Mr. Stefan Hayden reports

CALEDONIA MINING 2011 FOURTH QUARTER AND ANNUAL RESULTS AND NOTIFICATION OF MANAGEMENT CONFERENCE CALL

Caledonia Mining Corp. has released its operating and financial results for the fourth quarter of 2011 and the 12 months to Dec. 31, 2011.

Operational highlights for the Blanket mine in Zimbabwe:

• Gold produced in the fourth quarter was 10,533 ounces, an increase of 8.1 per cent on the 9,743 ounces produced in the third quarter of 2011 and a 69-per-cent increase on the 6,227 ounces produced in Q4 of 2010. This was the seventh consecutive quarterly increase in production.
• Total 2011 gold production increased by 102 per cent to 35,826 ounces (2010: 17,707 ounces).
• Cash operating costs in Q4 substantially reduced to $521 (U.S.) per ounce of gold produced compared with $583 (U.S.) in the preceding quarter and $791 (U.S.) in the comparative quarter. Cash costs for the full year were $581 (U.S.) per ounce compared with $751 (U.S.) in 2010.

Financial highlights

• Turnover for the year increased to $55,705,000 from $22,388,000 in 2010.
• Gross profit for the year increased by 358 per cent to $29,115,000, (2010: $6.36-million).
• Net profit after income taxes for 2011 was $12.13-million compared with $1,455,000 in 2010. The 2011 net profit includes an impairment of $3,884,000 in respect of the Rooipoort PGE (platinum group elements) asset because, despite the timely application for the renewal of the prospecting rights, no rights have been issued.
• Adjusted basic earnings per share for 2011 (excluding the Rooipoort impairment and foreign exchange profit) was 3.14 cents per share -- a 14-fold increase on 2010.
• Cash and cash equivalents at Dec. 31, 2011, were $9,686,000 compared with $6,847,000 at Sept. 30, 2011, and $1,145,000 at Dec. 31, 2010.
• Cash flow from operations in 2011 before capital investment was $17,428,000 (2010: $6,611,000).
• During Q4 Blanket made payments in respect of direct and indirect taxes, royalties, licence fees, levies and other payments to the government of Zimbabwe totalling $5,024,000 (U.S.) compared with $3,847,000 (U.S.) in the preceding quarter and $761,000 (U.S.) in the comparative quarter. The total of such payments in 2011 was $13,614,000 (2010: $2,236,000).

Other highlights

• During 2011 Caledonia carried out a five-hole diamond drilling program on its wholly owned Nama copper/cobalt property in northern Zambia. On March 12, 2012, Caledonia announced the summary of the results of this 2011 exploration program which has identified a new mineralized zone with a weighted-average copper grade of 0.47 per cent, a weighted-average thickness of 41 metres and at a depth of 280 to 450 metres. A sufficiently large resource at shallow depth could provide the basis for a future open-pit mining operation. A further exploration program has now commenced comprising 8,400 metres of drilling.
• On Feb. 20, 2012, Caledonia announced it had signed a memorandum of understanding with the Minister of Youth, Development, Indigenization and Empowerment of the government of Zimbabwe pursuant to which Caledonia has agreed that indigenous Zimbabweans will acquire an effective 51-per-cent ownership interest of the Blanket mine for a paid transactional value of $30.09-million (U.S.).

Commenting on Caledonia's performance, Stefan Hayden, president and chief executive officer, said: "I am delighted to report that the fourth quarter of 2011 was the culmination of a highly successful year for Caledonia, during which gold production at the Blanket mine in Zimbabwe more than doubled. Production has now increased in each of the last seven quarters. In the fourth quarter of 2011 10,533 ounces of gold were produced, which exceeded our quarterly production target of 10,000 ounces. In addition, the cash cost of production was significantly reduced for the year as a whole to $581 (U.S.) per ounce, compared with $751 (U.S.) per ounce in 2010. In the fourth quarter alone, the cash cost of production was further lowered to $521 (U.S.) per ounce. This reduction, which is in line with our earlier guidance, was due to improved operating efficiency and the benefits of economies of scale. I believe that Blanket mine is now one of the most efficient and lowest-cost gold producers in Africa.

"In February, 2012, Caledonia signed a MoU with the government of Zimbabwe regarding the indigenization of the Blanket mine. We are working hard on the various transactions envisaged in this MoU which we hope will be implemented during the second quarter of 2012.

"At the Caledonia level, the strong operating performance from Blanket was diluted by the cost of extracting dividends from Zimbabwe.

"Elsewhere, at the Nama base metals project in Zambia, the 2011 exploration program identified an exciting new copper-bearing mineralized zone. Further exploration on the identified mineralized zone has commenced. The costs of these drilling programs will be fully funded from current cash resources.

"Looking forward, once indigenization has been implemented, Blanket will be financially and strategically well positioned to progress its exploration and development projects. Depending on the outcome of these projects, Blanket may, in due course, be able to increase production above 40,000 ounces of gold per annum. The Blanket crushing and metallurgical plant has surplus capacity, and any incremental ore could be treated without any requirement for new investment. I am also hopeful that the further exploration work at Nama will indicate the potential existence of a significant copper deposit."

The full report and accounts, including the notes, and management discussion and analysis for the year ended Dec. 31, 2011, will be posted to holders of Caledonia's AIM securities during the week commencing April 2, 2012, and are available from the company's website from SEDAR.

Caledonia management will host a conference call starting at 10 a.m. (EDT) on April 2, 2012. Please dial in 10 minutes beforehand and quote Caledonia as the conference call password.

Canada toll-free number:  1-800-608-0547

United Kingdom toll-free number:  0808-109-0700

United States toll-free number:  1-866-966-5335

Standard international access number:  44-0-20-3003-2666

If you are calling from a mobile phone your provider may charge you when connected to the toll-free numbers.

Further information regarding Caledonia's exploration activities and operations along with its latest financials, and management discussion and analysis may be found at the company's website.

              CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
            (In thousands of dollars except per-share amounts)                 
                                                                            
                                    For the three months   For the 12 months 
                                         ended Dec. 31,      ended Dec. 31, 
                                        2011       2010     2011       2010 

Revenue                              $15,972     $7,418  $55,705    $22,388 
(Royalty)                               (723)      (310)  (2,514)      (825)
Production (costs)                    (5,233)    (2,948) (21,093)   (12,617)
(Depreciation)                        (1,004)      (815)  (2,983)    (2,586)
Gross profit                           9,012      3,345   29,115      6,360 
Administrative (expenses)             (1,418)      (982)  (3,677)    (2,807)
Share-based payment (expense)              -       (354)  (1,101)      (354)
Foreign exchange gain                    143        132      303        359 
(Impairment)                          (3,884)         -   (3,884)         - 
Other income/(expense)                    (2)      (884)       -     (1,064)
Results from operating activities      3,851      1,257   20,756      2,494 
Net finance income/(expense)              28        (19)    (162)         3 
Profit before income tax               3,879      1,238   20,594      2,497 
Income tax (expense)                  (2,510)    (1,040)  (8,464)    (1,042)
Profit for the year                    1,369        198   12,130      1,455 
                                                                            
Other comprehensive (loss)/income                                           
Revaluation of investments to fair                                          
value                                      -        (45)       -        (45)
Foreign currency translation                                                
differences for foreign operations      (812)    (1,145)     265     (1,404)
Other comprehensive (loss)/income for                                       
the period, net of income tax           (812)    (1,190)     265     (1,449)

Total comprehensive income for the                                          
period                                   557       (992)  12,395          6 
                                                                            
Earnings per share (cents)                                                  
Basic                                   0.27       0.04     2.42       0.29 
Diluted                                 0.25       0.04     2.38       0.29