www.caledoniamining.com

Company Presentation

August December 2011

CALEDONIA MINING CORPORATION

May 2012

2012 AGM Presentation

Disclaimer

2

This presentation does not constitute, or form part of, any offer to sell or issue or any solicitation

of any offer to purchase or subscribe for, any shares in Caledonia, nor shall it (or any part of it) or

the fact of its distribution, form the basis of, or be relied on in connection with, or act as an

inducement to enter into any contract or agreement thereto.

Certain forward looking statements may be contained in the presentation which include, without

limitation, expectations regarding metal prices, estimates of production, operating expenditure,

capital expenditure and projections regarding the completion of capital projects as well as the

financial position of the company. Although Caledonia Mining Corporation (“Caledonia”) believes

that the expectations reflected in such forward-looking statements are reasonable, no assurance

can be given that such expectations will prove to be accurate. Accordingly, results could differ

from those projected as a result of, among other factors, changes in economic and market

conditions, changes in the regulatory environment and other business and operational risks.

Accordingly, neither Caledonia, nor any of its directors, officers, employees, advisers, associated

persons or subsidiary undertakings shall be liable for any direct, indirect or consequential loss or

damage suffered by any person as a result of relying upon this presentation or any future

communications in connection with this presentation and any such liabilities are expressly

disclaimed

Caledonia 2012 AGM Presentation

Contents

1. Operations

Blanket Gold Mine, Zimbabwe

Nama Base Metals, Zambia

2. Financial Performance

3. Corporate Issues

4. Outlook

5. Questions

3

Blanket Gold Mine, Zimbabwe Introduction

4

1. Safety, Health and Environment (SHE)

2. Production

3. Costs

4. Investment

5. Exploration

6. Indigenisation

Blanket Gold Mine, Zimbabwe Safety, Health and Environment

5

• Higher number of restricted work incidents in 2011 is being addressed by training and

SHE programs.

• Incidents in Q1 of 2012 shows improvement on the incident rate in 2011

• No environmental issues

Blanket Gold Mine, Zimbabwe Production

6

• May 2011: 18-22 Level ore

pass commissioned

• Q2-3 2011: rehabilitation of

L18 and L22 haulages

• Q4 2011 production

exceeds quarterly target of

10,000oz

• Q1 2012 production

temporarily affected by

shaft maintenance

• April 2012 production

3,722oz (44,600oz

annualised)

2012 production guidance of 40,000oz: 12% increase on 2011

Blanket Gold Mine, Zimbabwe Production

7

• Grade in 2011: lower grade areas economic to mine; dilutive effect of introduction of

additional long-hole stoping sections.

– Grade is expected to remain stable at approximately 3.8-4.0 g/t.

• Sustained improvement in recovery due to investments in the milling and Carbon-in-

Leach circuits.

– Gold recoveries expected to remain in the 93.0% to 93.5% range

Blanket Gold Mine, Zimbabwe Costs

8

• Downward trend in cash costs per ounce in 2011, despite increased input costs

• Increased Q1 2012 cost per ounce due to lower production and one-off expense items

Blanket Gold Mine, Zimbabwe Costs

9

• Blanket remains a low-cost African producer

Blanket Gold Mine, Zimbabwe Capital Investment

10

• Reduced investment requirement

after completion of No.4 Shaft

Project and related works

• New investment restricted to

essential items and low capital,

high return projects until the

investment climate improves

• Post indigenisation investment will

be funded from Blanket cash flows

• Any major investment at Blanket

which requires shareholder

funding will be funded by all

shareholders on a pro-rata basis

• Failure to participate in funding

calls will result in dilution

Blanket Gold Mine, Zimbabwe Exploration

11

• Surplus capacity at the Blanket metallurgical plant means additional ore can be

processed without capital investment or increased fixed overheads

• Two exploration and development programmes are under way to identify incremental ore

• At Blanket Mine the continuations of known ore-shoots via the L22 Haulage development

and exploration

– Target being the identification of up to 10 million tonnes or 1.25moz down to 1,300 m

– Approximately 36 months to revised NI 43-101, followed by feasibility study

• At Blanket’s portfolio of Satellite Properties

– Underground development exploration activities have started at Eagle Vulture and are

scheduled to start shortly at GG and Mascot

– Timing and amount of any future production is subject to exploration

• Illustratively, daily throughput of 1,800tpd would result in gold production of 70,000oz pa

Blanket Gold Mine, Zimbabwe Indigenisation

12

• Zimbabwe Law requires 51% Indigenous Zimbabwean (“IZ”) ownership

• 20 February 2012: Memorandum of Understanding signed: IZ’s to acquire 51% of Blanket

Mine

– IZ owners will comprise employee and community trusts, National Indigenisation and

Economic Empowerment Fund and others

• Transaction value $30.09m ($59m on a 100% basis)

• Vendor-financed

– In the absence of third party funding Caledonia will extend loans to the purchasers

– Loans will be repaid from 80% of the purchaser’s share of future Blanket dividend.

– Interest at LIBOR plus 10% on outstanding facilitation balances

– Loan tenor depends on Blanket’s financial performance and dividend payments

Blanket Gold Mine, Zimbabwe Indigenisation

13

• Caledonia Management is implementing the MoU

– Agreement signed for sale of 15% to Flemiro, a consortium of IZ parties

– Agreement signed for donation of 10% shares to Gwanda Community Share

Ownership Trust which has been established and US$1.0m donation will be

made

– Blanket Employee Trust registered and agreement signed for sale of 10% shares

– Agreement submitted to National Indigenisation Economic Empowerment Fund

for sale of 16% of shares

• Complex taxation and transaction structuring issues have been resolved: no tax

leakage is expected as a result of the transactions

• Completion of all transactions is subject to the necessary RBZ approval for

repatriation of sale proceeds

• Signed agreements confirm Caledonia as manager while any facilitation loans are

outstanding

Blanket Gold Mine, Zimbabwe Indigenisation – The Future

14

• Caledonia’s future earnings will reflect 49% ownership of Blanket

• Caledonia’s cash flows will include

– Blanket dividends (49%)

– Blanket management fee

– Repayment of $30.09m facilitation loans plus interest at 10%

• Caledonia will continue to manage Blanket for as long as the loans remain outstanding.

• Blanket’s budgeted capital investment will be funded from Blanket’s cash flows

– Dividend payments are after capital investment

• Any substantial capital expenditure which requires funding from Blanket shareholders

must be funded on a pro rata basis to avoid dilution

As an Indigenised, cash-generative entity, Blanket will be well-positioned to take

advantage of new opportunities that may arise in Zimbabwe.

Zambian Base Metals - Nama Introduction

15

• Caledonia holds Mining

Licences covering approx

800 sq. km.

• Konkola East: 5 holes drilled in 2011 identified a new copper-bearing mineralised zone

– Adjacent to Konkola and Vale/ARM properties

VALE

VEDANTA

Zambian Base Metals – Nama Substantial Copper-Cobalt Opportunity

16

• New mineralised zone identified in

holes 3, 4 and 5 is considered to be

contiguous.

• The assay results for the 3

intersections have a weighted

average of 0.47% copper over a

weighted average width of 41m at

depths of 280-450 m.

• Holes 3 and 4 are 1,650 metres

apart representing a minimum

strike length of the mineralisation.

• 2012 exploration programme:

• Phase 1:6 holes to identify near

surface extension commenced in

March and 5th hole in progress

• Phase 2: drilling to identify

deeper extension will start after

Phase 1 is completed

2011 Financial Review Overview

17

• Significant increase in revenues due to increased production and the higher

gold price

• Gross profit $29.1m:

– 358% increase on 2010

• Reduction in cash cost to US$521/oz in Q4 of 2011

– Increased average cost in Q1 of 2012 due to short term non-recurring

expenses

• Strong cash generation: $17.4m of operational cash flows before $8.5m of

capital expenditure (development and sustaining)

• Significant taxation and other payments to Zimbabwe Government: US$13.6m

in 2011

• Transition from Canadian GAAP to IFRS completed.

Financial Review Profit and Loss

18

• Royalty rate increases from 3.5% to 7%

• Admin expenses includes $0.3m of

indigenisation costs

• Share based expenses relates to issue of

16m options

• Impairment in respect of South African PGM

assets

• Income tax includes $2.6m of withholding

tax. Higher taxes reflect increased profits

and higher dividend payments from

Zimbabwe.

(C$'m) 12 Months to 31 Dec

2010 2011

Revenues 22.4 55.7

Royalty -0.8 -2.5

Operating costs -12.6 -21.1

Depreciation -2.6 -3.0

Gross Profit 6.4 29.1

Admin expenses -2.8 -3.7

Share based expenses -0.4 -1.1

Foreign exchange 0.4 0.3

Impairment - -3.9

Other -1.1 -

Operating Profit 2.5 20.8

Finance charges 0.0 -0.2

Profit before tax 2.5 20.6

Income tax -1.0 -8.5

Profit after tax 1.5 12.1

Adjusted EPS (basic) (cents)* 0.22 3.14* Adjusted EPS excludes Impairment and Foreign Exchange movements

Financial Review Cash Flow

19

• Strong operational cash flows reflects higher

profit and stable working capital

• Lower capital investment at Blanket; capital

investment at Nama increases from $0.6m to

$2.7m.

• Healthy improvement in net cash available:

further increase in Q1 of 2012 to over $16m

12 Months to 31 Dec

(C$'m) 2010 2011

Cash flow from operations 6.6 25.4

Taxation paid -0.0 -8.0

Net capital investment -7.3 -8.5

Financing 0.2 -0.3

Increase in cash -0.5 8.6

Cash b/fwd 1.6 1.1

Exchange rate fluctuation 0.0 -0.1

Cash c/fwd 1.1 9.7

Financial Review Balance Sheet

20

• Non current assets is after impairment of

Rooipoort

• Increased inventory and receivables reflect

increased production volumes. Majority of

receivables are due from Rand Refineries

and have been received in full

• Improved cash position and further

improvement anticipated

• Blanket overdraft remains well within $2.5m

facility

C$'m 2010 2011

Non current assets 32.0 34.2

Inventories 2.6 4.5

Prepayments 0.1 0.3

Receivables 2.3 3.7

Cash and equivalents 1.1 9.7

Total current assets 6.2 18.2

Total Assets 38.2 52.4

Long term liabilities -7.1 -7.8

Trade creditors -3.9 -3.8

Bank overdraft -0.7 -

Income tax - -

Total current liabilities -4.6 -11.7

Net Assets 26.5 40.7

As at 31 December

Corporate Issues

21

1. Share price performance

2. Investor relations

3. Strategy

Corporate Issues Share Price Performance

22

1. CG Index includes a selection of AIM-listed gold exploration and development companies

Source: Canaccord Genuity

• Mining shares generally have come under significant pressure in recent months

• Gold producers in particular have not performed as well as the gold price

• Caledonia’s share price has underperformed the other mining companies, including the

other listed Zimbabweans

triple-exchange liquidity; weak-holders; North American retail investors

uncomfortable with Zimbabwe risk; conservative growth profile; Caledonia at the

forefront of indigenisation

Corporate Issues Investor Relations Activity

23

• Roll-out of Investor Relations strategy commenced in 2011

Canada USA UK/Other

Institutional • Frequent approaches

to Canadian brokers:

no interest without an

equity raise

• 3 road shows with

Collins Stewart across

USA

• Further assistance is

required

• Collins Stewart initiate

research March 2011, 3

road shows

• Conferences: Mines and

Money; African Mining

Congress; London Spring

Conference; Minesite

Retail/

Private

Client

Brokers

(PCB)

• Renmark appointed

May 2011(replaced

with CHF in March

2012)

• 2 road shows, 115

investors in 5 cities

• Renmark road shows

cover 90 investors in

NYC and Boston

• Further assistance is

required and is being

addressed

• Edison initiate research

July 2011. 2 road shows

• Threadneedle (Dec 2012)

media coverage and PCB

and institutional broker

access

• Proactive: media access,

private client conferences

Corporate Issues Investor Relations Feedback

24

• Zimbabwe uncertainty remains the biggest single obstacle to significant buying.

“The big thing that the company will suffer from is the whole Zimbabwe issue. That’s a

huge shame in my eyes as the project itself, in its own right, sounded good. ”

“If the project was anywhere else I think people would say they are doing everything right.

……The main issue is, and will remain, the huge country risk…..I think many would not

want to take the investment risk at this stage”

• But there are encouraging signs as we get the message out

“We were all surprised with the presentation. We all went in with slightly preconceived

ideas about the company and in particular Zimbabwe and thought it would be a no go.

We were convinced of the story after the presentation and the way they are developing

Blanket and moving it forward really reduces the risk in our minds.”

“There is no doubt…that Zimbabwe is a hard sell at the moment but it seems that the

country is slowly sorting itself out. The company just needs to concentrate on optimising

the mine, expanding the resource and hopefully all will come good.”

Corporate Issues Investor Relations Approach

25

• Continued efforts to educate the investor market preferably via 1-1 or small group

meetings

Short term focus is PCB’s and private clients

Continued efforts to attract institutional buyers

• Encouraging signs of support in UK – particularly from PCB and private clients

• Canadian institutional market is closed without an equity raise, which we do not require

at this stage

• Further efforts to access US market; other markets not yet approached (Europe, Asia)

• Caledonia management to control all marketing:

A “difficult ”story – incoming investors must understand the risks as well as the

rewards

Highly politicised Zimbabwe environment needs careful management of all

marketing messages to avoid adverse effects of flow-back into Zimbabwe

Strategy

26

1. We have virtually completed the Indigenisation of Blanket in accordance with

Zimbabwean law

2. Progress exploration at Blanket’s satellite projects

– Further enhance cash performance

– Demonstrate that we can continue to grow the business as an indigenised operation

3. Continue down-dip exploration at Blanket

– 3-4 year investment horizon is appropriate in the current Zimbabwe environment

4. Continue exploration at Nama

– Exciting potential for a substantial new copper mine in a new jurisdiction

5. Continue to accumulate cash

– Enhances Caledonia’s ability to invest in its existing projects and to take advantage

of new opportunities

Questions

27

Contacts

28

Caledonia Mining

Website: www.caledoniamining.com

Stefan Hayden, President and CEO

Tel: +27 11 447 2499

Email: shayden@caledoniamining.com

Mark Learmonth, Vice President

Tel: +27 11 447 2499

Email: marklearmonth@caledoniamining.com