Caledonia Mining First Quarter 2011 Results

FOR:  CALEDONIA MINING CORPORATION

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

May 18, 2011

Caledonia Mining First Quarter 2011 Results

TORONTO, ONTARIO--(Marketwire - May 18, 2011) - Caledonia Mining Corporation ("Caledonia" or the "Corporation")
(TSX:CAL)(OTCBB:CALVF)(AIM:CMCL) is pleased to announce its first quarter 2011 operating and financial results.

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

Highlights:

--  Gold production increased by 17% to 7,322 ounces compared to 6,235
    ounces in the fourth quarter 2010 (Q1 2010: 3,129 ounces). Gold
    production in April 2011 was 2,737 ounces.

--  Average cash cost per ounce of gold produced decreased by 18% to US$648
    compared to the fourth quarter 2010 (Q1 2010: US$807).

--  Average achieved price per ounce of gold was US$1,397 (Q1 2010:
    US$1,107).

--  Gross Profit for the quarter (i.e. before depreciation, amortization and
    administrative expenses) nearly doubled to $5,248,000 compared to
    $2,815,000 in the fourth quarter 2010 (Q1 2010: $449,000).

--  At March 31, 2011 the Corporation had net cash and cash equivalents of
    $1,406,000 (December 31, 2010: $398,000).

--  During the quarter Caledonia made considerable progress in removing the
    remaining constraints to Blanket achieving the targeted annual
    production rate.

--  The 2011 drilling program commenced in March 2011 at the Konkola West
    area of the Nama base metals project in Zambia.

Commenting on the results, Stefan Hayden, President and CEO, said: "I am very pleased to report a strong first
quarter performance for 2011. The increased production coupled with the continued strength in the gold price
and a reduction in Blanket's cash cost resulted in a substantial improvement in Caledonia's profitability and
cash generation.

"We have made significant progress during the current quarter to address the remaining constraints which, once
solved, should enable us to reach our target of 10,000 ounces per quarter. A new ore pass was raise-bored and
commissioned on May 13, 2011. The commissioning of the complete standby generating system commenced on May 16,
2011 and is expected to be completed by the end of May, after which Blanket will be able to maintain full
operations during any interruption to the normal power supply. I am confident that Blanket will achieve its
targeted quarterly production from the third quarter of 2011.

"The drilling program at the Nama base metals project in Zambia commenced in March 2011 to identify typical
copper-belt type mineralization. This drilling program is expected to be completed by the third quarter 2011.

On May 9 2011, Caledonia submitted its Indigenization Plan to the Government of Zimbabwe and awaits their
response."

Financial Highlights

---------------------------------------------------------------------------
Condensed Consolidated Statement of Comprehensive Income
(in thousands of Canadian dollars except per share amounts)
                                               Three months ended March 31,
                                                   2011                2010
                                                      $                   $
Revenue                                          11,226               4,458
Royalty                                             455                 145
Production costs                                  4,950               3,279
Amortization                                        573                 585
---------------------------------------------------------------------------
Gross profit                                      5,248                 449
Administrative Expenses                           2,049                 424
---------------------------------------------------------------------------
Results from operating activities                 3,199                  25
Finance income                                        -                 100
Finance cost                                        155                  15
---------------------------------------------------------------------------
Profit before income tax                          3,044                 110
Income Tax expense                                1,150                   -
---------------------------------------------------------------------------
Profit for the period                             1,894                 110
Loss on foreign currency translation               (714)               (676)
----------------------------------------------------------------------------
Total comprehensive income/(loss) for the
 period                                           1,180                (566)
----------------------------------------------------------------------------
Earnings per share (cents)
  Basic                                            0.38                0.02
  Diluted                                          0.35                0.02
---------------------------------------------------------------------------

----------------------------------------------------------------------------
Condensed Consolidated Statement of Financial Position
(in thousands of Canadian dollars)
                                                         Mar 31,     Dec 31,
                                                            2011        2010
                                                               $           $
Total assets                                              39,910      34,520
Total liabilities                                         14,807      11,699
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Condensed Consolidated Statement of Cash Flows
(in thousands of Canadian dollars)
                                                Three months ended March 31,
                                                        2011            2010
Cash provided by (used in)                                 $               $
Profit for the period                                  1,894             110
Adjustments to reconcile net cash from
 operations                                            2,960             561
Changes in non-cash operating account
 balances                                                (72)            612
Income tax paid                                          (96)              -
----------------------------------------------------------------------------
Cash from operations                                   4,686           1,283
Net expenditures on capital items and
 mineral properties                                    3,523           1,025
Net cash from/(used in) financing activities             (91)            771
----------------------------------------------------------------------------
Increase/(decrease) in cash for the period             1,072           1,029
Cash and cash equivalents at the start of
 the period                                            1,145           1,623
Cash and cash equivalents at the end of the
 period                                                2,217           2,652
----------------------------------------------------------------------------

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
[phone]

OR

BuckBias
Alex Buck
[phone]

OR

Collins Stewart
John Prior/Sebastian Jones
[phone]

Caledonia Mining Corp