Caledonia Mining 2011 Second Quarter and Half Y...

FOR:  CALEDONIA MINING CORP

TSX SYMBOL:  CAL
OTC Bulletin Board SYMBOL:  CALVF
AIM SYMBOL:  CMCL

August 12, 2011

Caledonia Mining 2011 Second Quarter and Half Year Results and Management Conference Call

TORONTO, ONTARIO--(Marketwire - Aug. 12, 2011) - Caledonia Mining Corporation ("Caledonia")
(TSX:CAL)(OTCBB:CALVF)(AIM:CMCL) is pleased to announce its second quarter and half year 2011 operating and
financial results.

The financial results below are reported in Canadian dollars, except where otherwise stated.

Second Quarter 2011 Highlights:

--  Gold produced at the Blanket Mine in Zimbabwe in the quarter was 8,226
    ounces, 141% higher than the 3,408 ounces of gold produced in 2nd
    quarter of 2010.

--  Gold production increased by 12% from the 7,322 ounces produced in the
    preceding quarter.

--  The average price per ounce of gold sold in the 2nd quarter of 2011 was
    US$1,512 compared to US$1,192 in the 2nd quarter of 2010.

--  Gross Profit (i.e. before depreciation, amortization and administrative
    expenses) was $6,226,000, over 300% higher than the $1,534,000 achieved
    in the 2nd quarter of 2010.

--  Caledonia recorded net profit before tax of $3,836,000, over 800% higher
    than the $413,000 achieved in the 2nd quarter of 2010.

--  Average gold recovery increased to 92.9% from 92.2% in the first quarter
    2011, reflecting the recent investment in the milling and Carbon-in-
    Leach ("CIL") circuits.

--  Cash operating costs at the Blanket Mine in the quarter were US$585 per
    ounce of gold produced, compared to US$648 per ounce in the 1st quarter
    of 2011 and US$816 per ounce in the 2nd quarter of 2010.

--  Blanket made payments in the quarter totalling US$3,307,000 (Q1 2011,
    US$1,442,000) in respect of direct and indirect taxes, royalties,
    licence fees and other payments to the Government of Zimbabwe.

--  At June 30, 2011 the Corporation had gross cash and cash equivalents of
    $5,033,000 (March 31, 2011 $2,217,000).

--  The drilling program at the Nama base metals project in Zambia commenced
    in March 2011 to identify typical copper-belt type mineralization. This
    program continues and the results are expected in the 4th quarter of
    2011.

Commenting on the results, Stefan Hayden, President and CEO, said: "Caledonia has had a very strong performance
for the second quarter and first half of 2011. The further increase in production coupled with the strength in
the gold price and a continued reduction in Blanket's operating costs has resulted in a substantial improvement
in Caledonia's profitability and cash generation.

We have made significant progress in addressing the remaining production constraints which, once solved, should
enable us to reach our target of 10,000 ounces per quarter. The new raise bored ore pass became fully
operational at the end of July and has substantially improved the efficiency of the underground operations and
reduced ore handling costs.

The 10 MVA standby electrical generating system was commissioned at the end of May and Blanket can now maintain
full operations during any interruption to the normal power supply. Electricity supply was reasonably stable
during the quarter but, as anticipated, Blanket experienced several interruptions and the standby generators
operated as designed for approximately 51 hours during the second quarter.

The installation of a second new gyratory crusher, a new triple-deck screen and the commissioning of the
standby generators required a five day planned interruption in production during the second quarter. The new
crushers and screen are operating well and have contributed to the improved recovery and reduced costs.

Production for the quarter was also impacted by the raise boring of a ventilation raise, a shortage of spare
parts for key items of equipment, and the need to remediate some sections of the underground haulages to allow
for increased shunting speeds. The historic lack of investment over the past years due to the shortage of
funding, which is common to virtually all mines in Zimbabwe, contributed to an increased incidence of equipment
breakdowns at the higher production levels which are now being achieved. This will be an area of focus for
Management for the second half of the year. It is now anticipated that Blanket will achieve its target
production level of 40,000 ounces per annum by the start of the fourth quarter of 2011.

Caledonia submitted an indigenization proposal on May 9, 2011 and awaits a formal response from the Minister.
Caledonia continues to work closely with, amongst others, the Chamber of Mines Zimbabwe (the "Chamber")
regarding the continued engagement between the Chamber and the Minister in respect of the indigenisation of the
mining sector.

During the second quarter Blanket made payments of approximately US$3.3 million to the Government of Zimbabwe
in respect of direct and indirect taxation, royalties, licence fees etc. I hope that payments of this magnitude
will address the widespread misconception in Zimbabwe that mining companies do not pay tax.

The initial 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 the second quarter, 2 holes had been drilled and the drill rig
was being moved to the 3rd hole. This drilling program is expected to be completed by early in the fourth
quarter 2011 and the final assay results received thereafter. The conclusions arising from this program will be
made available once management has received and evaluated all of the results. This is anticipated to be during
the fourth quarter of 2011."

Caledonia Management will host a conference call starting at 1000 (EDT) on August 15, 2011. Please dial-in 10
minutes beforehand and quote the conference ID number: 837504#.

----------------------------------------------------------------------------
                           Toll-Free Number(i)                   Toll Number
----------------------------------------------------------------------------
Canada                        + 1 866 561 8617               [phone]
----------------------------------------------------------------------------
USA                           + 1 866 928 6049               [phone]
----------------------------------------------------------------------------
UK                            [phone]           [phone]
----------------------------------------------------------------------------
International                                            [phone]
----------------------------------------------------------------------------
(i) If you are calling from a mobile phone your provider may charge you when
    connected to the toll-free numbers.

Financial Highlights

----------------------------------------------------------------------------
Condensed Consolidated Statement of Comprehensive Income (unaudited)
(In thousands of Canadian dollars except per share amounts)
                                       For the 3 months    For the 6 months
                                          ended June 30       ended June 30
                                         2011      2010      2011      2010
                                            $         $         $         $
Revenue                                11,990     4,154    23,216     8,614
Royalty                                  (593)     (147)   (1,048)     (292)
Production costs                       (5,171)   (2,473)  (10,121)   (5,755)
Amortization                             (633)     (575)   (1,206)   (1,160)
                                    ----------------------------------------
Gross profit                            5,593       959    10,841     1,407
Administrative expenses                (1,733)     (469)   (2,679)     (895)
Share-based payment                         -         -    (1,102)        -
                                    ----------------------------------------
Results from operating activities       3,860       490     7,060       512
Finance income                              -        63         -       162
Finance expense                           (24)     (140)     (179)     (154)
                                    ----------------------------------------
Profit before income tax                3,836       413     6,881       520
Income tax expense                       (962)       (2)   (2,112)       (2)
                                    ----------------------------------------
Profit for the period                   2,874       411     4,769       518
Profit/(loss) on foreign currency
 translation                             (361)      575    (1,075)     (101)
                                    ----------------------------------------
Total comprehensive income for the
 period                                 2,513       986     3,694       417
                                    ----------------------------------------
Earnings per share (cents)
Basic                                    0.58      0.08      0.96      0.10
Diluted                                  0.54      0.08      0.88      0.10
Weighted average number of common
 shares outstanding (thousand)
Basic                                 500,313   500,169   500,241   500,169
Diluted                               542,853   500,169   542,781   500,169
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Condensed consolidated statements of financial position (unaudited)
(In thousands of Canadian dollars)
As at                                                 June 30,  December 31,
                                                          2011          2010
                                                             $             $
Total non-current assets                                31,382        28,348
Inventories                                              2,826         2,620
Prepayments                                                 89            93
Trade and other receivables                              4,028         2,314
Cash and cash equivalents                                5,033         1,145
                                                  --------------------------
Total assets                                            43,358        34,520
                                                  --------------------------
Total non-current liabilities                            7,995         7,070
Trade and other payables                                 5,287         3,882
Bank overdraft                                           2,421           747
                                                  --------------------------
Total liabilities                                       15,703        11,699
                                                  --------------------------
Capital and reserves                                    27,655        22,821
                                                  --------------------------
Total equity and liabilities                            43,358        34,520
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands of Canadian dollars)
                                                          For the 6 months
                                                           ended June 30
                                                            2011       2010
                                                               $          $
Cash flows from operating activities
Profit for the period                                      4,769        518
Adjustments for:
Reconcile net cash from operations                         4,580        957
Changes in non-cash working capital                         (512)       139
Income tax paid                                           (1,312)        (2)
                                                        --------------------
Net cash from operating activities                         7,525      1,612

Cash flows from investing activities
Property, plant and equipment additions                   (5,171)    (3,438)
Sale of investment                                             -         51
                                                        --------------------
Net cash used in investing activities                     (5,171)    (3,387)

Cash flows from financing activities
Bank overdraft increase                                    1,675      1,766
Finance expense                                             (179)      (154)
Finance income                                                 -        162
Shares issued                                                 38          -
                                                        --------------------
Net cash from (used in) financing activities               1,534      1,774

Net increase in cash and cash equivalents                  3,888         (1)
Cash and cash equivalents at beginning of period           1,145      1,623
Cash and cash equivalents at end of period                 5,033      1,622
----------------------------------------------------------------------------

Further information regarding Caledonia's exploration activities and operations along with its latest
financials and Management Discussion and Analysis may be found at www.caledoniamining.com

-30-

FOR FURTHER INFORMATION PLEASE CONTACT:

Caledonia Mining
Mark Learmonth
+ 27 11 447 2499
[e-mail]

OR

Buck Bias
Alex Buck
+ 44 7932 740 452

OR

Collins Stewart Europe Limited
John Prior/Sebastian Jones
+ 44 20 7523 8350

OR

Renmark Financial Communications Inc
John Boidman
[e-mail]

OR

Renmark Financial Communications Inc
Dustin Buenaventura
[phone] or [phone]
[e-mail]
www.renmarkfinancial.com

Caledonia Mining Corp