Issue of Equity

Caledonia Mining Corporation
06 July 2006


                          Caledonia Mining Corporation

                      Caledonia Completes Private Placement
                  and Confirms Blanket Transaction now Closed

Toronto, Ontario - July 6th 2006: Caledonia Mining Corporation ('Caledonia')
(TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce the completion
of a $3,625,928 private placement financing which was first disclosed in the
first quarter report. Caledonia is also pleased to confirm that the transaction
to purchase the Blanket Gold Mine in Zimbabwe, originally announced in our press
release of June 20th 2006, has been closed as of July 5th 2006.

The Blanket Mine has Proven & Probable Mineral Reserves totaling 3.2 million
tonnes with an average grade of 4.24 grams per tonne. The Mine currently mills
600 tonnes per day of underground ore at an average grade of 4.1 grams per tonne
and produces an average of 2,100 ounces of gold per month. Further details are
available in the June 20th release and on the Caledonia website. Dr Trevor
Pearton, PhD, FGSSA., Caledonia's Geological Consultant, is Caledonia's
'Qualified Person' with respect to the Blanket Mine property for the purposes of
Canadian National Instrument 43-101.

The placement, which was handled by fiscal agents in Europe, was for 34,828,259
units priced at between $0.12 and $0.15 each. Each unit consists of one common
share and one share purchase warrant. Each warrant entitles the holder to
purchase one common share of Caledonia at a price of between $0.15 and $0.18 for
a period of 12 months from the date of issue. The new shares, which cannot be
traded for four months from the date of issue, are expected to be admitted to
trading on AIM on 11 July 2006.

In conjunction with this financing, Caledonia Mining Corporation has made a
block listing application for 34,828,259 common shares to be admitted to trading
on AIM, with admission expected to occur on 11 July 2006. The block listing
arrangement is being put in place for the 34,828,259 warrants that were issued
pursuant to the share placement, as mentioned above.

The funds raised will be used to fund the optimization of the underground
production and metallurgical circuit at the recently completed Plant expansion
at the Barbrook Mine in South Africa, and the exploration activities at the
Rooipoort PGE Project in South Africa and for general corporate purposes.

Caledonia continues to be debt free.

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

For more information, please contact:

Stefan Hayden                                     Alex Buck / Nick Bias
President and CEO, Caledonia Mining               buck-bias
Tel: [phone]                              Tel: [phone]

Certain statements included herein are 'forward-looking statements'.  Management
cautions that forward-looking statements are not guarantees and that actual
result could differ materially from those expressed or implied in the
forward-looking statements.  Important factors that could cause the actual
results of operations, exploration or development programs, or the financial
condition of the Company, to differ include, but are not necessarily limited to,
the risks and uncertainties discussed in documents filed by the Company with the
various regulatory authorities having jurisdiction.



                      This information is provided by RNS
            The company news service from the London Stock Exchange