<SEC-DOCUMENT>0001137171-11-000589.txt : 20111115
<SEC-HEADER>0001137171-11-000589.hdr.sgml : 20111115
<ACCEPTANCE-DATETIME>20111115120503
ACCESSION NUMBER:		0001137171-11-000589
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20110930
FILED AS OF DATE:		20111115
DATE AS OF CHANGE:		20111115

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:		111206255

	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>caledonia6k11142011.htm
<DESCRIPTION>CALEDONIA MINING CORPORATION - FORM 6K
<TEXT>
<HTML>
<HEAD>
     <TITLE>MD - Filed by Filing Services Canada Inc. (403) 717-3898</TITLE>
</HEAD>
<BODY STYLE="font: 11pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>FORM
6-K</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>SECURITIES
AND EXCHANGE COMMISSION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Washington,
DC 20549</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Report
of Foreign Private Issuer</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Pursuant
to Rule 13a-16 or 15d-16</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Of
the Securities Exchange Act of 1934</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">For
the month of November 2011</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Commission
File Number: 000-13345</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>CALEDONIA
MINING CORPORATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(Translation
of registrant&rsquo;s name into English)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>1710
&ndash; 1177 West Hastings Street</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Vancouver,
British Columbia V6E 2L3</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Canada</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(Address
of principal executive offices)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Indicate
by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Form
20-F___<U>x</U>___ Form 40-F _____</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">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): ____</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">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): ____</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Yes
____ No&nbsp;&nbsp; <U>x&nbsp;&nbsp;</U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">If
&ldquo;Yes&rdquo; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Signatures</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="3" STYLE="line-height: 115%; font-size: 10pt; font-weight: bold">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">Caledonia
    Mining Corporation</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="3" STYLE="line-height: 115%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">(Registrant)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 27%; line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; line-height: 115%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">By:</FONT></TD>
    <TD STYLE="width: 47%; line-height: 115%; font-size: 10pt; text-decoration: underline"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">/s/&nbsp;
    Carl Jonsson</FONT></TD>
    <TD STYLE="width: 25%; line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="3" STYLE="line-height: 115%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">Name: &nbsp;Carl
    Jonsson</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">Title: &nbsp;&nbsp;&nbsp;Director
    and Secretary</FONT></TD>
    <TD STYLE="line-height: 115%; font-size: 12pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dated:&#9;November
10, 2011</FONT></P>


<p STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; text-align: justify; margin: 0">&nbsp;</p>
<p STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; text-align: justify; margin: 0">&nbsp;</p>
<p STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; text-align: justify; margin: 0">&nbsp;</p>
<p STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; text-align: justify; margin: 0">&nbsp;</p>
<p STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; text-align: justify; margin: 0">&nbsp;</p>
<p style="margin:0pt">&nbsp;</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:0pt">&nbsp;</p>
<p style="margin-top: 0pt; margin-bottom: -12pt">99.1</p>

<P STYLE="margin: 0pt; padding-left: 216pt"><a href="financials.htm">Condensed interim
consolidated financial statements for the period ended September 30, 2011</a></P>

<p style="margin-top: 0pt; margin-bottom: -12pt">99.2</p>
<p style="margin: 0pt; padding-left: 216pt"><a href="mda.htm">Management&#8217;s Discussion and Analysis
for the period ended September 30, 2011</a></p>
<p style="margin-top: 0pt; margin-bottom: -12pt">99.3</p>

<P STYLE="margin: 0pt; padding-left: 216pt"><a href="ceocert.htm">Form 52-109F2
- Certification of interim filings - Chief Executive Officer</a></P>

<p style="margin-top: 0pt; margin-bottom: -12pt">99.4</p>
<p style="margin: 0pt; padding-left: 216pt"><a href="cfocert.htm">Form 52-109F2
- Certification of interim filings - Chief Financial Officer</a></p>
<p style="margin-top: 0pt; margin-bottom: -12pt">99.5</p>
<p style="margin: 0pt; padding-left: 216pt"><a href="newsrelease.htm">News Release dated
November 10, 2011</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>
<blockquote>
  <p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
</blockquote>
<p style="margin: 0pt; padding-left: 216pt">&nbsp;</p>
<hr>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>financials.htm
<DESCRIPTION>CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2011
<TEXT>
<HTML>
<HEAD>
     <TITLE>MD - Filed by Filing Services Canada Inc. (403) 717-3898</TITLE>
</HEAD>
<BODY STYLE="font: 11pt Times New Roman, Times, Serif">

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="4">Caledonia Mining Corporation</font> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">Condensed interim
consolidated financial statements of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt"><B>Caledonia Mining
Corporation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">For the nine month
period ended September 30, 2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">(Unaudited)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 7.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">These are the Group&rsquo;s third set of 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">1</P>



<BR>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><B>For the nine month period ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">Table of contents</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="778">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Letter to shareholders</TD>
    <TD STYLE="line-height: 115%" align="right" width="255">3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Condensed c<FONT STYLE="color: black">onsolidated statements of comprehensive income (loss)</FONT></TD>
    <TD STYLE="line-height: 115%" align="right" width="255">4</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Condensed consolidated statements of financial position</TD>
    <TD STYLE="line-height: 115%" align="right" width="255">5</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Condensed c<FONT STYLE="color: black">onsolidated statements of changes in equity</FONT></TD>
    <TD STYLE="line-height: 115%" align="right" width="255">6-7</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Condensed c<FONT STYLE="color: black">onsolidated statements of cash flows</FONT></TD>
    <TD STYLE="line-height: 115%" align="right" width="255">8</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Notes to the condensed consolidated financial statements</TD>
    <TD STYLE="line-height: 115%" align="right" width="255">9-46</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%" width="519">Corporate directory</TD>
    <TD STYLE="line-height: 115%" align="right" width="255">47-48</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">2</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top; background-color: black">
    <TD STYLE="width: 100%; border: windowtext 0.5pt solid; padding-top: 4pt; padding-bottom: 4pt; line-height: 115%; color: white">MANAGEMENT&rsquo;S RESPONSIBILITY FOR FINANCIAL INFORMATION</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><B>To the Shareholders of Caledonia
Mining Corporation (the &ldquo;Company&rdquo;):</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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 (&ldquo;IAS 34&rdquo;)
&ndash; 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Management have determined that as a
result of the relatively small size of the Company&rsquo;s head office finance department personnel, that in respect of the Internal
Controls over Financial Reporting (&ldquo;ICFR&rdquo;) assessment, 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In order to mitigate the risk of material
misstatement in the Company&rsquo;s consolidated financial statements, the Company has implemented additional cash flow reviews
and monitoring controls at head office on a monthly basis. 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">These third quarter financial statements
have not been reviewed by the Company&rsquo;s auditors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">These unaudited Financial Statements were authorised for
release by the Board of Directors on November 07, 2011.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 42%; line-height: 115%">S. E. Hayden</TD>
    <TD STYLE="width: 58%; line-height: 115%">S. R. Curtis</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%">President and Chief Executive Officer</TD>
    <TD STYLE="line-height: 115%">Vice-President, Finance and Chief Financial Officer</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">3</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="583">
<TR>
    <TD NOWRAP STYLE="padding-left: 5.75pt; padding-right: 5.75pt" width="1403">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Condensed consolidated statements of comprehensive income and
        (loss)</B></P>
    </TD></TR>
</TABLE>
<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1367">
<TR>
    <TD NOWRAP COLSPAN="2" STYLE="padding-left: 5.75pt; padding-right: 5.75pt" width="753">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Unaudited<br>
        </B><I>(In thousands of Canadian dollars)</I></P>
    </TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="298" align="right">For the 3 months ended September 30</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="262" align="right">For the 9 months ended September 30</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">Note</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">2011</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">2010</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">2011</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">2010</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; border-top: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="157">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="149">$</TD>
    <TD STYLE="line-height: 115%; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="131">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="131">$</TD>
    <TD STYLE="line-height: 115%; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="113">$</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Revenue</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">16,517</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">6,357</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">39,733</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">14,970</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Less: Royalty</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">743</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">223</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">1,791</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">515</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Production costs</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">5,763</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">3,915</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">15,883</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">9,669</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">647</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">612</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">1,853</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">1,772</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Gross profit</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">9,364</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">1,607</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">20,206</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">3,014</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">General and administrative expenses</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">4</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">910</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">527</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">3,587</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">1,423</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Share-based payment</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">11</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">-</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">354</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">1,102</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">354</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">910</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">881</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">4,689</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">1,777</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Finance income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">2</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">60</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">3</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">223</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Finance expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">(14)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">(44)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">(193)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">(200)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Net finance (costs)/income</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">(12)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">16</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">(190)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">23</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Profit before income tax</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">8,442</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">742</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">15,327</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">1,260</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Income tax expense</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">5</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">2,292</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">-</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">4,404</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">3</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Profit for the period</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">6,150</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">742</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">10,923</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">1,257</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Other comprehensive (loss)/income</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Foreign currency translation differences for foreign operations</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">2,152</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">-</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">1,077</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">1</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Total comprehensive income for the period</B></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="151">8,302</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">742</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="133">12,000</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="115">1,258</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="580">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="580"><B>Earnings per share (Cents)</B></TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">12</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Basic earnings per share</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">1.23</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">0.1</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">2.18</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">0.3</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="580">Diluted earnings per share</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="155">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="149">1.13</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">0.1</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="131">2.01</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="113">0.3</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral
part
of these financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">4</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1065">
<TR>
    <TD NOWRAP COLSPAN="4" STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="1405">Condensed consolidated statements of financial position</TD></TR>
<TR>
    <TD NOWRAP COLSPAN="2" STYLE="padding-left: 5.75pt; padding-right: 5.75pt" width="847">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Unaudited<br>
        </B><I>(In thousands of Canadian dollars)</I></P>
    </TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-style: italic; padding-left: 5.75pt; padding-right: 5.75pt" width="732">As at</TD>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">September 30,</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">December 31,</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="732">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">Note</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">2011</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">2010</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="732">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">$</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Assets</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Property, plant and equipment</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">6</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">34,561</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">28,343</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Other investments</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">7</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">5</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">5</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total non-current assets</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">34,566</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">28,348</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="732">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Inventories</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">8</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">3,413</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">2,620</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Prepayments</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">87</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">93</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Trade and other receivables</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">9</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">5,111</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">2,314</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Cash and cash equivalents</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">6,847</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">1,145</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total current assets</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">15,458</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">6,172</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total assets</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">50,024</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">34,520</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Deferred tax liability</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">6,107</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">5,151</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Provisions</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">14</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">2,140</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">1,919</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total non-current liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">8,247</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">7,070</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="732">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Trade and other payables</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">15</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">5,816</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">3,882</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Bank overdraft</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">10</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">747</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total current liabilities</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">5,816</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">4,629</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.75pt; padding-right: 5.75pt" width="732">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total liabilities</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">14,063</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">11,699</TD></TR>
<TR>
    <TD STYLE="padding-left: 5.75pt; padding-right: 5.75pt" width="732">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Equity </B></P></TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Share capital</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">11</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">196,163</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">196,125</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Capital reserve</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">14,170</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">14,170</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Contributed surplus</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">3,407</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">2,305</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Accumulative other comprehensive (loss)</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">(6,905)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">(7,982)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Deficit</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">(170,874)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">(181,797)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Capital and reserves</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="269">35,961</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.75pt; padding-right: 5.75pt" width="253">22,821</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.75pt; padding-right: 5.75pt" width="732">Total equity and liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.75pt; padding-right: 5.75pt" width="97">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="271">50,024</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.75pt; padding-right: 5.75pt" width="255">34,520</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Approved on behalf of the Board on November 07, 2011</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 41%; font: 11pt Calibri, Halvetica, Sans-Serif; tab-stops: center 225.65pt right 451.3pt">&nbsp;</TD>
    <TD STYLE="width: 59%; font: 11pt Calibri, Halvetica, Sans-Serif; tab-stops: center 225.65pt right 451.3pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="tab-stops: center 225.65pt right 451.3pt">&ldquo;Signed&rdquo;</TD>
    <TD STYLE="tab-stops: center 225.65pt right 451.3pt">&ldquo;Signed&rdquo;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="tab-stops: center 225.65pt right 451.3pt">S. E. Hayden</TD>
    <TD STYLE="tab-stops: center 225.65pt right 451.3pt">Robert W. Babensee</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part
of these financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">5</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Condensed consolidated statements of changes in equity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Unaudited</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(In thousands of Canadian dollars)<B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 15%">&nbsp;</TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Share<BR> Capital</TD>
    <TD STYLE="width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Capital<BR> Reserve</TD>
    <TD STYLE="width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Contributed<BR> Surplus</TD>
    <TD STYLE="width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Accumulative other<BR> Comprehensive (loss)</TD>
    <TD STYLE="width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Deficit</TD>
    <TD STYLE="width: 3%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center">Total</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">$</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">$</TD>
    <TD STYLE="font-weight: bold; text-align: right">$</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">$</TD>
    <TD STYLE="font-weight: bold; text-align: right">$</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">$</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">Balance at January 1, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">196,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">14,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">(6,441</TD>
    <TD>)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">(183,405</TD>
    <TD>)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">22,400</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">Share-based compensation expense</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">354</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">Foreign currency translation differences</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">(259</TD>
    <TD>)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">(259</TD>
    <TD>)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">Profit</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&mdash;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&mdash;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&mdash;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">1,257</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">1,257</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 8.65pt; text-indent: -8.65pt">Balance at September 30, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">196,125</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">14,170</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">2,305</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">6,700</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">(182,148</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">)</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; text-align: right">23,752</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">The accompanying notes are an integral part
of these financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">6</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><B>Condensed consolidated statements of changes in equity<BR>
Unaudited<BR>
</B><I>(In thousands of Canadian dollars)</I></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD NOWRAP STYLE="width: 27%; vertical-align: top; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="width: 12%; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">Share Capital</TD>
    <TD STYLE="width: 13%; padding-right: 5.75pt; padding-left: 5.75pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Capital</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Reserve</B></P></TD>
    <TD STYLE="width: 12%; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">Contributed Surplus</TD>
    <TD STYLE="width: 15%; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">Accumulative other Comprehensive (loss)</TD>
    <TD STYLE="width: 9%; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">Deficit</TD>
    <TD STYLE="width: 12%; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">Total</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">$</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.75pt; padding-left: 5.75pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Balance at January 1, 2010</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">196,125</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">14,170</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">1,951</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(6,441)</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(183,405)</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">22,400</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Share-based compensation expense</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">354</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">354</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Reclassification to net income on sale of investment</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(45)</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(45)</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Foreign currency translation differences</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(1,496)</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(1,496)</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Profit</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">1,608</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">1,608</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Balance at December 31, 2010</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">196,125</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">14,170</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">2,305</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(7,982)</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">(181,797)</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">22,821</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Shares issued (Note 11)</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">38</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">38</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Share-based compensation expense</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">1,102</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">1,102</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Foreign currency translation differences</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">1,077</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">1,077</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%">Profit</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">10,923</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">10,923</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold">Balance at September 30, 2011</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">196,163</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">14,170</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">3,407</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">(6,905)</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">(170,874)</TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; line-height: 115%; font-weight: bold; text-align: right">35,961</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part
of these financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>7</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="953">
<TR>
    <TD NOWRAP COLSPAN="4" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="1407">Condensed consolidated statements of cash flows</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="padding-left: 5.4pt; padding-right: 5.4pt" width="905">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Unaudited</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>(In thousands of Canadian dollars)</I></P></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="399">For the 9 months ended September 30</TD>
</TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="905">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">Note</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">2011</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">2010</TD>
</TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="905">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">$</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash flows from operating activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Profit for the period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">10,923</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">1,257</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Adjustments for:</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Reconcile net cash from operations</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">16</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">8,288</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">2,093</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Changes in non-cash working capital</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">16</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">(1,651)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">(502)</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash generated from operations</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">17,560</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">2,848</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Income tax paid</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">(3,448)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">(3)</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Net cash from operating activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">14,112</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">2,845</TD>
</TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="905">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash flows from investing activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Property, plant and equipment additions</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(7,511)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">(4,177)</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Sale of investment</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">-</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">51</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Net cash used in investing activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">(7,511)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">(4,126)</TD>
</TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="905">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash flows from financing activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">&nbsp;</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Bank overdraft increase/(decrease)</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(747)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">1,092</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Finance expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(193)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">(200)</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Finance income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">3</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">223</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Shares issued</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">38</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">-</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Net cash from (used in) financing activities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">(899)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">1,115</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Net increase/(decrease) in cash and cash equivalents</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="216">5,702</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="167">(166)</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash and cash equivalents at beginning of period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">1,145</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">1,623</TD>
</TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="905">Cash and cash equivalents at end of period,</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="71">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="218">6,847</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="169">1,457</TD>
</TR>
<TR>
    <TD width="919">&nbsp;</TD>
    <TD width="85">&nbsp;</TD>
    <TD width="230">&nbsp;</TD>
    <TD width="181">&nbsp;</TD>
</TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral part
of these financial statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">8</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="49">1</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1386">Reporting entity</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><br>
Caledonia Mining Corporation
(the &ldquo;Company&rdquo;) is a company domiciled in Canada. The address of the Company&rsquo;s registered office is Suite 1201,
67 Yonge Street, Toronto, Ontario M5E 1J8 Canada. The consolidated financial statements of the Company as at September 30, 2011
comprise the Company and its subsidiaries (together referred to as the &ldquo;Group&rdquo; and individually as &ldquo;Group entities&rdquo;).
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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="50">2</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1385">Basis of preparation</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(a) Statement of compliance</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">These condensed interim consolidated
financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (&ldquo;IAS
34&rdquo;) 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. These third quarter condensed consolidated
financial statements form part of the set of the Group&rsquo;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 21.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.65pt; text-align: justify"><FONT STYLE="color: black">These
condensed interim consolidated financial statements were authorised for issue by the Board of Directors on November 07, 2011. </FONT>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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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 21.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(b) Basis of measurement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 7.1pt; text-align: justify">The consolidated financial statements
have been prepared on the historical cost basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(c) Functional and presentation
currency</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">These consolidated financial
statements are presented in Canadian dollars, which is also the Company&rsquo;s functional currency. All financial information
presented in Canadian dollars, unless otherwise noted, has been rounded to the nearest thousand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">9</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(d)</B> <B>Use of estimates
and judgements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">i)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt"><B>Rehabilitation Provisions</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">Rehabilitation provisions have
been created based on the Company&rsquo;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 when these
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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">The discount rate currently applied
in the calculation of the net present value of the provision is 1.7%.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">ii)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt"><B>Exploration and Evaluation Expenditure</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">The application of the Company&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: center">10</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 0.5in; text-align: justify"><I><U>&nbsp;</U></I>

<BR>
</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">iii)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt"><B>Title to Mineral Property Interests</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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&rsquo;s
title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">iv)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt"><B>Income Taxes</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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
any potential 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">v)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt"><B>Share-based Payment Transactions</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">vi)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt; color: black"><B>Impairments</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 0.5in; text-align: center">11</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 0.5in; text-align: justify">&nbsp;</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 0in">vii)<FONT STYLE="font-size: 7pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT STYLE="font-size: 10pt; color: black"><B>Functional currency</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify"><B>(e) Going concern</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify"><FONT STYLE="letter-spacing: -0.1pt">The
ability of the Company to recover the amounts shown for its capital assets and mineral properties is dependent upon the existence
of economically recoverable reserves and the ability of the Company to obtain the necessary financing to complete exploration and
development and future profitable production or proceeds from the disposition of such capital assets and mineral properties.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify"><FONT STYLE="letter-spacing: -0.1pt">The
Company 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 Company's activities in these areas or may result in the impairment or loss of part or all of
the Company's interest in the properties<B>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify"><FONT STYLE="letter-spacing: -0.1pt">These
consolidated financial statements have been prepared on the basis of a going concern, which contemplates that the Company will
be able to realize assets and discharge liabilities in the normal course of business. The Company&rsquo;s ability to continue as
a going concern is dependent upon continued 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="34">3</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1401">Significant accounting policies</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(a) Basis of consolidation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(i)
<I>Subsidiaries</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">12</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(ii)
<I>Transactions eliminated on consolidation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(b) Foreign currency</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 31.35pt"><B>(i)
<I>Presentation currency</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">The Company&rsquo;s presentation
currency is the Canadian dollar (&ldquo;C$&rdquo;). The functional currencies of Caledonia Mining Corporation and its subsidiaries
are the Canadian dollar, US dollar and South African Rand (&ldquo;ZAR&rdquo;). 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">All resulting translation differences
are reported as a separate component of shareholders&rsquo; equity titled &ldquo;Accumulated other comprehensive income (loss)&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify; text-indent: 30.95pt"><B><I>(ii)
Foreign currency translation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.5pt; text-align: justify">In preparing the financial statements
of the individual entities, transactions in currencies other than the entity&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 0.5in"><B>(c) Financial
instruments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(i)
<I>Non-derivative financial assets</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">13</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loans
and receivables</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 2.45pt">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">Cash and cash equivalents comprise
cash balances and call deposits with original maturities of three months or less.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Available-for-sale
financial assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;s investments in equity securities and certain debt securities are classified as available-for-sale
financial assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(ii)
<I>Non-derivative financial liabilities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">The Group has the following non-derivative
financial liabilities: bank overdraft and trade and other payables.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(d) <I>Share capital</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Common
shares</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(e) Property, plant and equipment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
<I>Recognition and measurement</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">Purchased software that is integral
to the functionality of the related equipment is capitalised as part of that equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">14</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
<I>Subsequent costs</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)
<I>Depreciation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">The estimated useful lives for
the current and comparative periods are as follows:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="width: 90%; line-height: 115%">buildings 10 years</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%">plant and machinery 10 years</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%">fixtures and fittings10 years</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%">motor vehicles 4 years</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%">computer equipment 4 years</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">Depreciation methods including
life of mine are reviewed at each financial year-end and adjusted if appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">15</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">

<BR>
</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(f) Inventories</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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. 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(g) Impairment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 31.35pt"><B>(i)
<I>Financial assets (including receivables)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">16</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
<I>Non-financial assets</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">The carrying amounts of the Group&rsquo;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&rsquo;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 &ldquo;cash-generating
unit, or CGU&rdquo;). The Group&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">17</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">In terms of IFRS, the test for
recoverability of Exploration and Evaluation (&ldquo;E&amp;E&rdquo;) 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%; line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="width: 93%; line-height: 115%; text-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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%; text-align: justify">Substantive expenditure on further E&amp;E activities in the specific area is neither budgeted nor planned</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%; text-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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center">&bull;</TD>
    <TD STYLE="line-height: 115%; text-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</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(iii)
<I>Non-current assets held for sale</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;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, which continue to be measured in accordance with the Group&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">18</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(h) Employee benefits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(i)
<I>Defined contribution plans</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(ii)
<I>Share-based payment transactions</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 31.35pt"><B>(iii)
Short term employee benefits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">The cost of all short term employee
benefits is recognised during the period in which the employee renders the related service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(i) Provisions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">19</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Site
restoration</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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&rsquo;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&rsquo;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&rsquo;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 on-going 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 on-going current programs to prevent
and control pollution is charged against profit and loss as incurred.<FONT STYLE="color: black"> </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(j) Revenue</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 0.1in; text-align: justify"><FONT STYLE="letter-spacing: -0.1pt">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. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify; text-indent: 0.5in"><B>(k) Finance
income and finance costs</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">20</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">

<BR>
</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(l) Income tax</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>(m)<FONT STYLE="color: black">
Earnings per share</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">21</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><FONT STYLE="color: black"><B>(n) </B></FONT><B>Accounting
standards issued but not yet effective</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><B><I>Effective for annual periods beginning on or after
July 1, 2011</I></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center" width="94">&bull;</TD>
    <TD STYLE="line-height: 115%; text-align: justify" width="1341">Amendments to IFRS 1 <I>First time Adoption of International Financial Reporting Standards</I></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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 de-recognition 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>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center" width="93">&bull;</TD>
    <TD STYLE="line-height: 115%; text-align: justify" width="1342">Amendments to IFRS 7 <I>Financial Instruments: Disclosures</I></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"><B><I>Effective for annual periods beginning on or after
January 1, 2013</I></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: center" width="93">&bull;</TD>
    <TD STYLE="line-height: 115%; text-align: justify" width="1342">New standard IFRS 9 <I>Financial Instruments</I></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: center">22</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify">

<BR>
</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="37">4</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1398">General and administration</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.65pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1374">
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="276">
      <p align="right">For the three months ended Sept 30</p>
    </TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="268">For the nine months ended Sept 30</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">2011</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="124">2010</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="150">2011</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="106">2010</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">$</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">$</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">$</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Regional administration office fees reallocated</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">(34)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">72</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">524</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">202</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Withholding taxes</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">328</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">-</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">1,550</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Investor relations</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">132</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">10</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">240</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">88</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Costs related to indigenisation in Zimbabwe</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">326</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">-</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">326</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">-</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Management contract fee</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">174</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">170</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">552</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">507</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Audit fee</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">45</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">74</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">243</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">179</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Legal fees</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">5</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">10</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">53</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">49</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Accounting services fees</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">14</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">4</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">36</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">21</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Listing fees</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">14</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="122">43</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="148">77</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="104">96</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">Other</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">(96)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="124">145</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="150">(14)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="106">283</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="744">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">910</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="124">527</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="150">3,587</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="106">1,424</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="5" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 0.25in; padding-right: 5.4pt" width="1303">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="37">5</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1398">Income tax expense</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1248">
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="760">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="332">For the three months ended Sept 30</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="285">For the nine months ended Sept 30</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="760">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="191"><B>2011</B></TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="129">2010</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="158">2011</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="115">2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="760">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="189">$</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="127">$</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">$</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="113">$</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="760">Current period income tax</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="189">2,136</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="127">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">3,448</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="113">3</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="760">Deferred tax</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="191">156</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="129">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="158">956</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="115">-</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="760">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="191">2,292</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="129">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="158">4,404</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="115">3</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">23</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%; line-height: 115%; font-weight: bold">6</TD>
    <TD STYLE="width: 94%; line-height: 115%; font-weight: bold">Property, plant and equipment</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR>
    <TD STYLE="width: 29%; vertical-align: bottom; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 5%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; font-weight: bold; text-align: center">Note</TD>
    <TD STYLE="width: 9%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Land and buildings</TD>
    <TD STYLE="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Mineral properties being depleted</TD>
    <TD STYLE="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Mineral properties not being depleted</TD>
    <TD STYLE="width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Plant and equipment</TD>
    <TD STYLE="width: 9%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Fixtures and fittings</TD>
    <TD NOWRAP STYLE="width: 9%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Motor vehicles</TD>
    <TD STYLE="width: 9%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Total</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">$</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: justify">Cost</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at January 1, 2010</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">3,924</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">6,950</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,119</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">12,001</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,055</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">725</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">28,774</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Additions</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">111</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">2,319</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">630</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,048</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">45</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">100</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">7,253</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Disposals</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Foreign exchange movement</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(358)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(269)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(211)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(346)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(17)</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(55)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(1,256)</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at December 31, 2010</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">3,677</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">9,000</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,538</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">15,703</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,083</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">770</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">34,771</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at January 1, 2011</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">3,677</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">9,000</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,538</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">15,703</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,083</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">770</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">34,771</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Additions</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">988</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,850</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,673</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">7,511</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Disposals</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Foreign exchange movement</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(79)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(348)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(123)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">721</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">64</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">31</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">266</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Balance at September 30, 2011</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">3,598</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">9,640</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">6,265</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">21,097</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">1,147</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">801</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">42,548</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">24</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; line-height: 115%; font-weight: bold">6</TD>
    <TD STYLE="width: 95%; line-height: 115%; font-weight: bold">Property, plant and equipment (continued)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Land and buildings</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Mineral properties being depleted</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Mineral properties not being depleted</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Plant and equipment</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Fixtures and fittings</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Motor vehicles</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">Total</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Depreciation and Impairment losses</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at January 1, 2010</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">412</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">2,790</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">824</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">&nbsp;359</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,385</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Depreciation for the year</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">350</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">2,005</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">82</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">80</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">2,517</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Impairment loss</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Disposals</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Foreign exchange movement</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">70</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(487)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(46)</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(11)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(474)</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at December 31, 2010</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">832</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,308</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">860</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">428</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">6,428</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Balance at January 1, 2011</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">832</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,308</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">860</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">428</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">6,428</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Depreciation for the year</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">487</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,219</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">38</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">109</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">1,853</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Impairment loss</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Disposals</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Foreign exchange movement</TD>
    <TD COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(320)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">21</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">5</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">(294)</TD></TR>
<TR>
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Balance at September 30, 2011</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">1,319</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">-</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">5,207</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">919</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">542</TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">7,987</TD></TR>
<TR>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Carrying amounts</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">At January 1, 2010</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">3,924</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">6,538</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,119</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">9,211</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">231</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">366</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">24,389</TD></TR>
<TR>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">At December 31, 2010</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">3,677</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">8,168</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">4,538</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">11,395</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">223</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">342</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">28,343</TD></TR>
<TR>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">At September 30, 2011</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">3,598</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">8,321</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">6,265</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">15,890</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">228</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">259</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">34,561</TD></TR>
<TR>
    <TD STYLE="width: 29%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">25</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Recoverability</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="61">7</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1374">Other investments</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="994">
<TR>
    <TD STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="187">September 30, 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">Dec 31, 2010</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">$</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="993">Available for sale financial assets</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">5</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">5</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The fair value of the shares held
in Old Mutual Plc is $5 (2010: $5).</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="63">8</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1372">Inventories</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="897">
<TR>
    <TD STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="187">September 30, 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">Dec 31, 2010</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="993">Consumable stores</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">3,413</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">2,037</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="993">Gold in process</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="185">-</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">583</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="993">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="187">3,413</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">2,620</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The Company recognised $5,725
in the nine months ended September 30, 2011 ($3,332- September 30, 2010) of consumable stores as an expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: center">26</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="56">9</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1379">Trade and other receivables</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1288">
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="754">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">September 30, 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">Dec 31, 2010</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="754">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="754">Bullion sales receivable</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3,336</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">893</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="754">Vat receivable</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">935</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">888</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="754">Deposits for stores and equipment</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">840</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">833</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="754">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">5,111</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">2,314</TD>
</TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">In the monetary policy statement
announced by the Governor of the Reserve Bank of Zimbabwe (&ldquo;RBZ&rdquo;) 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 7.1pt"><FONT STYLE="color: black">At January 1, 2010 the Bond
was shown at the estimated recoverable amount of $810.</FONT> In arriving at this recoverable amount the Company 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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. <FONT STYLE="color: black">As at September 30, 2011 the capital value of the Bonds plus accrued interest was US$3,63
million.</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="59">10</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1376">Bank overdraft</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="828">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="935">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="230">September 30, 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="29">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">Dec 31, 2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="935">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="228">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="27">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">$</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="935">Bank overdrafts used for cash management purposes</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="228">-</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="27">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">(747)</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The bank overdraft facility of
US$2.50 million bears interest at 8% above the 30 day LIBOR rate. The facility is unsecured and valid for a period of 12 months
and is renewable. The facility is repayable on demand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">27</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; line-height: 115%; font-weight: bold">11</TD>
    <TD STYLE="width: 92%; line-height: 115%; font-weight: bold">Capital and reserves</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Share capital and share premium</B></P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1088">
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="400">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="151">September 30, 2011</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="223">Dec 31, 2010</TD>
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="263">September 30, 2011</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="110">Dec 31, 2010</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Authorised</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="221">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="261">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="108">&nbsp;</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Unlimited number of common shares.</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="221">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="261">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="108">&nbsp;</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Unlimited number of preference shares.</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="221">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="261">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="108">&nbsp;</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="400">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="149">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="221">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="261">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="108">&nbsp;</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Issued</TD>
    <TD COLSPAN="3" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: center; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="378">Shares</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: center; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="248">Value</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Outstanding shares as at January 1</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="149">500,169,280</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="221">500,169,280</TD>
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="261">196,125</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="108">196,125</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Issued</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="151">380,000</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="223">-</TD>
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="263">38</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="110">-</TD>
</TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="400">Outstanding shares as at September 30</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="151">500,549,280</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="223">500,169,280</TD>
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="263">196,163</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="110">196,125</TD>
</TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Common shares and preference
shares </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">Preference shares do not carry
the right to vote. All shares rank equally with regard to the Company&rsquo;s residual assets, except that preference shareholders
participate only to the extent of the face value of the shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Accumulated other comprehensive
income (loss)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt"><B>Option reserve </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">28</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Capital reserve</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Share-based payment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Description of the share-based
payment arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">At September 30, 2011 the Group
has the following share-based payment arrangement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Share option programme (equity-settled)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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 on the date they were granted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Terms and conditions of share
option programme </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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 Plan the maximum term of the options is 5 years. Under the Plan the aggregate number of
shares that may be issued may not exceed 10% of the number of the shares issued of the Group, at September 30, 2011, the Company
has the following options outstanding:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="740">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">Number of Options</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">Exercise Price</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Expiry Date</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="272">
      <p align="right">$</p>
    </TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="203">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">9,450,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Apr 24, 2012</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">1,300,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">May 31, 2012</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">13,320,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Mar 18, 2013</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">1,000,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Jul 1, 2013</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">210,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Apr 29, 2014</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">500,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Mar 23, 2014</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="217">16,460,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">0.13</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">Jan 31, 2016</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="219">300,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">0.07</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">May 11, 2016</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="219">42,540,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">0.093</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="203">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">29</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Share option programme</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The continuity of the options
granted, exercised, cancelled and expired under the Plans during 2011 and 2010 are as follows:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1032">
<TR>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="891">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">Number of Options</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">Weighted Avg. Exercise Price</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="891">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Options outstanding at January 1, 2010</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">32,580,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">0.1706</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Granted</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">-</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Forfeited or expired</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">-</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Options outstanding and exercisable at December 31, 2010</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">32,580,000</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">0.07</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Granted</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">16,460,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">0.13</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Forfeited or expired</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">(6,500,000)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="200">0.07</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="891">Options outstanding and exercisable at September 30, 2011</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">42,540,000</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="198">0.093</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The options 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 they were granted. The vesting of options is made at the discretion of the board of directors at the time the
options are granted. As of September 30, 2011 there are 7,476,928 stock options available to grant (2010:17,436,928).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Employee expenses</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1061">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="951">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="158">September 30,&nbsp;<br>
 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="83">September 30, 2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="951">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="81">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="951">Share options granted in 2010</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">-</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="81">354</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="951">Share options granted in 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">1,102</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="81">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="951">Total share based expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="158">1,102</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="83">354</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="951">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="84">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="156">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="81">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">30</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Inputs for measurement of grant
date fair values</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The fair value of compensation
expenses noted above was estimated using the Black-Sch&ouml;les Option Pricing Model with the following assumptions for the periods
ended September 30, 2011 and 2010.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1065">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="950">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: center; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">September 30,&nbsp;<br>
 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="14">&nbsp;</TD>
    <TD STYLE="border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="185">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">September 30,<br>
        2010</P>
    </TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Fair value of share options and assumptions</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="183">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Risk-free interest rate</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">1.1%</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">1-2%</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Expected dividend yield</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">Nil</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">Nil</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Expected stock price volatility</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">60%</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">45-55%</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Expected option life in years</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">5</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">1.7 &ndash; 5.8</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Exercise prise</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">0.13</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">0.07</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Share price at grant date</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">0.13</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">Various</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="950">Fair value at grant date</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">0.067</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="12">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="183">0.01 - 0.029</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">Option pricing models require
the input of highly subjective assumptions including the expected price volatility. 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&rsquo;s stock options.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; line-height: 115%; font-weight: bold">12</TD>
    <TD STYLE="width: 92%; line-height: 115%; font-weight: bold">Earnings per share</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Basic earnings per share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The calculation of basic earnings
per share at September 30, 2011 was based on the profit attributable to common shareholders of $10,923 (2010: $1,257), and a weighted
average number of common shares outstanding of 500,345 thousand (2010: 500,169 thousand), calculated as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Profit attributable to common
shareholders</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-left: 1 solid #000000; border-top: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: top; line-height: 115%; border-left: 1 solid #000000; border-top: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt" align="center">For the three months ended&nbsp;<br>
      September 30</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: top; line-height: 115%; border: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt" align="center">For the nine months ended&nbsp;<br>
 September 30</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 54%; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 12%; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">2011</TD>
    <TD STYLE="width: 12%; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">2010</TD>
    <TD NOWRAP STYLE="width: 10%; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">2011</TD>
    <TD NOWRAP STYLE="width: 12%; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;2010</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">$</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">Profit for the period after tax</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">6,150</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">742</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">10,923</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">1,257</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">Profit attributable to common shareholders</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">6,150</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">742</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">10,923</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">1,257</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">Weighted average number of common shares (basic)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,549</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,169</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,345</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,169</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">Weighted average number of common shares (diluted)</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">543,089</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,169</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-left: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">542,785</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-left: 1 solid #000000; border-right: 1 solid #000000; border-bottom: 1 solid #000000; padding-left: 5.4pt; padding-right: 5.4pt">500,169</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">31</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Weighted average number of
common shares</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 63%; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 7%; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">September 30,</TD>
    <TD NOWRAP STYLE="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">September 30,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">2011</TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">2010</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic">(In number of shares)</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Issued common shares</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">500,549,280</TD>
    <TD NOWRAP STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">500,169,280</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Weighted average number of common shares</TD>
    <TD NOWRAP STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">500,345,309</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">500,169,280</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Diluted earnings per share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The calculation of diluted earnings
per share at September 30, 2011 was based on the profit attributable to common shareholders of $10,923 (2010: $1,257), and a weighted
average number of common shares outstanding of 542,785 thousand (2010: 500,169 thousand), calculated as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Weighted average number of
common shares </B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 69%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic"><I>(In number of shares)</I></TD>
    <TD NOWRAP STYLE="width: 15%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">September 30, 2011</TD>
    <TD NOWRAP STYLE="width: 15%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">June 30, 2010</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; width: 1%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Weighted average number of common shares (basic)</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">500,345,309</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-top: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">500,169,280</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Effect of options exercisable</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">42,540,000</TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">-</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Weighted average number of common shares (diluted)</TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">542,785,309</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-top: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">500,169,280</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The average market value of the
Company&rsquo;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>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; line-height: 115%; font-weight: bold">13</TD>
    <TD STYLE="width: 91%; line-height: 115%; font-weight: bold">Defined Contribution Pension Plan</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">Under the terms of the Mining
Industry Pension Fund (&ldquo;Fund&rdquo;) 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 September 30, 2011 was $196 (2010: $156).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">32</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; line-height: 115%; font-weight: bold">14</TD>
    <TD STYLE="width: 91%; line-height: 115%; font-weight: bold">Provisions</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="50%" height="300">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">Site restoration</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Balance at January 1, 2010</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,678</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Accretion</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">93</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Foreign currency adjustment</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">148</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Balance at December 31, 2010</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">1,919</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Balance at January 1, 2011</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,919</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Accretion</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">16</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Foreign currency adjustment</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">205</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt">Balance at&nbsp; September 30, 2011</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">2,140</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Non-current</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">2,140</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Current</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">2,140</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Site
restoration</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; line-height: 115%; font-weight: bold">15</TD>
    <TD STYLE="width: 90%; line-height: 115%; font-weight: bold">Trade and other payables</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="50%">
<TR>
    <TD STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">September 30, 2011</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">Dec 31, 2010</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Other trade payables</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">5,119</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3,317</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Provision for tax</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">358</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Non-trade payables and accrued expenses</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">339</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">565</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">5,816</TD>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 1pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">3,882</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">33</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt"><B>&nbsp;</B></P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; line-height: 115%; font-weight: bold">16.</TD>
    <TD STYLE="width: 90%; line-height: 115%; font-weight: bold">Reconciling net cash from operations and changes in non-cash working capital</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt"><B>&nbsp;</B></P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="50%">
<TR>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">&nbsp;</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">September 30,<br>
      2011</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">September 30,&nbsp;<br>
 2010</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif" width="3">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">$</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">$</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Asset retirement obligation accretion</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">16</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">20</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Share-based payments</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">1,102</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">354</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Finance expense</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">193</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">200</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Finance income</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">(3)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">(223)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Deferred tax</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">956</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Income tax</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">3,448</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Depreciation</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">1,853</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">1,772</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Write down RBZ bond</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">173</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Other</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">723</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">(206)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Total</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">8,288</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">2,093</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">&nbsp;</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">&nbsp;</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Trade and other payables</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">1,935</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">(43)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Trade and other receivables</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">(2,798)</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">(441)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Inventories</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="171">(793)</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="176">98</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Prepayments</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">5</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">(116)</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="1035">Total</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="173">(1,651)</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="178">(502)</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; line-height: 115%; font-weight: bold">17.</TD>
    <TD STYLE="width: 92%; line-height: 115%; font-weight: bold">Contingencies</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">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. As at September 30, 2011 no scheme had been established, nor were any shares
of Blanket deposited in a Trust for the purposes of such a scheme. 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 once legally in force, 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">In 2008 the Zimbabwean parliament
passed the Indigenization and Economic Empowerment Act 2007 (&ldquo;Act&rdquo;) 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">34</P>

<BR>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">Blanket submitted its Indigenisation
Implementation Plan (&ldquo;the Plan&rdquo;) to the Zimbabwe Government on May 9, 2011 in terms of the Indigenisation and Empowerment
Act and associated Regulations. During August 2011 the Company was informed that the Government had rejected the Plan. Following
further meetings with the Government the Company agreed to prepare a revised Plan based on the outcome of an independent valuation
exercise. The revised Plan was presented to the Government in October 2011. The Company has received a written response from the
Government requesting further information and clarification. The Company is preparing a document in response to the latest request
from the Government.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The Company will continue to monitor
the situation and is consulting widely on this issue.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; line-height: 115%; font-weight: bold">18</TD>
    <TD STYLE="width: 92%; line-height: 115%; font-weight: bold">Related parties</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>Transactions with key management
personnel</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">Key management personnel and director
transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="992" height="160">
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 4.5pt; padding-right: 6pt" height="22" width="1006">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: center; padding-left: 4.5pt; padding-right: 6pt" height="22" width="354">
      <p align="right"><B>Nine months ended September 30</B></p>
    </TD></TR>
<TR>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-indent: 1.1pt; padding-left: 4.5pt; padding-right: 6pt" height="22" width="1049">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 4.5pt; padding-right: 6pt" height="22" width="173">2011</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 4.5pt; padding-right: 6pt" height="22" width="126">2010</TD></TR>
<TR>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 4.5pt; padding-right: 6pt" height="22" width="1049">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="22" width="171">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="22" width="124">$</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="line-height: 115%; padding-left: 4.5pt; padding-right: 6pt" height="19" width="1049">Management fees, allowances and bonus paid or accrued to a company which provides the services of the&nbsp; Company&rsquo;s President</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="19" width="171">454</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="19" width="124">416</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="line-height: 115%; padding-left: 4.5pt; padding-right: 6pt" height="17" width="1049">Rent paid to a Company owned by members of the President&rsquo;s family</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="17" width="171">25</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="17" width="124">29</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="line-height: 115%; padding-left: 4.5pt; padding-right: 6pt" height="19" width="1049">Legal fees paid to a law firm where a Director is a partner</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="19" width="171">51</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="19" width="124">22</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 4.5pt; padding-right: 6pt" height="22" width="1049">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="22" width="171">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 4.5pt; padding-right: 6pt" height="22" width="124">&nbsp;</TD></TR>
<TR>
    <TD height="17" width="1020">&nbsp;</TD>
    <TD height="17" width="41">&nbsp;</TD>
    <TD height="17" width="185">&nbsp;</TD>
    <TD height="17" width="138">&nbsp;</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">(i) The Group has entered into
a management agreement with Epicure Overseas S.A. (&ldquo;Epicure&rdquo;), a Panamanian Group, for management services provided
by the president. 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">35</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">During June 2011 Epicure subscribed
for a private placement for 380,000 common shares for a cash consideration of $34,000.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; line-height: 115%; font-weight: bold">19</TD>
    <TD STYLE="width: 91%; line-height: 115%; font-weight: bold">Group entities</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="70%">
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="3" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">Ownership interest</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">Country of incorporation</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">September 30, 2011</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Dec 31, 2010</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">January 1, 2010</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt">Significant subsidiaries</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">%</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">%</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">%</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Holdings Zimbabwe ((Pvt) Ltd(Private) Limited</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zimbabwe</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Mining Services Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zimbabwe</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Kadola Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Mining (Zambia) Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Nama Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Western Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Eersteling Gold Mining Corporation Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Fintona Investments (Proprietary) Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Greenstone Management Services (Proprietary) Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Maid O&rsquo; Mist (Pty) Ltd</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Mapochs Exploration (Pty) Ltd</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Caledonia Holdings (Africa) Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Barbados</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Blanket (Barbados) Holdings Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">Barbados</P>
        <P STYLE="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0; text-align: right">&nbsp;</P></TD>
    <TD NOWRAP STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="vertical-align: top; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Blanket Mine (1983) (Private) Limited</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zimbabwe</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">100</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; line-height: 115%; font-weight: bold">20</TD>
    <TD STYLE="width: 91%; line-height: 115%; font-weight: bold">Operating Segments</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The Group's operating segments
have been identified based on geographic areas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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 Company&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">36</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The accounting policy of the geographic
segments is the same as described in notes 2 and 3.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify"><B>Information about geographic
segments</B></P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="70%">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt">2011</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Corporate</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zimbabwe</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Total</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Revenues</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">39,733</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">39,733</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Royalty</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,791)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,791)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Production costs</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(15,124)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(759)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(15,883)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Administrative expenses</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(2,839)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,755)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(319)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(4,913)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Depreciation</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,837)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(16)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,853)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Other expenses</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">221</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">224</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Finance income</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Finance expense</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(193)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(193)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment profit before income tax</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(2,618)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">19,036</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,091)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">15,327</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Taxation</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(4,404)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(4,404)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment profit after income tax</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(2,618)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">14,632</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(1,091)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">10,923</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment assets:</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Current</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">4,830</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">8,692</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,893</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">43</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">15,458</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Non-current</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">55</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">26,981</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,320</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">6,210</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">34,566</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Capital expenditure</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">5,661</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,850</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">7,511</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment liabilities</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">648</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">12,197</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,211</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">7</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">14,063</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">37</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<div align="left">

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="70%">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt">2010</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Corporate</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zimbabwe</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">South Africa</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Zambia</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">Total</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">$</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Revenues</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">14,970</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">14,970</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Royalty</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(515)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(515)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Production costs</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(8,864)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(805)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(9,669)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Administrative expenses</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,470)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(202)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(153)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,825)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Depreciation</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,754)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(18)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,772)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Other expenses</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(52)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(180)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">280</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">48</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Finance income</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">42</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">180</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">223</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Finance expense</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(200)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(200)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment profit before income tax</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(1,480)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3,435</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(695)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,260</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Taxation</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(3)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(3)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment profit after income tax</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(1,480)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">3,432</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">(695)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt">1,257</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment assets</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Current</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,255</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">5,114</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">567</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">43</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">6,979</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Non-current</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">55</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">20,701</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">1,375</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">4,445</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">26,576</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Capital expenditure</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">-</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">3,755</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">(43)</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">465</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">4,177</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt">Geographic segment liabilities</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">295</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">9,058</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">439</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">7</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt">9,799</TD></TR>
</TABLE>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif" width="1439">
<TR STYLE="vertical-align: top">
    <TD STYLE="line-height: 115%; font-weight: bold" width="60">21</TD>
    <TD STYLE="line-height: 115%; font-weight: bold" width="1375">Explanation of transition to IFRS 1</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">As stated in note 2(a), these
are a part of the Group's first set of consolidated financial statements prepared in accordance with IFRS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">The accounting policies set out
in note 3 have been applied in preparing the financial statements for the period ended September 30, 2011,the comparative information
presented in these financial statements and in the preparation of an opening IFRS statement of financial position at January 1,
2010 (the Group's date of transition) as previously reported.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(a) Business Combinations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">38</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(b) Cumulative translation
differences</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(c) Share-based payment transactions</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(d) Borrowing Costs</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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&rsquo;s actual cash flows, it has resulted in changes to the Company&rsquo;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&rsquo;s Canadian GAAP statement of operations, statement of comprehensive income, statement of financial
position and statement of cash flows for the quarter ended September 30, 2011 and the year ended December 31, 2010 have been reconciled
to IFRS, with the resulting differences explained.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(A) Estimates</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">In accordance with IFRS 1, an
entity&rsquo;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&rsquo;s IFRS estimates
as of January 1, 2010 are consistent with its Canadian GAAP estimates for the same date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">39</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(B) Property plant and equipment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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&rsquo;s principal operating subsidiary, Blanket Mine , effectively adopted IFRS in
2009 when it changed its functional currency to the US dollar.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">In recent years, Zimbabwe has
been a hyperinflationary economy and Caledonia&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">As a consequence of the above
, a large difference resulted between the carrying values under Canadian GAAP and IFRS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">With the resultant higher carrying
value for Blanket Mine&rsquo;s fixed assets, and the same application of the same depreciation rates, the depreciation amount under
IFRS is much larger than under Canadian GAAP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(C) Share-based payment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>IFRS</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; Forfeiture estimates are
recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">40

<BR>
</P>

&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>Canadian GAAP</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; Forfeitures of awards are
recognized as they occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">No change resulted in the figures
because of this difference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(D)Provision for environmental
rehabilitation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>IFRS</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; The provision for environmental
rehabilitation must be adjusted for changes in the discount rate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>Canadian GAAP</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; The provision for environmental
rehabilitation is not adjusted for changes in the discount rate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">A small change in the figures
resulted from this difference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(E) Deferred tax asset/liability</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>IFRS</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; All deferred tax assets
and liabilities must be classified as non-current.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>Canadian GAAP</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">&bull; Deferred tax assets and
liabilities can be classified as current or non-current as appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify">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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: center">41</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt">(F) Other comprehensive income (loss)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4.25pt; text-align: justify">Other comprehensive income (loss)
consists of the change in the accumulated other comprehensive income(loss) (&ldquo;AOCI&rdquo;). 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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>(G) Impairment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>IFRS </I>&ndash; If indication
of impairment is identified, the asset&rsquo;s carrying value is compared to the asset&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><I>Canadian GAAP </I>- If indication
of impairment is identified, the asset&rsquo;s carrying value is compared to the asset&rsquo;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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify; text-indent: 0.5in"><I>(H) Presentation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-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="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-align: center">42</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 7.1pt; text-align: justify">&nbsp;</P>

&nbsp;
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1113">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="748">Reconciliation of equity at September 30, 2010</TD>
    <TD NOWRAP COLSPAN="3" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="645">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD STYLE="line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">Note</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">Canadian GAAP</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">Effect of transition to IFRS</TD>
    <TD STYLE="line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">IFRS</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">$</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Assets</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="vertical-align: top; line-height: 115%; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Property, plant and equipment</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">B</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">19,087</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">7,485</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">26,572</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Other investments</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">4</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">4</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Trade and other receivables</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">794</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(794)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">-</TD></TR>
<TR>
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total non-current assets</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">19,885</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">6,691</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">26,576</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Inventories</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">2,488</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">2,488</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Prepayments</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">174</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">73</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">247</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Trade and other receivables</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">2,088</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">699</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">2,787</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Cash and cash equivalents</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">1,457</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">1,457</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total current assets</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">6,207</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">772</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">6,979</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total assets</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">26,092</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">7,463</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">33,555</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Provisions</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">D</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">1,695</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(12)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">1,683</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Deferred tax liability</TD>
    <TD NOWRAP STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">E</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">827</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">3,486</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">4,313</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total non-current liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">2,522</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">3,474</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">5,996</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Trade and other payables</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">2,127</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">2,127</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Bank overdraft</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">1,680</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">-</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">1,680</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total current liabilities</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">3,807</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">3,807</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total Liabilities</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">6,329</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">3,474</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">9,803</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="589">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Equity</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Share capital</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">196,125</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">196,125</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Capital reserve</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">B</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">14,170</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">14,170</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Contributed surplus</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">2,305</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">2,305</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Accumulated other comprehensive income (loss)</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">F</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="199">(483)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(6,217)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="200">(6,700)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Deficit</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">B</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">(178,184)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(3,964)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">(182,148)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Capital and reserves</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">19,763</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">3,989</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">23,752</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="589">Total equity and liabilities</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="143">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="201">26,092</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">7,463</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 1.5pt double windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="202">33,555</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">43</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1393">
<TR STYLE="vertical-align: top">
    <TD NOWRAP COLSPAN="5" STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="1407">Reconciliation of comprehensive income for the three month period ended September 30, 2010</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">Note</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;Canadian GAAP</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">Effect of transition to IFRS</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;IFRS</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">$</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Revenue</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">6,331</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">26</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">6,357</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Royalty</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">(222)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">(222)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Production costs</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">(3,477)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(438)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">(3,915)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Depreciation</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">B</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">(107)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(505)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">(612)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Gross profit</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">2,525</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(917)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">1,608</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Administrative expenses</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">F</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">(893)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">9</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">(884)</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">(893)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">9</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">(884)</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Finance income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">61</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">61</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Finance expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">(45)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">(45)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Net finance income/(expense)</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">16</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">16</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Profit before income tax</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">1,648</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(908)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">740</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Income tax expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">(1)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">1</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Profit for the period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">1,647</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(907)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">740</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="531">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Other comprehensive income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Foreign currency translation differences for foreign operations</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Revaluation of investment to fair value</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">-</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="227">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="531">Total comprehensive income/(loss) for the period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="288">1,647</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="216">(907)</TD>
    <TD STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="229">740</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1407">
<TR>
    <TD STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="690">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="241">Canadian GAAP</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="215">Effect of transition to IFRS</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">IFRS</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="690">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="241">$</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="215">$</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">$</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="690">Earnings per share - cents</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="241">0.3</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="215">(0.2)</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">0.1</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">44</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1408">
<TR STYLE="vertical-align: top">
    <TD COLSPAN="8" STYLE="padding-left: 5.4pt; padding-right: 5.4pt" width="1407">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="8" STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="1407">Reconciliation of comprehensive income for the nine month period ended September 30, 2010</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-style: italic; font-weight: bold; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">Note</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;Canadian GAAP</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">Effect of transition to IFRS</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;IFRS</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">$</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">$</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">$</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; text-align: justify; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Revenue</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">14,975</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">(5)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">14,970</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Royalty</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">(516)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">(516)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Production costs</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">(9,678)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">10</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">(9,668)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Depreciation</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">B</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">(519)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">(1,253)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(1,772)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Gross profit</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">4,262</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">(1,248)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">3,014</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Administrative expenses</TD>
    <TD STYLE="line-height: 115%; font-style: italic; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">F</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">(1,683)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">(94)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">(1,777)</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">(1,683)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">(94)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(1,777)</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Finance income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">223</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">223</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Finance expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">(200)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(200)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Net finance income/(expense)</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">23</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">23</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Profit before income tax</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">2,602</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">(1,342)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">1,260</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Income tax expense</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">(3)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">(3)</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Profit for the period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">2,599</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">(1,342)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">1,257</TD></TR>
<TR>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="561">&nbsp;</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Other comprehensive income</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-left: 5.4pt; padding-right: 5.4pt" width="561">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">Revaluation of investment to fair value</P>
        <P STYLE="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0">&nbsp;</P></TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">1</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">1</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Foreign currency translation differences for foreign operations</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="272">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="213">-</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">-</TD></TR>
<TR>
    <TD STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="561">Total comprehensive income/(loss) for the period</TD>
    <TD STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="85">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="274">2,600</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="215">(1,342)</TD>
    <TD COLSPAN="2" STYLE="line-height: 115%; text-align: right; border-top: 0.5pt solid windowtext; border-bottom: 0.5pt solid windowtext; padding-left: 5.4pt; padding-right: 5.4pt" width="214">1,258</TD></TR>
<TR>
    <TD COLSPAN="3" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="691">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="257">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="213">&nbsp;</TD>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: bottom; text-align: center; padding-left: 5.4pt; padding-right: 5.4pt" width="198">&nbsp;</TD></TR>
<TR>
    <TD width="575">&nbsp;</TD>
    <TD width="99">&nbsp;</TD>
    <TD width="27">&nbsp;</TD>
    <TD width="257">&nbsp;</TD>
    <TD width="12">&nbsp;</TD>
    <TD width="213">&nbsp;</TD>
    <TD width="12">&nbsp;</TD>
    <TD width="212">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; font-family: 'Times New Roman', Times, Serif; border-collapse: collapse" width="1408">
<TR>
    <TD NOWRAP STYLE="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; padding-left: 5.4pt; padding-right: 5.4pt" width="632">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">Canadian GAAP</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">Effect of transition to IFRS</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">IFRS</TD></TR>
<TR>
    <TD NOWRAP STYLE="font-style: normal; font-variant: normal; font-weight: normal; line-height: 115%; font-size: 11pt; font-family: Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-left: 5.4pt; padding-right: 5.4pt" width="632">&nbsp;</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">$</TD>
    <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">$</TD>
    <TD STYLE="vertical-align: bottom; line-height: 115%; font-weight: bold; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">$</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="line-height: 115%; font-weight: bold; padding-left: 5.4pt; padding-right: 5.4pt" width="632">Earnings per share - cents</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="286">0.5</TD>
    <TD NOWRAP STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="214">(0.2)</TD>
    <TD STYLE="line-height: 115%; text-align: right; padding-left: 5.4pt; padding-right: 5.4pt" width="212">0.3</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">45</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR>
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold"><B>Directors and Management at September 30, 2011<FONT STYLE="color: white"> </FONT></B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 50%; font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: justify">BOARD OF DIRECTORS</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: right">OFFICERS</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">C. R. Jonsson&nbsp; (2) (3) (4) (5)&nbsp; - Chairman</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">C. R. Jonsson&nbsp; - Chairman</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Principal of Tupper Jonsson&amp; Yeadon</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">Corporate Secretary</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Barristers &amp; Solicitors</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Principal of Tupper Jonsson&amp; Yeadon</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Vancouver, British Columbia,</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Barristers &amp; Solicitors</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Canada</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Vancouver, British Columbia,</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Canada</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">S. E. Hayden(3) (4) (5)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">S. E. Hayden</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">President and Chief Executive Officer</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">President and Chief Executive Officer</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Johannesburg, South Africa</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Johannesburg, South Africa</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">J. Johnstone (1)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">S. R. Curtis</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Retired Mining Engineer</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Vice-President Finance and Chief Financial officer</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Gibsons, British Columbia, Canada</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Johannesburg, South Africa&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">F C. Harvey (1)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">Dr.&nbsp; T. Pearton</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Retired Executive</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Vice-President Exploration</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Oakville, Ontario, Canada</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Johannesburg, South Africa</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">R. W. Babensee (1) (2)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: right">J.M. Learmonth</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic">Chartered Accountant - Retired</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right; text-indent: 0.3in">Vice-President Business Development</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic">Toronto, Ontario, Canada</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: right">Johannesburg, South Africa</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">S. R. Curtis (5)</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Vice-President Finance and Chief Financial officer</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-style: italic; text-align: justify">Johannesburg, South Africa</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold; text-align: justify">BOARD COMMITTEES</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">(1)&nbsp; Audit Committee</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">(2)&nbsp; Compensation Committee</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">(3)&nbsp; Corporate Governance Committee</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">(4)&nbsp; Nominating Committee</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
<TR>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; text-align: justify">(5)&nbsp; Disclosure Committee</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: center">46</P>

<BR>
<p>&nbsp;
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>
<p><br>
</p>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><font size="3">Caledonia Mining Corporation</font> </B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<p><B><BR>
Notes to the Condensed Consolidated Financial Statements<BR>
For the nine month period ended September 30, 2011 and 2010<BR>
Unaudited<BR>
</B>(<I>figures in thousands of Canadian dollars unless otherwise stated</I>)</p>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">CORPORATE DIRECTORY</TD>
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">SOLICITORS</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">CORPORATE OFFICES</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Tupper, Jonsson &amp; Yeadon</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Canada - Head Office</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">1710-1177 West Hastings St, Vancouver,</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Caledonia Mining Corporation</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">British Columbia V6E 2L3 Canada</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Suite 1201, 67 Yonge Street</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Toronto, Ontario M5E 1J8 Canada</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Borden Ladner Gervais LLP</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Tel:(1)(416) 369-9835 Fax:(1)(416) 369-0449</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Suite 4100, Scotia Plaza</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">info@caledoniamining.com</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">40 King Street West</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Toronto, Ontario M5H 3Y4 Canada</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">South Africa &ndash; Africa Office</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Greenstone Management Services (Pty) Ltd.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AUDITORS</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">AUDITORS</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">P.O. Box 834&#9;<B>&#9;&#9;BDO Dunwoody LLP</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">BDO Canada LLP</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Saxonwold 2132&#9;&#9;<B>Chartered Accountants</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Chartered Accountants</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">South Africa&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Suite 3300, 200 Bay Street</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Suite 3300, 200 Bay Street</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Tel: (27)(11) 447-2499 Fax: (27)(11) 447-2554</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Royal Bank Plaza, South Tower</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Toronto, Ontario M5J 2J8 Canada</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Zambia</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Caledonia Mining (Zambia) Limited</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">REGISTRAR &amp; TRANSFER AGENT</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">P.O. Box 36604</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Equity Transfer Services Inc.</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Lusaka, Zambia&#9;<B>&#9;&#9;</B>Suite 400 200 University Ave</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Suite 400&nbsp;200 University Ave.</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Toronto, Ontario M5H 4H1 Canada</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Tel: (416) 361 0152 Fax: (416) 361 0470</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">BANKERS</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Zimbabwe</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Canadian Imperial Bank of Commerce</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Caledonia Holdings Zimbabwe (Limited)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">6266 Dixie Road</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">P.O. Box CY1277</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Mississauga, Ontario L5T 1A7 Canada</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Causeway, Harare</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Zimbabwe</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">NOMADS AND BROKERS (AIM)</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Collins Stewart Europe Limited</TD></TR>
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    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">88 Wood Street</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">CAPITALIZATION at September 30, 2011&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">London EC2V 7QR</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Authorised: Unlimited&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 71 Queen Victoria Street</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Fax: +44 20 7523 8134</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">Shares, Warrants and Options Issued:</TD>
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
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    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Common Shares:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 500,549,280 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tel: +44 20 7653 4000</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold">SHARES LISTED</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Warrants:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nil</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Toronto Stock Exchange Symbol &ldquo;CAL&rdquo;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">Options: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 42,540,000</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">NASDAQ OTCQX Symbol &quot;CALVF&quot;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">London &ldquo;AIM&rdquo; Market Symbol &ldquo;CMCL&rdquo;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: 11pt/115% Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; font-weight: bold"><B>Web Site: </B><FONT STYLE="color: black">http://www.caledoniamining.com</FONT></TD></TR>
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<TYPE>EX-99.2
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<FILENAME>mda.htm
<DESCRIPTION>MANAGEMENT DISCUSSION & ANALYSIS FOR THE PERIOD ENDED SEPTEMBER 30, 2011
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    <title>MD - Filed by Filing Services Canada Inc. (403) 717-3898</title>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CALEDONIA MINING CORPORATION</font></div>
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  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;NOVEMBER 7, 2011</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 124.15pt" align="justify">&nbsp;
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  <p><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management&#8217;s Discussion and Analysis</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">This discussion and analysis of the consolidated operating results and financial position of Caledonia Mining Corporation ("Caledonia&#8221;) is for the fiscal quarter ended September 30, 2011 (the &#8220;Quarter&#8221;) and the period until November 07, 2011. It should be read in conjunction with the Unaudited Consolidated Financial Statements as at September 30, 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 <font style="DISPLAY: inline; TEXT-DECORATION: underline">www.sedar.com</font> or from Caledonia&#8217;s website at <font style="DISPLAY: inline; TEXT-DECORATION: underline">www.caledoniamining.com</font>.&#160;&#160;These Unaudited Consolidated Financial Statements and related notes have been prepared using accounting policies consistent with IFRS and in accordance with International Accounting Standard 34 (&#8220;IAS 34&#8221;) &#8211; Interim Financial Reporting. A reconciliation of the previously disclosed comparative periods&#8217; financial statements prepared in accordance with Canadian generally accepted accounting principles to IFRS is set out in Note 21 to these financial statements.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Note that all currency references in this document are to Canadian Dollars.</font></div>

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<td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.10.</font></font></td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.2.</font></div>
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<div style="TEXT-ALIGN: left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.&#160;&#160;</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This Management Discussion and Analysis contains certain forward-looking statements relating but not limited to Caledonia&#8217;s expectations, intentions, plans, and beliefs.&#160;&#160;Forward-looking information can often be identified by forward-looking words such as &#8220;anticipate&#8221;, &#8220;believe&#8221;, &#8220;expect&#8221;, &#8220;goal&#8221;, &#8220;plan&#8221;, &#8220;intend&#8221;, &#8220;estimate&#8221;, &#8220;could&#8221;, &#8220;should&#8221;, &#8220;may&#8221; and &#8220;will&#8221; or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.&#160;&#160;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.&#160;&#160;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.&#160;&#160;Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;Shareholders are cautioned not to place undue reliance on forward-looking information.&#160;&#160;By its nature, forward-looking information involves many assumptions, risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur.&#160;&#160;Caledonia undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OVERVIEW</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Caledonia is an exploration, development and mining corporation focused on Southern Africa.&#160;&#160;The<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>Corporation&#8217;s primary assets are an operating gold mine in Zimbabwe (the &#8220;Blanket Mine&#8221;), a base metals exploration project in Zambia (the &#8220;Nama Property&#8221;) and platinum and base metal (PGE) projects in South Africa (&#8220;Rooipoort/Mapochs&#8221;).&#160;&#160;Caledonia&#8217;s shares are listed on the Toronto Stock Exchange as &#8220;CAL&#8221;, on London&#8217;s AIM as &#8220;CMCL&#8221; and are also traded on NASDAQ-OTCQX as &#8220;CALVF&#8221;.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold produced by the Blanket Mine in Zimbabwe in the Quarter increased by 18% to 9,743 ounces from the 8,226 ounces produced in the 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font> quarter 2011 (the &#8220;preceding quarter&#8221;) and was 97% higher than the 4,935 ounces of gold produced in 3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">rd</font> quarter 2010 (the &#8220;comparative quarter&#8221;).&#160;&#160;This is the sixth consecutive quarterly increase in gold production.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average gold recovery increased to 93.1% from 92.9% in the preceding quarter and from 91.3% in the comparative quarter reflecting the benefits from investment in improvements to the milling and Carbon-in-Leach (&#8220;CIL&#8221;) circuits.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash operating costs at the Blanket Mine in the Quarter were US$583 per ounce of gold produced compared to US$585 in the preceding quarter and US$651 in the comparative quarter.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross Profit (i.e. after depreciation and amortization but before administrative expenses) was $9,364,000 compared to $1,607,000 in the comparative quarter.&#160;&#160;This is almost a six-fold increase on the comparative quarter and is the seventh consecutive quarterly increase in gross profit.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The average price received per ounce of gold sold during the Quarter was US$1,737 compared to US$1,241 in the comparative quarter.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Caledonia recorded net profit before tax of $8,442,000 compared to $742,000 in the comparative quarter which represents an 11-fold increase.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At September 30, 2011 the Corporation had no debt except current trade payables (September 30, 2010 $1,680,000) and had cash and cash equivalents of $6,847,000 (net debt as at September 30, 2010 $226,000).</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket made payments in respect of direct and indirect taxes, royalties, licence fees, levies and other payments to the Government of Zimbabwe during the Quarter totalling US$3,847,000 (US$3,307,000 &#8211; Q2 2011).</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket Mine&#8217;s Occupational, Safety and Health policies and procedures were audited by the National Social Security Authority (the &#8220;NSSA&#8221;) as a result of which&#160;&#160;Blanket was awarded the NSSA gold medal in the Mining and Quarrying sector in Matabeleland and the bronze medal across all industrial sectors in Zimbabwe.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Work on the 4-hole drilling program at the Konkola West area of the Nama base metals project in Zambia has continued.&#160;&#160;At the end of October, 3 holes had been completed and the drill rig had been moved to the fourth hole.&#160;&#160;The conclusions from this program will be provided when Management has received and evaluated all of the results.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated Statement of Comprehensive Income (unaudited)</font></div>

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  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the 3 months ended Sept 30</font></div>
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  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the 9 months ended Sept 30</font></div>
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<td valign="middle" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
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<td valign="top" width="36%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
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<td valign="middle" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16,517</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,357</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">39,733</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14,970</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Royalty</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">743</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">223</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,791</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">515</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Production costs</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,763</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,915</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,883</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,669</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amortization</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">647</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">612</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,853</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,772</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross profit</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,364</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,607</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,206</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,014</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Administrative expenses</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">910</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">527</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,587</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,423</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Share-based payment</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">354</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,102</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">354</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Results from operating activities</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,454</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">726</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,517</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,236</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finance income</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">60</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">223</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finance expense</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">44</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">193</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">200</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Profit before income tax</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,442</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">742</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,327</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,260</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income tax expense</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,292</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,404</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Profit for the period</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,150</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">742</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,923</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,257</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Profit/(loss) on foreign currency translation</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,152</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,077</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total comprehensive income for the period</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,302</font></div>
</td>
<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">742</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12,000</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,258</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Earnings per share (cents)</font></div>
</td>
<td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basic</font></div>
</td>
<td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.23</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.18</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.25</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Diluted</font></div>
</td>
<td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.13</font></div>
</td>
<td align="right" valign="bottom" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.01</font></div>
</td>
<td align="right" valign="bottom" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.25</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted average number of common shares outstanding (thousand)</font></div>
</td>
<td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="36%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basic</font></div>
</td>
<td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="left" valign="top" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,549</font></div>
</td>
<td align="left" valign="top" width="9%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td align="left" valign="top" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,345</font></div>
</td>
<td align="left" valign="top" width="8%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="36%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Diluted</font></div>
</td>
<td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="left" valign="top" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">543,089</font></div>
</td>
<td align="left" valign="top" width="9%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td align="left" valign="top" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">542,785</font></div>
</td>
<td align="left" valign="top" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
  <p>&nbsp;</p>
  <p align="center">3</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;</p>
  <p>&nbsp;
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues increased in the Quarter due to the combined effects of increased production at the Blanket Mine and the higher realised gold price.&#160;&#160;Administrative expenses in the Quarter included $328,000 of withholding tax which was incurred on certain inter-group payments from Zimbabwe (Q2 2011, $1,010,000; Q3 2010, nil). The income tax expense in the Quarter is made up of an income tax charge of $2,136,000 (Q2 2011, $853,000; Q3 2010, nil) and a movement in the deferred tax provision of $156,000 (Q2 2011, $109,000; Q3 2010, nil).</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">The table below sets out</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline">the unaudited, consolidated statement of cash flows for the 9 months to September 30, 2011 and 2010.</font></font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" colspan="4" valign="middle" width="79%" style="BORDER-TOP: black 0.5pt solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated Statement of Cash Flows (unaudited)</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(In thousands of Canadian dollars)</font></div>
</td>
</tr><tr>
<td valign="middle" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td colspan="2" valign="bottom" width="29%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the 9 months ended Sept 30</font></div>
</td>
</tr><tr>
<td valign="middle" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
</tr><tr>
<td valign="top" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;$</font></div>
</td>
<td valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;$</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flows from operating activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Profit for the period</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10,923</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,257</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adjustments for:</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reconcile net cash from operations</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,288</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,093</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes in non-cash working capital</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1,651)</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(502)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income tax paid</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3,448)</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net cash from operating activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14,112</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,845</font></div>
</td>
</tr><tr>
<td valign="middle" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flows from investing activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property, plant and equipment additions</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7,511)</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4,177)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sale of investment</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">51</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net cash used in investing activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7,511)</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4,126)</font></div>
</td>
</tr><tr>
<td valign="middle" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flows from financing activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bank overdraft increase/(decrease)</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(747)</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,092</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finance expense</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(193)</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(200)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finance income</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">223</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares issued</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">38</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net cash from (used in) financing activities</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(899)</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,115</font></div>
</td>
</tr><tr>
<td valign="middle" width="44%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net increase/(decrease) in cash and cash equivalents</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,702</font></div>
</td>
<td align="right" valign="bottom" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(166)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash and cash equivalents at beginning of period</font></div>
</td>
<td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,145</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,623</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="44%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash and cash equivalents at end of period</font></div>
</td>
<td valign="middle" width="6%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,847</font></div>
</td>
<td align="right" valign="bottom" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,457</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash generated by operations at the Blanket Mine in Zimbabwe increased substantially due to the increased gold production, higher gold prices and continued low cash operating costs.&#160;&#160;Additions to capital equipment primarily relate to expenditure on mine development at Blanket Mine of $988,000, $4,673,000 spent on equipment and $1,850,000 spent in Zambia on the Nama Cobalt/Copper project.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&nbsp;
  <p align="center">4</p>
<hr style="COLOR: black" noshade size="2">
  <br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The table below sets out the unaudited, consolidated statement of Caledonia&#8217;s financial position at September 30, 2011 and December 31, 2010.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" colspan="4" valign="middle" width="78%" style="BORDER-TOP: black 0.5pt solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated statements of Financial Position (unaudited)</font></div>
</td>
</tr><tr>
<td align="right" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(In thousands of Canadian dollars)&#160;&#160;&#160;&#160;&#160;&#160;As at</font></div>
</td>
<td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sept 30,</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December 31,</font></div>
</td>
</tr><tr>
<td valign="middle" width="34%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
</tr><tr>
<td valign="middle" width="34%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total non-current assets</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34,566</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28,348</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,413</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,620</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prepayments</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">87</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">93</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trade and other receivables</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,111</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,314</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash and cash equivalents</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,847</font></div>
</td>
<td align="right" valign="middle" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,145</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total assets</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50,024</font></div>
</td>
<td align="right" valign="middle" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34,520</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total non-current liabilities</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,247</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7,070</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trade and other payables</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,816</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,882</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bank overdraft</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
<td align="right" valign="middle" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">747</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total liabilities</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14,063</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11,699</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Capital and reserves</font></div>
</td>
<td valign="middle" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">35,961</font></div>
</td>
<td align="right" valign="middle" width="15%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22,821</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="34%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total equity and liabilities</font></div>
</td>
<td valign="middle" width="16%" style="border-bottom: 2px solid black"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="middle" width="13%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50,024</font></div>
</td>
<td align="right" valign="middle" width="15%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34,520</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trade and other receivables represent receivables due from Rand Refineries for gold sales and from the Zimbabwe Revenue Authority (&#8220;ZIMRA&#8221;) in respect of recoverable Value Added Tax (VAT).&#160;&#160;The increased level of receivables reflects Blanket&#8217;s increased level of production and the higher price of gold.&#160;&#160;All of the receivables due from Rand Refineries were received after the end of the Quarter.&#160;&#160;The VAT receivable is closely monitored and actively managed so as to ensure that it remains within acceptable parameters.&#160;&#160;The unsecured bank overdraft facility held by Blanket Mine in Zimbabwe was paid off.&#160;&#160;This overdraft facility was renegotiated and renewed for a further year after the end of the Quarter and is expected to be utilised from time to time.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following information is provided for each of the eight most recent quarterly periods ending on the dates specified.&#160;&#160;The figures are extracted from underlying unaudited financial statements that have been prepared using accounting policies consistent with IFRS, unless specified below.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" valign="bottom" width="16%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">($000&#8217;s-except per share amounts.)</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sept 30/11</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">June</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">30/11</font></div>
</td>
<td valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mar 31/11</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dec 31/10</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sept 30/10</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">June 30/10</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mar 31/10</font></div>
</td>
<td align="right" valign="bottom" width="8%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dec 31/09</font></div>
</td>
</tr><tr>
<td valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td colspan="7" valign="middle" width="55%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under IFRS</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
</td>
<td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Canadian GAAP</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue from operations</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16,517</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11,990</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11,226</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7,445</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,331</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,154</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,458</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,263</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Profit/ (loss) after tax from operations</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,150</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,909</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,894</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">351</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">736</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">411</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">110</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3,738)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Earnings per share &#8211; basic (cents)</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.23</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.58</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.38</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.07</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.08</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(0.75)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Earnings per share -diluted (cents)</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.13</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.54</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.35</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.07</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.08</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
</td>
<td align="right" valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No of shares basic &#8216;000</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,549</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,313</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="16%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No of shares diluted &#8216;000</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">543,089</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">542,853</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">542,709</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">503,472</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">503,472</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,169</font></div>
</td>
</tr></table>
</div>

<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td style="WIDTH: 36pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Note:</font></font></div>
</td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">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.</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&nbsp;
  <p>&nbsp;
  <p align="center">5</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The effect of the transition to IFRS and the reconciliation from Canadian GAAP to IFRS can be seen in Note 21 of the Condensed Consolidated Financial Statements.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;OPERATIONS AT THE BLANKET GOLD MINE, ZIMBABWE</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The primary objectives of the Blanket Mine for the Quarter were removing the identified mining constraints, installing the new crushing circuit and completing the ramp-up in production to the target annualised rate of 40,000 ounces of gold.&#160;&#160;These objectives were achieved in the Quarter and monthly production in each of August, September and October was at or slightly above the targeted rate.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td style="WIDTH: 36pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1</font></div>
</td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Safety, Health and Environment (&#8220;SHE&#8221;)</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The following safety statistics have been recorded for the three months and nine months to September 30, 2011 and 2010.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" colspan="6" valign="middle" width="77%" style="BORDER-TOP: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket Mine Safety Statistics</font></div>
</td>
</tr><tr>
<td colspan="2" valign="middle" width="37%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td colspan="2" valign="bottom" width="20%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the 3 months ended Sept 30</font></div>
</td>
<td colspan="2" valign="bottom" width="20%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the 9 months ended Sept 30</font></div>
</td>
</tr><tr>
<td valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lost time injury</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Occupational illness</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Medical aid</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Restricted work activity</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First aid</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15</font></div>
</td>
</tr><tr>
<td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">43</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">31</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incidents</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">42</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Near misses</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28</font></div>
</td>
</tr><tr>
<td valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td align="left" valign="middle" width="33%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Man-hours worked</font></div>
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">640,036</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">583,414</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,881,938</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,661,108</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During the Quarter, Blanket&#8217;s employees received 674 training modules either in respect of their designated role, and/or on general health, safety procedures and first aid.&#160;&#160;Blanket&#8217;s Occupational, Safety and Health (&#8220;OSH&#8221;) policy and procedures were audited by the National Social Security Authority (the &#8220;NSSA&#8221;), which was established as an initiative of the Government of Zimbabwe with the objective of introducing social protection to Zimbabwean workers and their families.&#160;&#160;The NSSA audit covered inter alia, Blanket&#8217;s OSH policies, procedures, training and management systems.&#160;&#160;As a result of this audit, Blanket was awarded the NSSA gold medal in the Mining and Quarrying sector in Matabeleland and the bronze medal across all industrial sectors in Zimbabwe.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There were no adverse environmental issues during the Quarter.&#160;&#160;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 5% higher than in the previous quarter and 26% higher than the comparable quarter of 2010 due to the increased tonnages being mined and processed.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td style="WIDTH: 36pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.2</font></div>
</td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Social Investment and support for the Zimbabwean Economy</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During the Quarter, Blanket Mine spent approximately US$26,000 on community and social investment projects (US $329,000 in the 9 months to September 30, 2011) which are not directly related to the operation of the mine or the welfare of Blanket Mine&#8217;s employees.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During the Quarter, Blanket Mine made payments to the Zimbabwean Government and its agencies totalling US$3,847,000 (US$6,875,000 in the 9 months to September 30, 2011) in respect of mining royalties, taxes and other non-taxation charges.&#160;&#160;In recognition of its exemplary compliance with local taxation regulations, <font style="DISPLAY: inline">Blanket Mine received the following Taxpayer Appreciation Awards 2011 from the Zimbabwe Revenue Authority:</font></font>
  <p>&nbsp;</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td align="right" style="WIDTH: 45pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&nbsp;&nbsp;&nbsp;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">st</font> place:&#160;Income Tax category, Region 2</font></div>
</td>
</tr></table>
</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td align="right" style="WIDTH: 45pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&nbsp;&nbsp;&nbsp;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">st</font> place: PAYE category, Region 2</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&nbsp;
  <p>&nbsp;</p>
  <p align="center">6</p>
<hr style="COLOR: black" noshade size="2">
  <p><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket Mine made payments to the Zimbabwe Electricity Supply Agency (&#8220;ZESA&#8221;) in the Quarter totalling US$1,480,000 of which US$800,000 represents the premium paid to secure a reasonably reliable electricity supply.&#160;&#160;Blanket Mine procures approximately 45% of is equipment and consumable supplies and services from within Zimbabwe and total expenditure in this regard was $5.7 million for the nine months to 30 September.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td style="WIDTH: 36pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.3</font></div>
</td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Production</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,743 ounces of gold were produced in the Quarter, an 18.4% increase on the 8,226 ounces produced during the 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font> quarter of 2011 and a 97.4% increase on gold produced during the 3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">rd</font> quarter of 2010.&#160;&#160;Tonnes milled, average grades, recoveries and gold produced during October 2011, the Quarter and the preceding 4 quarters are shown in the table below.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" colspan="7" valign="top" width="80%" style="BORDER-TOP: #000000 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket Mine Production Statistics</font></div>
</td>
</tr><tr>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year</font></div>
</td>
<td valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tonnes Milled</font></div>
</td>
<td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Head (Feed)&#160;&#160;Grade(g/t)</font></div>
</td>
<td valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Recovery</font></div>
</td>
<td valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Produced</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ounces)</font></div>
</td>
<td align="left" valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average sales&#160;&#160;price per ounce of gold sold (US$/oz)</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">October</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">32,200</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.71</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">93.3%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,585</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,680<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">*</font></font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Third quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">85,442</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.81</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">93.1%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,743</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,740</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">60,913</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.52</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">92.9%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,226</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,512</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">61,437</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.02</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">92.2%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7,322</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,397</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fourth quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">51,313</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.15</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">91.1%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,235</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,384</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Third quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">41,594</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.04</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">91.3%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,935</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,241</font></div>
</td>
</tr><tr>
<td align="left" valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second quarter</font></div>
</td>
<td valign="middle" width="8%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">30,788</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.79</font></div>
</td>
<td valign="middle" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">90.8%</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,408</font></div>
</td>
<td valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,192</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">* Estimate</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold production during the Quarter and in October 2011was higher than in previous periods due to the completion of the gold production ramp-up to the targeted annualised rate of 40,000 ounces per annum.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The tonnes mined in the Quarter were approximately 5% lower than targeted due to the constraints experienced mainly in July on the movement of materials underground, particularly on 22 Level (750 m below surface datum). These constraints, which are described in the Q2 MD&amp;A, were addressed and largely eliminated during the Quarter by improving the condition of underground haulages, improvement of underground equipment maintenance and the completion of the ore pass and ventilation raise.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The gold grade of the mined ore in the Quarter was 3.81 g/t which is slightly lower than in previous quarters, and reflects the normalisation of the mine plan.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the metallurgical plant the new gyratory crushers and triple-deck screen which were installed earlier in the year continued to operate well and are capable of providing adequate sized crushed ore for the mill feed well in excess of the targeted 1,000 tonnes per day (tpd). The improved product ore size delivered to the mills also contributed to an improvement in mill gold recovery circuit.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Metallurgical gold recoveries increased to 93.1%, which is higher than the planned recovery of 91% and slightly higher than the recovery of 92.9% which was achieved in the previous quarter, despite the significant increase in tonnage throughput over previous quarters.&#160;&#160;The higher overall gold recovery reflects the improved consistency of the input material to the CIL circuit, which was due to the major improvements in the crushing and milling circuit.&#160;&#160;Higher gold recoveries were also a result of recent investment in the CIL plant, including new agitator gearboxes and mixers and the installation of an automated cyanide-reagent dosing system.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&nbsp;
  <p>&nbsp;</p>
  &nbsp;
  <p align="center">7</p>
<hr style="COLOR: black" noshade size="2">
  <p><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Power availability in the Quarter remained reasonably stable although as anticipated, ZESA was unable to maintain un-interrupted supply.&#160;&#160;The standby generators operated as designed for 33 hours during the Quarter and allowed full operations to continue during the interruptions to normal electricity supply.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.4&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Operating costs</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The operating cash costs per ounce of gold produced during the Quarter and the preceding 4 quarters are set out in the table below.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="75%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td align="left" colspan="6" valign="top" width="79%" style="border-top: 0.5pt solid black; border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket Mine Cash Operating Costs per Ounce of Gold Produced &#8211; All in US$&#8217;s</font></div>
</td>
</tr><tr>
<td valign="top" width="27%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Q3</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Q4</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Q1</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Q2</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
<td valign="bottom" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Q3</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Labour</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">232</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">211</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">208</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">175</font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">157</font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consumables</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">249</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">329</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">247</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">212</font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">234</font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Electricity (incl. diesel)</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">105</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">167</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">145</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">154</font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">155</font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other admin costs</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">65</font></font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">84</font></font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">48</font></font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">44</font></font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">37</font></font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total US$ cost/oz gold produced</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">651</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">791</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">648</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">585</font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">583</font></div>
</td>
</tr><tr>
<td valign="bottom" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Ounces produced</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,935</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,235</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7322</font></div>
</td>
<td valign="middle" width="10%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8,226</font></div>
</td>
<td valign="top" width="10%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,743</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The average cost per ounce of gold produced decreased from $585/oz in the 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font> quarter of 2011 to $583/oz.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The labour component of cash costs continued to fall due to the increased gold production which outweighed the effect of the arbitrated increase in 2011 pay rates.&#160;&#160;The appeal by the Chamber of Mines against the arbitration increase is still outstanding and there may be a further significant increase in labour rates for 2011.&#160;&#160;Blanket has not significantly increased its employee levels, which remain at approximately 810.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consumable materials now represent the largest component of total cash costs.&#160;&#160;The consumable materials cost per tonne processed decreased by 6.9% from $28.58/t in the 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font> quarter of 2011 to $26.62 due to improved operating efficiency and a devaluation of the South African Rand against the US Dollar towards the end of the Quarter.&#160;&#160;The consumable cost per ounce of gold produced increased by 10% from $212/oz to $234/oz and reflects the effect of the lower head grade.&#160;&#160;Any further weakening of the South African Rand against the US Dollar for a sustained period of time will further assist in controlling the dollar-denominated cost of consumables imported from South Africa.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The electricity component of cash costs remained little changed at $155/oz.&#160;&#160;The 3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">rd</font> quarter of 2011 is the first full quarter to reflect the increase in the price of electricity supplied by ZESA which was implemented in May 2011 and this increase outweighed the beneficial effect of the electricity cost being spread over increased production.&#160;&#160;Electricity supplied by ZESA, although expensive, is still considerably cheaper than the cost of electricity generated by the mine&#8217;s standby generators.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.5&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Underground</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The AR South ore body above 18 Level (630m below surface datum) remains the most productive mining area and provided 35% of the total ore mined during the Quarter.&#160;&#160;&#160;Production from this area benefitted from the completion of the new ore pass which meant that ore could now be moved from the draw points on 18 Level to the 18 Level grizzlies and dropped directly via the new ore pass onto the 22 Level grizzlies feeding the ore bins above the new crushing station and automated skip loading system.</font></div>

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  <p>&nbsp;
  <p align="center">8</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;</p>
  <p>&nbsp;
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Production from AR South between 22 Level and 18 Level provided approximately 16% of average daily production in the Quarter.&#160;&#160;During the Quarter a &#8220;long-hole drilling&#8221; mining method was successfully introduced to this area and has resulted in increased production.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The balance of mining production came from the AR Main, Lima and Eroica ore bodies.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The main development activities include:</font></div>

<div>
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<td align="right" style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Extension of the 14 Level haulage (510m below surface datum) between the Eroica and Lima ore bodies to provide access to resources at Lima between 510m and 230m;</font></div>
</td>
</tr></table>
</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td align="right" style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Development at Eroica&#160;&#160;to open the resource block between 630m and 510m;</font></div>
</td>
</tr></table>
</div>

<div>
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<tr valign="top">
<td align="right" style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Development at AR Main to provide access between 630m and 510m; and</font></div>
</td>
</tr></table>
</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td align="right" style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
</td>
<td>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Strike development at AR Main on 750m.</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management is confident that the development work outlined above and the recent and continuing improvements to the underground haulages and other infrastructure will allow mine production to be sustained at the target rate of 1,000 tpd.</font></div>

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</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.6&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Capital Projects</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Raise Boring</font></font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The raise boring of a 120 meter long and 1.5 meter diameter ore pass from 18 Level to 22 Level was finished in late May and all of the related works were completed at the end of July.&#160;&#160;This new ore pass, which was fully commissioned at the end of July, has vastly improved the efficiency of delivering ore mined on 18 Level to the new underground crushing and hoist loading station and has contributed to the significant increase in production in the Quarter.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">750m AR &#8211; Lima Haulage</font></font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Development work has recommenced on the 22 Level Haulage Extension Project which will link the Blanket and Lima ore bodies on 22 Level and will also allow for the further down-dip exploration of the Blanket Mine&#8217;s known ore bodies.&#160;&#160;Crosscuts (side tunnels) will be mined from the 18 and 22 Level Haulages to provide the required drilling platforms from which the ore bodies below the 22 Level can be drilled for resource evaluation purposes.&#160;&#160;If this exploration is successful, this haulage will also allow for the rapid commencement of mining on any new mining areas defined.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included in the 22 Level Haulage Extension Project scope of work was a 230 meter long ventilation raise between 14 and 22 Levels to provide sufficient ventilation on 22 Level to allow double-shift blasting and thereby accelerate the daily rate of development advance. This ventilation raise was completed during the Quarter.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It is planned that all of the work on the 22 Level Haulage Extension Project and its cross-cuts will be carried out simultaneously with normal mining production with its completion anticipated for the end of 2012.&#160;&#160;It is planned that the underground exploration drilling of the ore zones below 750m Level, which will be undertaken from the completed crosscuts, will continue into 2013.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The budgeted cost of the 22 Level Haulage Extension Project utilizing internal resources is about US$900 per meter advanced and equipped. The estimated capital cost for the planned 2,400 meters of development, including the raise boring of the recently completed ventilation raise will be approximately US$2.4 million, which will be funded from internal cash flows.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.7&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Mineral Reserves and Resources</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An independent mineral reserve and resource report for the Blanket Mine calculated as at 31<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">st</font> December 2010 was prepared by the MSA Group, as the independent qualified person, in compliance with Canadian National Securities Instrument 43-101, and was published during the 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font> quarter of 2011.&#160;&#160;Further NI 43-101 reports are expected to be issued from time to time in order to disclose the results of on-going operations and exploration work.</font>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  &nbsp;
  <p align="center">9</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="72%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td colspan="4" valign="middle" width="79%" style="border-top: 0.5pt solid black; border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">MINERAL RESERVES as at December 31, 2010 </font>(based on a Gold Price of US$ 1,100/oz)</font></div>
</td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Classification</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tonnes</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Grade (Au g/t)</font></div>
</td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Content (oz)</font></div>
</td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Proven Ore</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total Proven Ore including Pillars*</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,326,100</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.02</font></div>
</td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">171,400</font></div>
</td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Probable Ore</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating and Development Areas</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,513,700</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.66</font></div>
</td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">295,800</font></div>
</td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total Proven + Probable Ore</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,839,800</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.78</font></div>
</td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">467,200</font></div>
</td>
</tr><tr>
<td colspan="4" valign="middle" width="79%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">MINERAL RESOURCES </font>(based on a Gold Price of US$ 1,100/oz)</font></div>
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<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Classification</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tonnes</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Grade (Au g/t)</font></div>
</td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold Content (oz)</font></div>
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</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicated</font></div>
</td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;510,000</font></div>
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<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.79</font></div>
</td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">62,100</font></div>
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<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="middle" width="22%" style="border-bottom: 2px solid black"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
</tr><tr>
<td valign="middle" width="26%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inferred</font></div>
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<td valign="middle" width="18%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2,408,200</font></div>
</td>
<td valign="middle" width="13%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.01</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tonnages and ounces are rounded to the nearest 100</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Note *&#160;&#160;&#160;</font>Pillar tonnages are discounted by 50%</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr. Mike Robertson, Pr. Sci. Nat., and&#160; Mr. Bruno Bvirakare, Pr. Sci. Nat., both consultants with The MSA Group are the &#8220;Independent Qualified Persons&#8221; for Blanket&#8217;s reserves and resources as required by National Instrument 43-101 of the Canadian Securities Administrators.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.8&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Indigenization</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2008 the Zimbabwean parliament passed the Indigenization and Economic Empowerment Act 2007 (&#8220;Act&#8221;) that stipulated that 51% ownership of all companies had to reside in the hands of Indigenous Zimbabwean citizens.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In a joint statement issued on August 23, 2011 by Caledonia and the Ministry of Youth Development, Indigenization and Empowerment (the &#8220;Ministry&#8221;) it was stated that Caledonia and the Ministry had&#160;&#160;agreed on a process that will result in the production of a revised Indigenization Implementation Plan for Blanket Mine that is compliant with the Act.&#160;&#160;The plan will be based on an independently prepared valuation of Blanket Mine and other agreed criteria.&#160;&#160;Blanket Mine submitted the revised Indigenization Implementation Plan to the Zimbabwe Government on October 12, 2011, which the Zimbabwe Government is reviewing.&#160;&#160;The Company has received a written response from the Government requesting further information and clarification of the revised plan to which the Company is currently preparing a response.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indigenization: Indigenization legislation continues to be high on the Government&#8217;s political agenda.&#160;&#160;&#160;Uncertainty regarding Blanket&#8217;s final obligations in respect of the implementation of indigenization and the general climate of uncertainty that indigenization policies has created include: investor uncertainty; uncertainty as to the level of any indigenization shareholding; uncertainty as to the terms on which any indigenization may be concluded; the identity of indigenization partners; uncertainty as to any future revenue obligations that may be required to offset a requirement for direct equity participation by indigenous parties and uncertainty as to any potential taxation implications of any indigenization transaction.</font></div>
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  &nbsp;
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Illegal mining: During the Quarter there has been an increase in illegal mining activities at surface on properties controlled by Blanket.&#160;&#160;This gives rise to increased security costs and an increased risk of theft and damage to equipment.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Succession planning:&#160;&#160;the limited availability of mining and other technical skills and experience in Zimbabwe and the difficulty of attracting appropriately skilled employees to Zimbabwe creates a risk that appropriate skills may not be available if, for whatever reason, the current skills base at the Blanket Mine is depleted.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regulatory uncertainty:&#160;&#160;Blankets existing licences and permits are in good standing.&#160;&#160;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.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reserve replacement: as is normal, 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.&#160;&#160;Blanket has embarked on development and exploration programmes as set out in sections 5.7 (Lima Haulage) and 6.2.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Increased production: Blanket&#8217;s existing reserves and resources could support a further increase in production provided the necessary investments in the resource development are able to be made.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Surplus capacity: The mine currently has a daily average mining capacity of over 1,000 tonnes per day; the crushing and milling plant has the capacity to process approximately 1,800 tonnes of ore per day and the CIL plant has capacity of 3,800 tonnes per day. Any increased production arising from increased mining throughput could therefore be achieved with little or no capital investment and incurring only consumable costs to treat any increased throughput.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exploration success: Blanket&#8217;s main exploration objectives are the 22 Level Haulage Project and the related exploration of the down-dip extensions of the known ore bodies and the GG and Mascot satellite exploration projects.&#160;&#160;Depending on future exploration success, Blanket may be able to increase its production levels.</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost reductions: Blanket has several opportunities to further reduce its current operating costs:</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">if mining can supply additional ore from either or both the Blanket mine underground and the satellite exploration properties, this could be processed using the surplus capacity noted above, with a resultant reduction in unit costs; and</font></font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject to a sustainable and satisfactory investment climate prevailing in Zimbabwe after an acceptable clarification of the Government&#8217;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.</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Blanket has achieved its annualized targeted production rate of 40,000 ounces per annum, which is expected to be sustained as a result of the recent improvements in the underground handling systems and ongoing mine development.&#160;&#160;Routine maintenance work on the No. 4 Shaft which is scheduled for part of the first half of 2012 may have a temporary and minor effect on production during that period.&#160;&#160;However, this work will allow for increased hoisting speeds which will be required to allow increased future production if sufficient ore can be made available from the Blanket underground.</font></div>

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</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The surplus capacity of the Blanket crushing and milling plant enables it to immediately treat additional feed material from the Blanket underground and from the GG and Mascot Project Area mines if the planned exploration/development work is successful.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Base Metals: Nama Cobalt/Copper Project &#8211; Zambia</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Three main styles of cobalt (&#8220;Co&#8221;) mineralization occur in the Nama area:</font></div>

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<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a)&#160;&#160;</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;A-type&#8221; cobalt oxide mineralization;</font></div>
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<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b)&#160;&#160;</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;D-type&#8217; iron oxide bodies which are mostly enriched in Co; and</font></div>
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<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c)&#160;&#160;</font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">copper (&#8220;Cu&#8221;) dominated Ore Shale hosted Cu-Co mineralization, which is more common elsewhere in the Copperbelt and is being exploited by neighbouring mines to the east and south of the Nama Licence Area.</font></div>
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</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Recent exploration and development activities at Nama have defined two resource targets (being &#8220;Konkola East&#8221; and &#8220;Kafwira&#8221;) characterized as belonging to the Ore Shale-hosted Cu-Co style of mineralization.&#160;&#160;The Konkola East target is currently being investigated with diamond drilling to confirm the existence of Copperbelt stratigraphy. The drilling of four holes at the Konkola East target area commenced in mid-March 2011.&#160;&#160;&#160;At the end of October the first three holes had been completed and the fourth hole was in progress and is expected to be completed by the end of November. The drill cores are logged and assayed as they become available.&#160;&#160;&#160;The conclusions arising from this initial drilling program will be released once all the results have been obtained and evaluated.&#160;&#160;Thereafter, depending on the results of this initial drilling program on Konkola East and seasonal climatic conditions, drilling may continue at Konkola East and/or at the Kafwira area.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gold: Zimbabwe</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Corporation&#8217;s primary exploration activities in Zimbabwe are at the Blanket Mine, which are discussed in section 5.6 (Lima Haulage)&#160;&#160;Other than at Blanket Mine itself, Blanket&#8217;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.&#160;&#160;Blanket&#8217;s main exploration efforts on its satellite properties are focused at this stage on the GG prospect and the Mascot Project Area, which are believed to have the greatest potential of success and which are both within an economic trucking distance of the Blanket plant.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Small drilling programs were carried out at GG over the past 8 years.&#160;&#160;Thirteen diamond-cored holes were drilled amounting to 2,336 meters of drilling.&#160;&#160;<font style="DISPLAY: inline">Two zones of potentially economic gold mineralization have been established down to a depth of approximately 200 m.&#160;&#160;A prospect shaft was sunk down to the first level as a first step to exposing the mineralization.&#160;&#160;However, work was suspended due to the lack of a connection to the electricity grid.&#160;&#160;Blanket has now provided financial assistance to ZESA so that it can fund the construction of this connection. Work on this connection has commenced and ZESA expects to complete the GG sub-station in early 2012.&#160;&#160;Thereafter, the deepening of the existing prospect shaft can continue and underground development on the first and second levels will commence to expose the extent of the mineralization and to facilitate its evaluation, sampling and mine planning.&#160;&#160;Depending on the successful outcome of exploration work, it is intended that economic ore production would be trucked approximately 7 km to the Blanket plant for processing.</font></font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&nbsp;
  <p>&nbsp;</p>
  &nbsp;
  <p align="center">12</p>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Mascot Project Area comprises three existing shafts (Mascot, Penzance and Eagle Vulture) which extend down to various depths of up to 450 meters. These shafts and other infrastructure are in need of extensive rehabilitation.&#160;&#160;Production at each of these shafts ceased many decades ago due to a combination of political difficulties and the limitations of the technology that was then available.&#160;&#160;Blanket Mine Management believes that the application of modern exploration and processing techniques may allow some or all of these shafts to operate profitably for a period of time, and not just at the prevailing high gold price.&#160;&#160;Priority has been given to the rehabilitation and installation of infrastructure at Mascot and Eagle Vulture shafts.&#160;&#160;However, planned work at Mascot has been <font style="DISPLAY: inline">suspended due to the lack of a connection to the electricity grid.</font>&#160;&#160;Work on this connection has now commenced and ZESA expects to complete this work in early 2012.&#160;&#160;Depending on the outcome of exploration work, it is intended that production would be trucked a distance of approximately 40 km to the Blanket Mine plant for processing.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><br>
&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Blanket Mine metallurgical plant has existing surplus treatment capacity and could immediately handle up to an additional 800 tonnes per day of ore with no requirement for further capital investment or increased overheads</font></div>

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</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The rate of investment at GG and the Mascot Project Area has been slowed pending clarification of the intentions of the government of Zimbabwe regarding Blanket Mine&#8217;s indigenization obligations and concluding an agreement with ZESA regarding the equipment costs and the time required to construct the power lines.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The exploration work at Blanket Mine as set out in section 5.6 continues despite the current uncertainty regarding the outcome of indigenization.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PGE/Ni/Cu: Rooipoort and Mapochsgronde (including Grasvally) - South Africa</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;The prospecting rights granted to the Corporation to prospect for Platinum Group Elements (PGE&#8217;s) on the major portions of the Mapochsgronde tribal trust land are currently in the process of registration.&#160;&#160;A further application has been made for an adjoining property to the north of the rights granted above.&#160;&#160;The Corporation awaits the grant of the prospecting right.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Activities at Rooipoort/Mapochs properties were suspended during 2010 and have continued to be suspended throughout 2011 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&#8217;s local subsidiaries.&#160;&#160;Without secure title transfers the Company did not wish to expend funds on these properties until the tenure matter has been satisfactorily resolved.</font></div>

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&#160;</div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INVESTING</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During the Quarter Caledonia invested $2,340,000 ($1,136,000 &#8211; 2010) in capital assets and mineral properties.&#160;&#160;Of the amount invested $1,072,000 ($162,000 &#8211; 2010) was spent at Nama and $1,268,000 ($640,000 &#8211; 2010) at Blanket.&#160;&#160;Foreign Exchange revaluation difference amounted to $1,491,000 in the 3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">rd</font> quarter of 2011 ($504,000 &#8211; 2010).</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FINANCING</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Caledonia financed all its operations using funds on hand and those generated by its operations.&#160;&#160;No equity fund raising is currently planned.&#160;&#160;Blanket&#8217;s unsecured US$2.5 million loan facility in Zimbabwe has been renewed for a further 12 months at <font style="DISPLAY: inline">an interest at 8% above the 30 day LIBOR rate. It is unsecured, is renewable and repayable on demand.</font> At the end of the Quarter, this facility was unused.</font></div>

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  <p align="center">13</p>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LIQUIDITY AND CAPITAL RESOURCES</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30, 2011, Caledonia had a working capital surplus of $9,642,000 ($4,268,000 &#8211; June 2011).&#160;&#160;As of September 30, 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 $2,140,000 ($1,694,000 &#8211; 2010).</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.&#160;&#160;&#160;&#160;&#160;&#160;OFF-BALANCE SHEET ARRANGEMENTS</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There are no off balance sheet arrangements.</font></div>

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<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.&#160;&#160;&#160;&#160;&#160;&#160;&#160;RELATED PARTY TRANSACTIONS</font></div>
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<div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Caledonia had the following related party transactions:</font></div>
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<td valign="top" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td colspan="3" valign="top" width="21%" style="border-top: 0.5pt solid black; border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nine months ended</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September 30</font></div>
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<td valign="top" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid">
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  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
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<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid" align="right">
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  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
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<td valign="top" width="7%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2009</font></div>
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<td valign="top" width="52%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160; </font></td>
<td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$&#8217;000</font></div>
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<td align="right" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$&#8217;000</font></div>
</td>
<td align="right" valign="bottom" width="7%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$&#8217;000</font></div>
</td>
</tr><tr>
<td valign="top" width="52%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management fees, bonuses and expense allowances paid or accrued to a company which provides the services of the&#160;&#160;Corporation&#8217;s President</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">454</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">416</font></div>
</td>
<td valign="top" width="7%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">338</font></div>
</td>
</tr><tr>
<td valign="top" width="52%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rent paid to a Company owned by members of the President&#8217;s family</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">29</font></div>
</td>
<td valign="top" width="7%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36</font></div>
</td>
</tr><tr>
<td valign="top" width="52%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legal fees paid to a law firm where a Director is a partner</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">51</font></div>
</td>
<td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid" align="right">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22</font></div>
</td>
<td valign="top" width="7%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
  <p align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">46</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During June 2011 Epicure subscribed for a private placement for 380,000 common shares for a cash consideration of $34,000.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.&#160;&#160;&#160;&#160;&#160;&#160;CRITICAL ACCOUNTING POLICIES</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The major areas where accounting estimates are made are asset impairment, asset retirement obligations and future tax liabilities.&#160;&#160;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.&#160;&#160;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.&#160;&#160;The asset retirement obligations estimation for Blanket was recalculated before December 31, 2010.&#160;&#160;The estimations are accreted annually at rates between 1.7% and 5% and thus any change in circumstances is considered unlikely to have a material impact on the results of Caledonia or its operations.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There have been no accounting policy changes adopted since January 1, 2010, except for IFRS.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.1. Adoption of Accounting Standards and Pronouncements under IFRS</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#8217;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 (&#8220;GAAP&#8221;) to IFRS as set out in Note 21.</font>
  <p>&nbsp;</p>
  &nbsp;
  <p align="center">14</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The increase in the deemed cost for Blanket Mine also resulted in an annual increase in the amortization charge of approximately $1.5 million.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;SECURITIES OUTSTANDING</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -2.3pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As at November 7, 2011 the following securities were outstanding:</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;500,549,280 common shares issued;</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Options and warrants as follows:</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table cellpadding="0" cellspacing="0" width="62%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr>
<td valign="middle" width="12%" style="BORDER-TOP: #000000 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number</font></div>
</td>
<td valign="middle" width="27%" style="BORDER-TOP: #000000 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
</td>
<td valign="middle" width="12%" style="BORDER-TOP: #000000 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exercise Price</font></div>
</td>
<td valign="middle" width="24%" style="border-top: 0.5pt solid #000000; border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expiry Date</font></div>
</td>
</tr><tr>
<td align="center" valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">26,080,000</font></div>
</td>
<td align="right" valign="middle" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common share purchase options</font></div>
</td>
<td align="right" valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$0.07</font></div>
</td>
<td align="right" valign="middle" width="24%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Various until May 11, 2016</font></div>
</td>
</tr><tr>
<td align="center" valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16,460,000</font></div>
</td>
<td align="right" valign="middle" width="27%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common share purchase options</font></div>
</td>
<td align="right" valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$0.13</font></div>
</td>
<td align="right" valign="middle" width="24%" style="border-bottom: 2px solid black">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right">
  <p align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">January 31, 2016</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As Caledonia&#8217;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 7,514,928 shares.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;CONTROLS</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Corporation's internal controls over financial reporting (&#8220;ICFR&#8221;) are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because of its inherent limitations, the Corporation's ICFR may not prevent or detect any or all misstatements.&#160;&#160;Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Corporation previously engaged independent consultants in 2010 to carry out an assessment of the effectiveness of its internal controls over financial reporting using an internationally acceptable framework.&#160;&#160;Prior to this engagement, Management concluded that the following disclosable material weaknesses existed and still exist as at September 30, 2011.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
  <p>&nbsp;
  <p align="center">15</p>
<hr style="COLOR: black" noshade size="2">
  <p>&nbsp;
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Segregation of duties</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to the end of 2009, due to limited personnel resources at the Corporation&#8217;s Africa office in Johannesburg, adequate segregation of duties within the accounting group was not achieved.&#160;&#160;This created a risk that inaccurate entries could be made and not identified or corrected on a timely basis.&#160;&#160;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.&#160;&#160;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.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a consequence of the above, an additional accounting member of staff was recruited in November 2009 to the Corporation&#8217;s Africa office in Johannesburg. This has improved but not entirely eliminated the deficiency in the segregation of duties and lightened the work load of existing staff and improved control of the accounting function.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management has concluded, and the Audit Committee has agreed that taking into account the present stage of the Corporation&#8217;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.&#160;&#160;There have been no changes in the Corporation&#8217;s&#160;&#160;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.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;The Corporation&#8217;s Directors and Management, and the Disclosure Committee, are making all reasonable efforts to ensure that the Corporation&#8217;s disclosures are made in full compliance with all of the applicable rules, regulations and requirements.&#160;&#160;All reasonable efforts are also being made to ensure that the Corporation&#8217;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&#8217;s Certifying Officers by others within those entities.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: arial">
<tr valign="top">
<td style="WIDTH: 45pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.</font></div>
</td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">QUALIFIED PERSON</font></div>
</td>
</tr></table>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr. Trevor Pearton, <font style="DISPLAY: inline; COLOR: #333333">BSc Eng. (Mining Geology), PhD (Geology) FGSSA,</font> VP Exploration is the Corporation&#8217;s qualified person as defined by NI 43-101.&#160;&#160;Dr. Pearton is responsible for the technical information provided on this MD&amp;A except where otherwise stated.</font></div>

<br>
<div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
<div id="FTR">
<div style="WIDTH: 100%" align="left">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
</div>

<div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160; </font></div>
</div>

<div id="PN" style="PAGE-BREAK-AFTER: always; WIDTH: 100%">
<div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160; </font></div>

<div style="WIDTH: 100%; TEXT-ALIGN: center">
&nbsp;
<p align="center">16</p>
<hr style="COLOR: black" noshade size="2">
</div>
</div>

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<DOCUMENT>
<TYPE>EX-99.3
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<FILENAME>ceocert.htm
<DESCRIPTION>FORM 52-109F2 - CERTIFICATION OF INTERIM FILINGS - CHIEF EXECUTIVE OFFICER
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     <TITLE>MD - Filed by Filing Services Canada Inc. (403) 717-3898</TITLE>
</HEAD>
<BODY STYLE="font: 11pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Form 52-109F2</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Certification of interim filings - full
certificate</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 85%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="4" STYLE="text-align: justify">I, <B>Stefan Hayden, </B>Chief Executive Officer of <B>Caledonia Mining Corporation,</B> certify the following:</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>1.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Review: I have reviewed the interim financial report and interim MD&amp;A (together, the &ldquo;interim filings&rdquo;) of Caledonia Mining Corporation (the &ldquo;issuer&rdquo;) for the interim period ended September 30, 2011.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>2.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">No misrepresentations: 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.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Responsibility: The issuer&rsquo;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 Certification of Disclosure in Issuers&rsquo; Annual and Interim Filings, for the issuer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Design:&nbsp; Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer&rsquo;s other certifying officer and I have, as at the end of the period covered by the interim filings</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(a)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">designed DC&amp;P, or caused it to be designed under our supervision, to provide reasonable assurance that</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>(i)</TD>
    <TD STYLE="text-align: justify">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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>(ii)</TD>
    <TD STYLE="text-align: justify">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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(b)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">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&rsquo;s GAAP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.1</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Control framework:&nbsp; The control framework the issuer&rsquo;s other certifying officer and I used to design the issuer&rsquo;s ICFR is a framework we have devised in-house which we consider is adequate and appropriate to the issuer&rsquo;s situation and organization.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.2</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">ICFR &ndash; material weakness relating to design: The issuer has disclosed in its interim MD&amp;A&nbsp; each material weakness relating to design existing at the end of the interim period</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(a)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">a description of the material weakness;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(b)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">the impact of the material weakness on the issuer&rsquo;s financial reporting and its ICFR;&nbsp; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(c)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">the issuer&rsquo;s current plans, if any, or any actions already undertaken, for remediating the material weakness.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.3</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: justify">N/A</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>6.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Reporting changes in ICFR: The issuer has disclosed in its interim MD&amp;A&nbsp; any change in the issuer&rsquo;s ICFR that occurred during the period beginning on July 1, 2011 and ended on September 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer&rsquo;s ICFR.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Date: November 10, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&ldquo;Stefan Hayden&rdquo; </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">______________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Stefan Hayden,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Chief Executive Officer</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>5
<FILENAME>cfocert.htm
<DESCRIPTION>FORM 52-109F2 - CERTIFICATION OF INTERIM FILINGS - CHIEF FINANCIAL OFFICER
<TEXT>
<HTML>
<HEAD>
     <TITLE>MD - Filed by Filing Services Canada Inc. (403) 717-3898</TITLE>
</HEAD>
<BODY STYLE="font: 11pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Form 52-109F2</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Certification of interim filings - full
certificate</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">I, <B>Steven Curtis, </B>Chief Financial Officer of <B>Caledonia
Mining Corporation,</B> certify the following:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD>1.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Review: I have reviewed the interim financial report and interim MD&amp;A (together, the &ldquo;interim filings&rdquo;) of Caledonia Mining Corporation (the &ldquo;issuer&rdquo;) for the interim period ended September 30, 2011.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 85%; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>2.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">No misrepresentations: 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.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Responsibility: The issuer&rsquo;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 Certification of Disclosure in Issuers&rsquo; Annual and Interim Filings, for the issuer.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Design:&nbsp; Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer&rsquo;s other certifying officer and I have, as at the end of the period covered by the interim filings</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(a)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">designed DC&amp;P, or caused it to be designed under our supervision, to provide reasonable assurance that</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>(i)</TD>
    <TD STYLE="text-align: justify">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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>(ii)</TD>
    <TD STYLE="text-align: justify">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</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(b)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">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&rsquo;s GAAP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.1</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Control framework:&nbsp; The control framework the issuer&rsquo;s other certifying officer and I used to design the issuer&rsquo;s ICFR is a framework we have devised in-house which we consider is adequate and appropriate to the issuer&rsquo;s situation and organization.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.2</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">ICFR &ndash; material weakness relating to design: The issuer has disclosed in its interim MD&amp;A&nbsp; each material weakness relating to design existing at the end of the interim period</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(a)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">a description of the material weakness;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(b)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">the impact of the material weakness on the issuer&rsquo;s financial reporting and its ICFR;&nbsp; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(c)</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">the issuer&rsquo;s current plans, if any, or any actions already undertaken, for remediating the material weakness.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.3</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: justify">N/A</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>6.</TD>
    <TD COLSPAN="3" STYLE="font-style: italic; font-weight: bold; text-align: justify">Reporting changes in ICFR: The issuer has disclosed in its interim MD&amp;A&nbsp; any change in the issuer&rsquo;s ICFR that occurred during the period beginning on July 1, 2011 and ended on September 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer&rsquo;s ICFR.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Date: November 10, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&ldquo;Steven Curtis&rdquo;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">______________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Steven Curtis,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Chief Financial Officer</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>6
<FILENAME>newsrelease.htm
<DESCRIPTION>NEWS RELEASE DATED NOVEMBER 10, 2011
<TEXT>
<HTML>
<HEAD>
     <TITLE>MD - Filed by Filing Services Canada Inc. (403) 717-3898</TITLE>
</HEAD>
<BODY STYLE="font: 11pt Times New Roman, Times, Serif">

<P STYLE="margin: 0" align="center"><img src="img001.jpg" width="813" height="130"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 12pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 85%; font-family: Arial, Helvetica, Sans-Serif; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Caledonia
    Mining 2011 Third Quarter Results</B></FONT></TD>
    <TD ROWSPAN="27" STYLE="width: 11%; font-family: Arial, Helvetica, Sans-Serif; font-weight: bold; text-align: center"><P STYLE="margin: 0"></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: bold 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Toronto,
    Ontario &ndash; November 10, 2011: Caledonia Mining Corporation (&ldquo;Caledonia&rdquo;) (TSX: CAL, OTCQX: CALVF, AIM: CMCL)
    is pleased to announce its Third Quarter 2011 (the &ldquo;Quarter&rdquo;) operating and financial results, which are reported
    below in Canadian dollars unless otherwise indicated.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: bold 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Operational
    Highlights</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&bull;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Gold
    produced by the Blanket Mine in Zimbabwe in the Quarter increased by 18% to 9,743 ounces from the 8,226 ounces produced in
    the 2<SUP>nd</SUP> quarter 2011 (the &ldquo;preceding quarter&rdquo;) and was 97% higher than the 4,935 ounces of gold produced
    in 3<SUP>rd</SUP> quarter 2010 (the &ldquo;comparative quarter&rdquo;). This is the sixth consecutive quarterly increase in
    gold production.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&bull;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Average
    gold recovery increased to 93.1% from 92.9% in the preceding quarter and from 91.3% in the comparative quarter reflecting
    the benefits from investment in improvements to the milling and Carbon-in-Leach (&ldquo;CIL&rdquo;) circuits.&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&bull;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    operating costs at the Blanket Mine in the Quarter were US$583 per ounce of gold produced compared to US$585 in the preceding
    quarter and US$651 in the comparative quarter.&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: bold 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Financial
    Highlights</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Gross
    Profit (i.e. after depreciation and amortization but before administrative expenses) was $9,364,000 compared to $1,607,000
    in the comparative quarter.&nbsp; This is almost a six-fold increase on the comparative quarter and is the seventh consecutive
    quarterly increase in gross profit.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The
    average price received per ounce of gold sold during the Quarter was US$1,737 compared to US$1,241 in the comparative quarter.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Caledonia
    recorded net profit before tax of $8,442,000 compared to $742,000 in the comparative quarter which represents an 11-fold increase.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">At
    September 30, 2011 the Corporation had no debt except current trade payables (September 30, 2010 $1,680,000) and had cash
    and cash equivalents of $6,847,000 (net debt as at September 30, 2010 $226,000).</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: bold 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Other
    Highlights</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Blanket
    made payments in respect of direct and indirect taxes, royalties, licence fees, levies and other payments to the Government
    of Zimbabwe during the Quarter totalling US$3,847,000 (US$3,307,000 &ndash; Q2 2011).</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Blanket
    Mine&rsquo;s Occupational, Safety and Health policies and procedures were audited by the National Social Security Authority
    (the &ldquo;NSSA&rdquo;) as a result of which Blanket was awarded the NSSA gold medal in the Mining and Quarrying sector in
    Matabeleland and the bronze medal across all industrial sectors in Zimbabwe.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 11pt Arial, Helvetica, Sans-Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Work
    on the 4-hole drilling program at the Konkola West area of the Nama base metals project in Zambia has continued. At the end
    of October, 3 holes had been completed and the drill rig had been moved to the fourth hole. The conclusions from this program
    will be provided when Management has received and evaluated all of the results.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>


<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>




<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>


<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><BR>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 95%; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Commenting
    on these results, Stefan Hayden, President and Chief Executive Officer said:&nbsp; &ldquo;Caledonia has had, as forecast,
    a very strong performance for the third quarter and profits for the third quarter of 2011 exceeded profits for the entire
    first half of 2011. &nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The increase in profit
    was primarily achieved due to the 18% increase in gold production and the 15% increase in the average price of gold sold compared
    to the second quarter of 2011.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The Blanket Mine in
    Zimbabwe achieved its target annualised production level of 40,000 ounces of gold for the last two months of the third quarter
    and this level of production was sustained in October.&nbsp; The increase in production was achieved following the completion
    of work to address the remaining constraints to underground production and included the commissioning of a new ore pass at
    the end of July, which substantially improved the efficiency of underground operations and reduced ore handling costs. We
    expect that Blanket Mine will operate sustainably at this level of production.&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash costs at the
    Blanket Mine fell to US$583/oz. from US$585/oz. in the preceding quarter.&nbsp; The cost per ounce of labour and electricity
    was lower than the previous quarter as these are largely fixed costs and were amortised over the higher production.&nbsp;
    The cost per ounce of consumables increased due to the expected normalisation in the head grade which was reflected in a 40%
    increase in the tonnes of ore processed and an 18% increase in gold production. &nbsp;Overall, however, the cost per tonne
    of ore mined and processed fell due to improved underground operating efficiency and recent investments in the milling and
    CIL circuits which have reduced consumable usage and increased recoveries.&nbsp; Blanket&rsquo;s cash costs remain highly
    competitive compared with other gold producers, not only in Zimbabwe, but also in the rest of Africa.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The Blanket Mine recently
    won several prestigious Safety Health and Environment (&ldquo;SHE&rdquo;) awards.&nbsp; These awards reflect the close attention
    given to SHE by both Blanket Mine and Caledonia.&nbsp; These awards also demonstrate that Blanket Mine does not achieve its
    low costs by neglecting its obligations in this very important area.&nbsp; It is hoped that these awards will help to dispel
    the commonly-held misconception in Zimbabwe that mining companies act with little regard for the well-being of their employees
    and the environment.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Caledonia submitted
    a revised indigenization proposal on 12 October, 2011 and continues constructive dialogue with the Minister of Indigenization,
    his officials and advisers.&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">During the third quarter
    Blanket made payments of approximately US$3.8 million to the Government of Zimbabwe in respect of direct and indirect taxation,
    royalties, licence fees etc. Blanket Mine also received Taxpayer Appreciation Awards 2011 from the Zimbabwe Revenue Authority
    in respect of Income Tax and PAYE categories.&nbsp; It is hoped that payments of this magnitude and the fact that Blanket
    Mine has received recognition in terms of these awards will further address the widespread misconception in Zimbabwe that
    mining companies do not pay tax.&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><BR>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 95%; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The 4-hole
    drilling program on the Konkola West area of the Nama base metals project in Zambia commenced during March 2011 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 the Nama Licence Area. At the end of October 2011
    3 holes had been completed and work on the fourth hole had commenced.&nbsp; This drilling program is expected to be completed
    in the fourth quarter 2011 and the final assay results received thereafter. The conclusions arising from this program will
    be released once management has received and evaluated all of the results.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The culmination of
    the investment programs at the Blanket Mine over the past 30 months has substantially transformed Caledonia&rsquo;s financial
    and operating performance as demonstrated by these third quarter results.&nbsp; The implementation of these programs in a
    very difficult environment is a testament to the high engineering standards and the hard work, determination and creativity
    of the management and employees of Caledonia and Blanket Mine.&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: 0.3in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Financial
Highlights</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif; border-collapse: collapse">
<TR>
    <TD NOWRAP COLSPAN="6" STYLE="border: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Consolidated
                                                                                                               Statement of Comprehensive
                                                                                                               Income (unaudited)</B></FONT></P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>(<I>In
        thousands of Canadian dollars except per share amounts)</I></B></FONT></P></TD></TR>
<TR>
    <TD NOWRAP COLSPAN="2" STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">For
    the 3 months ended Sept 30</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">For
    the 9 months ended Sept 30</FONT></TD></TR>
<TR>
    <TD STYLE="width: 48%; border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 8%; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 11%; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2011</FONT></TD>
    <TD STYLE="width: 11%; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2010</FONT></TD>
    <TD STYLE="width: 11%; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2011</FONT></TD>
    <TD STYLE="width: 11%; vertical-align: bottom; border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2010</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Revenue</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">16,517</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6,357</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">39,733</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">14,970</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Royalty</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">743</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">223</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,791</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">515</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Production
    costs</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5,763</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,915</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">15,883</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">9,669</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Amortization</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">647</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">612</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,853</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,772</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Gross
    profit</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">9,364</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,607</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">20,206</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,014</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Administrative
    expenses</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">910</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">527</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,587</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,423</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Share-based
    payment</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">354</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,102</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">354</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Results
    from operating activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">8,454</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">726</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">15,517</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,236</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Finance
    income</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">60</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">223</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Finance
    expense</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">14</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">44</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">193</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">200</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Profit
    before income tax</B></FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">8,442</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">742</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">15,327</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,260</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Income
    tax expense</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,292</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">4,404</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Profit
    for the period</B></FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6,150</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">742</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10,923</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,257</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Profit/(loss)
    on foreign currency translation</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,152</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,077</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Total
    comprehensive income for the period</B></FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">8,302</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">742</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">12,000</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,258</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Earnings
    per share (cents)</B></FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Basic</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1.23</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">0.15</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2.18</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">0.25</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Diluted</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1.13</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">0.15</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2.01</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">0.25</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Weighted
    average number of common shares outstanding (thousand)</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Basic</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; padding-right: 5.75pt; padding-bottom: 4.5pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,549</FONT></TD>
    <TD STYLE="vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,169</FONT></TD>
    <TD STYLE="vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,345</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,169</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Diluted</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">543,089</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,169</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: top; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">542,785</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">500,169</FONT></TD></TR>
</TABLE>
<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3</FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><BR>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif; border-collapse: collapse">
<TR>
    <TD NOWRAP COLSPAN="4" STYLE="border: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Consolidated
                                                                                                             Statement of Cash
                                                                                                             Flows (unaudited)
                                                                                                             </B></FONT></P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>(In
        thousands of Canadian dollars)</I></FONT></P></TD></TR>
<TR>
    <TD NOWRAP STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">For
    the 9 months ended Sept 30</FONT></TD></TR>
<TR>
    <TD STYLE="width: 57%; border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 8%; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 11%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2011</FONT></TD>
    <TD STYLE="width: 24%; vertical-align: bottom; border-right: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2010</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;&nbsp;
    $</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    $</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    flows from operating activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Profit
    for the period</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10,923</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,257</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Adjustments
    for:</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Reconcile
    net cash from operations</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">8,288</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,093</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Changes
    in non-cash working capital</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(1,651)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(502)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Income
    tax paid</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(3,448)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(3)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net
    cash from operating activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">14,112</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,845</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    flows from investing activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Property,
    plant and equipment additions</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(7,511)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(4,177)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Sale
    of investment</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">51</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net
    cash used in investing activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(7,511)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(4,126)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    flows from financing activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Bank
    overdraft increase/(decrease)</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(747)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,092</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Finance
    expense</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(193)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(200)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Finance
    income</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">223</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Shares
    issued</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">38</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net
    cash from (used in) financing activities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(899)</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,115</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net
    increase/(decrease) in cash and cash equivalents</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5,702</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(166)</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    and cash equivalents at beginning of period</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,145</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,623</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; border-left: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    and cash equivalents at end of period</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6,847</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,457</FONT></TD></TR>
</TABLE>
<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif; border-collapse: collapse">
<TR>
    <TD NOWRAP COLSPAN="4" STYLE="border: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Consolidated
    statements of Financial Position (unaudited)</FONT></TD></TR>
<TR>
    <TD STYLE="width: 46%; border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(In
    thousands of Canadian dollars)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at</FONT></TD>
    <TD STYLE="width: 7%; vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 22%; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Sept
    30,</FONT></TD>
    <TD STYLE="width: 25%; border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">December
    31,</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2011</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2010</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD></TR>
<TR>
    <TD NOWRAP STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-bottom: 4.5pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total
    non-current assets</FONT></TD>
    <TD NOWRAP STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">34,566</FONT></TD>
    <TD NOWRAP STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">28,348</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Inventories</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,413</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,620</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Prepayments</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">87</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">93</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Trade
    and other receivables</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5,111</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,314</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Cash
    and cash equivalents</FONT></TD>
    <TD NOWRAP STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6,847</FONT></TD>
    <TD NOWRAP STYLE="border-right: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,145</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total
    assets</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">50,024</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">34,520</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-bottom: 4.5pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total
    non-current liabilities</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">8,247</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">7,070</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Trade
    and other payables</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5,816</FONT></TD>
    <TD STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,882</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Bank
    overdraft</FONT></TD>
    <TD NOWRAP STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">-</FONT></TD>
    <TD NOWRAP STYLE="border-right: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">747</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total
    liabilities</FONT></TD>
    <TD NOWRAP STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">14,063</FONT></TD>
    <TD NOWRAP STYLE="border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">11,699</FONT></TD></TR>
<TR>
    <TD STYLE="border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Capital
    and reserves</FONT></TD>
    <TD NOWRAP STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">35,961</FONT></TD>
    <TD NOWRAP STYLE="border-top: windowtext 0.5pt solid; border-right: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">22,821</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; border-left: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total
    equity and liabilities</FONT></TD>
    <TD STYLE="border-bottom: windowtext 0.5pt solid; font: 12pt Times New Roman, Times, Serif; padding-right: 5.75pt; padding-left: 5.75pt; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">50,024</FONT></TD>
    <TD STYLE="border: windowtext 0.5pt solid; padding-right: 5.75pt; padding-left: 5.75pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">34,520</FONT></TD></TR>
</TABLE>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 6pt 4.55pt 6pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">4</FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><BR>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0 12.1pt 0 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>For
more information, please contact:</B></FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0 12.1pt 0 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 57%; padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; font-weight: bold; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Caledonia
    Mining Corporation</FONT></TD>
    <TD STYLE="width: 43%; padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; font-weight: bold; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Collins
    Stewart Europe Limited</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Mark
    Learmonth</FONT></TD>
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">John
    Prior / Sebastian Jones</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Tel:
    + 27 11&nbsp;447 2499</FONT></TD>
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Tel:
    + 44 20 7523 8350</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">marklearmonth@caledoniamining.com</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 12.1pt; padding-left: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 12.1pt; padding-left: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 12.1pt; padding-left: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: -5.4pt; padding-left: 5.4pt; font-size: 11pt; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Renmark
    Financial Communications Inc</FONT></TD>
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt; font-weight: bold; text-align: justify; text-indent: 0pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Collins
    Stewart LLC</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">John
                                                          Boidman or Dustin Buenaventura</FONT></P>
        <P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Tel:
        +1 514 939 3989 or +1 416 644 2020</FONT></P>
        <P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">jboidman@renmarkfinancial.com</FONT></P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0 12.1pt 0 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dan
                                                          Mintz</FONT></P>
        <P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 0 12.1pt 0 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Tel:
        +1&nbsp;212&nbsp;389 8022 DMintz@collinsstewartllc.com</FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 12.1pt; padding-left: 5.4pt; font-size: 11pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">dbuenaventura@renmarkfinancial.com</FONT></TD>
    <TD STYLE="font: 12pt Times New Roman, Times, Serif; padding-right: 12.1pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10.5pt Arial, Helvetica, Sans-Serif; margin: 0 4.55pt 0 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10.5pt Arial, Helvetica, Sans-Serif; margin: 0 4.55pt 0 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Further
information regarding Caledonia&rsquo;s exploration activities and operations along with its latest financials and Management
Discussion and Analysis may be found at www.caledoniamining.com</B></FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5</FONT></P>

<P STYLE="font: 11pt Arial, Helvetica, Sans-Serif; margin: 6pt 4.55pt 6pt 0; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=4>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
