&nbsp;&nbsp;&nbsp;<br>
Tel: +27 11 447 2499&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: +44 7932 740 452&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: +44 20 7029 7881</p>
<p style="margin:0px" align="justify">&nbsp;</p>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:-18.933px; padding-right:44.2px; font-family:Arial; font-size:11pt" align=justify>Further information regarding Caledonia&#146;s exploration activities and operations along with its latest financials may be found at <FONT style="color:#0000FF"><U>www.caledoniamining.com</U></FONT><FONT style="font-family:Times New Roman; font-size:12pt"></FONT>.</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px; font-size:12pt" align=center>- 2 -</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
