Caledonia Mining Corporation Results for the Third Quarter of 2015

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November 12, 2015: Caledonia Mining Corporation (“Caledonia” or the “Company” - http://www.commodity-tv.net/c/search_adv/?v=293891) announces its operating and financial results for the third quarter of 2015 (“Q3” or the “Quarter”). All results are reported in Canadian dollars unless otherwise indicated. Following the implementation of indigenisation in September 2012, Caledonia owns 49% of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and the financial information set out below is on a 100% basis unless otherwise indicated.

Operating and Financial Review

	3 Months to 30 September		9 Months to 30 September
	2014	2015	2014	2015	Comment
Gold produced (oz.)	9,890	10,927	31,354	31,288	Higher gold production in the Quarter due to increased tonnes milled, offset by lower grades and metallurgical recovery
On Mine cash cost (US$/oz.)^{^[1]}	669	668	636	689	On mine cash costs remain stable
All-in sustaining cost (US$/oz.)¹	952	1,011	908	993	Increased AISC due to higher sustaining capital investment
Gold Sales (oz.)	9,890	10,927	33,323	32,102	Sales for the nine months to September 30 2015 includes work in progress brought forward from 2014; there is no work in progress included in the Quarter
Average realised gold price (US$/oz.)¹	1,252	1,106	1,262	1,159	Lower realised gold price is after realisation costs and reflects the lower prevailing gold price
Gross profit ($’m)^{^[2]}	4.3	3.7	16.0	12.3	Lower gross profit reflects higher Canadian-dollar denominated operating costs as a result of a 20% devaluation of the Canadian dollar to the USD and an 18% increase in tons mined.
Net profit attributable to shareholders ($’m)	1.1	1.7	5.4	3.6	Higher attributable profit in the Quarter due to foreign exchange gain and lower taxation

	3 Months to 30 September		9 Months to 30 September
	2014	2015	2014	2015	Comment
Adjusted basic earnings per share^{^[3]} (cents)	2.0	5.0	10.5	10.2	Higher adjusted EPS in the Quarter is after deduction of deferred tax, foreign exchange gain and non-recurring costs associated with South African tax remediation
Cash and cash equivalents ($’m)	26.9	19.6	26.9	19.6	Cash position remains robust, but is reduced due to the higher capital investment and lower cash generation.
Cash from operating activities ($’m)	3.6	0.9	11.5	6.8	Lower cash generation due to higher Canadian-dollar operating costs and investment in working capital
Payments to the community and Zimbabwe government (US$’m)	3.1	1.8	9.7	5.4	Lower payments due to the lower tax and royalty payments due to lower US$ gold price and lower profitability in US$ terms

Commenting on these results, Steve Curtis, Caledonia’s President and Chief Executive Officer said:

“In the quarter to September 30, 2015, we began to see the benefits of the Revised Investment Plan at Blanket Mine, which we presented to investors in November 2014. The first element of the Revised Investment Plan, the Tramming Loop at the 750 metre level, was completed in June 2015 following which Blanket increased its mining activity to a record level. The record level of mining activity contributed to the 10% increase in gold production compared to Q3 of 2014.

“The next element of the Revised Investment Plan is the No. 6 Winze which will start production in the first quarter of 2016, and will provide access to resources below 750 metres. This will allow Blanket to increase production progressively in 2016 with a full year target for 2016 of 50,000 ounces.

“The average realized US dollar-denominated gold price in the Quarter was lower than previous quarters following the sharp fall in the gold price in July. Notwithstanding the lower gold price, net profit attributable to shareholders in the Quarter was higher than the previous four quarters.

“Caledonia’s cash position remains robust and gives us the confidence to continue to invest in Blanket. Caledonia’s board and management believe that the implementation of the Revised Investment Plan remains in the best interests of shareholders: the successful implementation of the plan will result in a significant increase in Blanket’s production and operating efficiency; the lower gold price increases the importance of delivering the Revised Investment Plan as scheduled. I am pleased to report that we have met all of our key milestones and we remain on target for achieving all of the future milestones.”

Dividend Policy and Shareholder Matters

Since January 2014, Caledonia has paid a quarterly dividend of 1.5 Canadian cents per share, which amounts to a total dividend of 6 Canadian cents per annum. The first quarterly dividend was paid on January 31, 2014 and subsequent quarterly dividends were paid thereafter.

It is currently envisaged that the existing dividend policy will be maintained, however, the Board remains attentive to further changes in market conditions.

Strategy and Outlook

Caledonia’s strategic focus is the implementation of the Revised Investment Plan at Blanket, which was announced in November 2014. The Revised Investment Plan is expected to increase gold production, reduce the average cost of production and extend the life of mine by providing access to deeper levels for production and further exploration, thereby safeguarding Blanket’s long term future. Caledonia’s board and management therefore believe the successful implementation of the Revised Investment Plan is in the best interests of all stakeholders.

Effect of the Lower Gold Price

The price of gold is lower than the level of $1,200 per ounce which was used as the basis for planning the funding of the Revised Investment Plan at Blanket. Accordingly, to ensure that Blanket retains the financial capacity to implement the Revised Investment Plan, Caledonia intends to provide additional funding of approximately US$5m to Blanket. This funding will come from Caledonia’s treasury which has deliberately been maintained at a high level to cater for this eventuality.

Zimbabwe Electricity Supply

The Kariba Dam lies between Zimbabwe and Zambia and represents approximately 50 per cent of Zimbabwe’s electricity generating capacity. Water levels in the Kariba Dam have fallen due to abnormally low inflows in the most recent rainy season and higher than expected extraction rates. As a result of the low water level, power generation from Kariba has been significantly reduced by the Zimbabwe and Zambian power generators and has resulted in widespread power outages in Zimbabwe. Zimbabwe has insufficient spare generating capacity to make up the lost production from Kariba. Given the regional deficit in generating capacity, it is unlikely that Zimbabwe will be able to import sufficient power from neighbouring countries.

Blanket Mine has an un-interruptible power supply agreement with the Zimbabwe Electricity Supply Agency (“ZESA”) which has so far been honoured. Blanket also has 12MW of stand-by diesel generating capacity which is sufficient to allow all mining and processing activities and work at the central shaft to continue if there are any interruptions to the ZESA supply. It is expected that the cost of using the generators would be mitigated by a reduction in electricity consumption from ZESA and a reduction in the tariff payable to ZESA. Accordingly, the effect of running the generators is not expected to have a significant adverse effect on the financial performance of Blanket and Caledonia for 2015.

The Financial Statements and the Management Discussion and Analysis for the Quarter and the period ended September 30, 2015 are available on www.caledoniamining.com and on www.sedar.com. A review of the results for the Quarter and the year to date, and a video Q&A are also available for download from Caledonia’s website

Caledonia Mining Corporation Mark Learmonth Tel: +27 11 447 2499 marklearmonth@caledoniamining.com	WH Ireland Adrian Hadden/Nick Prowting Tel: +44 20 7220 1751

Blytheweigh Tim Blythe/Camilla Horsfall/Megan Ray/George Yeomans Tel: +44 20 7138 3204	German speaking Region: Swiss Resource Capital AG Jochen Staiger info@resource-capital.ch

[1] Non-IFRS measures such as “on-mine cash cost per ounce” “all-in sustaining cost per ounce” and “average realised gold price” are used throughout this document. Refer to Section 10 of this MD&A for a discussion of non-IFRS measures.

[2] Gross profit is after deducting royalties, production costs and depreciation but before administrative expenses.

[3] Adjusted earnings per share (“EPS”) is a non-IFRS measure which aims to reflect Caledonia’s ordinary trading performance. Refer to Section 10 of the MD&A for a discussion of non-IFRS measures

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Caledonia Mining Corporation Results for the Third Quarter of 2015