Caledonia Mining Corporation

Caledonia Mining Corporation

March 29, 2005 09:00 ET

Caledonia Mining 4th Quarter and 2004 Annual Results



OTC Bulletin Board SYMBOL: CALVF

MARCH 29, 2005 - 09:00 ET

Caledonia Mining 4th Quarter and 2004 Annual Results

TORONTO, ONTARIO--(CCNMatthews - March 29, 2005) - Caledonia Mining
Corporation ("Caledonia") (TSX:CAL)(NASDAQ-OTCBB:CALVF) is pleased to
announce its key financial and operating results for the fourth quarter
and the year ended 31 December 2004. The financial results are reported
in thousands of Canadian dollars except where otherwise stated.

Financials (in C$ 000's)
Q4'04 Q4'03 FY'04 FY'03
(unaudited) (audited)
Revenue and operating costs
Revenue from sales 469 334 841 646
Operating costs 1,686 1,405 6,451 3,630
Gross profit (loss) (1,217) (1,071) (5,610) (2,984)
Cost and Expenses 3,352 10,777 4,382 11,550
Cash 6,470 4,179 6,470 4,179
Net (loss) for the period (4,569) (11,810) (9,979) (14,496)
Net (loss) per share (basic &
fully diluted) (0.015) (0.052) (0.034) (0.062)

For the year ended December 31, 2004, Caledonia recorded a net loss,
after write downs, of $10 million ($0.034 per share) compared to a net
loss of $14.5 million ($0.062 per share) in 2003. The loss in 2004
included a write down of mineral properties of $1.1 million and losses
from operations of $5.6 million. The loss from operating activities
increased from $3.0 million in 2003, reflecting a higher level of
activity associated with ongoing activities to refurbish the Barbrook
Gold Mine. In 2004 general and administrative expense includes a charge
of $0.2 million for stock option grant expense as compared to $0.1
million in 2003. As of December 31, 2004 Caledonia's cash position is
healthy, with working capital of $6.4 million (2003: $3.8 million).
Caledonia remains completely debt-free.

During the year, $14.3 million was raised from private placements,
exercise of warrants and options (2003: $9.5 million). The majority of
these funds will be used to finance the improvements in the processing
of gold ore at Barbrook and exploration activity on the Company's most
prospective projects.

Reviewing the company's performance, Stefan Hayden, President and CEO,
said "2004 has been another challenging yet exciting year for Caledonia
as we work towards bringing the Barbrook Gold Mine into profitable gold
production and consolidate work on exploration projects, in particular,
the prospective Nama Cobalt/Copper Deposit in Zambia and the Rooipoort
Platinum Project.

We have worked hard to consolidate Caledonia's financial situation
during 2004 and I am pleased to report the Company is completely
debt-free, with a solid cash position of $6.4 million at the year end.

While the macro-economic environment in South Africa where we operate
the Barbrook Gold Mine continues to be challenging, we believe that the
overall outlook for commodity prices is good. The continuing strength of
the rand is impacting negatively in the South African mining industry,
however, we remain confident that despite this challenge we will return
Barbrook to profit in the near future."

Barbrook Gold Mine, South Africa

The complex refractory sulphide ore body at Barbrook continued to test
the metallurgical plant during most of 2004, necessitating further
extensive modifications to increase gold recoveries. Following these
changes, there has been a significant improvement in the operating
efficiency in the resin-in-leach ("RIL") section during the first
quarter of 2005. Recently, gold recoveries of over 80% have been
achieved and the Company expects further improvements during the 2005
financial year. Gold production for the year increased 43% to 1,693
ounces (2003: 1,187 ounces).

Due to the longer than expected time for improvements in gold
recoveries, mill throughput will only rise to 10,000 tonnes later on in
the year. The Biox® feasibility study is underway and the Company is
awaiting the results of further testing of the virtually carbon free
concentrate now being produced, and its impact on the Biox® plant
design and cost. In addition, Caledonia is evaluating ultra-fine milling
and dense media separation technologies to improve feed quality and
recoveries. A decision on whether to implement the Biox® plant and/or
ultra-fine milling and/or dense media separation is also anticipated in
the second quarter of 2005.

Barbrook underground development continued at the French Bob's, Taylors
and Daylight/Victory zones to delineate the mine's reserves and

Nama Project, Zambia

Our exciting cobalt project Nama, located in northern Zambia, has made
steady progress during 2004 with encouraging results from the mini-bulk
sample. The sample was tested, during the fourth quarter, at MINTEK's
laboratory in South Africa and confirmed that a suitable cobalt
concentrate can be extracted. In 2005 a larger tonnage sample will be
excavated and processed through a pilot plant, to be built on site, to
produce a suitable cobalt concentrate for testing through a smelter or
hydrometallurgical plant. If this test is successful and satisfactory
economic terms are obtained, Caledonia will seek to negotiate a
long-term supply contract with a large cobalt user or users. Caledonia
will also investigate potential joint venture partners to assist with
the development of this project.

Rooipoort Platinum Exploration Project, South Africa

Exploration work in the fourth quarter continued at the Rooipoort
Platinum Project with the commencement of an initial drilling programme
intended to define an indicated PGM resource. This follows the
completion of an earlier stratigraphic diamond drill program. Flotation
testwork on mineralized composite samples from 5 lithological units was
also conducted during the last quarter to verify the flotation
amenability of the ore. The tests included milling and basic flotation
to produce a flotation concentrate. The results indicated that from each
of the 5 mineralized zones, a re-cleaner flotation concentrate of low
mass recovery can be produced that contains medium to high recovery of
the platinum, palladium, gold, copper and nickel. This initial test work
indicates that a simple metallurgical process route could process a
flotation concentrate from a high-tonnage lower-grade feed ore from an
open-pit ore source.

In 2005 the work program will focus on drilling the northern and extreme
southern property boundaries, where recent exploration results show the
mineralization is closer to surface. Results will be released during the
second quarter of 2005.

Grasvally, Adjacent to Rooipoort Project, South Africa

During 2004, Caledonia completed the purchase of an additional 342
hectares of mineral and prospecting rights on the Grasvally farm
prospect adjacent to the Rooipoort property to the south. We consider
Grasvally to be highly prospective as the mineralization in this area
appears to be near surface with a shallow dip. Caledonia's application
for the necessary Prospecting Permit from the Department of Minerals and
Energy, which was filed on April 23, 2004, was refused on March 11, 2005
on the sole grounds of not having a shareholders agreement in place with
regard to a black economic empowerment partner. Caledonia believes that
this refusal has no legal basis and continues to actively pursue this
permit by all available means.

Mulonga Plain Joint Venture Diamond Project, Zambia

At the Mulonga Plain Diamond Project in Zambia, our joint venture
partners have continued to fully fund the exploration programs. Based on
the results of a 5,000 line km Falcon® airborne gravity and magnetic
survey, flown over the identified kimberlite mineral clusters located in
the most eastern portion of the Mulonga licence area, a drilling budget
for 2005 of US$520,000 has been allocated to follow up the
identification of the targets derived from previous work and the 71
gravity anomalies identified by the preliminary interpretation of the
Falcon® data. At Kashiji Plain, a number of samples were collected and
are currently undergoing laboratory work. Budget allocation and planning
for 2005 has been deferred until these analyses are complete.
Caledonia's interest in Mulonga Plain remains 40%.

Kikerk Lake Diamond Project, Canada

Caledonia's joint venture partners have continued their obligation to
fund the exploration programs. During 2004, all the heavy mineral
follow-up samples, collected in 2003, were processed. A total of 361
heavy mineral samples were collected during July and August 2004. The
sampling program had two objectives: the first was to better define
known indicator mineral trains or confirm isolated indicator anomalies;
the second was to increase the sample density across the property in
those areas of the property where sampling was considered inadequate to
confidently assess mineral potential. Results from this sampling program
are expected by the end of the second quarter 2005.

Caledonia's 17.5% share of this program is funded by Ashton Mining of
Canada. Ashton holds a 52.5% interest, having incurred in excess of
$750,000 in exploration expenditures on the property. This interest can
be increased to 59.5% if Ashton funds Caledonia's share of the costs
through to a completed feasibility study. The remaining 30% interest is
held by Stornoway Diamond Corporation.

Eersteling Gold Mine

During 2004, Caledonia redeemed minority shareholdings in Eersteling,
thus making Eersteling a 100% owned subsidiary of Caledonia.

A full geological review of the Eersteling property, including the mine
plans and other technical data, was commenced in October 2004. The
resources at Eersteling were evaluated and a development program
prioritized. Other prospective areas, which should be investigated as
potential ore sources, were identified and a surface exploration program
has commenced to test some of these areas. This included a high
resolution aeromagnetic and radiometric survey, which was completed in
January 2005. In the soil geochemical program, 500 soil samples in a
3,500 sample program were collected at Eersteling, with the results
currently pending. Potential target zones will be identified and it is
planned to drill these during 2005.


During 2004, Caledonia continued its programme to enlarge and enhance
the skills of the Board and meet corporate governance objectives. The
Company obtained shareholder approval to increase the Caledonia Board of
Directors to six members and appointed Roland Fasel, a Swiss based
businessman, to the Caledonia Board of directors. Mike Tombs was
appointed Vice President Finance and Chief Financial Officer and is
based in Johannesburg, South Africa. Steven Poad has assumed the
position of Controller. In February 2005, Rupert Pardoe was appointed
Chairman, with immediate effect.

Caledonia plans during the second quarter 2005 to list the company's
shares on the Alternative Investment Market in London, England in
conjunction with a financing. The Board believes this listing will
introduce Caledonia to London's institutional investors, offer Caledonia
greater market exposure, and further broaden the shareholder base,
ultimately benefiting all shareholders.

By March 31, 2005 Caledonia's Audited 2004 Financial Statement and
Management Discussion and Analysis will be filed with SEDAR, and
published on our website, and will be posted to
registered shareholders.

Further information regarding Caledonia's exploration activities and
operations along with its latest financials may be found at

2004 2003(2) 2002(2) 2001(2) 2000(2)
Financial - C$ 000's
Revenue from Sales 841 646 27 124 6,623
Gross Profit (Loss) (5,610) (2,984) (118) (143) 284
Expenses (General and
Administration, Interest 2,959 1,841 1,585 1,130 2,143
and Amortization)
Net Income (Loss)
- before Write-Downs (8,917) (4,737) (1,856) (1,096) 7,451
Net Income (Loss)
- after Write-Downs (9,979)(14,496) (4,446) (1,096) 7,451
Cash 6,470 4,179 1,864 90 75
Current Assets 7,481 4,573 2,094 184 200
Assets 23,666 19,530 24,969 25,183 25,273
Current Liabilities 1,062 790 1,336 2,701 2,556
Long Term Liabilities 423 1,089 1,073 1,499 1,598
Working Capital (Deficiency) 6,419 3,783 758 (2,517) (2,356)
Shareholders' Equity 22,181 17,651 22,560 20,983 21,119
Total Capital Expenditures
including Mineral 3,813 2,279 613 23 120
Expenditures on Mineral
Properties 2,298 2,042 624 23 120
Financing Raised 14,314 9,511 5,174 1,078 979
Share Information
Market Capitalization
($ Thousands) 39,145 105,955 86,836 9,086 10,374
Shares Outstanding
(Thousands) 301,112 252,274 211,795 165,202 148,202
Warrants & Options (Thousands) 52,342 27,348 28,055 19,566 7,566
Earnings (Loss) per Share (0.03) (0.06) (0.02) (0.01) 0.08
TSE Share Price High 0.465 0.610 0.44 0.09 0.35
TSE Share Price Low 0.12 0.215 0.060 0.04 0.05
TSE Share Volume (Thousands) 56,934 99,233 81,234 22,310 22,939
NASDAQ Share Price High (US$) 0.37 0.39 0.281 0.06 0.18
NASDAQ Share Price Low (US$) 0.10 0.16 0.040 0.02 0.03
NASDAQ Share Volume
(Thousands) 210,251 440,811 271,404 74,714 61,919
Operating Results (1)
Gold Production (Ounces) 1,693 1,187 52 114 14,558
Silver Production (Ounces) 66 42 4 - 122,665
Average Cost per Ounce Gold
(US $) Sold 2,310 3,129 - - 240
Average Revenue per Ounce
Gold (US $) Sold 415 402 - - 285
Year End Gold Resource
(Thousand Ounces) 2,459 2,478 2,489 2,930 2,930
(1) Filon Sur to June 30 for year 2000 only.
(2) Restated for the adoption of the Asset Retirement Obligations
change in accounting policy.


Contact Information

    Caledonia Mining Corporation
    Stefan Hayden
    President and CEO
    +27 11 447 2499
    Alex Buck / Nick Bias
    +44 7932 740 452