1st Quarter Results
Caledonia Mining Corporation
16 May 2006
CALEDONIA MINING CORPORATION
Caledonia Mining 1st Quarter Results 2006
Toronto, Ontario - May 16 2006: Caledonia Mining Corporation ('Caledonia') (TSX:
CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce its operating and
financial results for the quarter ended 31 March 2006. The financial results are
reported in Canadian dollars, except where otherwise stated.
Operational Highlights:
Barbrook Gold Mine
* Completed plant expansion to 15,000 tonnes per month capacity and
commissioned new plant on the January 26th, which resulted in a first quarter
with just over 2 months of revenue.
* Production improvements were evident during the first quarter and
are expected to continue as mining and milled tonnages are increased.
Exploration
* Acquired a 100% interest of Falconbridge's prospecting rights
adjoining the Company's Rooipoort Platinum Project, which effectively doubles
the area of the Rooipoort Project.
* Received notification from the South African Department of Energy
and Minerals that the old mining rights for this acquisition have been converted
to New Order Rights.
Corporate/Financial
* Completed the private placement, commenced in December 2005, and
raised $1,475,065 after expenses through the issue of 15,437,626 common shares
and 15,437,626 share purchase warrants.
For the quarter ended March 31, 2006 Caledonia recorded a net loss of
$2.3million ($0.006 per share) compared to a net loss of $1.8 million ($0.007
per share) during the same period in 2005. The loss in 2006 results from
operations at Barbrook during the plant expansion, the normal administration
expenses and ongoing exploration costs during the quarter.
Reviewing the quarter, Stefan Hayden, President and Chief Executive Officer,
said 'This quarter has been mainly focused on the Barbrook Gold Mine in South
Africa with the commissioning of the plant expansion, optimizing the
metallurgical circuit and ramping up tonnage from the underground mine to 15,000
tonnes per month. The commissioning of the plant on January 26 has resulted in
only two months of revenue during this quarter. In April 513 ounces of gold were
recovered from 9,450 tonnes milled, this compares with 902 ounces produced from
the 19,357 tonnes treated during the two months of operation in the first
quarter. This is expected to further improve as the goldlock-up in the new
circuit is recovered.
Underground development continues in a number of ore zones to provide additional
reserves and resources and allow for additional flexibility to the underground
operations.
At the Rooipoort Platinum Project, we are very excited about the acquisition of
Falconbridge's prospecting rights which effectively doubles the area of the
Rooipoort project and greatly enhances the potential economic viability of this
project. The properties are situated at the southern end of the highly
prospective north limb of the Bushveld Complex, some 50km south of the Anglo
Platinum open pit mining operation on the Platreef. Intensive exploration is
being conducted along the entire length of this 110km prospective zone by a
number of companies, including AfriOre, Anooraq, Pan-Palladium, Ivanhoe Nickel &
Platinum, PTM and AIM Resources.
Caledonia is evaluating the near surface, up-dip extensions of this
mineralization on the Rooipoort and Grasvally properties in this 'central zone'
with the initial aim of drilling and delineating an open pit resource as soon as
the necessary permits have been granted by the South African authorities.
Negotiations with a number of large potential end users of cobalt continued and
the economic studies related to producing cobalt carbonates and hydroxides at
Nama have been updated'.
For further information please contact:
Caledonia Mining BuckBias
Stefan Hayden, President and CEO Alex Buck / Nick Bias
Tel: +27 11 447 2499 Tel: +44 7932 740 452
Further information regarding Caledonia's exploration activities and operations,
along with its latest financials may be found at www.caledoniamining.com.
The full Quarterly Report is set out below.
Certain statements included herein are 'forward-looking statements'. Management
cautions that forward-looking statements are not guarantees and that actual
results 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.
2006 FIRST QUARTER HIGHLIGHTS
Barbrook Gold Mine
* Completed plant expansion to 15,000 tonnes per month capacity and
commissioned new plant in late January.
* Production improvements were evident during first quarter and are
expected to continue as mining and milled tonnages are increased.
Exploration
* Acquired a 100% interest in prospecting rights covering a total area
of 4,315.8 hectares adjoining the company's Rooipoort PGE project. Subsequent to
this acquisition Caledonia received notification from the DME that the old
mining rights for this acquisition had been converted to New Order Rights.
Corporate/Financial
* Mr. Steve Curtis was appointed Vice President Finance and Chief Financial
Officer, replacing Mr. M. Tombs who has completed his employment contract.
* Completed the private placement commenced in December 2005 and raised
$1,475,065 after expenses through the issue of 15,437,626 common shares and
15,437,626 share purchase warrants.
2006 OBJECTIVES
* Optimise gold production at Barbrook Mine in South Africa by
treating at least 15,000 t.p.m.
* Continue developing additional reserves/resources at Barbrook
Mine.
* Complete metallurgical studies to confirm viability of
economic gold recovery from Daylight & Victory ores at Barbrook
Mine.
* Improve safety awareness at Barbrook Mine and further develop
necessary programs to ensure a safe operation.
* Further explore the polymetallic resource on the farms
Rooipoort and Grasvally which form the Rooipoort PGE/Ni/Cu
Exploration Project in South Africa.
* Increase the land holdings around the Rooipoort Exploration
Project area.
* Drill identified extensions to the known ore zones on the
Eersteling and Zandrivier Mining Licence areas.
* Continue with negotiations to conclude an agreement with a
cobalt end producer to purchase cobalt concentrate produced at
Nama and/or form strategic alliances to achieve this objective.
* Seek a joint-venture partner to commence an exploration program
at the Kadola copper/cobalt and the Eureka copper/gold
properties in Zambia.
* Pursue possible acquisitions and/or strategic partnerships to
expand Caledonia's portfolio of properties.
* Expand the Board of Directors to address ongoing Corporate
Governance requirements.
* Implement succession plans for senior executive and
operational staff.
* Strengthen the Investor Relations and Public Relations
functions within Caledonia.
* Conclude necessary agreements to satisfy the South African
Black Economic Empowerment ('BEE') requirements.
* Arrange necessary financing to support the activities required
to meet these objectives.
President's Message
Now that the commissioning of the plant expansion at the Barbrook Gold Mine in
South Africa has been completed, all efforts are focused on optimizing the
metallurgical circuit and ramping up tonnage from the underground mine to reach
and exceed the planned tonnage of 15,000 tonnes per month. A number of mining
areas outside the main French Bob zone are being developed to provide additional
reserves and resources, and to allow mining to take place in a number of other
ore zones thereby providing additional flexibility to the underground
production.
Exploration work continued at the Rooipoort Platinum Project, south of Mokopane
in South Africa, but has been limited by excessive rainfall. Soil sampling will
resume as soon as conditions permit. In March Caledonia concluded an agreement
to acquire a 100% interest in Falconbridge's prospecting rights covering the
farms Moordrift 289KR, Jaagbaan 291KR, and portions of Grasvally 293KR, a total
area of 4,316 hectares and adjacent to the western and southern boundaries of
the Rooipoort Project area. This acquisition greatly enhances the potential
economic viability of the Rooipoort Project as it effectively doubles the
exploration area, which is underlain by Bushveld Complex rocks with proven PGE
potential.
At the end of the quarter, Mike Tombs, CFO left Caledonia's employ at the end of
his employment contract. I wish to thank Mike for his efforts on the
Corporation's behalf. I would like to welcome Steve Curtis as the new CFO. Steve
previously worked in the mining sector and has extensive experience as Financial
Director in the South African manufacturing industry.
Negotiations with a number of large potential cobalt end-users continued and the
economic studies related to producing cobalt carbonates and hydroxides at Nama
are being updated.
'Signed'
S. E. Hayden
President and Chief Executive Officer
Management's Discussion and Analysis
Expressed in Canadian Dollars
This discussion provides updated information to the Management Discussion and
Analysis contained in the Caledonia's Annual Report for 2005 which have been
filed on SEDAR and are available at www.sedar.com or on the Corporation's
website at www.caledoniamining.com, where no comments are made there are no
updates to report.
OPERATIONAL REVIEW
Barbrook Mines Limited
The metallurgical plant expansion at the Barbrook Gold Mine was completed in
December, the change over to the new plant commenced on January 3rd and
commissioning of the new plant was started on January 26th. During February and
March the plant throughput was progressively increased, reaching 10,500 tonnes
in March. Tonnage from underground was constrained by a series of oversized
rocks in the orepass system which created a bottleneck and diluted the mined
grade from underground. These rocks originated in a waste pillar which sloughed
into the stope.
The reduction in Gold Sales Revenue for the quarter compared with the same
period in 2005 is due to the lack of production in January while the plant was
being commissioned, accumulations of gold in the metallurgical circuit which
have not yet been recovered, in addition there was a gold theft of approximately
60 ounces of gold from Barbrook during the quarter.
The 'ultra-fine milling' section of the plant was not fully operational during
the quarter and was temporarily replaced by recommissioning secondary grinding
in the Sala mill until the density control system to the Ultra Fine Milling
circuit is installed and commissioned early May 2006. Excessive gold lockup in
the circuit was identified and steps are being taken to reduce this.
Underground development is continuing in the Taylors, French Bob, Twalas,
Victory and Brown zones to develop additional resources in these zones.
Barbrook mine - 2006 Production Results
First Quarter April
Ore mined Tonnes 27,565 7,982
Development advance Meters 795 329
Ore milled Tonnes 19,357 9,450
Grade milled g/t 3.78 3.04
Gold recovered Ounces 902 513
CONSOLIDATED FINANCIAL RESULTS
For the quarter ended March 31, 2006 Caledonia recorded a net loss of
$2,3million ($0.006 per share) compared to a net loss of $1.8 million ($0.007
per share) during the same period in 2005 and a net loss of $1.7 million ($0.007
per share) in the first quarter of 2004. The loss in 2006 results from
operations at Barbrook, the normal administration expenses and ongoing
exploration costs during the quarter.
Financing
The private placement, initiated during December 2005, was completed in January
and February 2006. In 2006 15,437,626 units, each consisting of one common share
and one share purchase warrant, were issued raising $1,475,065 net of expenses.
In all, this placement raised $3,180,633 after expenses and issued 33,287,626
units.
In April 2006 the company commenced a private placement to raise additional
funds. To date this placement has raised $2 million from the sale of 16,666,667
units. Each unit consists of one common share and one share purchase warrant.
These funds will be used for general working capital and opportunities as they
may arise.
Summary of Quarterly Results
The following information is provided for each of the eight most recently
completed quarters of the company: (in thousands of Canadian dollars except per
share amounts)
Q1-2006 Q4-2005 Q3-2005 Q2-2005 Q1-2005 Q4-2004 Q3-2004 Q2-2004
Net Sales
or $418 $453 $743 $965 $481 $469 $202 $30
Total
Revenues
(Net loss)
- total ($2,266) ($2,054) ($2,564) ($3,276) ($1,786) ($4,569) ($2,250) ($1,435)
- per
share
undiluted ($0.006) ($0,006) ($0.008) ($0.011) ($0.007) ($0,015) ($0.008) ($0.005)
- per
share
diluted ($0.006) ($0,006) ($0.008) ($0.011) ($0.007) ($0,015) ($0.008) ($0.005)
Note: As there are no extraordinary items the disclosed net loss per share is
identical to the total loss before extraordinary items.
EXPLORATION AND PROJECT DEVELOPMENT
Eersteling Gold Exploration Project
Logging and sampling of trenches in the central Pienaar area of the Eersteling
mine was ongoing during the quarter, it was however limited as mobility over the
exploration was restricted by heavy rains. A total of 64 trench channel samples
were collected for analysis and 85 meters were logged in two trenches.
Rooipoort and Grasvally Platinum Exploration Project
Soil geochemical sampling planned for the Rooipoort Platinum Exploration Project
near Mokopane (Potgietersrus), South Africa was also delayed by exceptional
rainfall conditions.
In March Caledonia concluded an agreement, on behalf of its wholly owned South
African subsidiary company Eersteling Gold Mining Company Limited
('Eersteling'), with Falconbridge Ventures of Africa (Pty) Ltd ('Falconbridge'),
to acquire a 100% interest in Falconbridge's prospecting rights covering the
farms Moordrift 289KR, Jaagbaan 291KR, and portions of Grasvally 293KR, a total
area of 4,315.8 hectares. This acquisition effectively doubles the area of
Caledonia's Rooipoort Project underlain by Bushveld Complex rocks with proven
PGE potential.
The Rooipoort Project properties are situated at the southern end of the highly
prospective north limb of the Bushveld Complex, some 50km south of the Anglo
Platinum open pit mining operation on the Platreef. Intensive exploration is
being conducted along the entire length of this 110km prospective zone by a
number of companies, viz. AfriOre, Anooraq, Pan-Palladium, Ivanhoe Nickel &
Platinum, PTM and AIM Resources.
The Moordrift, Jaagbaan and Grasvally farms adjoin the western and southern
boundary of Caledonia's Rooipoort (PGE/Au/Ni/Cu) Project area and contain the
down dip extension of PGE/Ni/Cu mineralization that was recently discovered by
Caledonia on the western side of Rooipoort farm. Falconbridge conducted limited
exploration drilling on the Rooipoort boundary and on Grasvally and intersected
the down dip extension of the mineralisation intersected by Caledonia, described
above. Results from this drilling program are available in the Press Release of
March 13, 2006 which is available on the Caledonia website at
(www.caledoniamining.com).
Falconbridge drilled 19 holes focused on an additional PGE mineralised horizon
situated to the west of this earlier drilling (Western Target Zone). The
location of these holes and the results of this drilling can be found in the
Investor Centre on the Caledonia website (www.caledoniamining.com) under
Technical Reports, in the document titled 'Rooipoort PGE/Au/Ni/Cu Project -
Falconbridge Property Acquisition - Drilling Results'.
This reef horizon is characterized by a highly favourable 3 Pt: 1 Pd ratio.
Falconbridge concentrated on following up their best intersection in hole
MD03-02 (6.86 m @3.38g/t Pt; 1.23 g/t Pd; 0.57 g/t Au; 0.23% Ni; and 0.29% Cu)
as a probable conformable structure. Caledonia's interpretation of rock
alteration and of the aeromagnetic data indicates the possibility of more
irregular vertical 'cathedral type' structures that could have been missed by
Falconbridge's vertical drilling for a planar west dipping reef.
Caledonia is evaluating the near surface, up-dip extensions of this
mineralization on the Rooipoort and Grasvally properties in this 'central zone'
with the initial aim of drilling and delineating an open pit resource as soon as
the necessary permits have been granted by the South African authorities.
This property and data acquisition opens up an extensive new target area of PGE
mineralisation and greatly enhances the potential economic viability of
Caledonia's Rooipoort PGE/Au/Ni/Cu Project by more than doubling the area
underlain by highly prospective PGE/Au/Ni/Cu mineralised stratigraphy already
identified by drilling.
Subsequent to this acquisition the DME advised that it had converted the old
mining rights to New Order Rights. Application to the South African authorities
to transfer these Falconbridge rights to Eersteling has commenced.
SUPPLEMENT TO THE FINANCIAL STATEMENTS
As at April 30, 2006 the following securities were outstanding:
• 402,819,429 common shares.
• 16,898,000 common share purchase options at an average price of $0.21
maturing at various dates until February 1, 2015.
• 33,287,626 common share purchase warrants exercisable at a price of
$0.20 per share until February 3, 2008 and 16,666,667 share purchase
warrants exercisable at a price of $0.15 per share until April 28, 2007.
Caledonia Mining Corporation
Consolidated Balance Sheets
(in thousands of Canadian dollars)
March 31, December 31,
(Unaudited) 2006 2005
Assets
Current
Cash and short term deposits $293 $1,076
Accounts receivable 415 768
Inventories 362 90
Prepaid expenses 332 330
--------- ---------
1,402 2,264
Investment at cost 79 79
Capital assets 9,769 9,156
Mineral properties 11,081 10,839
--------- ---------
$22,331 $22,338
---------------------------------- --------- ---------
Liabilities and Shareholders' Equity
Current $281 $197
Bank overdraft
Accounts payable 3,059 2,392
--------- ---------
3,340 2,589
Asset retirement obligation (Note 4) 389 377
--------- ---------
3,729 2,966
Shareholders' Equity (Note 1)
Share capital 181,528 180,053
Contributed surplus 944 923
Deficit (163,870) (161,604)
--------- ---------
18,602 19,372
--------- ---------
$22,331 $22,338
---------------------------------- --------- ---------
On behalf of the Board:
'Signed' Director
F. C. Harvey
'Signed' Director
J. Johnstone
Caledonia Mining Corporation
Consolidated Statements of Deficit
(in thousands of Canadian dollars)
For the three months ended March 31,
(Unaudited) 2006 2005 2004
Deficit, beginning of period (161,604) (151,924) (141,945)
Net (loss) for the period (2,266) (1,786) (1,725)
--------- --------- ---------
Deficit, end of period ($163,870) ($153,710) ($143,670)
Consolidated Statements of Operations
(in thousands of Canadian dollars except per share amounts)
For the three months ended March 31,
(Unaudited) 2006 2005 2004
Revenue and operating costs
Revenue from sales $418 $481 $140
Operating costs 2,350 1,748 1,315
--------- --------- ---------
Gross profit (loss) (1,932) (1,267) (1,175)
--------- --------- ---------
Costs and expenses
General and administrative 255 496 299
Other expense (income) (Note 3) 79 23 264
--------- --------- ---------
334 519 563
--------- --------- ---------
(Loss) before non-controlling interest (2,266) (1,786) (1,738)
Non-controlling interest - - 13
--------- --------- ---------
Net (loss) for the period ($2,266) (1,786) ($1,725)
--------------------------- --------- --------- ---------
Net (loss) per share (Note 2)
Basic and fully diluted ($0.006) ($0.007) ($0.007)
--------------------------- --------- --------- ---------
Caledonia Mining Corporation
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
For the three months ended March 31,
(Unaudited) 2006 2005 2004
Cash provided by (used in)
Operating activities
Net (loss) for the period ($2,266) ($1,786) ($1,725)
Adjustments to reconcile net cash from 213 192 90
operations (note 4)
Changes in non-cash working capital 746 (143) 12
Balances (note 4)
--------- --------- ---------
(1,307) (1,737) (1,623)
--------- -------- ---------
Investing activities
Expenditures on capital assets (730) (187) (187)
Expenditures on mineral properties (305) (1,156) (183)
--------- --------- ---------
(1,035) (1,343) (370)
--------- --------- ---------
Financing activities
Bank overdraft increase 84 - -
Issue of share capital net of issue costs 1,475 - 9,282
--------- --------- ---------
1,559 - 9,282
--------- --------- ---------
Increase (decrease) in cash for the period (783) (3,080) 7,289
Cash and cash equivalents, beginning of period 1,076 6,470 4,179
--------- --------- ---------
Cash and cash equivalents, end of period $293 $3,390 $11,468
--------- --------- ---------
Caledonia Mining Corporation
Summary of Significant Accounting Policies
(Unaudited) For the three months ended March 31, 2006, 2005 and 2004
Nature of Business
The Company is engaged in the acquisition, exploration and development of
mineral properties for the exploitation of base and precious metals. The ability
of the Company to recover the amounts shown for its capital assets and mineral
properties is dependent upon the existence of economically recoverable reserves;
the ability of the Company to obtain the necessary financing to complete
exploration and development; and future profitable production or proceeds from
the disposition of such capital assets and mineral properties.
Basis of Presentation
These financial statements have been prepared on the basis of a going concern,
which contemplates that the Company will be able to realize assets and discharge
liabilities in the normal course of business. The Company's ability to continue
as a going concern is dependent upon attaining profitable operations and
obtaining sufficient financing to meet its liabilities, its obligations with
respect to operating expenditures and expenditures required on its mineral
properties.
Measurement Uncertainties
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. The more significant areas
requiring estimates relate to mineral resources, future cash flows associated
with capital assets and mineral properties. Management's calculation of reserves
and resources and cash flows are based upon engineering and geological estimates
and financial estimates including gold prices and operating costs. The amount
ultimately recovered could be materially different than the estimated values.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
together with all its subsidiaries. All significant inter-company balances and
transactions have been eliminated on consolidation.
The Company's consolidated (all 100% owned) subsidiaries are Barbrook Mines
Limited ('Barbrook'), Eersteling Gold Mining Company Limited (100% owned since
June 2004) ('Eersteling') Greenstone Management Services (Proprietary) Limited,
Fintona Investments (Proprietary) Limited, Maid O' Mist (Proprietary) Limited,
Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama
Limited and Caledonia Western Limited.
Cash and Cash Equivalents
Cash and cash equivalents represent cash on hand in operating bank accounts and
money market funds
Inventories
Inventories are stated at the lower of cost, which is determined on the
first-in, first-out basis, and net realizable value.
Revenue Recognition
Revenue from the sale of precious metals is recognized when the benefits of
ownership are transferred and the receipt of proceeds is substantially assured.
Capital Assets
Producing Assets
Producing assets are recorded at cost less grants, accumulated amortization and
write-downs. Producing assets are amortized using the straight line method basis
on the estimated useful lives of the assets. The estimated useful life of the
producing assets ranges up to 10 years. Repairs and maintenance expenditures are
charged to operations; major improvements and replacements which extend the
useful life of an asset are capitalized and amortized over the remaining useful
life of that asset. Barbrook continues to undertake activities to re-establish
commercial operations and has been presented as a producing asset in these
financial statements for 2006, 2005 and 2004. As of December 31, 2002, the
Company did not have any producing capital assets.
Non-Producing Assets
Non-producing assets are recorded at cost less write downs. During non-producing
periods, no amortization is recorded.
At the time of commercial production, the assets are reclassified as producing
and amortized in the manner described above.
Mineral Properties
Producing Properties
When and if properties are placed in production, the applicable capitalized
costs are amortized using the unit-of-production method on the ratio of tonnes
of ore mined or processed to the estimated proven and probable mineral reserves
as defined by the Canadian Institute of Mining, Metallurgy and Petroleum.
Barbrook continues to undertake activities to re-commence commercial operations
and has been presented as a producing asset in these financial statements for
2006, 2005 and 2004. For the 2002 fiscal year the Company did not have any
producing mineral properties.
Non-Producing Properties
Costs relating to the acquisition, exploration and development of non-producing
resource properties which are held by the Company or through its participation
in joint ventures are capitalized until such time as either economically
recoverable reserves are established, or the properties are sold or abandoned.
A decision to abandon, reduce or expand activity on a specific project is based
upon many factors including general and specific assessments of mineral
reserves, anticipated future mineral prices, anticipated costs of developing and
operating a producing mine, the expiration date of mineral property leases, and
the general likelihood that the Company will continue exploration on the
project. However, based on the results at the conclusion of each phase of an
exploration program, properties that are not suitable as prospects are
re-evaluated to determine if future exploration is warranted and that carrying
values are appropriate.
The ultimate recovery of these costs depends on the discovery and development of
economic ore reserves or the sale of the properties or the mineral rights. The
amounts shown for non-producing resource properties do not necessarily reflect
present or future values.
Strategic Alliances
The Company has entered into various agreements under which the participants
earn a right to participate in the mineral property by incurring exploration
expenditures in accordance with the conditions of the agreements. Upon
satisfaction of the conditions of any agreement a joint venture may be formed
with customary joint venture terms and provisions and then accounted for on a
proportionate consolidation basis. Until a joint venture is formed only
expenditures on the properties incurred by the Company are reflected in these
financial statements.
Foreign Currency Translation
Balances of the Company denominated in foreign currencies and the accounts of
its foreign subsidiaries are translated into Canadian dollars as follows:
(i) monetary assets and liabilities at period end rates;
(ii) all other assets and liabilities at historical rates; and
(iii) revenue and expense transactions at the average rate of exchange
prevailing during the period.
Exchange gains or losses arising on these translations are reflected in income
in the period incurred. Gains and losses arising on translation of long term
foreign currency denominated liabilities at each year end are reflected in
income.
Asset Retirement Obligation
Effective January 1, 2004 the Company adopted the Canadian Institute of
Chartered Accountants Standard 3110, 'Asset Retirement Obligations' This
standard requires that a liability for retirement obligations to be settled as a
result of an existing law, regulation or contract be recognized.
Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, future tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Future tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply when the asset is
realized or the liability settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the period that
substantive enactment or enactment occurs.
Caledonia Mining Corporation
Notes to the Consolidated Financial Statements
(Unaudited) For the three months ended March 31, 2006
1. Share Capital
Authorised:
An unlimited number of common shares
An unlimited number of preference shares a
Issued - Common Shares
Number of Shares Amount (000's)
-------------------------- ----------- -----------
Balance, December 31, 2005 370,715,136 $180,053
-------------------------- ----------- -----------
Issued pursuant to private placement 15,437,626 1,621
-------------------------- ----------- -----------
Balance, March 31, 2006 386,152,762 $181,674
-------------------------- ----------- -----------
Issued - Preference Shares Nil
Stock Option Plans
The Company has established incentive stock option plans for employees,
officers, directors, consultants and other service providers. As at March 31,
2006, the Company has 16,898,000 common share options exercisable at an average
price of $0.21 maturing at various dates until February 1, 2015
Share Purchase Warrants
The Company has 33,287,626 share purchase warrants outstanding exercisable at an
average price of $0.20 maturing at various dates until February 3, 2008
2. Net (Loss) Per Share
The net (loss) per share figures have been calculated using the weighted average
number of common shares outstanding during the first quarter which amounted to
380,714,447. Under the treasury method of calculating fully diluted income per
share, exercise of the outstanding stock options and warrants would be
anti-dilutive in 2006
3. Other Expense (Income)
Included in other expense (income) are unrealized exchange translation gains of
$102,000 (2005 -gain of $134,000, 2004 - loss of $234,000) and an amortization
charge of $180,751 (2005 - $158,000, 2004 - $ nil). The amortization charge
relates mainly to Barbrook, where increasing production levels lead to
increasing amortization charges in terms of the accounting policies detailed
under 'Mineral Properties' on page 12 above.
4. Supplemental Cash Flow Information
Items not involving cash are as follows:
2006 2005 2004
Accretion asset retirement obligation $12 $0 $4
Non-controlling interest - - (13)
---------- ---------- ---------
Amortization 181 158 -
Other 20 34 99
---------- ---------- ---------
$213 $192 $90
---------- ---------- ---------
The net changes in non-cash working capital balances for continuing operations
are as follows:
2006 2005 2004
Accounts payable $667 ($155) ($229)
Accounts receivable 353 68 31
Inventories (272) 29 86
Prepaid expenses (2) (85) 124
---------- ---------- ---------
$746 $(143) $12
---------- ---------- ---------
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