Re Agreement

Caledonia Mining Corporation
29 January 2008



           Caledonia Mining Announces Cobalt Off-take Agreement with
                             Large Chinese Refiner



Toronto, Ontario - January 29, 2008:  Caledonia Mining Corporation ('Caledonia')
(TSX: CAL, NASDAQ-OTCBB: CALVF, AIM: CMCL) is pleased to announce the signing of
a cobalt off-take agreement with a large Chinese refiner.  Under the terms of
the agreement, Caledonia will supply a minimum of 21,000 tonnes of cobalt metal
equivalent in the form of cobalt hydroxide from its Nama Cobalt Project over the
next six years. The agreement specifies that the price shall be based on the
published monthly average for 99.3% cobalt from the London Metal Exchange, and
contains a guaranteed 'Take or Pay' minimum cobalt price of US$12/lb of cobalt
metal.  The agreement is renewable.



Caledonia's 100% owned Nama Project is located in Northern Zambia.  Caledonia
plans to commence mining Anomalies 'A' and 'C' using open pit mining methods,
pre-concentration and conventional cobalt extractive technology.



Caledonia is proceeding with detailed mine planning and is targeting
commencement of production by early 2009 at an expected annual production level
of 10,000 tonnes of cobalt metal.  An internal feasibility study has estimated
capital expenditure at US$125 million and production costs below US$10/lb. The
cobalt project will become the main strategic focus for Caledonia going forward.



Commenting on the announcement, Stefan Hayden, President and CEO of Caledonia
Mining said 'The signing of this cobalt off-take agreement marks an important
milestone for Caledonia as we commence with the development of Nama, which I
expect will  prove to be one of the world's largest primary cobalt deposits.  In
the context of current spot prices for cobalt of US$44/lb and the floor price of
US$12/lb, this contract represents substantial value and confirms Caledonia's
potential to become one of the key primary players in the cobalt market.
Negotiations on further agreements with refiners continue. With rising demand
from China, India and America, we believe the fundamentals for cobalt remain
robust in the near-term.'



For more information, please contact:


Stefan Hayden, President & CEO                Alex Buck                        Andrew Smith
Caledonia Mining                              BuckBias                         RBC Capital Markets
Tel: [phone]                          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