Memorandum of Understanding

Caledonia Mining Corporation
15 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 of
a 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 been
finalized.

Under South African legislation introduced in May 2004, and in order to receive
New Order Prospecting Rights and Mining Licences, Caledonia must comply with the
Minerals and Petroleum Resources Development Act 2002. The Act refers in
particular to a requirement for an effective Black Economic participation of at
least 26% equity in mining companies within ten years.

In terms of the transaction being negotiated, the Consortium will at a
negotiated fair market value, purchase an equity interest of at least 15% in
Caledonia's South African assets with the option to acquire up to 30% of these
assets thereafter.

Stefan Hayden, President and CEO of Caledonia, said: 'Caledonia has taken an
important first step towards ensuring our South African assets comply with local
legislation required to receive the New Order Prospecting Rights and Mining
Licenses. We have carefully selected this Consortium for its proven leadership
and the broad representation of its members which includes woman's groups and
the local communities in areas where Caledonia operates. We believe our new
partners will be active stakeholders, contributing to the growth and expansion
of the South African business for the benefit of all our shareholders.'

For more information, please contact:

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

Further information regarding Caledonia's exploration activities and operations
along 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