Penny Gold Miners

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Caledonia Mining Corporation (CAL:TSE) 3rd Q's Result -
Exchange: Toronto Stock Exchange

$0.120 Nov 10, 2011, 9:42 AM EST
Change: 0.025 (26.32%)Volume: 484,900

http://tmx.quotemedia.com/article.php?newsid=46015428&qm_symbol=CAL

Caledonia Mining 2011 Third Quarter Results -
TORONTO, Nov. 10, 2011 /CNW Telbec/ -

Caledonia Mining Corporation -
("Caledonia") (TSX: CAL) (OTCQX: CALVF) (AIM: CMCL) is pleased
to announce its Third Quarter 2011 (the "Quarter") operating
and financial results, which are reported below in Canadian
dollars unless otherwise indicated.

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Operational Highlights

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 2nd quarter 2011
(the "preceding quarter") and was
97% higher than
the 4,935 ounces of gold produced in 3rd quarter 2010
(the "comparative quarter").
This is the sixth consecutive quarterly increase in gold
production.

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 ("CIL") circuits.

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.
Financial Highlights

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.
This is almost a six-fold increase on the comparative quarter
and is the seventh consecutive quarterly increase in gross
profit.
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.

Caledonia recorded net profit before tax of $8,442,000 compared
to $742,000 in the comparative quarter which represents
an 11-fold increase.

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).

Other Highlights

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 - Q2 2011).

Blanket Mine's Occupational, Safety and Health policies and
procedures were audited by the National Social Security
Authority (the "NSSA") 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.

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.

Commenting on these results, Stefan Hayden, President and Chief
Executive Officer said:
"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.

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.

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.

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.

Cash costs at the Blanket Mine fell to US$583/oz.
from US$585/oz. in the preceding quarter.

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.

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.

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.

Blanket's cash costs remain highly competitive compared with
other gold producers, not only in Zimbabwe, but also in
the rest of Africa.

The Blanket Mine recently won several prestigious Safety Health
and Environment ("SHE") awards.
These awards reflect the close attention given to SHE by both
Blanket Mine and Caledonia.
These awards also demonstrate that Blanket Mine does not
achieve its low costs by neglecting its obligations in this
very important area.
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.

Caledonia submitted a revised indigenization proposal on 12
October, 2011 and continues constructive dialogue with the
Minister of Indigenization, his officials and advisers.

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.
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.

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.
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.

The culmination of the investment programs at
the Blanket Mine over the past 30 months has substantially
transformed Caledonia's financial and operating performance
as demonstrated by these third quarter results.
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.

Financial Highlights


Consolidated Statement of Comprehensive Income (unaudited)
(In thousands of Canadian dollars except per share amounts)
For the 3 months
ended Sept 30 For the 9 months
ended Sept 30
2011 2010 2011 2010
$ $ $ $
Revenue 16,517 6,357 39,733 14,970
Royalty 743 223 1,791 515
Production costs 5,763 3,915 15,883 9,669
Amortization 647 612 1,853 1,772
Gross profit 9,364 1,607 20,206 3,014
Administrative expenses 910 527 3,587 1,423
Share-based payment - 354 1,102 354
Results from operating activities 8,454 726 15,517 1,236
Finance income 2 60 3 223
Finance expense 14 44 193 200
Profit before income tax 8,442 742 15,327 1,260
Income tax expense 2,292 - 4,404 3
Profit for the period 6,150 742 10,923 1,257
Profit/(loss) on foreign currency translation 2,152 - 1,077 1
Total comprehensive income for the period 8,302 742 12,000 1,258
Earnings per share (cents)
Basic 1.23 0.15 2.18 0.25
Diluted 1.13 0.15 2.01 0.25
Weighted average number of common
shares outstanding (thousand)
Basic 500,549 500,169 500,345 500,169
Diluted 543,089 500,169 542,785 500,169

Consolidated Statement of Cash Flows (unaudited)
(In thousands of Canadian dollars)
For the 9 months ended Sept 30
2011 2010
$ $
Cash flows from operating activities
Profit for the period 10,923 1,257
Adjustments for:
Reconcile net cash from operations 8,288 2,093
Changes in non-cash working capital (1,651) (502)
Income tax paid (3,448) (3)
Net cash from operating activities 14,112 2,845

Cash flows from investing activities
Property, plant and equipment additions (7,511) (4,177)
Sale of investment - 51
Net cash used in investing activities (7,511) (4,126)

Cash flows from financing activities
Bank overdraft increase/(decrease) (747) 1,092
Finance expense (193) (200)
Finance income 3 223
Shares issued 38 -
Net cash from (used in) financing activities (899) 1,115

Net increase/(decrease) in cash and cash equivalents 5,702 (166)
Cash and cash equivalents at beginning of period 1,145 1,623
Cash and cash equivalents at end of period 6,847 1,457

Consolidated statements of Financial Position (unaudited)
(In thousands of Canadian dollars) As at Sept 30, December 31,
2011 2010
$ $
Total non-current assets 34,566 28,348
Inventories 3,413 2,620
Prepayments 87 93
Trade and other receivables 5,111 2,314
Cash and cash equivalents 6,847 1,145
Total assets 50,024 34,520
Total non-current liabilities 8,247 7,070
Trade and other payables 5,816 3,882
Bank overdraft - 747
Total liabilities 14,063 11,699
Capital and reserves 35,961 22,821
Total equity and liabilities 50,024 34,520

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