Memorandum of Understanding

15 Aug 2005 14:00

Caledonia Mining Corporation15 August 2005 Caledonia Mining Corporation Caledonia Mining signs a Memorandum of Understanding with a South African Black Economic Empowerment Consortium Toronto, Ontario -15th August 2005: Caledonia Mining Corporation ("Caledonia")(TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce the signing ofa Memorandum of Understanding with a Black Economic Empowerment Consortium("Consortium") with respect to its South African assets. Full details of the Consortium will be disclosed once the deal has beenfinalized. Under South African legislation introduced in May 2004, and in order to receiveNew Order Prospecting Rights and Mining Licences, Caledonia must comply with theMinerals and Petroleum Resources Development Act 2002. The Act refers inparticular to a requirement for an effective Black Economic participation of atleast 26% equity in mining companies within ten years. In terms of the transaction being negotiated, the Consortium will at anegotiated fair market value, purchase an equity interest of at least 15% inCaledonia's South African assets with the option to acquire up to 30% of theseassets thereafter. Stefan Hayden, President and CEO of Caledonia, said: "Caledonia has taken animportant first step towards ensuring our South African assets comply with locallegislation required to receive the New Order Prospecting Rights and MiningLicenses. We have carefully selected this Consortium for its proven leadershipand the broad representation of its members which includes woman's groups andthe local communities in areas where Caledonia operates. We believe our newpartners will be active stakeholders, contributing to the growth and expansionof the South African business for the benefit of all our shareholders." For more information, please contact: Stefan Hayden Alex Buck / Nick BiasPresident and CEO, Caledonia Mining buck-biasTel: +27 11 447 2499 Tel: +44 7932 740 452 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