<SEC-DOCUMENT>0001137171-11-000291.txt : 20110520
<SEC-HEADER>0001137171-11-000291.hdr.sgml : 20110520
<ACCEPTANCE-DATETIME>20110520154906
ACCESSION NUMBER:		0001137171-11-000291
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20110331
FILED AS OF DATE:		20110520
DATE AS OF CHANGE:		20110520

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:		11861508

	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>caledonia6k05202011.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 May 2011</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)<br>
</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;May 20, 2011<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:0pt">&nbsp;</P>
<P style="margin-top: 0pt; margin-bottom: -12pt">99.1</P>
<p style="margin: 0pt; padding-left: 216pt"><a href="newsrelease.htm">News
Release dated May 18, 2011</a></p>
<P style="margin-top: 0pt; margin-bottom: -12pt">99.2</P>
<P style="margin: 0pt; padding-left: 216pt"><a href="financials.htm">Condensed interim consolidated financial statements
for the three month period ended March 31, 2011</a></P>
<P style="margin-top: 0pt; margin-bottom: -12pt">99.3</P>
<p style="margin: 0pt; padding-left: 216pt"><a href="mda.htm">Management
Discussion and Analysis for the period ended March 31, 2011</a></p>
<P style="margin-top: 0pt; margin-bottom: -12pt">99.4</P>
<p style="margin: 0pt; padding-left: 216pt"><a href="ceocert.htm">Certification
of Interim Filing - Chief Executive Officer</a></p>
<P style="margin-top: 0pt; margin-bottom: -12pt">99.5</P>
<p style="margin: 0pt; padding-left: 216pt"><a href="cfocert.htm">Certification
of Interim Filing - Chief Financial Officer</a></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>
<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>newsrelease.htm
<DESCRIPTION>NEWS RELEASE DATED MAY 18, 2011
<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="Michelle">
<META NAME="date" CONTENT="05/19/2011">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0px"><BR></P>
<P style="margin:0px" align="center"><BR><img border="0" src="caledoniaheader.jpg" width="682" height="124"></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:10.5pt" align=center><B>Caledonia Mining First Quarter 2011 Results</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt" align=justify><B>Toronto, Ontario &#150; May 18, 2011: </B>Caledonia Mining Corporation (&#147;Caledonia&#148; or the &#147;Corporation&#148;) (TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce its first quarter 2011 operating and financial results. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt" align=justify>The financial results below are reported in Canadian dollars, except where otherwise stated.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:3.667px; margin-bottom:3.667px; padding-left:-18.933px; font-family:Arial; font-size:11pt"><B>Highlights: </B></P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>Gold production increased by 17% to 7,322 ounces compared to 6,235 ounces in the fourth quarter 2010 (Q1 2010: 3,129 ounces). Gold production in April 2011 was 2,737 ounces.</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>Average cash cost per ounce of gold produced decreased by 18% to US$648 compared to the fourth quarter 2010 (Q1 2010: US$807).</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>Average achieved price per ounce of gold was US$1,397 (Q1 2010: US$1,107).</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt">Gross Profit for the quarter (i.e. before depreciation, amortization and administrative expenses) nearly doubled to $5,248,000 compared to $2,815,000 in the fourth quarter 2010 (Q1 2010: $449,000).</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>At March 31, 2011 the Corporation had net cash and cash equivalents of $1,406,000 (December 31, 2010: $398,000).</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>During the quarter Caledonia made considerable progress in removing the remaining constraints to Blanket achieving the targeted annual production rate. </P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:24px; font-family:Arial; font-size:11pt; clear:left; float:left"><font style='font-family:Arial Unicode MS,Arial'>&#8226;</font></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:24px; padding-right:16.267px; text-indent:-2px; font-family:Arial; font-size:11pt" align=justify>The 2011 drilling program commenced in March 2011 at the Konkola West area of the Nama base metals project in Zambia.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt">Commenting on the results, Stefan Hayden, President and CEO, said: &#147;I am very pleased to report a strong first quarter performance for 2011. The increased production coupled with the continued strength in the gold price and a reduction in Blanket&#146;s cash cost resulted in a substantial improvement in Caledonia&#146;s profitability and cash generation. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt">&#147;We have made significant progress during the current quarter to address the remaining constraints which, once solved, should enable us to reach our target of 10,000 ounces per quarter. &nbsp;A new ore pass was raise-bored and commissioned on May 13, 2011. &nbsp;The commissioning of the complete standby generating system commenced on May 16, 2011 and is expected to be completed by the end of May, after which Blanket will be able to maintain full operations during any interruption to the normal power supply. &nbsp;I am confident that Blanket will achieve its targeted quarterly production from the third quarter of 2011. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt">&#147;The drilling program at the Nama base metals project in Zambia commenced in March 2011 to identify typical copper-belt type mineralization. This drilling program is expected to be completed by the third quarter 2011.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt">On May 9 2011, Caledonia submitted its Indigenization Plan to the Government of Zimbabwe and awaits their response.&#148; &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt; page-break-before:always" align=justify><B>Financial Highlights </B></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=264.667 /><TD width=75.6 /><TD width=113.4 /><TD width=9.467 /><TD width=160.6 /></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000; border-right:1px solid #000000" valign=top width=623.733 colspan=5><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify><B>Condensed Consolidated Statement of Comprehensive Income</B></P>
<P style="margin:0px; font-family:Arial; font-size:11pt" align=justify><B><I>(in thousands of Canadian dollars except per share amounts)</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=359.067 colspan=4><P style="margin:0px; padding-left:11.667px; font-family:Arial; font-size:11pt" align=right><B>Three months ended March 31,</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:96.733px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>2011</B></P>
<P style="margin:0px; padding-left:96.733px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:49.467px; padding-right:48.6px; font-family:Arial; font-size:11pt" align=right>2010</P>
<P style="margin:0px; padding-left:49.467px; padding-right:48.6px; text-indent:9.467px; font-family:Arial; font-size:11pt" align="right">&nbsp;$</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Revenue</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>11,226</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>4,458</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Royalty</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>455</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>145</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Production costs</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>4,950</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>3,279</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Amortization</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>573</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>585</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Gross profit</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>5,248</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>449</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Administrative Expenses</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>2,049</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>424</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Results from operating activities</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>3,199</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>25</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Finance income</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Finance cost</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>155</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Profit before income tax</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>3,044</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Income Tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,150</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Profit for the period</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Loss on foreign currency translation</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>(714)</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>(676)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify><B>Total comprehensive income/(loss) for the period</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,180</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>(566)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt"><B>Earnings per share (cents)</B></P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; padding-left:18.933px; font-family:Arial; font-size:11pt" align=justify>Basic </P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>0.38</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:26.333px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=right>0.02</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; padding-left:18.933px; font-family:Arial; font-size:11pt" align=justify>Diluted </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>0.35</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:26.333px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=right>0.02</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=160.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000; border-right:1px solid #000000" width=623.733 colspan=5><P style="margin:0px; font-family:Arial; font-size:11pt"><B>Condensed Consolidated Statement of Financial Position</B></P>
<P style="margin:0px; font-family:Arial; font-size:11pt"><B><I>(in thousands of Canadian dollars)</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=340.267 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>Mar 31, </B></P>
<P style="margin:0px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>2011</B></P>
<P style="margin:0px; padding-right:30.6px; font-family:Arial; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=170.067 colspan=2><P style="margin:0px; padding-left:40.067px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=right>Dec 31, 2010</P>
<P style="margin:0px; padding-left:40.067px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=center>$</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=340.267 colspan=2><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Total assets</P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>39,910</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=170.067 colspan=2><P style="margin:0px; padding-left:40.067px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=right>34,520</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=340.267 colspan=2><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Total &nbsp;liabilities</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>14,807</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=170.067 colspan=2><P style="margin:0px; padding-left:40.067px; padding-right:58.933px; font-family:Arial; font-size:11pt" align=right>11,699</P>
</TD></TR>
</TABLE>
<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=264.667 /><TD width=198.467 /><TD width=160.6 /></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000; border-right:1px solid #000000" valign=top width=623.733 colspan=3><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify><B>Condensed Consolidated Statement of Cash Flows</B></P>
<P style="margin:0px; font-family:Arial; font-size:11pt" align=justify><B><I>(in thousands of Canadian dollars)</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=359.067 colspan=2><P style="margin:0px; padding-left:11.667px; font-family:Arial; font-size:11pt" align=center><B>Three months ended March 31,</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=264.667><P style="margin-top:0px; margin-bottom:12.2px; font-family:Arial; font-size:11pt"><B>Cash provided by (used in)</B></P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:96.733px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>2011</B></P>
<P style="margin:0px; padding-left:96.733px; padding-right:11.733px; font-family:Arial; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:30.6px; padding-right:48.6px; font-family:Arial; font-size:11pt" align=right>2010</P>
<P style="margin:0px; padding-left:49.467px; padding-right:48.6px; font-family:Arial; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Profit for the period</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Adjustments to reconcile net cash from operations </P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>2,960</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>561</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Changes in non-cash operating account balances</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>(72)</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>612</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Income tax paid</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>(96)</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Cash from operations</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>4,686</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>1,283</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Net expenditures on capital items and mineral properties</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>3,523</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>1,025</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt">Net cash from/(used in) financing activities</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>(91)</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>771</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Increase/(decrease) in cash for the period</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,072</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>1,029</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Cash and cash equivalents at the start of the period</P>
</TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>1,145</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>1,623</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=264.667><P style="margin:0px; font-family:Arial; font-size:11pt" align=justify>Cash and cash equivalents at the end of the period</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467><P style="margin:0px; padding-left:68.4px; padding-right:21.2px; font-family:Arial; font-size:11pt" align=right><B>2,217</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=160.6><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-family:Arial; font-size:11pt" align=right>2,652</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=264.667><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=160.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=justify><BR></P>
<p style="margin:0px" align="justify">&nbsp;</p>
<p style="margin:0px; padding-left:-24px; padding-right:6.067px; font-family:Arial; font-size:11pt" align="justify"><b>For
more information, please visit </b><font style="color:#0000FF"><b><u>www.caledoniamining.com</u></b></font><b>
or contact:</b></p>
<p style="margin:0px" align="justify">&nbsp;</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Martin Eales</font></b></p>
<p style="margin:0px" align="justify"><font size="3">Caledonia Mining&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;
RBC Capital Markets&nbsp;&nbsp;&nbsp;<br>
Tel: +27 11 447 2499&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tel:
+44 7932 740 452&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tel: +44 20 7029 7881</font></p>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px; padding-left:-18.933px; padding-right:6.067px; font-family:Arial; font-size:10.5pt"><B>Further information regarding Caledonia&#146;s exploration activities and operations along with its latest financials and Management Discussion and Analysis may be found at <U>www.caledoniamining.com</U></B></P>
<P style="margin:0px"><BR>
<BR></P>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>financials.htm
<DESCRIPTION>CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2011
<TEXT>
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<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</TITLE>
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<META NAME="date" CONTENT="05/19/2011">
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<P style="margin:0px; padding-left:6px; font-size:14pt">&nbsp;</P>
<P style="margin:0px; padding-left:6px; font-size:14pt">&nbsp;</P>
<P style="margin:0px; padding-left:6px; font-size:14pt">&nbsp;</P>
<P style="margin:0px; padding-left:6px; font-size:14pt"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; text-indent:9.467px; font-size:11pt" align=justify>Condensed interim consolidated financial statements of</P>
<P style="margin-top:0px; margin-bottom:15.533px; text-indent:9.467px; font-size:14pt" align=justify><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; text-indent:9.467px; font-size:11pt" align=justify>For the three month period ended March 31, 2011</P>
<P style="margin-top:0px; margin-bottom:12.2px; text-indent:9.467px; font-size:11pt" align=justify>(Unaudited)</P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">These are the Group&#146;s first condensed interim consolidated financial statements prepared in accordance with IFRS and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. </P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>1</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.533px; font-size:14pt"><B>For the three month period ended March 31, 2011</B></P>
<P style="margin-top:0px; margin-bottom:15.533px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.533px; font-size:14pt">Table of contents</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; float:left">Letter to shareholders</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">3</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; clear:left; float:left">Condensed consolidated statements of comprehensive income (loss)</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">4</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; clear:left; float:left">Condensed consolidated statements of financial position</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">5</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; clear:left; float:left">Condensed consolidated statements of changes in equity</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">6</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; clear:left; float:left">Condensed consolidated statements of cash flows</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">7</P>
<P style="margin-top:0px; margin-bottom:-2px; width:528px; font-size:12pt; clear:left; float:left">Notes to the condensed consolidated financial statements</P>
<P style="margin-top:0px; margin-bottom:13.333px; text-indent:-2px; font-size:12pt">8-48</P>
<P style="margin-top:0px; margin-bottom:13.333px; clear:left"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>2</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px">&nbsp;</P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="1405"><TR height=0 style="font-size:0"><TD width=1403 /></TR>
<TR><TD style="background-color: #000000; border: 1px solid #000000; margin-top: 0px" valign=top width=1403><P style="margin-top:5.333px; margin-bottom:5.333px; font-family:Shruti,Times New Roman; font-size:12pt; color:#FFFFFF">MANAGEMENT&#146;S RESPONSIBILITY FOR FINANCIAL INFORMATION</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify><B>To the Shareholders of Caledonia Mining Corporation:</B></P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>Management has prepared the information and representations in this report. The Unaudited Condensed Consolidated Financial Statements and related notes have been prepared using accounting policies consistent with IFRS and in accordance with International Accounting Standard 34 (&#147;IAS 34&#148;) &#150; Interim Financial Reporting, and, where appropriate, these statements include some amounts that are based on best estimates and judgment. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>Financial information used elsewhere is consistent with that in the financial statements. The MD&amp;A also includes information regarding the impact of current transactions and events, sources of liquidity and capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>The Corporation maintains adequate systems of internal accounting and administrative controls, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information is produced. </P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>Management have concluded that as a result of the relatively small size of the Corporation&#146;s head office finance department personnel, the Internal Controls over Financial Reporting (&#147;ICFR&#148;) assessment concluded that there were limited resources to adequately segregate duties and to permit or necessitate the comprehensive documentation of all policies and procedures that form the basis of an effective design of ICFR.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>In order to mitigate the risk of material misstatement in the Corporation&#146;s consolidated financial statements, the Corporation implemented additional cash flow review and monitoring controls at head office on a monthly basis and as part of their monitoring and oversight role the Audit Committee performs additional analysis and other post closing procedures. No material exceptions were noted based on the additional procedures and no evidence of fraudulent activity was found.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal control. The Audit Committee is composed of three unrelated directors. This Committee meets periodically with management and the external auditors to review accounting, auditing, internal control and financial reporting matters.</P>
<P style="margin-top:5.533px; margin-bottom:5.533px" align=justify>The financial statements have not been reviewed by the Corporation&#146;s auditors.</P>
<P style="margin-top:0px; margin-bottom:11.133px">These unaudited Financial Statements were authorised for release by the Board of Directors on May 16, 2011.</P>
<P style="margin-top:0px; margin-bottom:11.133px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:283.533px; float:left">S. E. Hayden</P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:-2px">&nbsp;S. R. Curtis</P>
<P style="margin-top:0px; margin-bottom:-2px; width:288px; clear:left; float:left">President and Chief Executive Officer</P>
<P style="margin-top:0px; margin-bottom:11.133px; text-indent:-2px">Vice-President, Finance and Chief Financial Officer</P>
<P style="margin-top:0px; margin-bottom:12.2px; clear:left"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>3</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="614"><TR height=0 style="font-size:0"><TD width=317 /><TD width=47 /><TD width=130 /><TD width=20 /><TD width=90 /></TR>
<TR><TD style="margin-top: 0px" width=612 colspan=5><P style="margin:0px; font-size:14pt"><B>Condensed consolidated statements of comprehensive income and (loss)</B></P>
<P style="margin:0px">&nbsp;</P>
<P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=366 colspan=2><P style="margin:0px; font-size:11pt"><B>Unaudited</B></P>
<P style="margin:0px; font-size:11pt"><I>&nbsp;(In thousands of Canadian dollars)</I></P>
</TD><TD style="margin-top: 0px" valign=bottom width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><I>For the three month period ended &nbsp;March 31,</I></P>
</TD><TD style="margin-top: 0px" width=47><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Revenue</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>11,226</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>4,458</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Less: Royalty</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>455</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>145</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production costs</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>4,950</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>3,279</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>573</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>585</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Gross profit</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=132><P style="margin:0px; font-size:11pt" align=right><B>5,248</B></P>
</TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=114 colspan=2><P style="margin:0px; font-size:11pt" align=right>449</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">General and administrative expenses</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; font-size:11pt" align=center><I>4</I></P>
</TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>947</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>424</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Share-based payment</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>1,102</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=132><P style="margin:0px; font-size:11pt" align=right><B>3,199</B></P>
</TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=114 colspan=2><P style="margin:0px; font-size:11pt" align=right>25</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=132><P style="margin:0px; font-size:11pt" align=right><B>155</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=114 colspan=2><P style="margin:0px; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Net finance costs/income</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>155</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Profit before income tax</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>3,044</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Income tax expense</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; font-size:11pt" align=center><I>5</I></P>
</TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>1,150</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Profit for the period</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=132><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=114 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Other comprehensive (loss)/income</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Foreign currency translation differences for foreign operations</P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right><B>(714)</B></P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>(676)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Total comprehensive income for the period</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=132><P style="margin:0px; font-size:11pt" align=right><B>1,180</B></P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=114 colspan=2><P style="margin:0px; font-size:11pt" align=right>(566)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt"><B>Earnings per share</B></P>
</TD><TD style="margin-top: 0px" valign=top width=47><P style="margin:0px; font-size:11pt" align=center><I>12</I></P>
</TD><TD style="margin-top: 0px" width=130><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Basic earnings per share</P>
</TD><TD style="margin-top: 0px" valign=bottom width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right>$0.0038</P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>$0.0002</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=317><P style="margin:0px; font-size:11pt">Diluted earnings per share</P>
</TD><TD style="margin-top: 0px" valign=bottom width=47><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=130><P style="margin:0px; font-size:11pt" align=right>$0.0035</P>
</TD><TD style="margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>$0.0002</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px">&nbsp;</P>
<P style="margin:0px; font-size:9pt" align=center>The accompanying notes are an integral part of these financial statements</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>4</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR><BR>
<BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=275.533 /><TD width=47.267 /><TD width=94.467 /><TD width=113.4 /><TD width=94.533 /></TR>
<TR><TD style="margin-top:0px" width=530.667 colspan=4><P style="margin:0px; font-size:14pt"><B>Condensed consolidated statements of financial position</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=322.8 colspan=2><P style="margin:0px; font-size:11pt"><B>Unaudited</B></P>
<P style="margin:0px; font-size:11pt"><I>&nbsp;(In thousands of Canadian dollars)</I></P>
</TD><TD style="margin-top:0px" valign=bottom width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><I>As at</I></P>
</TD><TD style="margin-top:0px" valign=top width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>March 31,</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>December 31,</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>January 1,</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Assets</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Property, plant and equipment</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>6</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>30,546</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>28,343</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>24,389 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Other investments</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>7</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>5</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>5</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>59 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">RBZ bond</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>9</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>810</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total non-current assets</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>30,551</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>28,348</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>25,258 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Inventories</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>8</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>2,193</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>2,620</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>2,586 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Prepayments</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>88</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>93</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>130 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>9</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>4,861</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>2,314</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>1,551 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>2,217</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>1,145</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>1,623 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total current assets</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>9,359</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>6,172</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>5,890 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total assets</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>39,910</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>34,520</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>31,148</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Liabilities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Deferred tax liability</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>5,843</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>5,151</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>4,313 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Provisions</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>14</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>1,866</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>1,919</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>1,678</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total non-current liabilities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>7,709</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>7,070</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>5,991 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Trade and other payables</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>15</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>6,287</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>3,882</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>2,169 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Bank overdraft</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>10</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>811</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>747</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>588 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total current liabilities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>7,098</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>4,629</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>2,757 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total liabilities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>14,807</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>11,699</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>8,748 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt"><B>Equity </B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Share capital</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>11</I></P>
</TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>196,125</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>196,125 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Capital reserve</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>14,170</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Contributed surplus</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>3,407</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>2,305</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>1,951 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Accumulative other comprehensive (loss)</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>(8,696)</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>(7,982)</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>(6,441) </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt">Deficit</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>(179,903)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>(181,797)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>(183,405)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Capital and reserves</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>25,103</B></P>
</TD><TD style="margin-top:0px" width=113.4><P style="margin:0px; font-size:11pt" align=right>22,821</P>
</TD><TD style="margin-top:0px" width=94.533><P style="margin:0px; font-size:11pt" align=right>22,400 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=275.533><P style="margin:0px; font-size:11pt"><B>Total equity and liabilities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-size:11pt" align=right><B>39,910</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=113.4><P style="margin:0px; font-size:11pt" align=right>34,520</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=94.533><P style="margin:0px; font-size:11pt" align=right>31,148</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt">Approved on behalf of the Board on May 16, 2011</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:281.2px; font-size:9pt; float:left">&#147;Signed&#148;</P>
<P style="margin:0px; text-indent:-2px; font-size:9pt">&#147;Signed&#148;</P>
<P style="margin-top:0px; margin-bottom:-2px; width:233.4px; font-size:9pt; clear:left; float:left">S. E. Hayden</P>
<P style="margin:0px; text-indent:-2px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert W. Babensee</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>The accompanying notes are an integral part of these financial statements</P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>6</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:15.533px"><BR>
<BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="986"><TR height=0 style="font-size:0"><TD width=22 /><TD width=113 /><TD width=164 /><TD width=1 /><TD width=108 /><TD width=31 /><TD width=64 /><TD width=49 /><TD width=51 /><TD width=44 /><TD width=111 /><TD width=107 /><TD width=96 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=22><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=113><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=769 colspan=11><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=908 colspan=13><P style="margin:0px; font-size:14pt"><B>Condensed consolidated statements of changes in equity</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=372 colspan=6><P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt"><B>Unaudited</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt"><I>&nbsp;(In thousands of Canadian dollars)</I></P>
</TD><TD style="margin-top: 0px" width=115 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=417 colspan=5><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=303 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>Share capital</B></P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><BR></P>
<P style="margin:0px; font-size:11pt" align=right><B>Capital</B></P>
<P style="margin:0px; font-size:11pt" align=right><B>Reserve</B></P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>Contributed Surplus</B></P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>Accumulative other Comprehensive (loss)</B></P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right><B>Deficit</B></P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right><B>Total</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=303 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=303 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=97 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=107><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=96><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Balance at January 1, 2010</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right>196,125 </P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right>1,951 </P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right>(6,441) </P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right>(183,405)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>22,400 </P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Share-based compensation expense</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right>354</P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>354</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Reclassification to net income on sale of investment</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right>(45)</P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>(45)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Foreign currency translation differences</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right>(1,496)</P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>(1,496)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Profit </P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=99 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=159 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=109><P style="margin:0px; font-size:11pt" align=right>1,608</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right>1,608</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Balance at December 31, 2010</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right>2,305</P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right>(7,982)</P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right>(181,797)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>22,821</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=97 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=107><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=96><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Share-based compensation expense</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>1,102</B></P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right><B>1,102</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Foreign currency translation differences</P>
</TD><TD style="margin-top: 0px" width=110 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=97 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=102 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=157 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>(714)</B></P>
</TD><TD style="margin-top: 0px" width=107><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right><B>(714)</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Profit </P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=99 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=159 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=109><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=303 colspan=3><P style="margin:0px; font-size:11pt">Balance at March 31, 2011</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>196,125</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=99 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>14,170</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>3,407</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=159 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>(8,696)</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=109><P style="margin:0px; font-size:11pt" align=right><B>(179,903)</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right><B>25,103</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>The accompanying notes are an integral part of these financial statements</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>7</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin:0px" align=center><BR>
<BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=319.067 /><TD width=47.267 /><TD width=97.733 /><TD width=112.733 /><TD width=15.733 /></TR>
<TR><TD style="margin-top:0px" width=464.067 colspan=3><P style="margin:0px; font-size:14pt"><B>Condensed consolidated statements of cash flows</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Unaudited</B></P>
<P style="margin:0px; font-size:11pt"><I>&nbsp;(In thousands of Canadian dollars)</I></P>
</TD><TD style="margin-top:0px" valign=top width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><I>For the three month period ended &nbsp;March 31,</I></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=319.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Cash flows from operating activities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Profit for the period</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Adjustments for:</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Reconcile net cash from operations</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>16</I></P>
</TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>2,960</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>561</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Changes in non-cash working capital</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>16</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(72)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>612</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Cash generated from operations </B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>4,782</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>1,283</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Income tax paid</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(96)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Net cash from operating activities </B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>4,686</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>1,283</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Cash flows from investing activities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Property, plant and equipment additions</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(3,523)</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>(1,076)</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Sale of investment</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>51</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Net cash used in investing activities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(3,523)</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>(1,025)</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Cash flows from financing activities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Bank overdraft increase</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>64</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>686</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(155)</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>(15)</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Net cash from (used in) financing activities</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>(91)</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>771</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Net increase in cash and cash equivalents</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>1,072</B></P>
</TD><TD style="margin-top:0px" width=112.733><P style="margin:0px; font-size:11pt" align=right>1,029</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt">Cash and cash equivalents at beginning of period </P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>1,145</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>1,623</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=319.067><P style="margin:0px; font-size:11pt"><B>Cash and cash equivalents at end of period, </B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=97.733><P style="margin:0px; font-size:11pt" align=right><B>2,217</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.733><P style="margin:0px; font-size:11pt" align=right>2,652</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>The accompanying notes are an integral part of these financial statements</P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>8</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:6.2px; width:48px; font-size:11pt; float:left"><B>1</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:6.2px; text-indent:-2px; font-size:11pt" align=justify><B>Reporting entity</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt; clear:left" align=justify>Caledonia Mining Corporation (the &#147;Company&#148;) is a company domiciled in Canada. The address of the Company&#146;s registered office is Suite 1201, 67 Yonge Street, Toronto, Ontario M5E 1J8 Canada. The consolidated financial statements of the Company as at March 31, 2011 comprise the Company and its subsidiaries (together referred to as the &#147;Group&#148; and individually as &#147;Group entities&#148;). The Group primarily is involved in the operation of a gold mine, acquisition, exploration and development of mineral properties for the exploration of base and precious metals.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:6.2px; width:48px; font-size:11pt; float:left"><B>2</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:6.2px; text-indent:-2px; font-size:11pt" align=justify><B>Basis of preparation</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt; clear:left" align=justify><B>(a) Statement of compliance</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (&#147;IAS 34&#148;) as issued by the International Accounting Standards Board and using the accounting policies the Company expects to adopt in its consolidated financial statements as at and the for the year ending December 31, 2011. &nbsp;These are the Group&#146;s first condensed interim consolidated financial statements prepared in accordance with IFRS and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Group is provided in note 22.</P>
<P style="margin:0px; padding-left:6.2px; font-size:11pt" align=justify>These condensed interim consolidated financial statements were authorised for issue by the Board of Directors on May 16, 2011. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2011 could result in restatement of these condensed interim consolidated financial statements, including the transition adjustments recognized on change-over to IFRS.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>These condensed interim consolidated financial statements should be read in conjunction with the Company's 2010 annual consolidated financial statements prepared in accordance with pre-changeover Canadian generally accepted accounting principles (&quot;GAAP&quot;) and in consideration of the IFRS transition disclosures included in note 22.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(b) Basis of measurement</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:9.467px; font-size:11pt" align=justify>The consolidated financial statements have been prepared on the historical cost basis.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(c) Functional and presentation currency</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>These consolidated financial statements are presented in Canadian dollars, which is also the Company&#146;s functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>9</P>
<P style="margin:0px" align=center><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify><B>(d)</B> <B>Use of estimates and judgements</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>Caledonia makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the condensed interim financial statements within the next financial year are discussed below:</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">i)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Rehabilitation Provisions</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>Rehabilitation provisions have been created based on the Company&#146;s internal estimates. Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis upon which to estimate the future liability. These estimates take into account any material changes to the assumptions that occur when reviewed regularly by management. Estimates are reviewed annually and are based on current regulatory requirements. Significant changes in estimates of contamination, restoration standards and techniques will result in changes to provisions from period to period. Actual rehabilitation costs will ultimately depend on future market prices for the rehabilitation costs which will reflect the market condition at the time of the rehabilitation costs are actually incurred.&nbsp; The final cost of the currently recognized rehabilitation provisions may be higher or lower than currently provided for. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>The discount rate currently applied in the calculation of the net present value of the provision is 1.7%. </P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">ii)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Exploration and Evaluation Expenditure</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>The application of the Company&#146;s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in the profit or loss in the period the new information becomes available.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>10</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">iii)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Title to Mineral Property Interests</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company&#146;s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">iv)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Income Taxes</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilized. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">v)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Share-based Payment Transactions</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 11.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">vi)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Impairments</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>At each accounting period end the Company determines if impairment indicators exist, and if present, performs an impairment review of the non-monetary assets held in the group. The exercise is subject to various judgement decisions and estimates. Financial assets are also reviewed regularly for impairment. Further details of the judgements and estimates made for these reviews are set out in Note 3(g).</P>
<P style="margin:6.133px" align=justify><BR>
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<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>11</P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left">vii)</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>Functional currency</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt; clear:left" align=justify>The functional currency of each company in the group is determined after considering various primary and secondary indicators which require management to make numerous judgement decisions. The determination of the functional currency will have a bearing on the translation process and ultimately the accumulated foreign currency adjustment.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify><B>(e) Going concern</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" 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 and the ability of the Corporation to obtain the necessary financing to complete exploration and development and future profitable production or proceeds from the disposition of such capital assets and mineral properties.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>The Corporation operates in a number of Southern African 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="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>These 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 operating profitable operations, realising proceeds from the disposal of mineral properties and obtaining sufficient financing to meet its liabilities and its obligations with respect to operating expenditures and expenditures required on its mineral properties.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:6.2px; width:48px; font-size:11pt; float:left"><B>3</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:6.2px; text-indent:-2px; font-size:11pt" align=justify><B>Significant accounting policies</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt; clear:left" align=justify>The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and in preparing the opening IFRS statement of financial position at January 1, 2010 for the purposes of the transition to IFRS, unless otherwise indicated. The accounting policies have been applied consistently by the Group entities.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>&nbsp;<B>(a) Basis of consolidation</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Subsidiaries</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.</P>
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<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>12</P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(ii) <I>Transactions eliminated on consolidation</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group&#146;s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(b) Foreign currency</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Presentation currency</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>The Company&#146;s presentation currency is the Canadian dollar (&#147;C$&#148;). The functional currencies of Caledonia Mining Corporation and its subsidiaries are the Canadian dollar, US dollar and South African Rand (&#147;ZAR&#148;). These consolidated financial statements have been translated into the Canadian dollar in accordance with IAS 21 <I>The Effects of Changes in Foreign Exchange Rates</I>. This standard requires that assets and liabilities be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for the period).</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>All resulting translation differences are reported as a separate component of shareholders&#146; equity titled &#147;Accumulated other comprehensive income(loss)&#148;.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; text-indent:41.267px; font-size:11pt" align=justify><B><I>(ii) Foreign currency translation</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6px; font-size:11pt" align=justify>In preparing the financial statements of the individual entities, transactions in currencies other than the entity&#146;s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each statement of financial position date, monetary assets and liabilities are translated using the period end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are included in the consolidated statement of comprehensive income.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>&nbsp;<B>(c) Financial instruments</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Non-derivative financial assets</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>13</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group has the following non-derivative financial assets: loans and receivables, cash and cash equivalents, and available-for sale financial assets.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><I>Loans and receivables</I></P>
<P style="margin-top:5px; margin-bottom:5px; padding-left:6.2px; text-indent:3.267px; font-size:11pt" align=justify>Loans and receivables are initially recognized at the transaction value and subsequently carried at amortized cost less impairment losses. The impairment loss of receivables is based on a review of all outstanding amounts at period end. Bad debts are written off during the year in which they are identified. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial<FONT style="font-family:Verdana,Times New Roman; font-size:9pt">.</FONT></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><I>Available-for-sale financial assets</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Available-for-sale financial assets are non-derivative financial assets that are designated as available- for-sale and that are not classified in any of the previous categories. The Group&#146;s investments in equity securities and certain debt securities are classified as available-for-sale financial assets.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for sale equity instruments, are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(ii) <I>Non-derivative financial liabilities</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.</P>
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<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>14</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group has the following non-derivative financial liabilities: bank overdraft and trade and other payables.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(d) <I>Share capital</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><I>Common shares</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognised as a deduction from equity, net of any tax effects.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(e) Property, plant and equipment</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Recognition and measurement</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets for which the commencement date for capitalisation is on or after January 1, 2009.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>All direct costs related to the acquisition, exploration and development of mineral properties are capitalized until the properties to which they relate are ready for their intended use, sold, abandoned or management has determined there to be impairment. If economically recoverable ore reserves are developed, capitalized costs of the related property are reclassified as mineral properties being depleted and depreciated.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>15</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(ii) <I>Subsequent costs</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(iii) <I>Depreciation</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. On commencement of commercial production, depreciation of each mineral property and development is provided for on the unit-of-production basis using estimated proven and probable reserves. Where the total reserves are not determinable because ore bearing structures are open at depth or are open laterally the straight-line method of depreciation is applied over the estimated life of the mine. Land is not depreciated.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The estimated useful lives for the current and comparative periods are as follows:</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:30.2px; width:54.2px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:54.2px; text-indent:-2px; font-size:11pt" align=justify>buildings 10 years</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:30.2px; width:54.2px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:54.2px; text-indent:-2px; font-size:11pt" align=justify>plant and machinery 10 years</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:30.2px; width:54.2px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:54.2px; text-indent:-2px; font-size:11pt" align=justify>fixtures and fittings10 years</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:30.2px; width:54.2px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:54.2px; text-indent:-2px; font-size:11pt" align=justify>motor vehicles 4 years</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:30.2px; width:54.2px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:54.2px; text-indent:-2px; font-size:11pt" align=justify>computer equipment 4 years</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt; clear:left" align=justify>Depreciation methods including life of mine are reviewed at each financial year-end and adjusted if appropriate. </P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>16</P>
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<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(f) Inventories</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Consumable stores are measured at the lower of cost and net realisable value. The cost of consumable stores is based on the weighted average cost principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of gold in process, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Consumable stores are reviewed for obsolete items and when a provision is created for such items identified, this provision is netted off the weighted average cost.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(g) Impairment</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Financial assets (including receivables)</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group considers evidence of impairment for receivables at specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>In assessing collective impairment the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management&#146;s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset&#146;s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. </P>
<P style="margin:6.133px" align=justify><BR>
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<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>17</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are reflected as a component of finance income.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(ii) <I>Non-financial assets</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The carrying amounts of the Group&#146;s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset&#146;s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the &#147;cash-generating unit, or CGU&#148;). &nbsp;The Group&#146;s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the unit (group of units) on a <I>pro rata </I>basis. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset&#146;s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation , if no impairment loss had been recognised.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>18</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In terms of IFRS, the test for recoverability of Exploration and Evaluation (&#147;E&amp;E&#148;) assets can combine several CGUs as long as the combination is not larger than a segment. The definition of a CGU does, however, change once development activities have begun. There are special impairment triggers for E&amp;E assets. Despite certain relief in respect of impairment triggers and the level of aggregation, the general impairment standards are applied in measuring the impairment of E&amp;E assets. Reversals of impairment losses are permitted.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>E&amp;E assets are only assessed for impairment when facts and circumstances suggest that the carrying amount of an E&amp;E asset may exceed its recoverable amount and upon transfer to development assets (therefore no requirement to assess for indication at each reporting date until the entity has sufficient information to reach a conclusion about the commercial viability and technical feasibility of extraction). Indicators of impairment include the following:</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:29.733px; width:53.733px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:53.733px; text-indent:-2px; font-size:11pt" align=justify>The entity's right to explore in the specific area has expired or will expire in the near future and is not expected to be renewed</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:29.733px; width:53.733px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:53.733px; text-indent:-2px; font-size:11pt" align=justify>Substantive expenditure on further E&amp;E activities in the specific area is neither budgeted nor planned</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:29.733px; width:53.733px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:53.733px; text-indent:-2px; font-size:11pt" align=justify>The entity has not discovered commercially viable quantities of mineral resources as a result of E&amp;E activities in the area to date and has decided to discontinue such activities in the specific area</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:29.733px; width:53.733px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:53.733px; text-indent:-2px; font-size:11pt" align=justify>Even if development is likely to proceed, the entity has sufficient data indicating that the carrying amount of the asset is unlikely to be recovered in full from successful development or by sale</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt; clear:left" align=justify><B>(iii) <I>Non-current assets held for sale</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are re-measured in accordance with the Group&#146;s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated to the assets and liabilities on <I>pro rata </I>basis, except that no loss is allocated to inventories, financial assets, deferred tax assets or employee benefit assets, &nbsp;which continue to be measured in accordance with the Group&#146;s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.</P>
<P style="margin:6.133px" align=justify><BR>
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<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>19</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(h) Employee benefits</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(i) <I>Defined contribution plans</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that is due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(ii) <I>Share-based payment transactions</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The grant date fair value of share-based payment awards granted to employees and directors is recognised as compensation expense, with a corresponding increase in equity, over the vesting period of the award. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met taking into account expected forfeitures, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income (loss) over the remaining vesting period.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the statement of comprehensive loss/income, unless they are related to the issuance of shares.&nbsp; Amounts related to the issuance of shares are recorded as a reduction of share capital.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B>(iii) Short term employee benefits</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The cost of all short term employee benefits is recognised during the period in which the employee renders the related service. &nbsp;</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(i) Provisions</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>20</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; text-indent:41.8px; font-size:11pt" align=justify><B><I>Site restoration</I></B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of property, plant and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as mining assets. The Company&#146;s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company&#146;s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates. Changes in the net present value, excluding changes in the Company&#146;s estimates of reclamation costs, are charged to profit and loss for the period. The net present value of restoration costs arising from subsequent site damage that is incurred on an ongoing basis during production are charged to profit or loss in the period incurred. The costs of rehabilitation projects that were included in the rehabilitation provision are recorded against the provision as incurred. The cost of ongoing current programs to prevent and control pollution is charged against profit and loss as incurred. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(j) Revenue</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:9.6px; font-size:11pt" align=justify>Revenue from the sale of precious metals is recognized when the metal leaves the mine for delivery to the respective refineries, risk and benefits of ownership are transferred and the receipt of proceeds are substantially assured. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>&nbsp;<B>(k) Finance income and finance costs</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Finance income comprises interest income on funds invested and gains on the disposal of available-for-sale financial assets. Interest income is recognised as it accrues in profit or loss, using the effective interest method.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Finance costs comprise interest expense on the rehabilitation provisions and impairment losses recognised on financial assets and also includes interest on overdraft balances.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. </P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>21</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(l) Income tax</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.</P>
<P style="margin:0px; padding-left:9.467px; font-size:11pt" align=justify>Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify><B>(m) Earnings per share</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:6.2px; font-size:11pt" align=justify>The Group presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held, for the effects of all dilutive potential common shares, which comprise share options granted to employees and directors.</P>
<P style="margin:6.133px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>22</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt"><B>(n) Accounting standards issued but not yet effective</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt"><B><I>Effective for annual periods beginning on or after July 1, 2011</I></B></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt">Amendments to IFRS 1 <I>First time Adoption of International Financial Reporting Standards</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt; clear:left" align=justify>The IASB has issued <I>Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters: Amendments to IFRS 1.</I> This guidance replaces references to a fixed date of &quot;January 1, 2004&quot; with &quot;the date of transition to IFRSs,&quot; thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. This guidance is intended to provide relief for first time adopters of IFRSs from having to reconstruct transactions that occurred before their date of transition to IFRSs. In addition, this guidance provides how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. Earlier adoption is permitted.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:27px; width:51px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:51px; text-indent:-2px; font-size:11pt">Amendments to IFRS 7 <I>Financial Instruments: Disclosures </I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt; clear:left" align=justify>Increase in disclosure with regards to the transfer of financial assets, especially if there is a disproportionate amount of transfer transactions that take place around the end of a reporting period.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt"><B><I>Effective for annual periods beginning on or after January 1, 2013</I></B></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:48px; text-indent:-2px; font-size:11pt">New standard IFRS 9 <I>Financial Instruments</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt; clear:left" align=justify>This new standard is a partial replacement of IAS 39 <I>Financial Instruments: Recognition and Measurement </I>which provides guidance on the classification and measurement of financial assets. Earlier adoption is permitted.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>The Company has not early adopted these revised standards and is currently assessing the impact that these standards will have on the consolidated financial statements.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>23</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:6.2px; width:48px; font-size:11pt; float:left"><B>4</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:6.2px; text-indent:-2px; font-size:11pt" align=justify><B>General and administration</B></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 height="159"><TR height=0 style="font-size:0"><TD width=454.6 height="17" /><TD width=94.533 height="17" /><TD width=80 height="17" /></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Regional administration office fees</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>274</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>62</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Withholding taxes </P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>212</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Investor relations</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>84</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>64</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Management contract fee</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>171</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>141</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Audit fee</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>78</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>40</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Legal fees</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>13</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>13</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Accounting services fees</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>15</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>7</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Listing fees</P>
</TD><TD style="margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>19</B></P>
</TD><TD style="margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=justify>Other</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=94.533 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>81</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=80 height="31"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>82</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=454.6 height="1"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=94.533 height="1"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>947</B></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" valign=top width=80 height="1"><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>424</P>
</TD></TR>
</TABLE>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.667px; width:66.667px; font-size:11pt; float:left"><B>5</B></P>
<P style="margin:0px; padding-left:5.667px; text-indent:-2px; font-size:11pt" align=justify><B>Income tax expense</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=406.8 /><TD width=48 /><TD width=76.733 /><TD width=15.733 /><TD width=76.733 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=406.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.733><P style="margin:0px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.733><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=406.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.733><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.733><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=406.8><P style="margin:0px; font-size:11pt">Current period income tax</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.733><P style="margin:0px; font-size:11pt" align=right><B>459</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=406.8><P style="margin:0px; font-size:11pt">Deferred tax</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.733><P style="margin:0px; font-size:11pt" align=right><B>691</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=406.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=76.733><P style="margin:0px; font-size:11pt" align=right><B>1,150</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=76.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>24</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>6</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Property, plant and equipment</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=201.6 /><TD width=45.133 /><TD width=75.8 /><TD width=81.6 /><TD width=81.6 /><TD width=81.6 /><TD width=76.8 /><TD width=76.8 /><TD width=76.8 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=45.133><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right><B>Land and buildings</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Mineral properties being depleted</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Mineral properties not being depleted</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Plant and equipment</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Fixtures and fittings</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Motor vehicles</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Total</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=75.8><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=81.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=81.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=81.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=201.6><P style="margin:0px; font-size:11pt" align=justify><B>Cost </B></P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=75.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at January 1, 2010</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>3,924</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>6,950</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,119</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>12,001 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>1,055 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>725 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>28,774 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Additions</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>111</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>2,319</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>630</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,048</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>45</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>7,253</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Foreign exchange movement</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>(358)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(269)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(211)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(346)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(17)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(55)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(1,256)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at December 31, 2010</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=75.8><P style="margin:0px; font-size:11pt" align=right>3,677</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>9,000</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,538</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>15,703</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>1,083</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>770</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>34,771</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at January 1, 2011</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>3,677</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>9,000</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,538</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>15,703</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>1,083</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>770</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>34,771</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Additions</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>1,156</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>166</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>2,201</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,523</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Foreign exchange movement</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; font-size:11pt" align=right>(162)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(101)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(123)</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(593)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>2</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(24)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(1,001)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at March 31, 2011</P>
</TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=75.8><P style="margin:0px; font-size:11pt" align=right>3,515</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>10,055</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,581</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>17,311</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>1,085</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>746</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>37,293</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=45.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>25</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>6</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; text-indent:-2px; font-family:Calibri,Times New Roman; font-size:11pt"><B>Property, plant and equipment (continued)</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=201.6 /><TD width=44.133 /><TD width=76.8 /><TD width=81.6 /><TD width=81.6 /><TD width=81.6 /><TD width=76.8 /><TD width=76.8 /><TD width=76.8 /></TR>
<TR><TD style="margin-top:0px" valign=top width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Land and buildings</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Mineral properties being depleted</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Mineral properties not being depleted</B></P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right><B>Plant and equipment</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Fixtures and fittings</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Motor vehicles</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Total</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=201.6><P style="margin:0px; font-size:11pt"><B>Depreciation and Impairment losses</B></P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at January 1, 2010</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>- </P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>412</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>2,790 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>824 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>&nbsp;359 </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>4,385 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Depreciation for the year</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>350</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>2,005</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>82</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>80</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>2,517</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Impairment loss</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Foreign exchange movement</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>70</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(487)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(46)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(11)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(474)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at December 31, 2010</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>832</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,308</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>860</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>428</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>6,428</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at January 1, 2011</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>832</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,308</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>860</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>428</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>6,428</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Depreciation for the year</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>318</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>86</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>84</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>573</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Impairment loss</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Disposals</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Foreign exchange movement</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>50</P>
</TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; font-size:11pt" align=right>(181)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(63)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(60)</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>(254)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">Balance at March 31, 2011</P>
</TD><TD style="margin-top:0px" valign=top width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>967</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,445</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>883</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>452</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>6,747</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=201.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=201.6><P style="margin:0px; font-size:11pt"><B>Carrying amounts</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=81.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">At January 1, 2010</P>
</TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,924</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>6,538</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,119</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>9,211</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>231</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>366</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>24,389</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">At December 31, 2010</P>
</TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,677</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>8,168</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,538</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>11,395</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>223</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>342</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>28,343</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=201.6><P style="margin:0px; font-size:11pt">At March 31, 2011</P>
</TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,515</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>9,088</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>4,581</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=81.6><P style="margin:0px; font-size:11pt" align=right>12,866</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>202</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>294</P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>30,546</P>
</TD></TR>
</TABLE>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>27</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Recoverability</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" 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 have drilled sufficiently large resources on the properties which are of interest to other parties or alternatively 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.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.733px; font-size:11pt; float:left"><B>7</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Other investments</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=353.333 /><TD width=76.8 /><TD width=15.333 /><TD width=76.8 /><TD width=15.333 /><TD width=86.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>Dec 31, 2010</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Available for sale financial assets</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>5</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>5</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>59 </P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>On May 9, 2002, the Group 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="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The fair value of the investment in Lucara is $nil (2010: $nil and January 1, 2010: $54) and the fair value of the shares held in Old Mutual Plc is $5 (2010: $5 and January 1, 2010: $5). The Group sold the Lucara shares in 2010.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>8</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Inventories</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=353.333 /><TD width=76.8 /><TD width=15.333 /><TD width=76.8 /><TD width=15.333 /><TD width=86.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>Dec 31, 2010</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=86.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Consumable stores</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>2,193</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>2,037</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>2,088 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Gold in process</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>583</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>498 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>2,193</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>2,620</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=86.4><P style="margin:0px; font-size:11pt" align=right>2,586 </P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Inventory is comprised of gold in process at Blanket and consumable stores utilised by Blanket Mine. Consumable stores are disclosed net of any write downs or provision for obsolete items.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Corporation recognised $3,245in the 1<SUP>st</SUP> quarter 2011 (3 months ended March 31, 2010- $1,795) of consumable stores as an expense.</P>
<P style="margin-top:6.133px; margin-bottom:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>28</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.667px; width:66.667px; font-size:11pt; float:left"><B>9</B></P>
<P style="margin:0px; padding-left:5.667px; text-indent:-2px; font-size:11pt" align=justify><B>Trade and other receivables</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=353.333 /><TD width=80.4 /><TD width=14.8 /><TD width=0.4 /><TD width=76.4 /><TD width=14.8 /><TD width=86.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=80.4><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8 colspan=2><P style="margin:0px; font-size:11pt" align=right>Dec 31, 2010</P>
</TD><TD style="margin-top:0px" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=80.4><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8 colspan=2><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" valign=top width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=86.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Bullion receivable</P>
</TD><TD style="margin-top:0px" width=80.4><P style="margin:0px; font-size:11pt" align=right><B>2,626</B></P>
</TD><TD style="margin-top:0px" width=15.2 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.4><P style="margin:0px; font-size:11pt" align=right>893</P>
</TD><TD style="margin-top:0px" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>690 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Vat receivable</P>
</TD><TD style="margin-top:0px" width=80.4><P style="margin:0px; font-size:11pt" align=right><B>1,247</B></P>
</TD><TD style="margin-top:0px" width=15.2 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.4><P style="margin:0px; font-size:11pt" align=right>888</P>
</TD><TD style="margin-top:0px" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>749</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Deposits for stores and equipment</P>
</TD><TD style="margin-top:0px" width=80.4><P style="margin:0px; font-size:11pt" align=right><B>988</B></P>
</TD><TD style="margin-top:0px" width=15.2 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.4><P style="margin:0px; font-size:11pt" align=right>833</P>
</TD><TD style="margin-top:0px" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>112 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=80.4><P style="margin:0px; font-size:11pt" align=right><B>4,861</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=15.2 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.4><P style="margin:0px; font-size:11pt" align=right>2,314</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=14.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=86.4><P style="margin:0px; font-size:11pt" align=right>1,551 </P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The bullion receivable is received shortly after the delivery of the gold and no provision for non-recovery is required.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" 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.</P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:9.467px; font-size:11pt">At January 1, 2010 the Bond was shown at the estimated recoverable amount of $810. In arriving at this recoverable amount the Corporation 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-top:0px; margin-bottom:12.2px; padding-left:9.467px; font-size:11pt" align=justify>The Bond plus interest is guaranteed by RBZ on maturity. Blanket has been unable to sell the Bond at an acceptable discount rate and the RBZ did not redeem the Bond on the initial maturity date nor any subsequently advised maturity dates. As a result of the uncertain redemption date and the lack of information coming from the RBZ, the Bond has been written down to nil whilst Blanket continues to retain legal ownership of the RBZ debt.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>10</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Bank overdraft</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=358.867 /><TD width=74.8 /><TD width=15.733 /><TD width=74.8 /><TD width=15.733 /><TD width=84.067 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=358.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=74.8><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=74.8><P style="margin:0px; font-size:11pt" align=right>Dec 31, 2010</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=84.067><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=358.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=74.8><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=74.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=84.067><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=358.867><P style="margin:0px; font-size:11pt">Bank overdrafts used for cash management purposes</P>
</TD><TD style="margin-top:0px" width=74.8><P style="margin:0px; font-size:11pt" align=right><B>(811)</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=74.8><P style="margin:0px; font-size:11pt" align=right>(747)</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=84.067><P style="margin:0px; font-size:11pt" align=right>(588)</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The bank overdraft facility of US$2.50 million bears interest at 7% above the 30 day LIBOR rate. The facility is unsecured and valid for a 180 day period which is renewable. The facility is repayable on demand.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>29</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>11</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Capital and reserves</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify><B>Share capital and share premium</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=353.333 /><TD width=76.8 /><TD width=15.333 /><TD width=76.8 /><TD width=15.333 /><TD width=86.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>Dec 31, 2010</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt"><B>Authorised</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Unlimited number of common shares. </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">Unlimited number of preference shares.</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt"><B>Issued</B></P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; font-size:11pt">500,169,280 common shares </P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>196,125</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>196,125 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=353.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Common shares and preference shares </B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The holders of common shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. Holders of preference shares receive a non-cumulative dividend per share at the Company&#146;s discretion, or whenever dividends to ordinary shareholders are declared. They do not have the right to participate in any additional dividends declared for ordinary shareholders.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Preference shares do not carry the right to vote. All shares rank equally with regard to the Company&#146;s residual assets, except that preference shareholders participate only to the extent of the face value of the shares. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Accumulated other comprehensive income(loss)</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The accumulated other comprehensive income(loss)<B> </B>reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations and the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt"><B>Option reserve </B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The option reserve comprises the cumulative net change in the fair value of the share based compensation until the options are fully vested and exercisable. This is disclosed as contributed surplus.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt"><B>Capital reserve</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The capital reserve arises from the Blanket operations and arose in 2009 when the functional currency of the Zimbabwean operations changed to the US dollar and assets and liabilities were revalued as at January 1, 2009.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>30</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Share-based payment</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Description of the share-based payment arrangements</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>At March 31, 2011 the Group has the following share-based payment arrangement:</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Share option programme (equity-settled)</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Group has established incentive stock option plans (the &quot;Plans&quot;) for employees, officers and directors. In accordance with these programmes options are exercisable at the market price of the shares at the date of grant.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Terms and conditions of share option programme </B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The terms and conditions relating to the grants of the share option programme and the share appreciation rights are as follows; all options are to be settled by physical delivery of shares. Under the current plan the maximum term of the options is 5 years. &nbsp;Under the Plan the aggregate number of shares that may be issued will not exceed 10% of the number of the shares issued of the Group, and as at March 31, 2011, the Group has the following options outstanding:</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=146.4 /><TD width=121.2 /><TD width=138.733 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=146.4><P style="margin:0px; font-size:11pt" align=right><B>Number of Options</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=121.2><P style="margin:0px; font-size:11pt" align=right><B>Exercise Price</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=138.733><P style="margin:0px; font-size:11pt" align=right><B>Expiry Date</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=121.2><P style="margin:0px; font-size:11pt" align=center>$</P>
</TD><TD style="margin-top:0px" valign=bottom width=138.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>9,450,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Apr 24, 2012</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>1,300,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>May 31, 2012</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>13,320,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Mar 18, 2013</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>1,000,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Jul 1, 2013</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>210,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Apr 29, 2014</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>500,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Mar 23, 2014</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=146.4><P style="margin:0px; font-size:11pt" align=right>16,460,000</P>
</TD><TD style="margin-top:0px" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.13</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>Jan 31, 2016</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-bottom:1px solid #000000" width=146.4><P style="margin:0px; font-size:11pt" align=right>300,000</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; font-size:11pt" align=right>May 11, 2016</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-bottom:1px solid #000000" width=146.4><P style="margin:0px; font-size:11pt" align=right>42,540,000</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=121.2><P style="margin:0px; font-size:11pt" align=right>0.093</P>
</TD><TD style="margin-top:0px" width=138.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>31</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Share option programme</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The continuity of the options granted, exercised, cancelled and expired under the Plans during 2011 and 2010 are as follows:</P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="629"><TR height=0 style="font-size:0"><TD width=357 /><TD width=131 /><TD width=135 /></TR>
<TR><TD style="margin-top: 0px" valign=top width=357><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=131><P style="margin:0px; font-size:11pt" align=right><B>Number of Options</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=135><P style="margin:0px; font-size:11pt" align=right><B>Weighted Avg. Exercise Price</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=357><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=131><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=135><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Options outstanding at January 1, 2010</P>
</TD><TD style="margin-top: 0px" width=131><P style="margin:0px; font-size:11pt" align=right>32,580,000</P>
</TD><TD style="margin-top: 0px" width=135><P style="margin:0px; font-size:11pt" align=right>0.1706</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Granted</P>
</TD><TD style="margin-top: 0px" width=131><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=135><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Forfeited or expired</P>
</TD><TD style="border-bottom: 1.333px solid #000000; margin-top: 0px" width=133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1.333px solid #000000; margin-top: 0px" width=137><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Options outstanding and exercisable at December 31, 2010</P>
</TD><TD style="margin-top: 0px" width=131><P style="margin:0px; font-size:11pt" align=right>32,580,000</P>
</TD><TD style="margin-top: 0px" width=135><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Granted</P>
</TD><TD style="margin-top: 0px" width=131><P style="margin:0px; font-size:11pt" align=right>16,460,000</P>
</TD><TD style="margin-top: 0px" width=135><P style="margin:0px; font-size:11pt" align=right>0.13</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Forfeited or expired</P>
</TD><TD style="border-bottom: 1.333px solid #000000; margin-top: 0px" width=133><P style="margin:0px; font-size:11pt" align=right>(6,500,000)</P>
</TD><TD style="border-bottom: 1.333px solid #000000; margin-top: 0px" width=137><P style="margin:0px; font-size:11pt" align=right>0.07</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=357><P style="margin:0px; font-size:11pt">Options outstanding and exercisable at March 31, 2011</P>
</TD><TD style="margin-top: 0px" width=131><P style="margin:0px; font-size:11pt" align=right>42,540,000</P>
</TD><TD style="margin-top: 0px" width=135><P style="margin:0px; font-size:11pt" align=right>0.093</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The options to purchase common shares noted above, have been granted to directors, officers and employees at exercise prices determined by reference to the market value of the common shares on the date of grant. The vesting of options is made at the discretion of the board of directors at the time the options are granted. As of March 31, 2011 there are 7,476,928 stock options available to grant (2010:17,436,928 stock options).</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Employee expenses</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=407.067 /><TD width=48 /><TD width=76.8 /><TD width=15.333 /><TD width=76.8 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=407.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right>Mar 31, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=407.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=407.067><P style="margin:0px; font-size:11pt">Share options granted in 2010</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=407.067><P style="margin:0px; font-size:11pt">Share options granted in 2011</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>1,102</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=407.067><P style="margin:0px; font-size:11pt">Total expense recognised as employee costs</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>1,102</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=407.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>32</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Inputs for measurement of grant date fair values</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The fair value of compensation expenses noted above was estimated using the Black-Sch&#246;les Option Pricing Model with the following assumptions for the periods ended March 31, 2011 and 2010.</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=455.067 /><TD width=76.8 /><TD width=15.333 /><TD width=76.8 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=center><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; font-size:11pt" align=center>Mar 31,</P>
<P style="margin:0px; font-size:11pt" align=center>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=455.067><P style="margin:0px; font-size:11pt"><B>Fair value of share options and assumptions</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Risk-free interest rate</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>1.1%</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Expected dividend yield</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>Nil</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Expected stock price volatility</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>60.47%</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Expected option life in years</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>5</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Exercise prise</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>0.13</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Share price at grant date</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>0.13</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin:0px; font-size:11pt">Fair value at grant date</P>
</TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right><B>0.067</B></P>
</TD><TD style="margin-top:0px" width=15.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" 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 Group&#146;s stock options.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>12</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt"><B>Earnings per share</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify><B>Basic earnings per share</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The calculation of basic earnings per share at March 31, 2011 was based on the profit attributable to common shareholders of $1,894 (2010: $110), and a weighted average number of common shares outstanding of 500,169 thousand (2010: 500,169 thousand), calculated as follows:</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Profit attributable to common shareholders</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=371.2 /><TD width=72.933 /><TD width=18.933 /><TD width=9.467 /><TD width=68.333 /><TD width=7.267 /><TD width=57.733 /><TD width=8.4 /></TR>
<TR><TD style="margin-top:0px" width=371.2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=101.333 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=75.6 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=66.133 colspan=2><P style="margin:0px; font-size:11pt" align=right>Mar 31, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=371.2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=72.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=104 colspan=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=66.133 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=444.133 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=104 colspan=4><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=66.133 colspan=2><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=444.133 colspan=2><P style="margin:0px; font-size:11pt">Profit for the period</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=104 colspan=4><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=66.133 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=444.133 colspan=2><P style="margin:0px; font-size:11pt">Profit attributable to common shareholders</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=104 colspan=4><P style="margin:0px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=66.133 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=463.067 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=77.8 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=73.4 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>33</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Weighted average number of common shares</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=376.333 /><TD width=44.133 /><TD width=93.733 /><TD width=15.733 /><TD width=94.067 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=376.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=93.733><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, </B></P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=94.067><P style="margin:0px; font-size:11pt" align=right>Mar 31, </P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=376.333><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=93.733><P style="margin:0px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=94.067><P style="margin:0px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=376.333><P style="margin:0px; font-size:11pt"><I>(In number of shares)</I></P>
</TD><TD style="margin-top:0px" width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=93.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=376.333><P style="margin:0px; font-size:11pt">Issued common shares </P>
</TD><TD style="margin-top:0px" width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=93.733><P style="margin:0px; font-size:11pt" align=right><B>500,169,280</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=94.067><P style="margin:0px; font-size:11pt" align=right>500,169,280 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=376.333><P style="margin:0px; font-size:11pt">Weighted average number of common shares </P>
</TD><TD style="margin-top:0px" width=44.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=93.733><P style="margin:0px; font-size:11pt" align=right><B>500,169,280</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=94.067><P style="margin:0px; font-size:11pt" align=right>500,169,280</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Diluted earnings per share</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The calculation of diluted earnings per share at March 31, 2011 was based on the profit attributable to common shareholders of $1,894 (2010: $110 ), and a weighted average number of common shares outstanding of 542,709 thousand (2010: 500,169 thousand), calculated as follows:</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Profit attributable to common shareholders (diluted)</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><B>Weighted average number of common shares </B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=417.133 /><TD width=94.067 /><TD width=25 /><TD width=87.733 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=417.133><P style="margin:0px; font-size:11pt"><I>(In number of shares)</I></P>
</TD><TD style="margin-top:0px" valign=bottom width=94.067><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=top width=25><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=87.733><P style="margin:0px; font-size:11pt" align=right>Mar 31, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=417.133><P style="margin:0px; font-size:11pt">Weighted average number of common shares (basic) </P>
</TD><TD style="margin-top:0px" width=94.067><P style="margin:0px; font-size:11pt" align=right><B>500,169,280</B></P>
</TD><TD style="margin-top:0px" width=25><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=87.733><P style="margin:0px; font-size:11pt" align=right>500,169,280</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=417.133><P style="margin:0px; font-size:11pt">Effect of options exercisable</P>
</TD><TD style="margin-top:0px" width=94.067><P style="margin:0px; font-size:11pt" align=right><B>42,540,000</B></P>
</TD><TD style="margin-top:0px" width=25><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=87.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=417.133><P style="margin:0px; font-size:11pt">Weighted average number of common shares (diluted) </P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=94.067><P style="margin:0px; font-size:11pt" align=right><B>542,709,280</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=25><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=87.733><P style="margin:0px; font-size:11pt" align=right>500,169,280</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The average market value of the Company&#146;s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>13</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Defined Contribution Pension Plan</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify>Under the terms of the Mining Industry Pension Fund (&#147;Fund&#148;) in Zimbabwe eligible employees contribute a fixed percentage of their eligible earnings to the Fund. Blanket makes a matching contribution plus an inflation levy as a fixed percentage of eligible earnings of these employees. The total contribution by Blanket for the period ended March 31, 2011 was $70 (2010: $59).</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>34</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>14</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Provisions</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=508.8 /><TD width=115.2 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=508.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=115.2 align="right"><P style="margin:0px; font-size:11pt" align=center><B>Site restoration</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=508.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=115.2 align="right"><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Balance at January 1, 2010</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,678 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Accretion</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>93</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Foreign currency adjustment</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>148</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Balance at December 31, 2010</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,919</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Balance at January 1, 2011</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,919</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Accretion</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>13</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Foreign currency adjustment</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>(66)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Balance at &nbsp;March 31, 2011</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,866</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Non-current </P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,866</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; font-size:11pt">Current</P>
</TD><TD style="margin-top:0px" width=115.2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=508.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=115.2><P style="margin:0px; font-size:11pt" align=right>1,866</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; text-indent:60.467px; font-size:11pt" align=justify><B>Site restoration</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Deferred expenditure relates to the net present value of the estimated cost of closing down the mine and site and environmental restoration costs. Deferred expenditure costs are capitalised at initial recognition and amortised systematically over the estimated life of the mine. Additional provisions were recognised due to the commencement of mining activities on claims and mine shafts previously not mined.</P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>15</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Trade and other payables</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=305.267 /><TD width=48 /><TD width=70.933 /><TD width=15.733 /><TD width=76.8 /><TD width=15.733 /><TD width=86.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=305.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=right><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>Mar 31, 2010</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>January 1, 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=305.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD><TD style="margin-top:0px" width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=305.267><P style="margin:0px; font-size:11pt">Other trade payables</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>5,666</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,317</P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>1,789</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=305.267><P style="margin:0px; font-size:11pt">Provision for tax</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>362</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=305.267><P style="margin:0px; font-size:11pt">Non-trade payables and accrued expenses</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>259</B></P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; font-size:11pt" align=right>565</P>
</TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; font-size:11pt" align=right>380 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=305.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=70.933><P style="margin:0px; font-size:11pt" align=right><B>6,287</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=76.8><P style="margin:0px; font-size:11pt" align=right>3,882</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1.333px solid #000000" width=86.4><P style="margin:0px; font-size:11pt" align=right>2,169 </P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=305.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=15.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=86.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:6.133px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>35</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>16.</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt"><B>Non cash items and changes in non-cash working capital</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=455.067 /><TD width=85.067 /><TD width=86.933 /><TD width=3.8 /></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>Mar 31,&nbsp;<br>
 2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Asset retirement obligation accretion</P>
</TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>13</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>6</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Share-based payments</P>
</TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>1,102</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top:0px" width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>155</B></P>
</TD><TD style="margin-top:0px" width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top:0px" width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>(100)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Deferred tax </P>
</TD><TD style="margin-top:0px" width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>691</B></P>
</TD><TD style="margin-top:0px" width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Income tax </P>
</TD><TD style="margin-top:0px" width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>458</B></P>
</TD><TD style="margin-top:0px" width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Depreciation</P>
</TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>573</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>585</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Write down RBZ bond</P>
</TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>57</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Interest accrued on RBZ bond</P>
</TD><TD style="margin-top:0px" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>(57)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Other</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>(32)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>56</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Total</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>2,960</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>562</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Trade and other payables</P>
</TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>2,045</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>(262)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>(2,549)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>359</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Inventories</P>
</TD><TD style="margin-top:0px" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>427</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>561</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Prepayments </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>5</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>(46)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=455.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt">Total</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=85.067><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right><B>(72)</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=90.733 colspan=2><P style="margin-top:6.133px; margin-bottom:6.133px; font-size:11pt" align=right>612</P>
</TD></TR>
</TABLE>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>17.</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt"><B>Contingencies</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left">In the Share Sale Agreement dated May 12, 2006 pursuant to which the Group purchased 100% of the shares of Blanket, the Group agreed that it would, as soon as reasonably practicable after the Closing of the Agreement, cause Blanket to implement a share incentive scheme considered by the Directors to be in the best interests of Blanket, pursuant to which a percentage of the shares of Blanket will be deposited in a Trust for the benefit of the management and employees of Blanket. &nbsp;As at March 31, 2011 no scheme had been established, nor were any shares of Blanket deposited in a Trust for the purposes of such a scheme. &nbsp;The Group and the Board of Directors of Blanket have delayed the establishment of the required scheme pending clarity of the anticipated Zimbabwe laws relating to the indigenization of the mining industry, as it is recognized that the Zimbabwean laws when enacted, will likely have a material impact on the structure of the proposed scheme and the percentage of the issued shares of Blanket required to be put into trust for the purposes of the scheme.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>36</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>18</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Related parties</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify><B>Transactions with key management personnel</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Key management personnel and director transactions.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Certain key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>A number of these entities completed transactions with the Group in the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm's length basis.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:</P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=464 /><TD width=84 /><TD width=84 /></TR>
<TR><TD style="margin-top:0px" valign=top width=464><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=168 colspan=2><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=center><B>Three months ended March 31</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=464><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right>2010</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=464><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=464><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt">Management fees and allowances paid or accrued to a company which provides the services of the &nbsp;Corporation&#146;s President</P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>140</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-family:Calibri,Times New Roman; font-size:11pt" align=right>138</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=464><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt">Rent paid to a Company owned by members of the President&#146;s family</P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>14</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-family:Calibri,Times New Roman; font-size:11pt" align=right>13</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=464><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt">Fees paid to the Chairman of the Board </P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>5</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-family:Calibri,Times New Roman; font-size:11pt" align=right>12</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=464><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt">Legal fees paid to a law firm where a Director is a partner</P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="line-height:12pt; margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-size:11pt" align=right><B>12</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=84><P style="margin-top:0px; margin-bottom:12.2px; padding-left:6px; font-family:Calibri,Times New Roman; font-size:11pt" align=right>12</P>
</TD></TR>
</TABLE>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>(i) The Group has entered into a management agreement with Epicure Overseas S.A. (&#147;Epicure&#148;), a Panamanian Group, for management services provided by the president. &nbsp;The Group is required to pay a base annual remuneration adjusted for inflation and bonuses set out in the agreement. In the event of a change of control of the Group, Epicure can terminate the agreement and receive a lump sum payment equal to 200% of the remuneration for the year in which the change occurs.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>37</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:66.667px; font-size:11pt; float:left"><B>19</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Group entities</B></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="694"><TR height=0 style="font-size:0"><TD width=334 /><TD width=4 /><TD width=124 /><TD width=67 /><TD width=67 /><TD width=86 /></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=124><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=224 colspan=3><P style="margin:0px; font-size:11pt" align=center><B>Ownership interest</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=124><P style="margin:0px; font-size:11pt" align=center><B>Country of incorporation</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=center><B>Mar 31, 2011</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=center><B>Dec 31, 2010</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=86><P style="margin:0px; font-size:11pt" align=center><B>January 1, 2010</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt"><B>Significant subsidiaries</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=124><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=center><B>%</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=center><B>%</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=86><P style="margin:0px; font-size:11pt" align=center><B>%</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Holdings Zimbabwe (Private) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zimbabwe</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Mining Services Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zimbabwe</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Kadola Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zambia</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Mining (Zambia) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zambia</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Nama Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zambia</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Western Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zambia</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Eersteling Gold Mining Corporation Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>South Africa</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Fintona Investments (Proprietary) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>South Africa</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Greenstone Management Services (Proprietary) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>South Africa</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Maid O&#146; Mist (Pty) Ltd</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>South Africa</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Mapochs Exploration (Pty) Ltd</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>South Africa</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Caledonia Holdings (Africa) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=124><P style="margin:0px; font-size:11pt" align=right>Zimbabwe</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Blanket (Barbados) Holdings Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=124><P style="margin:0px; font-size:11pt" align=right>Barbados</P>
</TD><TD style="margin-top: 0px" valign=top width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" valign=top width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" valign=top width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=334><P style="margin:0px; font-size:11pt">Blanket Mine (1983) (Private) Limited</P>
</TD><TD style="margin-top: 0px" valign=bottom width=4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=124><P style="margin:0px; font-size:11pt" align=right>Zimbabwe</P>
</TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" valign=bottom width=67><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top: 0px" valign=bottom width=86><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
</TABLE>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:70.2px; font-size:11pt; float:left"><B>20</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Operating Segments</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify>The Group's operating segments have been identified based on geographic areas.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Group has four geographic segments as described below, which are the Group's strategic business locations. The strategic business locations are managed separately because they require different technology and marketing strategies. For each of the strategic business locations the Corporation&#146;s CEO reviews internal management reports on at least a quarterly basis. The following geographical areas describe the operations of the Group's geographic segments: Corporate, Zimbabwe, South Africa and Zambia.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The accounting policy of the geographic segments is the same as described in notes 2 and 3.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>38</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Information regarding the results of each geographic segment is included below. Performance is measured based on segment profit before income and tax, as included in the internal management report that are reviewed by the Group's CEO and CFO. Segment profit and goal performance is used to measure performance as management believes that such information is the most relevant in evaluation the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm's length basis.</P>
<P style="margin-top:6.133px; margin-bottom:0px; padding-left:5.667px; font-size:11pt" align=justify><B>Information about geographic segments</B></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=220.733 /><TD width=85.133 /><TD width=85.133 /><TD width=75.733 /><TD width=75.733 /><TD width=76.867 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=220.733><P style="margin:0px; font-size:11pt"><B>2011</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=85.133><P style="margin:0px; font-size:11pt" align=center><B>Corporate</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=85.133><P style="margin:0px; font-size:11pt" align=center><B>Zimbabwe</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=75.733><P style="margin:0px; font-size:11pt" align=center><B>South Africa</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=75.733><P style="margin:0px; font-size:11pt" align=center><B>Zambia</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.867><P style="margin:0px; font-size:11pt" align=center><B>Total</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=220.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=85.133><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=85.133><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=75.733><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=75.733><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.867><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Revenues</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>11,226</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>11,226</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Royalty</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(455)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>(455)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Production costs</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(4,719)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>(231)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>(4,950)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Administrative expenses</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(1,505)</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(486)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>(58)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>(2,049)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Depreciation</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(567)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>(6)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>(573)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Other expenses</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>--</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>(34)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>(121)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=76.867><P style="margin:0px; font-size:11pt" align=right>(155)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Geographic segment profit before income tax</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>(1,539)</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>4,878</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>(295)</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>3,044</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Taxation</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>(1,150)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=76.867><P style="margin:0px; font-size:11pt" align=right>(1,150)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Geographic segment profit after income tax</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>(1,539)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=85.133><P style="margin:0px; font-size:11pt" align=right>3,728</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>(295)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=75.733><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=76.867><P style="margin:0px; font-size:11pt" align=right>1,894</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Geographic segment assets:</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Current</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>1,718</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>6,094</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>1,506</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>41</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>9,359</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Non-current</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>55</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>24,627</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>1,344</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>4,525</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>30,551</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Capital expenditure</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>3,356</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>167</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>3,523</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; font-size:11pt">Geographic segment liabilities</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>416</P>
</TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; font-size:11pt" align=right>12,709</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>1,675</P>
</TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; font-size:11pt" align=right>7</P>
</TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; font-size:11pt" align=right>14,807</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=220.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=85.133><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=75.733><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=76.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>39</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 width="837"><TR height=0 style="font-size:0"><TD width=307 /><TD width=102 /><TD width=112 /><TD width=104 /><TD width=96 /><TD width=104 /></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=307><P style="margin:0px; font-size:11pt"><B>2010</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=102><P style="margin:0px; font-size:11pt" align=center><B>Corporate</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=112><P style="margin:0px; font-size:11pt" align=center><B>Zimbabwe</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=104><P style="margin:0px; font-size:11pt" align=center><B>South Africa</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=96><P style="margin:0px; font-size:11pt" align=center><B>Zambia</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=104><P style="margin:0px; font-size:11pt" align=center><B>Total</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=307><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=102><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=112><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=104><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=96><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=104><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Revenues</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>4,458</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>4,458</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Royalty</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>(145)</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(145)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Production costs</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>(2,994)</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(285)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(3,279)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Administrative expenses</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>(315)</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>(62)</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(44)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(421)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Depreciation</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>(579)</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(6)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(585)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Other expenses</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>(42)</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>(57)</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>96</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>42</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>58</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=114><P style="margin:0px; font-size:11pt" align=right>(15)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>(15)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Geographic segment profit before income tax</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>(315)</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>664</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(239)</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Taxation</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=114><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Geographic segment profit after income tax</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>(315)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=114><P style="margin:0px; font-size:11pt" align=right>664</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>(239)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=98><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=106><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Geographic segment assets</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=104><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=96><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=104><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Current</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>1,461</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>4,414</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>845</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>43</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>6,763</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Non-current</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>58</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>18,757</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>1,287</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>4,096</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>24,198</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Capital expenditure</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>919</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>1</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>156</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>1,076</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=307><P style="margin:0px; font-size:11pt">Geographic segment liabilities</P>
</TD><TD style="margin-top: 0px" width=102><P style="margin:0px; font-size:11pt" align=right>404</P>
</TD><TD style="margin-top: 0px" width=112><P style="margin:0px; font-size:11pt" align=right>8,247</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>469</P>
</TD><TD style="margin-top: 0px" width=96><P style="margin:0px; font-size:11pt" align=right>7</P>
</TD><TD style="margin-top: 0px" width=104><P style="margin:0px; font-size:11pt" align=right>9,127</P>
</TD></TR>
</TABLE>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:70.2px; font-size:11pt; float:left"><B>21</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Subsequent events</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify>Zimbabwean Indigenization</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In 2008 the Zimbabwean parliament passed the Indigenization and Economic Empowerment Act 2007 (&#147;Act&#148;) that stipulated that 51% ownership of all companies had to reside in the hands of Indigenous Zimbabwean citizens. In February 2010, Statutory Instrument 21 of 2010 was released which dealt with the regulations around the implementation of the Act. In terms of the regulations Blanket will have to submit an implementation plan which outlines how Blanket proposes to comply with the requirements of the Act within a 5 year period. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Blanket submitted its Indigenisation Implementation Plan to the Zimbabwe Government on May 9, 2011 in terms of the Indigenisation and Empowerment Act and associated Regulations. We await a response from the Zimbabwe Government</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Corporation will continue to monitor the situation and is consulting widely on this issue.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>40</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style=margin-top:6.133px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:5.733px; width:70.2px; font-size:11pt; float:left"><B>22</B></P>
<P style="margin-top:0px; margin-bottom:6.133px; padding-left:5.733px; text-indent:-2px; font-size:11pt" align=justify><B>Explanation of transition to IFRS 1</B></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt; clear:left" align=justify>As stated in note 2(a), these are the Group's first consolidated financial statements prepared in accordance with IFRS.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended &nbsp;March 31, 2011, the comparative information presented in these financial statements for the year ended December 31, 2010 and in the preparation of an opening IFRS statement of financial position at January 1, 2010 (the Group's date of transition).</P>
<P style="margin:0px; padding-left:5.733px; font-size:11pt" align=justify>IFRS 1 <I>First-time Adoption of International Financial Reporting Standards </I>sets forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are applied retrospectively at the transitional statement of financial position date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. The Company has applied the following exemptions to its opening statement of financial position dated January 1, 2010:</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(a) Business Combinations</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3 <I>Business Combinations </I>retrospectively to business combinations that occurred before the date of transition to IFRS. The Company has taken advantage of this election.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(b) Cumulative translation differences</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>IFRS 1 allows a first-time adopter to not comply with the requirements of IAS 21 <I>The Effects of Changes in Foreign Exchange Rates </I>for cumulative translation differences that existed at the date of transition to IFRS. The Company has chosen to apply this election and has eliminated the cumulative translation difference for Blanket Mine and adjusted retained earnings by the same amount at the date of transition to IFRS. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(c) Share-based payment transactions</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2 <I>Share-based Payments </I>to equity instruments that were granted on or before November 7, 2002, or equity instruments that were granted subsequent to November 7, 2002 and vested before the later of the date of transition to IFRS and January 1, 2005. The Company has elected not to apply IFRS 2 to awards that vested prior to January 1, 2010.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(d) Borrowing Costs</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Company has elected to apply the transitional provisions of IAS 23 Borrowing Costs which permits prospective capitalization of borrowing costs on qualifying assets from the Transition Date.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>41</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In preparing its opening IFRS statement of financial position, the Group has adjusted amounts reported previously in financial statements prepared in accordance with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected the Group&#146;s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>IFRS employs a conceptual framework that is similar to Canadian GAAP. However, significant differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS has not changed the Company&#146;s actual cash flows, it has resulted in changes to the Company&#146;s reported financial position and results of operations. In order to allow the users of the financial statements to better understand these changes, the Company&#146;s Canadian GAAP statement of operations, statement of comprehensive income, statement of financial position and statement of cash flows for the quarter ended March 31, 2011 and the year ended December 31, 2010 have been reconciled to IFRS, with the &nbsp;&nbsp;resulting differences explained.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(A) Estimates</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In accordance with IFRS 1, an entity&#146;s estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous GAAP, unless there is objective evidence that those estimates were in error. The Company&#146;s IFRS estimates as of January 1, 2010 are consistent with its Canadian GAAP estimates for the same date.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(B) Property plant and equipment</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its subsidiary or associate adopting IFRS, the assets and the liabilities of the subsidiary or associate are to be included in the consolidated financial statements at the same carrying amounts as in the financial statements of the subsidiary or associate. The Company&#146;s principal operating subsidiary, Blanket Mine , effectively adopted IFRS in 2009 when it changed its functional currency to the US dollar.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In recent years, Zimbabwe has been a hyperinflationary economy and Caledonia&#146;s Blanket Mine has been specifically impacted by this. As a result of the situation in Zimbabwe, IAS 29 <I>Financial Reporting in Hyperinflationary Economies</I> was not applied because there was neither a reliable price index nor exchangeability of the Zimbabwean Dollar into a stable foreign currency (i.e. US Dollar).</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>During 2009, the commonly used currency in Zimbabwe changed from Zimbabwean Dollar to US Dollar. As a result, the operations of Blanket Mine ceased to be subject to severe hyperinflation on this date. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Blanket Mine has elected to measure the assets and liabilities of the company at fair value and to use the fair value as the deemed cost of those assets and liabilities in the Blanket Mine&#146;s opening IFRS statement of financial position, being 1 January 2009, and recognise the difference directly as a component of equity in the Capital reserve.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>42</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>In accordance with IFRS 1 paragraph D17 the group is required in its consolidated financial statements, to measure the assets and liabilities of the Blanket Mine at the same carrying amounts as in the financial statements of the Blanket Mine, after adjusting for consolidation adjustments and for the effects of the business combination in which the entity acquired the Blanket Mine.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>As a consequence of the above , a large difference resulted between the carrying values under Canadian GAAP and IFRS.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>With the resultant higher carrying value for Blanket Mine&#146;s fixed assets, and the same application of the same depreciation rates, the depreciation amount under IFRS is &nbsp;much larger than under Canadian GAAP.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(C) Share-based payment</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>IFRS</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; Each tranche of an award with different vesting dates is considered a separate grant for the calculation of fair value, and the resulting fair value is amortized over the vesting period of the respective tranches.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; Forfeiture estimates are recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>Canadian GAAP</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; The fair value of stock-based awards with graded vesting are calculated as one grant and the resulting fair value is recognized on a straight-line basis over the vesting period.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; Forfeitures of awards are recognized as they occur.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>No change resulted in the figures because of this difference.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>43</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(D)Provision for environmental rehabilitation</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>An obligation exists to restore certain sites for the effect of the Group's operations. Under IFRS, a liability can arise as a result of a constructive and/or legal obligation. However Canadian GAAP only requires a liability to be raised if there is a legal obligation. IFRS requires provisions to be discounted if the effect is material. Unlike IFRS, Canadian GAAP does not require discounting if the amount is fixed or reliably determinable.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>IFRS</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; The provision for environmental rehabilitation must be adjusted for changes in the discount rate.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>Canadian GAAP</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; The provision for environmental rehabilitation is not adjusted for changes in the discount rate.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>A small change in the figures resulted from this difference.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(E) Deferred tax asset/liability</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>IFRS</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; All deferred tax assets and liabilities must be classified as non-current.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>Canadian GAAP</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>&#149; Deferred tax assets and liabilities can be classified as current or non-current as appropriate.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt">As a result of the transition to IFRS the carrying amounts of various assets and liabilities have been adjusted (see B above).&nbsp; There has not been a corresponding change to the tax basis of these assets and liabilities. This will impact the deferred taxes recognized. As a result of the change in the carrying values of the Blanket assets the deferred tax liability has also increased by a large amount.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(F) Other comprehensive income (loss)</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>Other comprehensive income (loss) consists of the change in the accumulated other comprehensive income(loss) (&#147;AOCI&#148;). Due to other IFRS adjustments, the balances that are used to calculate the AOCI are different in accordance with IFRS than in accordance with Canadian GAAP. As a result, AOCI and other comprehensive income (loss) are different in accordance with IFRS than in accordance with Canadian GAAP.</P>
<P style="margin:6.133px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>44</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
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<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>(G) Impairment</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>IFRS </I>&#150; If indication of impairment is identified, the asset&#146;s carrying value is compared to the asset&#146;s discounted cash flows. If the discounted cash flows are less than the carrying value, the asset is impaired by an amount equal to the difference between the discounted cash flows and the carrying value.</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>Canadian GAAP </I>- If indication of impairment is identified, the asset&#146;s carrying value is compared to the asset&#146;s undiscounted cash flows. If the undiscounted cash flows are less than the carrying value, the asset is impaired by an amount equal to the difference between the undiscounted cash flows and the carrying value. </P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The Company completed an impairment review of its assets at January 1, 2010 and concluded that the assets were not impaired in accordance with IFRS</P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify><I>&nbsp;(H) Presentation</I></P>
<P style="margin-top:6.133px; margin-bottom:6.133px; padding-left:5.733px; font-size:11pt" align=justify>The presentation of the cash flow statement in accordance with IFRS differs from the presentation of the cash flow statement in accordance with Canadian GAAP.</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>45</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="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=241.933 /><TD width=70.933 /><TD width=99.467 /><TD width=105.6 /><TD width=105.6 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=312.867 colspan=2><P style="margin:0px; font-size:11pt"><B>Reconciliation of equity at January 1, 2010</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=310.667 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=70.933><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=99.467><P style="margin:0px; font-size:11pt" align=center><B>Canadian GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=99.467><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; font-size:11pt" align=center>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Property, plant and equipment</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>15,304 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>9,085 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>24,389 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Other investments</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>59 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>59 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>810 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>810 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>16,173 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>9,085 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>25,258 </P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Inventories</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,589 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(3)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,586 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Prepayments</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>158 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(28) </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>130 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,547 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>4 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,551 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,623 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,623 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>5,917 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(27)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,890 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>22,090 </P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>9,058 </P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>31,148 </P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; font-size:11pt" align=justify>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Provisions</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>D</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,730 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(52) </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,678 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Deferred tax liability</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>E</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>859 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,454 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>4,313 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,589 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,402 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,991 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other payables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,171 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;(2) </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,169 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Bank overdraft</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>588 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>588 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,759 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(2) </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,757 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total Liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>5,348 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,400 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>8,748 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Equity </B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Share capital</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>196,125 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>196,125 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Capital reserve</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Contributed surplus</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,951 </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,951 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Accumulated other comprehensive income (loss)</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>F</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>(550)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(5,891) </P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(6,441) </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Deficit</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>(180,784)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(2,621) </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(183,405)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Capital and reserves</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>16,742 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,658 </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>22,400 </P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total equity and liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>22,090 </P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>9,058</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>31,148 </P>
</TD></TR>
</TABLE>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>46</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=241.933 /><TD width=70.933 /><TD width=99.467 /><TD width=105.6 /><TD width=105.6 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=312.867 colspan=2><P style="margin:0px; font-size:11pt"><B>Reconciliation of equity at March 31, 2010</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=310.667 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=70.933><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=99.467><P style="margin:0px; font-size:11pt" align=center><B>Canadian GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=99.467><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; font-size:11pt" align=center>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Property, plant and equipment</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>16,213</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,982</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>24,195</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Other investments</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>786</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>786</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>17,002</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,982</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>24,984</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Inventories</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,027</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(3)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,024</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Prepayments</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,240</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(23)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,217</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,652</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,652</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>6,004</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(26)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,978</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total assets</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>23,006</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,956</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>30,962</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Provisions</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>D</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,667</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(34)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,633</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Deferred tax liability</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>E</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>827</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,486</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>4,313</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>2,494</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,452</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,946</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other payables</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,907</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,907</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Bank overdraft</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,274</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,274</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>3,181</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,181</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total Liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>5,675</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,452</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>9,127</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Equity </B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=99.467><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Share capital</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Capital reserve</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Contributed surplus</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>1,951</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,951</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Accumulated other comprehensive income (loss)</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>F</I></P>
</TD><TD style="margin-top:0px" width=99.467><P style="margin:0px; font-size:11pt" align=right>(620)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(6,496)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(7,116)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Deficit</P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>(180,125)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(3,170)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(183,295)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Capital and reserves</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>17,331</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>4,504</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>21,835</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total equity and liabilities</B></P>
</TD><TD style="margin-top:0px" width=70.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=99.467><P style="margin:0px; font-size:11pt" align=right>23,006</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,956</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>30,962</P>
</TD></TR>
</TABLE>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>47</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></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=241.933 /><TD width=48 /><TD width=122.4 /><TD width=105.6 /><TD width=105.6 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=623.533 colspan=5><P style="margin:0px; font-size:11pt"><B>Reconciliation of equity at December 31, 2010</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=48><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.4><P style="margin:0px; font-size:11pt" align=center><B>Canadian GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.4><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Assets</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; font-size:11pt" align=center>&nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Property, plant and equipment</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>21,289</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,054</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>28,343</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Other investments</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>5</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>5</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current assets</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>21,294</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,054</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>28,348</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Inventories</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>2,626</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(6)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,620</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Prepayments</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>114</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(21)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>93</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other receivables</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>2,309</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>5</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,314</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>1,145</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,145</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current assets</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>6,194</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(22)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>6,172</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total assets</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>27,488</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,032</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>34,520</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=241.933><P style="margin:0px; font-size:11pt"><B>Liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Provisions</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>D</I></P>
</TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>1,731</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>188</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>1,919</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Deferred tax liability</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>E</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>2,286</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,865</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>5,151</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total non-current liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>4,017</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,053</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,070</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Trade and other payables</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>3,882</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,882</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt">Bank overdraft</P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>747</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>747</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total current liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>4,629</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>4,629</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total Liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>8,646</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,053</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>11,699</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Equity and liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Share capital</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>196,125</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Capital reserve</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>14,170</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Contributed surplus</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>2,305</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>2,305</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Accumulated other comprehensive income (loss)</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>F</I></P>
</TD><TD style="margin-top:0px" width=122.4><P style="margin:0px; font-size:11pt" align=right>(1,061)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(6,921)</P>
</TD><TD style="margin-top:0px" width=105.6><P style="margin:0px; font-size:11pt" align=right>(7,982)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Deficit</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>(178,527)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(3,270)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>(181,797)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Capital and reserves</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>18,842</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>3,979</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>22,821</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=241.933><P style="margin:0px; font-size:11pt"><B>Total equity and liabilities</B></P>
</TD><TD style="margin-top:0px" width=48><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=122.4><P style="margin:0px; font-size:11pt" align=right>27,488</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>7,032</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" width=105.6><P style="margin:0px; font-size:11pt" align=right>34,520</P>
</TD></TR>
</TABLE>
<P style="margin-top:0px; margin-bottom:12.2px"><BR>
<BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>48</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=227.8 /><TD width=47.267 /><TD width=14.867 /><TD width=117.467 /><TD width=5.4 /><TD width=98.533 /><TD width=7.067 /><TD width=105.6 /></TR>
<TR><TD style="margin-top:0px" valign=top width=624 colspan=8><P style="margin:0px; font-size:11pt"><B>Reconciliation of comprehensive income for the period ended March 31, 2010</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=47.267><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>&nbsp;Canadian GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>&nbsp;IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Revenue</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>4,490</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(32)</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>4,458</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Royalty</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>145</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>145</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Production costs</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>3,282</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>3,279</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Depreciation</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>167</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(418)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>585</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt"><B>Gross profit</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>896</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(447)</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>449</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Administrative expenses</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; font-size:11pt" align=center><I>F</I></P>
</TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>322</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(102)</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>424</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>574</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(549)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>25</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>15</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt"><B>Net finance income</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>85</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt"><B>Profit before income tax</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>659</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(549)</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Income tax expense</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt"><B>Profit for the period</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>659</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(549)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=227.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=227.8><P style="margin:0px; font-size:11pt"><B>Other comprehensive income</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt">Foreign currency translation differences for foreign operations</P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>(70)</P>
</TD><TD style="margin-top:0px" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(606)</P>
</TD><TD style="margin-top:0px" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>(676)</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=227.8><P style="margin:0px; font-size:11pt"><B>Total comprehensive income/(loss) for the period</B></P>
</TD><TD style="margin-top:0px" width=47.267><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=132.333 colspan=2><P style="margin:0px; font-size:11pt" align=right>589</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=103.933 colspan=2><P style="margin:0px; font-size:11pt" align=right>(1,155)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" width=112.667 colspan=2><P style="margin:0px; font-size:11pt" align=right>(566)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; font-size:11pt"><B>Canadian
    GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; font-size:11pt"><B>Effect
    of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt"><B>IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=289.933 colspan=3><P style="margin:0px; font-size:11pt"><B>Earnings per share</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; font-size:11pt" align=right>0.0013</P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px; font-size:11pt" align=right>(0.0011)</P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; font-size:11pt" align=right>0.0002</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=289.933 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=122.867 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=105.6 colspan=2><P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><BR></P>
<P style="margin:0px" align=right><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=105.6><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=624 colspan=8><P style="margin:0px"><BR></P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>49</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px"><BR></P>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="margin:0px; padding-left:6px; font-size:14pt; page-break-before:always"><B>Caledonia Mining Corporation</B></P>
<P style="margin:0px; padding-left:5.733px; font-size:14pt"><B>Notes to the Condensed Consolidated Financial Statements</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>For the three month period ended March 31, 2011 and 2010 </B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>Unaudited</B></P>
<P style="margin:0px; padding-left:5.667px; font-size:14pt"><B>(</B><FONT style="font-size:11pt"><B><I>figures in thousands of Canadian dollars unless otherwise stated</I></FONT>)</B></FONT><B>)</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<TABLE style="font-size: 10pt; margin-top: 0px" cellpadding=0 cellspacing=0 height="798">
<TR><TD style="margin-top: 0px" valign=top width=624 colspan=8 height="19"><P style="margin:0px; font-size:11pt"><B>Reconciliation of comprehensive income for the year ended December 31, 2010</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=227.8 height="53"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=47.267 height="53"><P style="margin:0px; font-size:11pt" align=center><B><I>Note</I></B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=132.333 colspan=2 height="53"><P style="margin:0px; font-size:11pt" align=center><B>&nbsp;Canadian GAAP</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=103.933 colspan=2 height="53"><P style="margin:0px; font-size:11pt" align=right><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=112.667 colspan=2 height="53"><P style="margin:0px; font-size:11pt" align=center><B>&nbsp;IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top: 0px" valign=bottom width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=center><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=103.933 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=top width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Revenue</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>22,401</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(13)</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>22,388</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Royalty</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>825</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>825</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Production costs</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>13,298</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(9)</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>13,307</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Depreciation</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; font-size:11pt" align=center><I>B</I></P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>566</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,951)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>2,517</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt"><B>Gross profit</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>7,712</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,973)</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>5,739</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="font-size: 11pt; margin: 0px" align="right">&nbsp;</P></TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Administrative expenses</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; font-size:11pt" align=center><I>F</I></P>
</TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>4,028</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>936</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>3,092</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>3,684</P>
</TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,037)</P>
</TD><TD style="border-top: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>2,647</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Finance income</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>270</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>270</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Finance expense</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(267)</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(267)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt"><B>Net finance income</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="border-bottom: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>3</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt"><B>Profit before income tax</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>3,687</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,037)</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>2,650</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt">Income tax expense</P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,430)</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>388</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(1,042)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="19"><P style="margin:0px; font-size:11pt"><B>Profit for the period</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>2,257</P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>(649)</P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; font-size:11pt" align=right>1,608</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=227.8 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" valign=bottom width=227.8 height="19"><P style="margin:0px; font-size:11pt"><B>Other comprehensive income</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="48"><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">Reclassification adj for other than temporary decline in value</P>
</TD><TD style="margin-top: 0px" width=47.267 height="48"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="48"><P style="margin:0px; font-size:11pt" align=right>(45)</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="48"><P style="margin:0px; font-size:11pt" align=right>-</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="48"><P style="margin:0px; font-size:11pt" align=right>(45)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="36"><P style="margin:0px; font-size:11pt">Foreign currency translation differences for foreign operations</P>
</TD><TD style="margin-top: 0px" width=47.267 height="36"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" width=132.333 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>(466)</P>
</TD><TD style="margin-top: 0px" width=103.933 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>(1,030)</P>
</TD><TD style="margin-top: 0px" width=112.667 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>(1,496)</P>
</TD></TR>
<TR><TD style="margin-top: 0px" width=227.8 height="36"><P style="margin:0px; font-size:11pt"><B>Total comprehensive income/(loss) for the period</B></P>
</TD><TD style="margin-top: 0px" width=47.267 height="36"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=132.333 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>1,746</P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=103.933 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>(1,679)</P>
</TD><TD style="border-top: 1px solid #000000; border-bottom: 1px solid #000000; margin-top: 0px" width=112.667 colspan=2 height="36"><P style="margin:0px; font-size:11pt" align=right>67</P>
</TD></TR>
<TR><TD style="margin-top: 0px" valign=top width=289.933 colspan=3 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=122.867 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=105.6 colspan=2 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top: 0px" valign=bottom width=105.6 height="19"><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:6.133px" 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=277 /><TD width=134.4 /><TD width=99.6 /><TD width=114 /></TR>
<TR><TD style="margin-top:0px" valign=top width=277><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=134.4><P style="margin:0px; font-size:11pt" align=right><B>Canadian GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=99.6><P style="margin:0px; font-size:11pt" align=right><B>Effect of transition to IFRS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=114><P style="margin:0px; font-size:11pt"><B>IFRS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=277><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=134.4><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=99.6><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=114><P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=277><P style="margin:0px; font-size:11pt"><B>Earnings per share</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=134.4><P style="margin:0px; font-size:11pt" align=right>0.0045</P>
</TD><TD style="margin-top:0px" valign=bottom width=99.6><P style="margin:0px; font-size:11pt" align=right>(0.0013)</P>
</TD><TD style="margin-top:0px" valign=bottom width=114><P style="margin:0px; font-size:11pt" align=right>0.0032</P>
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<P style="margin:0px; font-family:Calibri,Times New Roman; font-size:11pt" align=center>50</P>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>mda.htm
<DESCRIPTION>MANAGEMENT DISCUSSION AND ANALYSIS FOR THE PERIOD ENDED MARCH 31, 2011
<TEXT>
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<TITLE>MD Filed by Filing Services Canada Inc.&nbsp; (403) 717-3898</title>
<META NAME="author" CONTENT="Stefan Hayden">
<META NAME="date" CONTENT="05/19/2011">
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<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
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<P style="margin-top:0px; margin-bottom:-2px; width:336px; font-size:11pt; float:left"><B>CALEDONIA MINING CORPORATION</B></P>
<P style="margin-top:0px; margin-bottom:-2px; width:144px; font-size:11pt; float:left"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0px; padding-left:192px; text-indent:-2px; font-size:11pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MAY 18, 2011</B></P>
<P style="line-height:16.15pt; margin-top:0px; margin-bottom:12.2px; padding-right:165.533px; font-size:11pt; clear:left" align=justify><B>Management&#146;s Discussion and Analysis </B></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:14.067px; font-size:11pt" align=justify><I>This discussion and analysis of the consolidated operating results and financial condition of Caledonia Mining Corporation (&quot;Caledonia&#148;) is for the fiscal quarter ended March 31, 2011 and the period until May 15, 2011. It should be read in conjunction with the Unaudited Consolidated Financial Statements as at March 31, 2011 and the Annual Report for the year ended December 31, 2010, all of which are available from the System for Electronic Data Analysis and Retrieval at <U>www.sedar.com</U> or from Caledonia&#146;s website at <U>www.caledoniamining.com</U>. &nbsp;The Unaudited Consolidated Financial Statements and related notes have been prepared using accounting policies consistent with IFRS and in accordance with International Accounting Standard 34 (&#147;IAS 34&#148;) &#150; Interim Financial Reporting. A reconciliation of the previously disclosed comparative periods&#146; financial statements prepared in accordance with Canadian generally accepted accounting principles to IFRS is set out in Note 22 to these condensed financial statements. </I></P>
<P style="margin:0px; font-size:11pt" align=justify><B><I>Note that all currency references in this document are to Canadian Dollars. </I></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify><B>Contents of the MD&amp;A</B></P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; float:left">1.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Forward Looking Statements </P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">2.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Overview</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">3.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Highlights for the Quarter ended March 31, 2011 (1<SUP>st</SUP> Quarter 2011)</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">4.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Summary Financial Results for the 1<SUP>st</SUP> Quarter &nbsp;2011</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">5.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Operations at the Blanket Gold Mine, Zimbabwe</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.1.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Safety, Health and Environment</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.2.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Social Investment</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.3.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Gold Production</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.4.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Operating Costs</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.5.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Underground</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.6.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Metallurgical Plant</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.7.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Capital Projects</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.8.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Mineral Reserves and Resources</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">5.9.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Indigenization</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:96px; font-size:11pt; clear:left; float:left">5.10.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Risks</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:96px; font-size:11pt; clear:left; float:left">5.11.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Opportunities</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:96px; font-size:11pt; clear:left; float:left">5.12.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Outlook</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">6.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Exploration and Project Development<B> </B></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">6.1.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Base Metals: Nama Copper/Cobalt Project &#150; Zambia<B> </B></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">6.2.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>Gold: Zimbabwe &nbsp;</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.4px; width:66.2px; font-size:11pt; clear:left; float:left">6.3.</P>
<P style="margin:0px; padding-left:66.2px; text-indent:-2px; font-size:11pt" align=justify>PGE/Ni/Cu: Rooipoort (including Grasvally) and Mapochsgronde) - South Africa</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">7.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Investing</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">8.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Financing</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">9.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Liquidity and Capital Resources</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">10.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Off-Balance Sheet Arrangements</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">11.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Related Party Transactions</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">12.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Critical Accounting Policies</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">13.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Securities Outstanding</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">14.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Controls</P>
<P style="margin-top:0px; margin-bottom:-2px; width:24px; font-size:11pt; clear:left; float:left">15.</P>
<P style="margin:0px; padding-left:24px; text-indent:-2px; font-size:11pt" align=justify>Qualified Persons</P>
<P style="margin-top:0px; margin-bottom:12.2px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR>
<BR></P>
<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
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<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left"><B>1.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>FORWARD LOOKING STATEMENTS</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>This Management Discussion and Analysis contains certain forward-looking statements relating but not limited to Caledonia&#146;s expectations, intentions, plans, and beliefs. &nbsp;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. &nbsp;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. &nbsp;Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. &nbsp;Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. </P>
<P style="margin:0px; font-size:11pt" align=justify>Potential shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. &nbsp;Shareholders are cautioned not to place undue reliance on forward-looking information. &nbsp;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. &nbsp;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.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left"><B>2.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>OVERVIEW</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt; clear:left" align=justify>Caledonia is an exploration, development and mining corporation focused on Southern Africa. &nbsp;The<B> </B>Corporation&#146;s primary assets are an operating gold mine in Zimbabwe (the &#147;Blanket Mine&#148;), a base metals exploration project in Zambia (the &#147;Nama Property&#148;) and platinum and base metal (PGE) projects in South Africa (Rooipoort/Mapochs). &nbsp;</P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>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;.</P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>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 viable operations, and then add value by developing the asset, either as an operator or through joint venture agreements. &nbsp;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. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:11pt; float:left"><B>3.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify><B>HIGHLIGHTS FOR THE QUARTER ENDED MARCH 31, 2011 (&#147;1<SUP>st</SUP> &nbsp;QUARTER 2011&#148;) </B></P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Gold produced at the Blanket Mine in Zimbabwe increased by 17% to 7,322 ounces from the 6,235 ounces produced in the preceding quarter. &nbsp;Gold production in the quarter was 134% higher than the 3,129 ounces of gold produced in 1<SUP>st</SUP> quarter 2010. Gold production in April 2011 was 2,737 ounces.</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>The average achieved price per ounce of gold in the 1<SUP>st</SUP> quarter of 2011 was US$1,397 compared to US$1,107 in the 1<SUP>st</SUP> quarter of 2010.</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Gross Profit (i.e. before depreciation, amortization and administrative expenses) was $5,248,000 compared to $2,815,000 in the 4<SUP>th</SUP> quarter of 2010 and $449,000 in the 1<SUP>st</SUP> quarter of 2010.</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Caledonia recorded net profit before tax of $3,044,000 compared to $110,000 in the 1<SUP>st</SUP> quarter of 2010.</P>
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<P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=center>2</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Average gold recovery remained stable at 92%.</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Cash operating costs at the Blanket Mine were US$648 per ounce of gold produced, compared to US$807 per ounce in the 1<SUP>st</SUP> quarter of 2010 and US$791 per ounce in the 4<SUP>th</SUP> quarter of 2010. &nbsp;</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>At March 31, 2011 the Corporation had net cash and cash equivalents of $1,406,000 (December 31, 2010 $398,000).</P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>At Blanket, during the quarter the Corporation made considerable progress in removing the remaining constraints to achieving the targeted annual production rate. </P>
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<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>The 2011 drilling program commenced in March 2011 at the Konkola West area of the Nama base metals project in Zambia to identify whether typical copper-belt type mineralisation, which is the primary type of mineralisation found in Zambian copper and cobalt deposits exists similar to that on the adjacent property to the east of Konkola West. This drilling programme is on-going and the results will be made available when management has received and evaluated the results of this stage of the programme. &nbsp;</P>
<P style=margin-top:7.333px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; clear:left; float:left">&#183;</P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Blanket&#146;s Hazardous Chemical rating was upgrade from Yellow to Green by the Zimbabwean Environmental Management Agency, which is an excellent and noteworthy achievement by the Blanket management and staff.</P>
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<P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>4.</B></P>
<P style="margin-top:0px; margin-bottom:7.333px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>SUMMARY FINANCIAL RESULTS FOR 1<SUP>st</SUP> QUARTER 2011</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt; clear:left" align=justify>The table below set out selected consolidated financial information for the three months ended March 31, 2011 and 2010. </P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=252.933 /><TD width=75.6 /><TD width=79.867 /><TD width=43 /><TD width=198.4 /></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000; border-right:1px solid #000000" valign=top width=649.8 colspan=5><P style="margin:0px; font-size:11pt" align=justify><B>Condensed Consolidated Statement of Comprehensive Income</B></P>
<P style="margin:0px; font-size:11pt" align=justify><B><I>(in thousands of Canadian dollars except per share amounts)</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=252.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=396.867 colspan=4><P style="margin:0px; font-size:11pt" align=center><B>Three months ended March 31,</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=252.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:68.4px; padding-right:25.4px; font-size:11pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2011</B></P>
<P style="margin:0px; padding-left:68.4px; padding-right:25.4px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:16.867px; padding-right:48.6px; font-size:11pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2010</P>
<P style="margin:0px; padding-right:48.6px; font-size:11pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Revenue</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:58.933px; padding-right:34.867px; font-size:11pt" align=right><B>11,226</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>4,458</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Royalty</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>455</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>145</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Production &nbsp;costs</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>4,950</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>3,279</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Amortization</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>573</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>585</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Gross profit</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>5,248</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>449</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt">Administrative Expenses</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>2,049</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>424</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Results from operating activities</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>3,199</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>25</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Finance income</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>-</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>100</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Finance expense</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>155</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Profit before income tax</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>3,044</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Income Tax expense</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>1,150</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Profit for the period</P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>1,894</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>110</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify>Loss on foreign currency translation</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>(714)</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>(676)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify><B>Total comprehensive income/(loss) for the period</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:21.133px; padding-right:34.867px; font-size:11pt" align=right><B>1,180</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:35.8px; padding-right:58.067px; font-size:11pt" align=right>(566)</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt"><B>Earnings per share (cents)</B></P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; padding-left:18.933px; font-size:11pt" align=justify>Basic </P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:58.933px; padding-right:34.867px; font-size:11pt" align=right><B>0.38</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:26.333px; padding-right:67.067px; font-size:11pt" align=right>0.02</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=252.933><P style="margin:0px; padding-left:18.933px; font-size:11pt" align=justify>Diluted </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin:0px; padding-left:58.933px; padding-right:34.867px; font-size:11pt" align=right><B>0.35</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:26.333px; padding-right:67.067px; font-size:11pt" align=right>0.02</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=252.933><P style="margin:0px; font-size:11pt" align=justify><B>Weighted average number of common shares outstanding</B></P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" valign=top width=252.933><P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=justify>Basic </P>
</TD><TD style="margin-top:0px" width=198.467 colspan=3><P style="margin:0px; padding-left:58.933px; padding-right:34.867px; font-size:11pt" align=center>500,169,280</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=198.4><P style="margin:0px; padding-left:26.333px; padding-right:67.067px; font-size:11pt" align=right>500,169,280</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" valign=top width=252.933><P style="margin:0px; text-indent:28.8px; font-family:Times,Times New Roman" align=justify>Diluted </P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=198.467 colspan=3><P style="margin-top:0px; margin-bottom:5.533px; padding-left:58.933px; padding-right:34.867px; font-size:11pt" align=right>542,709,280<SUP>(1)</SUP></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=198.4><P style="margin:0px; padding-left:26.333px; padding-right:67.067px; font-size:11pt" align=right>500,169,280</P>
</TD></TR>
<TR><TD style="margin-top:0px" width=649.8 colspan=5><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Arial; font-size:8pt; float:left"><SUP>(1)</SUP></P>
<P style="margin-top:0px; margin-bottom:4px; padding-left:48px; text-indent:-2px; font-family:Arial; font-size:8pt">The dilution effect is caused by share options &#147;in the money&#148; at March 31, 2010 and not common shares issued.</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-top:1px solid #000000; border-right:1px solid #000000" width=649.8 colspan=5><P style="margin:0px; font-size:11pt"><B>Condensed Consolidated Statement of Financial Position</B></P>
<P style="margin:0px; font-size:11pt"><B><I>(in thousands of Canadian dollars except per share amounts)</I></B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=328.533 colspan=2><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px" width=79.867><P style="margin:0px; font-size:11pt" align=right><B>Mar 31, 2011</B></P>
<P style="margin:0px; font-size:11pt" align=right><B>$</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=241.4 colspan=2><P style="margin:0px; padding-left:92.467px; padding-right:68.4px; font-size:11pt" align=right>Dec 31, 2010</P>
<P style="margin:0px; padding-left:92.467px; padding-right:68.4px; font-size:11pt" align=right>$</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000" width=328.533 colspan=2><P style="margin:0px; font-size:11pt" align=justify>Total assets</P>
</TD><TD style="margin-top:0px" width=79.867><P style="margin-top:0px; margin-bottom:5.533px; font-size:11pt" align=right><B>39,910</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000" width=241.4 colspan=2><P style="margin:0px; padding-left:92.467px; padding-right:68.4px; font-size:11pt" align=right>34,520</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-bottom:1px solid #000000" width=328.533 colspan=2><P style="margin:0px; font-size:11pt" align=justify>Total &nbsp;liabilities</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" width=79.867><P style="margin-top:0px; margin-bottom:5.533px; font-size:11pt" align=right><B>14,807</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=241.4 colspan=2><P style="margin:0px; padding-left:92.467px; padding-right:68.4px; font-size:11pt" align=right>11,699</P>
</TD></TR>
</TABLE>
<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-top:0px; margin-bottom:12.2px" align=justify>
<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="margin:0px" align=justify>&nbsp;</P>
<P style="margin:0px; font-size:11pt" align=justify>The following information is provided for each of the eight most recently completed quarters of Caledonia - ending on the dates specified - in thousands of Canadian Dollars. &nbsp;The figures are extracted from underlying unaudited financial statements that have been prepared using accounting policies consistent with IFRS, unless specified below.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; 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=160.667 /><TD width=56.733 /><TD width=56.733 /><TD width=56.667 /><TD width=56.733 /><TD width=56.667 /><TD width=66.133 /><TD width=56.667 /><TD width=56.733 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=bottom width=160.667><P style="margin:0px; padding-left:28.4px; text-indent:-28.4px; font-size:11pt">($000&#146;s-except per share amounts.)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; font-size:11pt" align=right><B>Mar 31/11</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="margin:0px; font-size:11pt" align=right><B>Dec 31/10</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px; font-size:11pt" align=right><B>Sept 30/10</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="margin:0px; font-size:11pt" align=right><B>June 30/10</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px; font-size:11pt" align=right><B>Mar 31/10</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=66.133><P style="margin:0px; font-size:11pt" align=right><B>Dec 31/09</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="margin:0px; font-size:11pt" align=right><B>Sept 30/09</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="margin:0px; font-size:11pt" align=right><B>June 30/09</B></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=160.667><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=283.533 colspan=5><P style="margin:0px; font-size:9pt" align=center><B>Under IFRS</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=179.533 colspan=3><P style="margin:0px; font-size:9pt" align=center><B>Under Canadian GAAP</B></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=160.667><P style="margin:0px">Sales from continuing operations</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>11,226</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>7,426</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>6,331</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>4,154</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>4,458</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>4,263</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>4,932</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>2,364</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=160.667><P style="margin:0px">Net Income/ (loss) after tax from operations</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>1,894</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>(643)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>1,133</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>(173)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>83</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>(3,738)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>826</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:9pt" align=center>(199)</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=160.667><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; float:left">-</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">Per share basic</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>0.0038</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>(0.0013)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>0.0023</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>(0.0003)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>0.0002</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px; font-size:9pt" align=center>(0.0075)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>0.0017</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>(0.0004)</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=160.667><P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; float:left">-</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">Per share diluted</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>0.0035</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>(0.0013)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>0.0023</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>(0.0003)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>0.0002</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px; font-size:9pt" align=center>-</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>-</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>-</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=160.667><P style="margin:0px">No of shares basic &#145;000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</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=160.667><P style="margin:0px">No of shares diluted &#145;000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>542,709</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>503,472</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>503,472</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.667><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=56.733><P style="margin:0px; font-size:9pt" align=center>500,169</P>
</TD></TR>
</TABLE>
<P style="line-height:11.55pt; margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:-2px; width:37.8px; float:left"><B><I>Note:</I></B></P>
<P style="line-height:11.55pt; margin:0px; padding-left:37.8px; text-indent:-2px" align=justify><I>&nbsp;The effect of the dilution on the earnings per share has not been calculated for 2009 as the result was a loss and the diluted earnings per share would be anti-dilutive.</I></P>
<P style="margin-top:0px; margin-bottom:12.2px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>Administration expenses in the 1<SUP>st</SUP> quarter included share-based expenses, for share options granted, of $1,102,000 (nil -2010), regional office expenses of $274,000 ($62,400 - 2010), withholding taxes paid $212,000 (nil &#150; 2010), management contract fee $171,000 ($141,000 &#150; 2010) audit fees $78,000 ($40,000 &#150; 2010) and other expenses of $212,000 ($181,000 &#150; 2010).</P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>The taxation charge in the 1<SUP>st</SUP> quarter is made up of an income tax estimate of $459,000 (nil &#150; 2010) and an increase in deferred tax of $691,000 (nil &#150; 2010).</P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify>The effect of the transition to IFRS and the reconciliation from Canadian GAAP to IFRS can be seen in Note 22 of the Condensed Consolidated Financial Statements. </P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; text-indent:-2px; font-size:11pt" align=justify><B>OPERATIONS AT THE BLANKET GOLD MINE, ZIMBABWE</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt; clear:left" align=justify>The primary focus of the Blanket Mine in Zimbabwe for the quarter under review was on the commencement of certain underground works which should, once completed, allow the planned gold production of approximately 40,000 ounces of gold per annum to be achieved on a sustainable basis and result in a reduction of mine operating costs. &nbsp;Further major capital investment at Blanket and the satellite projects, other than the contracted underground works and the installation of standby generating capacity have been largely curtailed pending clarification of the recently announced regulations regarding the indigenization policy of the Government of Zimbabwe. &nbsp;</P>
<A NAME="OLE_LINK4"></A><A NAME="OLE_LINK5"></A><P style="margin-top:0px; margin-bottom:12.2px" align=justify><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><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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style=margin-top:4.867px;margin-bottom:-1pt;font-size:1pt /><P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>5.1</B></P>
<P style="margin-top:0px; margin-bottom:4.867px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>Safety, Health and Environment (&#147;SHE&#148;)</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The following safety statistics have been recorded.</P>
<P style="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=160.667 /><TD width=87.8 /><TD width=94.467 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=top width=160.667><P style="margin:0px; font-size:11pt" align=center><B>Class</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center><B>1<SUP>ST</SUP> &nbsp;QUARTER 2011</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center><B>1<SUP>ST</SUP> QUARTER 2010</B></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=160.667><P style="margin:0px; font-size:11pt" align=justify>Lost time injury</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>0</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>0</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=160.667><P style="margin:0px; font-size:11pt" align=justify>Occupational illness</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>0</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>1</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=160.667><P style="margin:0px; font-size:11pt" align=justify>Medical aid</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>3</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>3</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=160.667><P style="margin:0px; font-size:11pt" align=justify>Restricted work activity</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>9</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>3</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=160.667><P style="margin:0px; font-size:11pt" align=justify>First aid</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:2px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>2</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:2px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>3</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:2px solid #000000; border-bottom:1px solid #000000" valign=top width=160.667><P style="margin:0px; font-size:11pt" align=justify><B>Total</B></P>
</TD><TD style="margin-top:0px; border-right:2px solid #000000; border-bottom:2px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center><B>14</B></P>
</TD><TD style="margin-top:0px; border-right:2px solid #000000; border-bottom:2px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center><B>10</B></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=160.667><P style="margin:0px; font-size:11pt" align=justify>Incidents</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>6</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>11</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=160.667><P style="margin:0px; font-size:11pt" align=justify>Near misses</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87.8><P style="margin:0px; font-size:11pt" align=center>7</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; font-size:11pt" align=center>13</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The increase in restricted work activity cases was primarily due to the increased number of man-hours worked in the quarter compared to the 1<SUP>st</SUP> quarter of 2010 and an increase in the number of new employees. &nbsp;The reduction in incidents and near misses reflects positively on the focus which the Blanket management team attaches to health and safety. &nbsp;During the 1<SUP>st</SUP> quarter, 510 of Blanket&#146;s employees received training either in respect of their designated role and/or on general health safety procedures and first aid. &nbsp;It is anticipated that the continued focus on preventive training will lead to a continuing improvement in future safety performance.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The positive effect of Blanket&#146;s continuing HIV/AIDS education is starting to show. &nbsp;Testing for HIV/AIDS is conducted purely on a voluntary basis and 7 new cases were identified amongst employees and 3 cases amongst their dependents. &nbsp;During the quarter 1,883 visits by workers and their dependents to the mine clinic were recorded. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>There were no adverse environmental issues during the quarter. &nbsp;Water sampling results from the 14 monitoring holes downstream of the tailing dams continue to verify satisfactory environmental controls. Water usage in the quarter was 12 % higher than in the comparable quarter of 2010 due to increased processed tonnes and a general increase in domestic water usage due to an exceptionally dry period.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Blanket&#146;s Hazardous Chemical rating was upgrade from Yellow to Green by the Zimbabwean Environmental Management Agency, which is excellent and noteworthy achievement by the Blanket Management and staff.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>5.2</B></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>Social Investment</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>During the quarter, Blanket Mine spent approximately $48,500 on community and social investment projects which are not directly related to the operation of the mine or the welfare of Blanket&#146;s employees. In the quarter, Blanket made total payments to the Zimbabwean Government and its agencies of US$1.8 million in respect of royalties, taxation and other non-taxation charges.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>5.3 </B></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>Gold Production </B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>7,322 ounces of gold were produced in the 1<SUP>st</SUP> quarter, a 17% increase on gold produced in the 4<SUP>th</SUP> quarter of 2010 and a 134 % increase on gold produced in the 1<SUP>st</SUP> quarter of 2010. &nbsp;Tonnages milled, average grades, recoveries and gold produced during April 2011, the 1<SUP>st</SUP> quarter and the preceding 4 quarters are shown in the table below.</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>5</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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=104 /><TD width=66.133 /><TD width=85.067 /><TD width=103.933 /><TD width=85.067 /><TD width=94.467 /><TD width=103.933 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=top width=104><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" valign=bottom width=66.133><P style="margin:0px; font-size:11pt" align=center><B>Year</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=85.067><P style="margin:0px; font-size:11pt" align=center><B>Tonnes Milled</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=103.933><P style="margin:0px; font-size:11pt" align=center><B>Gold Head (Feed) &nbsp;Grade(g/t)</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=85.067><P style="margin:0px; font-size:11pt" align=center><B>Recovery</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=94.467><P style="margin:0px; padding-left:16.533px; font-family:Times,Times New Roman; font-size:11pt" align=center><B>Gold Ounces Produced</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=103.933><P style="margin:0px; font-size:11pt"><B>Average sales &nbsp;price per ounce of gold sold (US$/oz)</B></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=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">April</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2011</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>20,149</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>4.53</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>93.3%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>2,737</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,507</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:3px solid #000000" width=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">First quarter</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2011</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>61,437</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>4.02</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>92.2%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>7,322</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,391</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=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">Fourth quarter</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2010</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>51,313</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>4.15</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>91.1%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>6,235</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,384</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=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">Third quarter</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2010</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>41,594</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>4.04</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>91.3%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>4,935</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,241</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=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">Second quarter</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2010</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>30,788</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>3.79<SUP>(1)</SUP></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>90.8%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>3,408</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,192</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-left:1px solid #000000; border-right:1px solid #000000; border-bottom:3px solid #000000" width=104><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt">First quarter</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=66.133><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>2010</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>29,805</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>3.58</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=85.067><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>91.2%</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" width=94.467><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>3,129</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:3px solid #000000" valign=top width=103.933><P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=center>1,109</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:37.8px; width:61.8px; font-size:8pt; float:left">(1)</P>
<P style="margin:0px; padding-left:61.8px; text-indent:-2px; font-size:8pt" align=justify>&nbsp;Increase in recovered grade is a direct result of discontinuing mining operations above the 510 m level</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Production during the 1<SUP>st</SUP> quarter of 2011 and in April 2011was higher than the period January to April 2010 due to the continued ramp-up in production following the commissioning of the No.4 Shaft Expansion Project in 2010. &nbsp;The increase in tonnes mined was lower than planned due to constraints experienced in the movement of materials underground, particularly on the 22 Level (750 m BMSL). These constraints were described in the 2010 annual report and MD&amp;A that is filed on SEDAR. The work that was undertaken to remedy these constraints had an adverse effect on production during the quarter. &nbsp;The gold grade of the mined ore was slightly above the mine plan and gold recoveries increased to 92.2%, higher than the planned recovery of 91% and the recovery of 91.1% which was achieved in the previous quarter. &nbsp;Power availability in the quarter remained stable following the new supply agreement which was signed in October 2010. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.4</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Operating costs</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The operating cash costs per ounce of gold produced during the quarter and the preceding 4 quarters are set out in the table below.</P>
<P style="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=189 /><TD width=88.8 /><TD width=88.867 /><TD width=88.8 /><TD width=88.867 /><TD width=88.867 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" valign=top width=189><P style="margin:0px" align=justify><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.8><P style="margin:0px; font-size:11pt" align=justify>Q1 2010</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.867><P style="margin:0px; font-size:11pt" align=justify>Q2</P>
<P style="margin:0px; font-size:11pt" align=justify>2010</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.8><P style="margin:0px; font-size:11pt" align=justify>Q3</P>
<P style="margin:0px; font-size:11pt" align=justify>2010</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.867><P style="margin:0px; font-size:11pt" align=justify>Q4</P>
<P style="margin:0px; font-size:11pt" align=justify>2010</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.867><P style="margin:0px; font-size:11pt" align=justify><B>1<SUP>st</SUP> &nbsp;Quarter 2011</B></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=bottom width=189><P style="margin:0px; font-size:11pt"><B>Gold &#150; US$ cost/oz produced</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=88.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=88.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=88.867><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify>Labour </P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>326</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>324</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>232</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>211</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>208</B></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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify>Consumables</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>306</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>301</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>249</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>329</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>247</B></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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify>Electricity (incl. diesel)</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>108</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>97</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>105</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>167</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>145</B></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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify>Other admin costs</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>67</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>94</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>65</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>84</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>48</B></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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify><B>Total US$ cost/oz gold produced</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center><B>807</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>816</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center><B>651</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>791</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>648</B></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=bottom width=189><P style="margin:0px; font-size:11pt" align=justify>Gold Ounces produced</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>3,129</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>3,408</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.8><P style="margin:0px; font-size:11pt" align=center>4,935</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center>6,235</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=88.867><P style="margin:0px; font-size:11pt" align=center><B>7,322</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The average cost per ounce of gold produced is sensitive to production volumes and the 17% increase in gold production between the 4<SUP>th</SUP> quarter of 2010 and the 1<SUP>st</SUP> quarter of 2011 resulted in an 18% reduction in the cost per ounce of gold produced. The extent of the overall cost reduction was impacted by a significant increase in labour costs (17%) in the 1<SUP>st</SUP> quarter following the eventual settlement of long-running wage negotiations with the resultant 2010 wage increase being backdated to October 2009. &nbsp;The availability and reliability of electrical power during the quarter continued the improvement which was seen in December 2010 subsequent to the signing of the new power agreement. &nbsp;The price of &nbsp;electricity supplied under the &nbsp;terms of the new supply agreement is more expensive than under the previous agreement, but it is still considerably less expensive than the cost of electricity generated by the mine&#146;s standby generators. &nbsp;The further strengthening of the South African Rand also adversely affected the US dollar-denominated cost of consumables and capital items imported from South Africa. </P>
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<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>
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<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.5</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Underground</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The AR South ore body continued to provide the majority of ore during the quarter. Actual average daily production from AR South above 18 Level was 284 tonnes and average daily production from AR South between 22 Level and 18 Level was197 tonnes. &nbsp;The balance of production came from the Lima and Eroica ore bodies, which had an average daily production in the quarter of 93 tonne and 144 tonnes respectively. &nbsp;Production from AR South in general was affected by handling constraints on 22 Level and production from AR South between 22 and 18 Levels was also affected by poor ventilation. &nbsp;The 22 Level material handling constraints have been addressed by the completion of the raise bored ore pass and the ventilation constraint will eventually be satisfied by the drilling of a new ventilation raise that has commenced and is discussed below. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.6</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Metallurgical Plant</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The metallurgical plant operated during the quarter at better than budgeted efficiency. &nbsp;The first of two new gyratory crushers was installed in the quarter and is working well. &nbsp;Subsequent to the end of the 1<SUP>st</SUP> quarter the second crusher and new triple- deck screen were installed and successfully commissioned on May 3. &nbsp;All of the Carbon-in-Leach (CIL) tanks have now been fitted with the new improved-design agitator mechanisms. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.7</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Capital Projects</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify><B><U>Raise Boring</U></B></P>
<P style="margin:0px; font-size:11pt" align=justify>Subsequent to the completion of the No. 4 Shaft Expansion Project, certain ore handling limitations existed on 18 and 22 Levels at the year end and were commented upon in detail in the 2010 MD&amp;A. &nbsp;These limitations have now been addressed by raise boring an ore pass connecting 18 Level to the No. 2 grizzly tip and ore bin on 22 Level. &nbsp;The 120 meter long and 1.5 meter diameter ore pass was completed during the quarter and the self-tipping ramp and grizzly on top of the ore pass on 18 Level is planned to be completed and commissioned by the end of May. &nbsp;This ore pass will vastly improve the efficiency of delivering ore to the new underground crushing and hoist loading station by eliminating the necessity to double handle ore and waste generated on 18 Level down to 22 Level via the No 6 winze before it is crushed and hoisted from the underground loading station to surface. &nbsp;However, the process of raise boring the ore pass interfered with production mining activities because waste from the raise borer had to be removed on a regular basis and transported on 22 Level so that it could be crushed and hoisted. This caused production to be lower than the mine&#146;s 1<SUP>st</SUP> quarter target</P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin:0px; font-size:11pt" align=justify><B><U>750m AR &#150; Lima Haulage &nbsp;</U></B></P>
<P style="margin:0px; font-size:11pt" align=justify>Subsequent to the completion of the No. 4 Shaft Expansion Project, work has recommenced on the 22-Level Haulage Extension Project. &nbsp;This project will link the Blanket and Lima shafts on 22-Level and will also allow for the further up-dip and down-dip exploration of the Blanket Mine&#146;s known ore bodies. &nbsp;Crosscuts (short side tunnels) will be mined from the 22-Level Haulage in order to provide the required drilling platforms from which the ore bodies below the 22-Level can be drilled. &nbsp;If this exploration is successful, this haulage will also allow for the rapid commencement of mining on the new mining areas defined. &nbsp;Included in the scope of work is a 230 meter long ventilation raise which is currently in progress and that will provide satisfactory ventilation in this area, allowing for double-shift blasting that will accelerate the daily advance drilling rate. &nbsp;Work on this ventilation raise is expected to be completed in the 2nd quarter of 2011. &nbsp;It is planned that all of the work on the 22-Level Haulage Project and its cross-cuts will be carried out simultaneously with normal mining production with completion by the end of 2012. &nbsp;The budgeted cost of the 22 Level Project utilizing internal resources is about US$900 per meter advanced and equipped. The estimated capital cost for the planned 2,400 meter development, including the raise boring of the ventilation raise is approximately US$2.4 million, which will be funded from internal cash flows. &nbsp;</P>
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<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>
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<P style="margin:0px; font-size:11pt" align=justify><B><U>10MW x 33KV Standby Diesel Generating System</U></B></P>
<P style="margin:0px; font-size:11pt" align=justify>The erection of the new standby power generation building with its 20 tonne overhead travelling gantry and the installation &nbsp;&nbsp;of the four standby generators, transformers, the required incoming and outgoing &nbsp;33KV reticulation and control systems is expected to be completed, tested and commissioned during the 2<SUP>nd</SUP> quarter. &nbsp;Notwithstanding the recent improvement in electricity supply, management decided to progress the plans to equip Blanket with full standby generating capacity. &nbsp;The standby generating system, when fully commissioned, will allow Blanket to maintain full operations during any interruptions to the normal electricity supply arising from load-shedding, line faults and other supply problems. &nbsp;</P>
<P style="margin:0px; text-indent:48px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.8</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Mineral Reserves and Resource</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Corporation previously published mineral reserve and resource figures for the Blanket Mine calculated as at December 2006. &nbsp;In the period since then the reserve and resource figures will have been depleted to the extent of the production which has occurred during the period. &nbsp;The Corporation has not had any new formal reserve or resource figures calculated and reported by a person who is an independent qualified person. &nbsp;Therefore current figures are not quoted in this report. A new technical report is currently being prepared by an independent qualified person, in compliance with Canadian National Securities Instrument 43-101, and will be published by the end of the 2<SUP>nd</SUP> quarter. &nbsp;Further NI 43-101 reports are expected to be issued from time to time thereafter which will reflect the results of on-going operations and exploration work.</P>
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<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.9</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Indigenization</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The President of the Republic of Zimbabwe brought the Indigenization and Economic Empowerment Act (the &#147;Act&#148;) into law through decree in March 2008. The law seeks to ensure that at least 51% of all businesses in Zimbabwe are held by Indigenous Zimbabweans. In February 2010, the Minister for Youth Development, Indigenization and Empowerment (the &#147;Minister&#148;) issued Regulations which gave effect to the Act. </P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;</P>
<P style="margin:0px; font-size:11pt" align=justify>Caledonia has consistently supported the principle of indigenization on a commercially acceptable basis and submitted an indigenization proposal on May 9, 2011. &nbsp;</P>
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<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.10</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Risks</B></P>
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<P style="margin:0px; font-size:11pt" align=justify>Future risks are identified as set out below. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Indigenization: Indigenization legislation is once again high on the Government&#146;s political agenda making Zimbabwe an exceptionally difficult investment environment. &nbsp;Uncertainty regarding Blanket&#146;s obligations in respect of the implementation of Indigenization and the general climate of uncertainty that indigenization policies have created in Zimbabwe creates multiple risks which include: investor uncertainty, uncertainty as to the level of any indigenization shareholding, the identity of indigenization partners and uncertainty as to any future revenue obligations that may be required to offset a requirement for direct equity participation by indigenous parties. &nbsp;&nbsp;</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Illegal mining: During the quarter there has been an increase in illegal mining activities at surface on properties controlled by Blanket. &nbsp;This gives rise to increased security costs and an increased risk of theft and damage to equipment.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Increasing costs and taxes: notwithstanding the dollarization of the Zimbabwean economy. Blanket continues to experience significant upward cost pressures from labour, the state-owned electricity supplier, and from local and national government for levies, fees, royalties and other direct and indirect taxes. &nbsp;The continued strength of the South African Rand against the United States Dollar also increases the US Dollar-denominated cost of materials and equipment which are imported to Zimbabwe from South Africa.</P>
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<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>
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<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Congestion on the 22 Level Haulage during the development phase of the haulage to Lima and the development of drilling crosscuts and platforms on 22 Level. &nbsp;The minimisation of the this congestion, by means of train scheduling, will become easier once the raise boring of the ventilation raise has been completed, and a newly designed mucking system has been put into operation. </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Succession planning: &nbsp;the limited availability of mining and other technical skills and experience in Zimbabwe and the difficulty of attracting appropriately skilled employees to Zimbabwe create a risk that appropriate skills may not be available if, for whatever reason, the current skills base at the Blanket mine is depleted. &nbsp;&nbsp;The lack of succession planning is also a risk at the Caledonia level.</P>
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<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Regulatory uncertainty: &nbsp;Blanket&#146;s existing licences and permits are in good standing. &nbsp;However, in the context of political uncertainty and the lack of administrative transparency in Zimbabwe, there is the risk that licences and permits may be revoked or not renewed.</P>
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<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Reserve replacement: exploration activities at Blanket may not identify sufficient resources of an adequate grade and metallurgical composition to replace ore which has been depleted by mining activities. &nbsp;Blanket has embarked on development and exploration programmes as set out in sections 5.7 (Lima Haulage) and 6.2.</P>
<P style="margin:0px; padding-left:56.733px; text-indent:-56.733px; font-size:11pt; clear:left" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.11</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Opportunities </B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Increased production: Completion of certain of the underground development works subsequent to the end of the quarter should allow an increase in quarterly gold production from the 7,322 ounces achieved in the 1<SUP>st</SUP> quarter to a level of approximately 10,000 ounces by the commencement of the third quarter. &nbsp;Blanket&#146;s existing reserves and resources could support a further increase in production provided the necessary investment in development is made.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Surplus capacity: The mine currently has a daily average mining capacity of at least 1,000 tonnes and the metallurgical plant currently has the capacity to process approximately 1,800 tonnes of ore per day. Any increased production arising from increased mining throughput could therefore be achieved with &nbsp;little or no capital investment in the metallurgical plant and incurring only increased consumable costs to treat the increased throughput. &nbsp;</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Exploration success: Blanket&#146;s main exploration objectives are to accelerate the 22 Level Haulage Development Project and the related exploration of the down-dip extensions of the known ore bodies and to develop the GG and Mascot exploration projects as rapidly as mine cash flow and the investment climate in Zimbabwe allow. &nbsp;Depending on exploration success, Blanket may be able to further increase its production levels within the proven and probable resource base.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:11pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:11pt" align=justify>Cost reductions: Blanket has several opportunities to reduce its current operating costs:</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:72px; width:96px; font-family:Courier New; font-size:11pt; clear:left; float:left">o</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt" align=justify>the completion of the new ore pass between 18 Level and 22 Level and the installation of the tipping station on 18 Level will help to reduce congestion on 22 Level at Blanket and remove the requirement for multiple handling of ore and waste; </P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:72px; width:96px; font-family:Courier New; font-size:11pt; clear:left; float:left">o</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt" align=justify>the present metallurgical plant currently has the capacity to treat approximately 1,800 tonnes of ore per day when mining is able to supply additional ore from either the Blanket mine underground or from its exploration/development properties; and<FONT style="font-size:10pt"> </FONT></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:72px; width:96px; font-family:Courier New; font-size:11pt; clear:left; float:left">o</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:11pt" align=justify>Management has identified and estimated the essential underground capital and development expenditures that will be required to attain higher than the 1000 tonnes per day currently targeted mining production levels. &nbsp;Subject to a satisfactory investment climate prevailing in Zimbabwe after an acceptable clarification of the Government&#146;s indigenization requirements, capital could be allocated to upgrade certain metallurgical circuits, upgrade surface and underground facilities in order to further increase gold production, optimize the operations and reduce operating costs.</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></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>9</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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left"><B>5.12</B></P>
<P style="margin:0px; text-indent:-2px; font-size:11pt" align=justify><B>Outlook</B></P>
<P style="margin:0px; padding-left:47.267px; text-indent:48px; font-size:11pt; clear:left" align=justify><B><U>&nbsp;</U></B></P>
<P style="margin:0px; text-indent:48px; font-size:11pt" align=justify>Following the commissioning of the 18 Level to 22 Level ore pass it is anticipated that production will increase to the targeted annualized production rate of 40,000 ounces of gold per annum by the start of the third quarter.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px; font-size:11pt" align=justify>In the absence of any unforeseen changes or legislated interference to the operating and commercial environment, Blanket should be able to achieve sufficient critical mass and realise substantial economies of scale and improve its cash-generative capacity. &nbsp;The expanded capacity of the Blanket metallurgical plant to approximately 1,800 tonnes per day enables it to immediately treat additional feed material from the Blanket underground and from the GG and Mascot area mines if the planned exploration/development work in the outside areas is successful.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify><B>6 &nbsp;&nbsp;&nbsp;&nbsp;EXPLORATION AND PROJECT DEVELOPMENT</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>6.1</B></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>Base Metals: Nama Copper/Cobalt Project &#150; Zambia</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Three main styles of cobalt (&#147;Co&#148;) mineralization occur in the Nama area, the &#147;A-type&#148; cobalt oxide mineralization, the &#145;D-type&#146; iron oxide bodies which are mostly enriched in Co, and the copper (&#147;Cu&#148;) dominated Ore Shale hosted Cu-Co mineralization, more common elsewhere in the Copperbelt, which is being exploited by neighbouring mines to the east and south of Nama. &nbsp;Recent exploration activities at Nama have resulted in the definition of two resource targets (being &#147;Konkola East&#148; and &#147;Kafwira&#148;) characterized as belonging to the Ore Shale-hosted Cu-Co style of mineralization. &nbsp;These targets will be investigated further during the 2011 exploration field season, including some diamond drilling to confirm the existence of Copperbelt stratigraphy within the two target areas. &nbsp;Drilling of the first of four sequential holes at the Konkola East target area commenced in mid-March 2011 and the drilling is expected to be completed and the receipt of assaying results of this first work program are expected to be received in the 3<SUP>rd</SUP> quarter. &nbsp;Thereafter, depending on the early results from Konkola east, drilling will continue on at Konkola East or on the Kafwira target area. </P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>6.2</B></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>Gold: Zimbabwe &nbsp;</B></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Corporation&#146;s primary exploration activities in Zimbabwe are at the Blanket Mine, which are discussed in section 5.7 (Lima Haulage) &nbsp;Other than at Blanket itself, Blanket&#146;s current exploration title holdings in the form of registered mining claims in the Gwanda Greenstone Belt total 78 claims, including a small number under option, covering an area of about 2,500 hectares. &nbsp;Blanket&#146;s main exploration efforts on its satellite properties continue to be focused on the GG prospect and the Mascot Project Area, which are believed to have the greatest potential of success and which are both within easy and economic trucking distance of the Blanket plant. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Drilling programs were carried out at GG over the past 5 years. &nbsp;Thirteen diamond cored holes were drilled amounting to 2,336 meters of drilling. &nbsp;Two zones of potentially economic gold mineralization have been established down to a depth of approximately 200 m. &nbsp;A prospect shaft has been sunk down to the first level as a first step to exposing the mineralization. At GG, further core drilling from the surface will be done in 2011 to establish the strike extent of previously established mineralization. &nbsp;In addition, the existing prospect shaft will be deepened and underground development on the first and second levels will be advanced to expose the extent of the mineralization and to facilitate evaluation, sampling and mine planning. &nbsp;Depending on the successful outcome of exploration work, daily production to a maximum of 200 tonnes of ore per day could be obtained, which could be trucked to the Blanket plant for processing as the plant has existing surplus capacity.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Mascot Project Area comprises three existing shafts (Mascot, Penzance and Eagle Vulture) each of which extend down to depths of up to 450 meters and other infrastructure, much of which is in need of extensive rehabilitation. &nbsp;Each of these shafts operated until the mid-1960&#146;s after which production ceased
due to the increasing political difficulties at that time and the limitations of the technology that was then available. &nbsp;Blanket management believes that the application of modern exploration and processing techniques may allow some or all of these shafts to operate profitably on a sustainable basis, and not just at the prevailing high gold price. &nbsp;The rehabilitation and installation of infrastructure at Mascot and Eagle Vulture mines continues and is at an advanced stage and underground activities are planned to resume in the 2<SUP>nd</SUP> quarter of 2011. Depending on the outcome of exploration work, daily production to a maximum of 400 tonnes of ore per day could be obtained, which could be trucked to the Blanket plant for processing as the plant has existing surplus capacity </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>10</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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;</P>
<P style="margin:0px; font-size:11pt" align=justify>The rate of investment at GG and the Mascot Project Area has been reduced pending clarification of the intentions of the government of Zimbabwe regarding Blanket&#146;s indigenization obligations.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:-2px; width:37.8px; font-size:11pt; float:left"><B>6.3</B></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:14.067px; padding-left:37.8px; text-indent:-2px; font-size:11pt" align=justify><B>PGE/Ni/Cu: Rooipoort and Mapochsgronde (including Grasvally) - South Africa</B></P>
<P style="margin:0px; font-size:11pt; clear:left" align=justify>An application in terms of the provisions of the applicable Act is in progress to treat the 5 adjoining prospecting rights at Rooipoort as a single right and to extend the period of this consolidated right for a further three years. &nbsp;The prospecting rights granted to the Corporation to prospect for Platinum Group Elements (PGE&#146;s) on the major portions of the Mapochsgronde tribal trust land are currently in the process of registration. &nbsp;A further application has been made for an adjoining property to the north of the rights granted above. &nbsp;The Corporation is awaiting the issue of the prospecting right</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Activities at Rooipoort/Mapochs properties were suspended during 2010 due to the continued complete lack of progress on the part of the South African Department of Mineral Resources in registering the licence areas in the names of Caledonia&#146;s local subsidiaries. &nbsp;Without secure title transfers the Company did not wish to expend further funds on these properties. The Corporation continues to search for a Joint Venture partner for the 2 projects.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:28.4px; font-size:11pt; float:left"><B>7.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:28.4px; text-indent:-2px; font-size:11pt" align=justify><B>INVESTING </B></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt; clear:left" align=justify>During 1<SUP>st</SUP> quarter 2011 Caledonia invested $3,523,000 ($1,076,000 &#150; 2010) in capital assets and mineral properties. &nbsp;Of the amount invested in 2011, $166,000 ($156,000 &#150; 2010) was spent at Nama and $3,357,000 ($915,000 &#150; 2010) at Blanket. &nbsp;</P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:28.4px; font-size:11pt; float:left"><B>8.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:28.4px; text-indent:-2px; font-size:11pt" align=justify><B>FINANCING </B></P>
<P style="margin:0px; font-size:11pt; clear:left" align=justify>Caledonia financed its operations using funds on hand and those generated by its operations. &nbsp;No equity fund raise is currently planned during 2011. &nbsp;In late 2010, Blanket secured an increased loan facility from its bankers in Zimbabwe which now is set at US$2.5 million and falls due for repayment on July 30, 2011. &nbsp;Subject to acceptable terms and conditions being offered, Blanket will seek a further renewal of this facility. At the end of the 1<SUP>st</SUP> quarter, US$ 811,000 ($588,000 &#150; 2010) was owed on this overdraft. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The remaining three diesel generators which are being commissioned in the 2<SUP>nd</SUP> quarter have been funded by the supplier. It is planned that all outstanding amounts in respect of these generators will be paid before the end of 2011.</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-top:0px; margin-bottom:-2px; width:28.4px; font-size:11pt; float:left"><B>9.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:28.4px; text-indent:-2px; font-size:11pt" align=justify><B>LIQUIDITY AND CAPITAL RESOURCES </B></P>
<P style="line-height:11.55pt; margin:0px; font-size:11pt; clear:left" align=justify>As of March 31, 2011, Caledonia had a working capital surplus of $2,261,000 ($1,543,000 &#150; Dec 2010). &nbsp;Current assets increased significantly during the quarter reflecting the increased level of trading activity at Blanket. &nbsp;Accounts receivable increased by $2,547,000 which was due to the increased amount owed by Rand Refineries for the last gold sale of the quarter and a Sales Tax (VAT) receivable. Inventory levels
have been reduced by $427,000 due to there being no gold in process at the quarter end and net cash balances increased by $1,008,000 during the quarter. &nbsp;Short term borrowings from Blanket&#146;s Zimbabwean bankers increased by $64,000 to $811,000, which is well within the full extent of that facility. </P>
<P style="line-height:11.55pt; margin:0px" align=justify><BR>
<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>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin:0px; font-size:11pt" align=justify>&nbsp; </P>
<P style="line-height:11.55pt; margin:0px; font-size:11pt" align=justify>As of March 31, 2011 Caledonia had potential liabilities for rehabilitation work on the Blanket and Eersteling Mines - if and when those Mines are permanently closed - at an estimated cost of $1,866,000 ($1,919,000 &#150; 2010). </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify><B>10. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OFF-BALANCE SHEET ARRANGEMENTS</B></P>
<P style="margin:0px; font-size:11pt" align=justify>There are no off balance sheet arrangements.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:37.8px; text-indent:-37.8px; font-size:11pt" align=justify><B>11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RELATED PARTY TRANSACTIONS</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:12pt; margin:0px; padding-left:37.8px; text-indent:-28.333px; font-size:11pt" align=justify>Caledonia had the following related party transactions: &nbsp;&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=415.8 /><TD width=56.667 /><TD width=56.733 /><TD width=56.733 /></TR>
<TR><TD style="margin-top:0px; border-right:1px solid #000000" valign=top width=415.8><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" valign=top width=170.133 colspan=3><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>Three months ended</B></P>
<P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>March 31</B></P>
</TD></TR>
<TR><TD style="margin-top:0px; border-right:1px solid #000000" valign=top width=415.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>2011</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:11pt" align=center>2010</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="line-height:12pt; margin:0px; font-size:11pt" align=center>2009</P>
</TD></TR>
<TR><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=415.8><P style="margin:0px; padding:0px; font-size:11pt">&nbsp;</P></TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=right><B>$&#146;000</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:11pt" align=right>$&#146;000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=56.733><P style="line-height:12pt; margin:0px; font-size:11pt" align=right>$&#146;000</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=415.8><P style="line-height:12pt; margin:0px; font-size:11pt" align=justify>Management fees, and expense allowances paid or accrued to a company which provides the services of the &nbsp;Corporation&#146;s President</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>140</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>138</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>141</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=415.8><P style="line-height:12pt; margin:0px; font-size:11pt" align=justify>Rent paid to a Company owned by members of the President&#146;s family</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>14</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>13</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>11</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=415.8><P style="line-height:12pt; margin:0px; font-size:11pt" align=justify>Fees paid to the Chairman of the Board </P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>5</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>12</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>50</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=415.8><P style="line-height:12pt; margin:0px; font-size:11pt" align=justify>Legal fees paid to a law firm where a Director is a partner</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.667><P style="line-height:12pt; margin:0px; font-size:11pt" align=center><B>12</B></P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>12</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=top width=56.733><P style="margin:0px; font-family:Times,Times New Roman; font-size:11pt" align=center>2</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:12.2px; font-size:11pt" align=justify><B>12. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CRITICAL ACCOUNTING POLICIES</B></P>
<P style="margin:0px; font-size:11pt" align=justify>The major areas where accounting estimates are made are asset impairment, asset retirement obligations and future tax liabilities. &nbsp;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. &nbsp;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. &nbsp;The asset retirement obligations estimation for Blanket was recalculated before December 31, 2010. &nbsp;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.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>There have been no accounting policy changes adopted since January 1, 2010, except for IFRS.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify><B>12.1. Adoption of Accounting Standards and Pronouncements under IFRS</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Company&#146;s first financial statements prepared under IFRS are the interim financial statements for the three months ended March 31, 2011, which includes full disclosure of its new IFRS policies in Note 3 to these financial statements. These financial statements also include reconciliations of the previously disclosed comparative periods financial statements prepared in accordance with Canadian generally accepted accounting principles (&#147;GAAP&#148;) to IFRS as set out in Note 22.<B> </B></P>
<P style="margin:0px; font-size:11pt" align=justify>The most significant effect of the transition to IFRS is the increase in the carrying value of the fixed assets at the transition date. As Caledonia adopted IFRS after its subsidiary companies it has to report the assets and liabilities at the values shown at subsidiary level. The increase in fixed asset values is mainly attributable to the inclusion of the Blanket Mine fixed assets at their IFRS deemed cost which resulted in an
increase of $13.9 million with corresponding reductions in Eersteling and Zambia on exploration properties. </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>
<HR style="margin-bottom:9.6px; padding-top:9.6px" noshade size=1.333>
<P style="line-height:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The increase in the deemed cost for Blanket Mine also resulted in an annual increase in the amortization charge of $1.99 million. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:12pt; margin-top:0px; margin-bottom:14.667px; font-size:11pt" align=justify><B>13. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITIES OUTSTANDING</B></P>
<P style="margin:0px; padding-right:-3.067px; font-size:11pt">As at May 15, 2011 the following securities were outstanding: &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:11.55pt; margin-top:0px; margin-bottom:-2px; width:48px; font-size:11pt; float:left">(1)</P>
<P style="line-height:11.55pt; margin:0px; text-indent:-2px; font-size:11pt" align=justify>500,169,280 common shares issued;</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:18.933px; width:42.933px; font-size:11pt; float:left">(1)</P>
<P style="margin:0px; padding-left:42.933px; text-indent:-2px; font-size:11pt" align=justify>Options and warrants as follows:</P>
<P style="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=93.867 /><TD width=214.333 /><TD width=98.2 /><TD width=192.733 /></TR>
<TR><TD style="margin-top:0px; border:1px solid #000000" width=93.867><P style="margin:0px; font-size:12pt" align=center><B>Number</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=214.333><P style="margin:0px; font-size:12pt" align=center><B>Description</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=98.2><P style="margin:0px; font-size:12pt" align=center><B>Exercise Price</B></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-right:1px solid #000000; border-bottom:1px solid #000000" width=192.733><P style="margin:0px; font-size:12pt" align=center><B>Expiry Date</B></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=93.867><P style="margin:0px; font-size:11pt">26,080,000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=214.333><P style="margin:0px; font-size:12pt">Common share purchase options</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=98.2><P style="margin:0px; font-size:12pt" align=center>$0.07</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=192.733><P style="margin:0px; font-size:12pt">Various until May 11, 2016</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=93.867><P style="margin:0px; font-size:12pt">16,460,000</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=214.333><P style="margin:0px; font-size:12pt">Common share purchase options</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=98.2><P style="margin:0px; font-size:12pt" align=center>$0.13</P>
</TD><TD style="margin-top:0px; border-right:1px solid #000000; border-bottom:1px solid #000000" width=192.733><P style="margin:0px; font-size:12pt">January 31, 2016</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:14.667px; font-size:11pt" align=justify>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 on a further 17,436,928 shares. &nbsp;</P>
<P style="line-height:12pt; margin:0px; font-size:11pt" align=justify>In January 2011, the Board granted 16,460,000 share options as an incentive to directors, officers and employees of the Company at an exercise price of $0.13 per Caledonia common share expiring on January 31, 2016.<FONT style="font-size:10pt"> &nbsp;</FONT>This gave rise to a &#145;non-cash&#146; share-based payment expense of $1,102,000 in this quarter.</P>
<P style="line-height:12pt; margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify><B>14. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONTROLS</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Corporation's President and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. &nbsp;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, 2010 as required by Canadian securities laws pursuant to the certification requirements of Multilateral Instrument 52-109. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Corporation's internal controls over financial reporting (&#147;ICFR&#148;) are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable Canadian GAAP. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Because of its inherent limitations, the Corporation's ICFR may not prevent or detect any or all misstatements. &nbsp;Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>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. &nbsp;Prior to this engagement, management concluded that the following disclosable material weaknesses existed and still exist as at March 31, 2011.</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>13</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:5pt; margin-top:0px; margin-bottom:3.867px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Segregation of duties</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>Prior to the end of 2009, due to limited personnel resources at the Corporation&#146;s Africa office in Johannesburg, adequate segregation of duties within the accounting group was not achieved. &nbsp;This created a risk that inaccurate entries could be made and not identified or corrected on a timely basis. &nbsp;The result is that the Corporation was 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. &nbsp;The Corporation continued to enhance and monitor this process to ensure that its financial accounting reporting system was able to prevent and detect potentially significant errors.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>As a consequence of the above, an additional accounting member of staff was recruited in November 2009 to the Corporation&#146;s Africa office in Johannesburg. This has improved the segregation of duties and lightened the work load of existing staff and improved control of the accounting function. &nbsp;Both disclosure control and procedure objectives have now been met.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>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 or requirement to warrant the hiring of additional staff to correct further segregation of duties weakness at this time. &nbsp;There have been no changes in the Corporation&#146;s &nbsp;internal controls over financial reporting since the year ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:11pt" align=justify>The Corporation has a Disclosure Committee consisting of three 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. &nbsp;The Corporation&#146;s Directors and Management, and the Disclosure Committee, are making all reasonable efforts to ensure that the Corporation&#146;s disclosures are made in full compliance with all of the applicable rules, regulations and requirements. &nbsp;All reasonable efforts are also being made to ensure that the Corporation&#146;s disclosure controls and procedures provide reasonable assurance that material information relating to the Corporation, including its consolidated subsidiaries, is made known to the Corporation&#146;s Certifying Officers by others within those entities.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:56.733px; font-size:11pt; float:left"><B>15.</B></P>
<P style="margin-top:0px; margin-bottom:12.2px; padding-left:56.733px; text-indent:-2px; font-size:11pt" align=justify><B>QUALIFIED PERSONS</B></P>
<P style="margin:0px; font-size:11pt; clear:left" align=justify>Dr. Trevor Pearton, BSc Eng (Mining Geology), PhD (Geology) FGSSA, VP Exploration is the Corporation&#146;s qualified person as defined by NI 43-101. &nbsp;Dr. Pearton is responsible for the technical information provided on this MD&amp;A except where otherwise stated. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px" 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>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>ceocert.htm
<DESCRIPTION>CERTIFICATION OF INTERIM FILING - 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="05/20/2011">
</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; 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>March 31, 2011.<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">&nbsp;</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;May 16, 2011<B><I> </I></B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">&#147;Signed&#148;</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">&nbsp;</P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>cfocert.htm
<DESCRIPTION>CERTIFICATION OF INTERIM FILING - 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="05/20/2011">
</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; 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>March 31, 2011.<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;May 16, 2011<B><I> </I></B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:11pt">&#147;Signed&#148;</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">&nbsp;</P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
