Caledonia Min Regulatory News (CMCL)

29 Jan 2008 14:00

Caledonia Mining Corporation29 January 2008 Caledonia Mining Announces Cobalt Off-take Agreement with Large Chinese Refiner Toronto, Ontario - January 29, 2008: Caledonia Mining Corporation ("Caledonia")(TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce the signing ofa cobalt off-take agreement with a large Chinese refiner. Under the terms ofthe agreement, Caledonia will supply a minimum of 21,000 tonnes of cobalt metalequivalent in the form of cobalt hydroxide from its Nama Cobalt Project over thenext six years. The agreement specifies that the price shall be based on thepublished monthly average for 99.3% cobalt from the London Metal Exchange, andcontains a guaranteed "Take or Pay" minimum cobalt price of US$12/lb of cobaltmetal. The agreement is renewable. Caledonia's 100% owned Nama Project is located in Northern Zambia. Caledoniaplans to commence mining Anomalies "A" and "C" using open pit mining methods,pre-concentration and conventional cobalt extractive technology. Caledonia is proceeding with detailed mine planning and is targetingcommencement of production by early 2009 at an expected annual production levelof 10,000 tonnes of cobalt metal. An internal feasibility study has estimatedcapital expenditure at US$125 million and production costs below US$10/lb. Thecobalt project will become the main strategic focus for Caledonia going forward. Commenting on the announcement, Stefan Hayden, President and CEO of CaledoniaMining said "The signing of this cobalt off-take agreement marks an importantmilestone for Caledonia as we commence with the development of Nama, which Iexpect will prove to be one of the world's largest primary cobalt deposits. Inthe context of current spot prices for cobalt of US$44/lb and the floor price ofUS$12/lb, this contract represents substantial value and confirms Caledonia'spotential to become one of the key primary players in the cobalt market.Negotiations on further agreements with refiners continue. With rising demandfrom China, India and America, we believe the fundamentals for cobalt remainrobust in the near-term." For more information, please contact: Stefan Hayden, President & CEO Alex Buck Andrew SmithCaledonia Mining BuckBias RBC Capital MarketsTel: +27 11 447 2499 Tel: +44 7932 740 452 Tel: +44 20 7029 7882 Further information regarding Caledonia's exploration activities and operationsalong with its latest financials may be found at www.caledoniamining.com. This information is provided by RNS The company news service from the London Stock Exchange