-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UatCCbNCjan4Af4qYnQhVYs1lqaqPml5anjLn7GtodqIwb9qAF3wxY9NyJvTMXup 4IZz3jvWRm2kSMmGCr4Swg== 0000909567-04-000479.txt : 20040405 0000909567-04-000479.hdr.sgml : 20040405 20040405160336 ACCESSION NUMBER: 0000909567-04-000479 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040402 FILED AS OF DATE: 20040405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALEDONIA MINING CORP CENTRAL INDEX KEY: 0000766011 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13345 FILM NUMBER: 04717623 BUSINESS ADDRESS: STREET 1: 9-2145 DUNWIN DR STREET 2: MISSISSAUGA ONTARIO CITY: CANADA STATE: A6 ZIP: L5L4L9 BUSINESS PHONE: 9056077543 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN NORTH RESOURCE CORP DATE OF NAME CHANGE: 19920302 6-K 1 t12504e6vk.txt FORM 6-K FORM 6-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of _April 2004 Commission File Number: 000-13345 CALEDONIA MINING CORPORATION (Translation of registrant's name into English) UNIT #9, 2145 DUNWIN DRIVE MISSISSAUGA ONTARIO L5L 4L9 CANADA (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [X] Form 40-F [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ] Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [X] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _______ SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CALEDONIA MINING CORPORATION (Registrant) By: /s/ James Johnstone --------------------------- Name: James Johnstone Title: Chief Operating Officer Dated: April 2, 2004 EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 First Quarter Report 2003 99.2 Second Quarter Report 2003 99.3 Third Quarter Report 2003 99.4 First Quarter Report 2002 99.5 Second Quarter Report 2002 99.6 Third Quarter Report 2002 EX-99.1 3 t12504exv99w1.txt EXHIBIT 99.1 2003 FIRST QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA MINING CORPORATION PRESIDENT'S LETTER RESULTS OF OPERATIONS South Africa At the Barbrook Mine refurbishment to the mine, metallurgical plant and surface infrastructure continued. Mining of the Taylors ore zone between 10 and 7 levels commenced in January 2003 and the first gold was produced during March 2003. Geological sampling and evaluation on adjacent blocks in the Taylors zone is ongoing. Development and stope tonnages from this area will supplement the present production allowing the mill throughput to be progressively increased to the 8,000 tonnes per month range. Ore samples from the higher grade, but more refractory Daylight ore zone are being taken and tested to confirm the metallurgical amenability of this material in the new "PreOx" and resin-in-leach circuit. If these tests prove positive the Daylight area will provide the plant with a readily accessible additional ore source of higher than average grade ore. The plant start-up was delayed by management's decision to install the latest technology of pump cells in the new resin-in-leach circuit. Because of the lower initial tonnage (6,000 tpm) throughput planned it was decided at an early stage to reconfigure a smaller primary and secondary milling circuits to cater for this lower tonnage. The 250 kW Vecor re-grind mill in the old 25,000 tpm circuit is presently being used as the primary ball mill and the Sala 90 kW tertiary mill is now being utilized as the concentrate regrind mill. A flash-flotation cell has been installed in the Vecor primary mill circuit to recover as much of the free and flotation-recoverable gold as early in the process circuit as possible and to reduce gold lock-up in the primary mill. A Knelson concentrator has also been installed in the primary Vecor mill circuit to recover free gold. The existing rougher flotation circuit has been fully refurbished. A new pre-aeration section has been refurbished and commissioned, and the existing cleaner flotation cells have been converted into the PreOx circuit. A brand new, 6-stage Pumped Cell resin in leach circuit ("PRIL"), the new resin elution, electrowinning circuits, the refurbished induction furnace and smelt house, and the associated security systems have been constructed and are still under final commissioning. As previously stated, the PRIL section is fitted with the state-of-the-art Anglo American-patented pump cells designed and fabricated by Kemix S.A. The tailings deposition area has been rehabilitated and the tailings delivery lines, which have been re-routed to avoid an environmentally sensitive area, have been pressure tested and the flotation tailings line extended. There has been a significant enhancement of the environmental and operating codes of practice and procedures to prevent the risk of pollution off the mine property and increase mine safety. The required regulatory and environmental practices have been evaluated, the risk assessments have been carried out and the required Codes of Practices drawn up and implemented. Barbrook was granted its Section 9 permanent mining authorization in March 2003. Expenditures at Barbrook during the quarter totaled $650,000. The Eersteling Gold Mine continued on care and maintenance during the quarter. The required Section 9 permanent mining permission was granted to Eersteling during April 2003. Once the Barbrook Mine has reached commercial production, work to return Eersteling to production will commence provided an economically sustainable Rand gold price continues to prevail. Present planning is to commence the de-watering of the underground areas during the 2nd quarter so as to allow the commencement of the refurbishment and development underground during the 3rd quarter of 2003. Depending upon the refurbishment work required in the metallurgical plant it is likely that the processing of the mine ore will commence during the 4th Quarter of 2003 or the 1st Quarter of 2004. The Rooipoort Exploration Project, approximately 8 kilometres east of Potgietersrus and about 30 km southwest of Caledonia's Eersteling gold mine in the Limpopo Province of South Africa, is considered to be highly prospective for platinum deposits. A comprehensive desk study on Rooipoort, based on airborne geophysics and the down dip drilling on the adjacent farm undertaken by Anglo Platinum has been completed. This study has confirmed the likely presence of both the Merensky and the UG-2 platinum group metals on the property. The prospecting permit was received during May 2003 and it is planned to carry out ground geophysics during June This will likely be followed immediately by a drilling program. Canada At the Kikerk Lake property in the Coronation Gulf area of Nunavut, in preparation for ground geophysics and drilling in the second quarter, Ashton Mining of Canada ("Ashton"), the operator for the project prioritized observation of 34 heavy mineral samples situated down-ice of select geophysical targets. Results from these samples have firmed-up two subtle indicator trains located 600 and 1,200 meters southwest of the Potentilla kimberlite. Age dating and petrographic studies were carried out on Pot entilla core during the quarter. The winter portion of the 2003 program has been completed and three electromagnetic anomalies associated with indicator mineral dispersions and underlying lakes approximately one km west of Potentilla were tested by drilling. At one anomaly, two angle holes drilled at inclinations of 46 degrees and 65 degrees from horizontal intersected approximately 0.6 m and 0.3 m of kimberlite respectively. This anomaly is located about 1.2 km west of the Stellaria kimberlite associated with a two km long linear structure. No kimberlite was intersected at the other two anomalies. Exploration on the Kikerk Lake property will continue during the summer and field activities will include follow-up on a number of unexplained indicator mineral and geophysical anomalies through heavy mineral sampling, ground geophysical surveys and prospecting. Ashton have notified Caledonia that it intends to proceed with the third earn-in portion of the option agreement with Caledonia. By doing so, Ashton can earn a 59.5% interest by funding Caledonia's share of all remaining exploration costs up to and including the completion of a Fully-Engineered Feasibility Study. The joint venture partners - Ashton, Caledonia and Northern Empire Minerals Ltd - - have approved surveying the individual Kikerk Lake claims and taking them to lease. In this way the mineral tenure can be maintained. Zambia Results of exploration work conducted on the Mulonga Plain diamond joint venture in 2002 are being applied to the geologic model and to existing geophysical interpretive work. This refined information is being used to identify new drill targets and re-prioritise existing targets. Heavy mineral samples results from follow-up sampling in the Kashiji Plain licence are pending. However Motapa Diamonds Inc, the project operator, reports that the initial review is positive. LIQUIDITY As can be seen from the March 2003 financial statements, Caledonia continues to remain debt free and will continue to focus its efforts on advancing its assets. An amount of $5.2 million, net of financing costs was raised during 2002 from private placements and the exercise of warrants. During early 2003, a further $1.2 million, net of financing costs was raised from the portion of the private placement carried over from December 2002 and from the exercise of warrants. On behalf of the Board of Directors, (signed) S. E. Hayden, Chairman of the Board, President and Chief Executive Officer May 26th, 2003 CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
MARCH 31, DECEMBER 31, (UNAUDITED) 2003 2002 - ----------- --------- ------------ ASSETS Current Cash and short term deposits $ 2,657 $ 1,864 Accounts receivable 163 113 Prepaid expenses 118 117 --------- ------------ 2,938 2,094 INVESTMENT AT COST 79 79 CAPITAL ASSETS 7,899 7,715 MINERAL PROPERTIES 15,915 14,879 --------- ------------ $ 26,831 $ 24,767 --------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 1,049 $ 1,267 Loan payable 30 69 --------- ------------ 1,079 1,336 PROVISION FOR SITE RESTORATION 524 506 NON-CONTROLLING INTEREST 774 774 --------- ------------ 2,377 2,616 --------- ------------ SHAREHOLDERS' EQUITY (Note 1) Share capital 152,076 149,623 Contributed surplus 209 209 Compensation warrants 235 177 Deficit (128,066) (127,858) --------- ------------ 24,454 22,151 --------- ------------ $ 26,831 $ 24,767 ========= ============
On behalf of the Board: ____________________________ Director (signed) F. C. Harvey ____________________________ Director (signed) J. Johnstone CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED) 2003 2002 2001 - ----------- --------- --------- --------- DEFICIT, beginning of period ($127,858) ($123,527) ($122,332) NET (LOSS) FOR THE PERIOD (208) (409) (226) --------- --------- --------- DEFICIT, end of period ($128,066) ($123,936) ($122,558) ========= ========= =========
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED) 2003 2002 2001 - ----------- ------- -------- ------- REVENUE AND OPERATING COSTS Revenue from sales $ 53 $ 9 $ - Operating costs 72 67 - ------- ------- ------- GROSS (LOSS) (19) (58) - ------- ------- ------- COSTS AND EXPENSES General and administrative 370 322 232 Interest 20 24 20 Other expense (income) (note 2) (201) 5 (26) ------- ------- ------- 189 351 226 ------- ------- ------- NET (LOSS) FOR THE PERIOD ($ 208) ($ 409) ($ 226) ======= ======= ======= (LOSS) PER SHARE Basic ($0.001) ($0.002) ($0.001) ======= ======= =======
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF CANADIAN DOLLARS) FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED) 2003 2002 2001 - ----------- ------- ----- ----- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net (loss) for the period ($ 208) ($ 409) ($226) Change in provision for site restoration 18 - - Change in non-cash working capital balances (269) 133 155 -------- ------ ----- (459) (276) (71) -------- ------ ----- INVESTING ACTIVITIES Expenditures on capital assets (184) - - Expenditures on mineral properties (1,036) 66 - -------- ------ ----- (1,220) 66 - -------- ------ ----- FINANCING ACTIVITIES Loan payable (39) 245 - Issue of share capital and compensation warrants net of 2,511 - - issue costs -------- ------ ----- 2,472 245 - -------- ------ ----- INCREASE (DECREASE) IN CASH FOR THE PERIOD 793 35 (71) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,864 90 75 -------- ------ ----- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,657 $ 125 $ 4 ======== ====== =====
CALEDONIA MINING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED) CERTIFICATION The Chief Executive Officer and the Vice President Finance confirm the veracity and soundness of these financial and operating results and have provided the board of directors with confirmation supporting this. 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 mineral resources and cash flows are based upon engineering and geological estimates and financial estimates including gold prices and operating costs. Actual results could differ from those estimated. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Comp any together with all its subsidiaries. The Company's principal consolidated subsidiaries are Barbrook Mines Limited (100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned) ("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and Caledonia Western Limited (all 100% owned) (collectively known as "Caledonia Zambia"). FINANCIAL DISCLOSURE NOTE The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Company. The interim consolidated financial statements should be read in conjunction with the year end 2002 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. 1. SHARE CAPITAL Issued and Outstanding On January 6, 2003, the Company concluded a private placement financing for $3.0 million gross proceeds comprised of 12,000,000 units. Each unit is comprised of one common share and one half common share purchase warrant issued at $0.25 per unit. In addition, a total of 1,200,000 whole broker warrants were issued with each warrant exchangeable for one whole common share. Whole warrants are exchangeable for shares at $0.33 per share for a period of one year from closing. A total of 6,720,000 units and 672,000 whole broker warrants were closed on December 31, 2002 for gross proceeds of $1,680,000. The balance of the private placement of $1,320,000 was closed on January 6, 2003. The remaining 528,000 broker warrants were issued upon closing at an assigned value of $0.11 per warrant for a total consideration of $58,000. Share issue costs associated with the January 6, 2003 amounted to $119,000 and have been charged to share capital. During the first quarter of the year a total of 6,512,635 common share were issued pursuant to the exercise of common share purchase warrants for total proceeds of $1,270,000 and a further 106,475 common shares were issued for the exercise of stock options for proceeds of $40,000. As of March 31, 2003 the Company has 223,694,380 common shares outstanding (December 31, 2002 - 211,795,270). The basic loss per share has been calculated based upon a weighted number of common shares outstanding as follows: For the quarter period ended March 31, 2003 - 221,678,417 Stock Options Options to purchase common shares have been granted to directors, officers, employees and consultants at exercise prices determined by reference to the market value on the date of grant. Vesting of options is made at the discretion of the board of directors at the time the options are granted. As at March 31, 2003, the Company has stock options outstanding for the purchase of 12,574,325 common shares (as at December 31, 2002 - 12,680,800 common shares). All of the options outstanding are exercisable. A total of 106,475 options were exercised during the first quarter of 2003 for proceeds of $40,000. There were no stock options granted during the first quarter of 2003. Warrants As of March 31, 2003, the Company has outstanding warrants to purchase an aggregate of 12,029,731 common shares. 2. OTHER EXPENSE (INCOME) Included in other expense (income) are unrealized foreign exchange gains of $185,000 (2002 - loss of $9,000; 2001 - gain of $3,000). CORPORATE DIRECTORY BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (March 31, 2003) Authorized: Unlimited number of common shares Issued Common Shares: 223,694,380 Warrants: 12,029,731 Options: 12,574,325 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com EX-99.2 4 t12504exv99w2.txt EXHIBIT 99.2 2003 SECOND QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA Mining Corporation ================================================================================ UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA, ONTARIO CANADA, L5L 4L9 TEL: (905) 607-7543 FAX: (905) 607-9806 WORLD WIDE WEB: HTTP://WWW.CALEDONIAMINING.COM PRESIDENT'S MESSAGE During the quarter, the Corporation's subsidiary, Barbrook Mines Limited accounted for its first operating expenses at the Barbrook Gold Mine. Revenue was then received from the first gold poured in early July. The resultant loss was offset to a degree by a foreign exchange gain of $128,000 during the quarter ($304,000 year to date) resulting from the strengthening of the South African Rand against the dollar. This currency fluctuation has been largely compensated by the increase in the US dollar price of gold so that the Rand price of gold continued to remain at over R80,000 per Kg. The overall loss for the quarter was $1,406,000 ($0.006 per share). The year-to-date loss was $1,614,000 ($0.007 per share) compared to a loss of $837,000 for the same six month period in 2002. The Corporation remains bullish on the prospects for the precious metals markets and believes that it is well positioned to benefit from any improvement in the gold and platinum sectors.. DISCUSSION AND ANALYSIS ON RESULTS OF OPERATIONS South Africa At the Barbrook Gold Mine stope development and production continued during the quarter. Underground production did not meet target figures largely because development shortfalls delayed the opening of stoping areas. Additional crews have been hired and improved infrastructure has been installed to correct this shortfall. Stope preparation in the main stoping area has been advanced and benching commenced in May. The mill circuit was commissioned and ore is being processed in the crushing, grinding, flotation, concentrate regrinding, pre-aeration and Pre-Ox circuits. Gold is being leached in the 6-stage carousel Pump cell - RIL section, absorbed onto resin, recovered in the elution section and transferred to electro-winning. The electro-winning circuit was commissioned at the end of June with the initial gold being poured during the first week of July. It is planned that the Plant will reach operating targets during September 2003. The Rooipoort Exploration Project, approximately 8 kilometers east of Potgietersrus and about 30 km southwest of Caledonia's Eersteling gold mine in the Limpopo province of South Africa is considered to be highly prospective for platinum deposits. The recently completed comprehensive desk study was based on the airborne geophysics and the down dip drilling on the adjacent property undertaken by Anglo Platinum and Falconbridge during the 1970's. Based on this desk study, we have sufficient confidence for the planned initial drilling program without the need for further geophysics. The study has confirmed the likely presence of Merensky like and UG-2 like platinum reefs, and potentially the continuation of the Plat reef mineralisation, on the property. These three reefs are the dominant platinum bearing reefs in the Bushveld geological Complex found in the Rooipoort area. A trenching and drilling program to investigate these occurrences is now being planned with trenching to commence in late August 2003. Sampling, assaying and quality control (QC) programs are being put in place prior to the mobilisation of the drills. The Eersteling Gold Mine remained on care and maintenance during the quarter while a hydrological survey was commenced preparatory to starting with the dewatering of the shafts. This survey should be completed by the end of third quarter. Present plans are to defer returning the Eersteling gold mine to commercial production until after the commencement of exploration on Eersteling's highly prospective Rooipoort platinum property. At the Goedgevonden diamond prospect near Stilfontein in North West Province a combined gravimetric and magnetometric survey was commenced in June over two target blocks each measuring 800m by 800m. The results of this survey are being analysed. Zambia Caledonia and their joint venture partners, Motapa Diamonds Inc., are planning this year's exploration program for the Mulonga Plain joint venture. At the Kashiji Plain licence area a number of aeromagnetic generated geophysical anomalies will be evaluated by ground geophysics. Targets of merit will then be drill tested. On the Mulonga Plain licence, work will be concentrated in the southeastern portion of the Mulonga Plain anomaly to follow-up on the encouraging geochem results obtained last year. Elsewhere in Zambia, the Luamfula, Ngosa and Konkola West prospecting licences were renewed for a two-year period. These licence areas form part of the Kalimba licence group and are prospective for copper, cobalt and nickel. Canada Kikerk Lake The property is located in the Coronation Gulf region of Nunavut. The diamondiferous Potentilla and Stellaria kimberlites were identified on the property in 2001 and 2002 respectively. The winter portion of the 2003 exploration program announced in March has now been completed. Three electromagnetic anomalies associated with indicator mineral dispersions and underlying lakes approximately one km west of Potentilla were tested by drilling. At one anomaly, two angle holes drilled at inclinations of 46 degrees and 65 degrees from horizontal intersected approximately 0.6 m and 0.3 m of kimberlite respectively. This anomaly is located about 1.2 km west of the Stellaria kimberlite associated with a two km long linear structure. No kimberlite was intersected at the other two anomalies. Exploration on the Kikerk Lake property will continue during the summer. Field activities will include follow-up on a number of unexplained indicator mineral and geophysical anomalies through heavy mineral sampling, ground geophysical surveys and prospecting. Exploration on the Kikerk Lake property is governed by a joint venture agreement among Ashton Mining of Canada Inc. ("Ashton"), the Corporation and Northern Empire Minerals Ltd. Ashton has a 52.5 percent interest in the property and has exercised an option with Caledonia to increase its interest to 59.5 percent by completing a feasibility study, at which time the Corporation's interest will reduce to 10.5%. Northern Empire has a 30 percent joint venture interest and is participating in the current program. Financing Subsequent to the end of the quarter, the Corporation raised $5 million, before closing costs, through the sale of 20 million Units under a Private Placement financing. Each unit was priced at $0.25 and comprises one common share of Caledonia and one half-share warrant. Each full warrant entitles the holder to purchase one common share of Caledonia at a price of $0.35 for a period of eighteen months. The funds raised will be use to financing the return to full operation of the Barbrook Gold Mine, the Corporation's ongoing exploration activities in Southern Africa, and for general corporate purposes. On behalf of the Board of Directors (signed) S.E. Hayden, Chairman of the Board, President and Chief Executive Officer August 25th 2003 FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected. Risk and uncertainties about the Corporation's business are more fully described in the Management's Discussion and Analysis published in the Corporation's Annual Report, Form 20F and the Annual Information Form. CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
JUNE 30, DECEMBER 31, (UNAUDITED) 2003 2002 - ----------- --------- ------------ ASSETS Current Cash and short term deposits $ 1,133 $ 1,864 Accounts receivable 284 113 Prepaid expenses 115 117 --------- ------------ 1,532 2,094 INVESTMENT AT COST 79 79 CAPITAL ASSETS 7,909 7,715 MINERAL PROPERTIES 15,960 14,879 --------- ------------ $ 25,480 $ 24,767 --------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 1,100 $ 1,267 Loan payable 25 69 --------- ------------ 1,125 1,336 PROVISION FOR SITE RESTORATION 524 506 NON-CONTROLLING INTEREST 774 774 --------- ------------ 2,423 2,616 --------- ------------ SHAREHOLDERS' EQUITY (NOTE 1) Share capital 152,085 149,623 Contributed surplus 209 209 Compensation warrants 235 177 Deficit (129,472) (127,858) --------- ------------ 23,057 20,151 --------- ------------ $ 25,480 $ 24,767 ========= ============
On behalf of the Board: ________________________ Director (signed) J. Johnstone ________________________ Director (signed) F. C. Harvey CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ------------ --------- --------- --------- --------- --------- --------- DEFICIT, Beginning of period ($128,066) ($123,936 ($122,558 ($127,858 ($123,527 ($122,332 NET (LOSS) FOR THE PERIOD (1,406) (428) (254) (1,614) (837) (480) --------- --------- --------- --------- --------- --------- DEFICIT, end of period ($129,472) ($124,364 ($122,812 ($129,472 ($124,364 ($122,812 ========= ========= ========= ========= ========= =========
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ----------- ------- ------- ------- ------- ------- ------- REVENUE AND OPERATING COSTS Revenue from sales $ - $ 24 $ 33 $ 53 $ 30 $ 33 Operating costs 1,232 136 13 1,304 203 13 -------- ------- ------- -------- ------- ------- GROSS PROFIT (LOSS) (1,232) (112) 20 (1,251) (173) 20 -------- ------- ------- -------- ------- ------- COSTS AND EXPENSES General and administrative 258 266 290 628 588 522 Interest 44 - 18 64 24 38 Other expense (income) (note 2) (128) 49 (34) (329) 54 (60) -------- ------- ------- -------- ------- ------- 174 315 274 363 666 500 -------- ------- ------- -------- ------- ------- (LOSS) BEFORE NON-CONTROLLING INTEREST (1,406) (430) (254) (1,614) (839) (480) Non-controlling interest - (2) - - (2) - -------- ------- ------- -------- ------- ------- NET (LOSS)FOR THE PERIOD ($ 1,406) ($ 428) ($ 254) ($ 1,614) ($ 837) ($ 480) ======== ======= ======= ======== ======= ======= (LOSS) PER SHARE Basic ($ 0.006) ($0.003) ($0.002) ($ 0.007) ($0.005) ($0.003) ======== ======= ======= ======== ======= =======
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ----------- -------- ------- ------- ------- ------- ----- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net (loss) for the period ($ 1,406) ($ 428) ($ 254) ($1,614) ($ 837) ($480) Items not involving cash Change in provision for site restoration - - - 18 - - Non-controlling interest - (2) - - (2) - -------- ------- ------- ------- ------- ----- (1,406) (430) (254) (1,596) (839) (480) Change in non-cash working capital balances (67) (47) 11 (336) 86 166 -------- ------- ------- ------- ------- ----- (1,473) (477) (243) (1,932) (753) (314) -------- ------- ------- ------- ------- ----- INVESTING ACTIVITIES Purchase of investment - (79) - - (79) - Expenditures on capital assets (10) (27) - (194) (27) - Expenditures on mineral properties (45) (79) - (1,081) (13) - -------- ------- ------- ------- ------- ----- (55) (185) - (1,275) (119) - -------- ------- ------- ------- ------- ----- FINANCING ACTIVITIES Loan payable (5) (1,275) - (44) (1,030) - Issue of share capital and compensation warrants net of issue costs 9 2,672 292 2,520 2,672 292 -------- ------- ------- ------- ------- ----- 4 1,397 292 2,476 1,642 292 -------- ------- ------- ------- ------- ----- INCREASE (DECREASE) IN CASH FOR THE PERIOD (1,524) 735 49 (731) 770 (22) CASH AND CASH EQUIVALENTS, beginning of period 2,657 125 4 1,864 90 75 -------- ------- ------- ------- ------- ----- CASH AND CASH EQUIVALENTS, end of period $ 1,133 $ 860 $ 53 $1,133 $ 860 $ 53 ======== ======= ======= ======= ======= =====
CALEDONIA MINING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) CERTIFICATION The Chief Executive Officer and the Vice President Finance confirm the veracity and soundness of these financial and operating results and have provided the board of directors with confirmation supporting this. 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 mineral resources and cash flows are based upon engineering and geological estimates and financial estimates including gold prices and operating costs. Actual results could differ from those estimated. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company together with all its subsidiaries. The Company's principal consolidated subsidiaries are Barbrook Mines Limited (100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned) ("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and Caledonia Western Limited (all 100% owned) (collectively known as "Caledonia Zambia"). FINANCIAL DISCLOSURE NOTE The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Company. The interim consolidated financial statements should be read in conjunction with the year end 2002 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. 1. SHARE CAPITAL Issued and Outstanding On January 6, 2003, the Company concluded a private placement financing for $3.0 million gross proceeds comprised of 12,000,000 units. Each unit is comprised of one common share and one half common share purchase warrant issued at $0.25 per unit. In addition, a total of 1,200,000 whole broker warrants were issued with each warrant exchangeable for one whole common share. Whole warrants are exchangeable for shares at $0.33 per share for a period of one year from closing. A total of 6,720,000 units and 672,000 whole broker warrants were closed on December 31, 2002 for gross proceeds of $1,680,000. The balance of the private placement of $1,320,000 was closed on January 6, 2003. The remaining 528,000 broker warrants were issued upon closing at an assigned value of $0.11 per warrant for a total consideration of $58,000. Share issue costs associated with the January 6, 2003 closing amounted to $119,000 and have been charged to share capital. During the first quarter of the year a total of 6,512635 common share were issued pursuant to the exercise of common share purchase warrants for total proceeds of $1,270,000 and a further 106,475 common shares were issued for the exercise of stock options for proceeds of $40,000. A further 50,000 common shares were issued pursuant to the exercise of common share purchase warrants for total proceeds of $9,000 during the second quarter. As of June 30, 2003 the Company has 223,744,380 common shares outstanding (December 31, 2002 - 211,795,270). The basic loss per share has been calculated based upon a weighted number of common shares outstanding as follows: For the period ended June 30, 2003 - 222,696,111 For the quarter ended June 30, 2003 - 223,702,622 Stock Options Options to purchase common shares have been granted to directors, officers, employees and consultants at exercise prices determined by reference to the market value on the date of grant. Vesting of options is made at the discretion of the board of directors at the time the options are granted. As at June 30, 2003, the Company has stock options outstanding for the purchase of 11,398,700 common shares (as at December 31, 2002 - 12,680,800 common shares). All of the options outstanding are exercisable. A total of 106,475 options were exercised during the first quarter of 2003 for proceeds of $40,000. There were no stock options granted during the first or second quarter of 2003. A total of 1,175,625 stock options expired as unexercised during the second quarter. Warrants As of June 30, 2003, the Company has outstanding warrants to purchase an aggregate of 12,029,731 common shares. 2. OTHER EXPENSE (INCOME) Included in other expense (income) are unrealized foreign exchange gains of $304,000 (2002 - 2002 - loss of $54,000; 2001 - gain of $36,000) 3. SUBSEQUENT EVENT Subsequent to the end of the quarter, the Company raised $5 million, before closing costs, through the sale of up to 20 million units under a Private Placement financing. Each unit was priced at $0.25 and comprised one common share of the Company and one half share warrant. Each full warrant entitles the holder to purchase one common share at a price of $0.35 for a period of eighteen months. The funds raised will be used to finance the return to full operation of the Barbrook gold mine, the Company's ongoing exploration activities in Southern Africa and for general corporate purposes. Corporate Directory BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (June 30, 2003) Authorized: Unlimited number of common shares Issued Common Shares: 223,744,380 Warrants: 11,398,700 Options: 12,029,731 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com EX-99.3 5 t12504exv99w3.txt EXHIBIT 99.3 2003 THIRD QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA Mining Corporation ================================================================================ UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA, ONTARIO CANADA, L5L 4L9 TEL: (905) 607-7543 FAX: (905) 607-9806 WORLD WIDE WEB: HTTP://WWW.CALEDONIAMINING.COM PRESIDENT'S MESSAGE During the quarter, Caledonia commenced drilling on its Rooipoort platinum project in South Africa and completed the first full quarter of operation at the Barbrook Gold Mine. Mining operations at Barbrook reached their targeted tonnes and exceeded the gold grades at the quarter end and are expected to continue for the foreseeable future. Metallurgical gold recoveries have been lower than targeted due to equipment breakdown and highly refractory gold that has not responded to the installed metallurgical process. By early November, additional equipment in the Flotation circuit was installed and commissioned and should improve gold recoveries both in the flotation and resin-in-leach (RIL) gold recovery circuits. During the quarter the mine produced 14,080 tonnes of ore at a grade of 6.82 g/t and the mill processed 10,171 tonnes of feed ore at a grade of 6.53 g/t and produced 19.5 kg gold. During October, the mine produced over 6,000 tonnes of ore grading well in excess of the targeted 6.0 g/t. The South African currency, the Rand continued to strengthen against the US dollar. The currency fluctuation is generally offset by the increase in the US dollar price of gold so that the Rand price of gold continued to remain at about R85,000 per Kg. Caledonia is pleased to announce that Mr. Jacques du Plessis has been appointed as General Manager of Caledonia's African operations. Mr. Du Plessis, a South African citizen, is a Mining Engineer and has had over 30 years experience in the South African mining industry and over 15 years in senior management positions. Mr. Du Plessis will take over the immediate responsibility for the Barbrook and Eersteling gold mines. Caledonia's overall loss for the quarter was $1,072,000 ($0.004 per share). The year-to-date loss was $2,686,000 ($0.012 per share) compared to a loss of $1,373,000 ($0.008 per share) for the same nine-month period in 2002. Caledonia continues to be bullish on the prospects for the precious metals markets and believes that it is well positioned to benefit from any improvement in the gold and platinum sectors. DISCUSSION AND ANALYSIS ON RESULTS OF OPERATIONS South Africa At the Barbrook Gold Mine stope development and production reached the targeted tonnage and exceeded the predicted grade during the quarter. Underground production met and exceeded the target figures due to the opening of new stoping areas. Additional crews were hired and improved underground infrastructure has been installed. Stope preparation in the main stoping areas has been advanced that should ensure that future targeted tonnages are met. The mill operated throughout the quarter but excessive end liner wear restricted throughput to 10,171 tonnes from the targeted 6,000 tonnes per month. Treated gold grades at 6.5 g/t were about 9% above the target. The mill end plates were temporarily repaired and thereafter the mill throughputs reached the target levels. The erratic and high sulphide content of the fresh underground ore led to difficulties in flotation control and reduced the gold recovery. To compensate for variable sulphide feed, an Imhoflot cleaner section has been installed which will further upgrade the flotation concentrate grade and reduce the concentrate mass generated. This addition will also improve the gold leaching recovery in the RIL section. The recently mined ore, although of significantly higher grade contains a much higher level of refractory gold in the form of arsenopyrite than had previously been encountered. This higher grade gold associated mineral gives much lower gold recovery than the more normal quartz, pyrite and pyrrhotite associated gold. Overall plant gold recovery for the quarter was unacceptably low at just over 30% compared to the target of 70%. The gold recovery should increase significantly with the introduction of the Imhoflot cleaner section and improvements in the RIL circuit. Alternative metallurgical equipment is also being investigated and the metallurgical management is being further upgraded. The Rooipoort Exploration Project, approximately 8 kilometres east of Potgietersrus and about 30 km southwest of Caledonia's Eersteling gold mine in the Limpopo province of South Africa is considered to be highly prospective for platinum deposits. Based on the comprehensive desk study completed in the 2nd quarter of this year, that was based on the high resolution airborne geophysics and the down dip drilling on the adjacent farm undertaken by Anglo Platinum/JCI and Falconbridge during the 1970's, an initial stratographic drilling program was developed. This drill program has been costed and contracts for the initial diamond drilling and assaying of the core generated have been negotiated. The previously mentioned desk study has confirmed the likely presence of Merensky like and UG-2 like platinum reefs, and potentially the continuation of the Plat reef mineralization, on the property. These three reefs are the dominant platinum bearing reefs in the Bushveld geological Complex found in the Rooipoort area. A trenching program to investigate these occurrences commenced in late August 2003 and was abandoned due to the depth of soil and colluvium (3 to 15 m) in the area. Sampling, assaying and quality control (QC) programs have been put in place prior to the start of the trenching and the mobilisation of the drills. Drilling commenced in September 2003 and this initial 15-hole program will be completed in the fourth quarter. Further announcements can be expected in the near future. The Eersteling Gold Mine remained on care and maintenance during the quarter. A hydrological survey was carried out in the quarter preparatory to the commencement of shaft dewatering. It is planned that the Eersteling gold mine's return to commercial production will be delayed until the results of the exploration program at Eersteling's Roodepoort property located just east of the Eersteling metallurgical plant are received and evaluated. The Roodepoort property, fully owned by Eersteling, is thought to be prospective for a shallow, open-pit gold deposit. At the Goedgevonden diamond prospect near Stilfontein in North West Province more detailed ground gravimetric and magnetometric surveys were conducted in the 2nd quarter over the pipe and other prospective targets in the area. This survey has indicated the existence of a northward extension to the known pipe that potentially increases its size by 30%. This extension has not been previously tested. On the Eleazar diamond property, 5 km northeast of Goedgevonden a further survey was conducted. This survey, centered over a prominent shallow depression has shown a gravity anomaly that may indicate the presence of a previously unknown kimberlite. Zambia Caledonia and their joint venture partners, Motapa Diamonds Inc., are planning this year's exploration program for the Mulonga Plain joint venture. At the Kashiji Plain licence area a number of aero magnetic generated geophysical anomalies will be evaluated by ground geophysics The next phase of exploration will include further aero-magnetic surveys over a new area of anomalous kimberlite indicator mineral values. An extension of the Kashiji Plain licence area is being sought. Any new targets of merit will then be drill tested. On the Mulonga Plain licence, work will be concentrated in the southeastern portion of the Mulonga Plain anomaly to follow-up on the encouraging geochemical results obtained last year. The complex geomorphic evolution of Mulonga Plain requires a reappraisal of the large amount of accumulated information to more accurately define the appropriate future exploration methodology. Elsewhere in Zambia, the Luamfula, Ngosa and Konkola West prospecting licences were renewed for a two-year period. These licence areas form part of the Kalimba/Nama licence group and are prospective for copper, cobalt and nickel. Interest has been expressed by a Zambian mining company for a source of cobalt/copper concentrate suitable for their Zambian operation. An evaluation is being conducted to determine if such a concentrate could be produced at Nama from the higher cobalt/copper anomaly "A" area. This shallow partially-oxidized "A" deposit was discovered by Caledonia in 1995/1996. The "A" anomaly is only one of several cobalt anomalous areas that combine to a resource of about a billion tonnes of low-grade cobalt/copper shallow mineralization. Nama is located immediately west and adjacent to the Konkola mining area on Zambia's famous Copperbelt. Canada Kikerk Lake The property is located in the Coronation Gulf region of Nunavut. The diamondiferous Potentilla and Stellaria kimberlites were identified on the property in 2001 and 2002 respectively. The summer portion of the 2003 exploration program has now been completed. A total of 100 samples were taken from 6 discrete areas across the claims. This sampling was carried out to follow-up on a number of unexplained indicator mineral and geophysical anomalies through heavy mineral sampling, ground geophysical surveys and prospecting. The samples will be analysed and the information used to determine the termination of indicator mineral trains. As part of the requirements for taking them to lease, all claims were surveyed during the quarter. The Mining Recorder is now reviewing these lease applications. Exploration on the Kikerk Lake property is governed by a joint venture agreement among Ashton Mining of Canada (Ashton), Caledonia and Stornoway Diamond Corporation (Stornoway), the successor company of Northern Empire Minerals Limited. In 2003, Caledonia's joint venture parties have spent an amount of about $575,000 on the Kikerk Lake property. Ashton has a 52.5 percent interest in the property and has exercised an option with Caledonia to increase its interest to 59.5 percent. Stornoway has a 30 percent joint venture interest and has participated in the recent programs. Caledonia has a fully carried interest in the property until a "fully-engineered" feasibility study has been completed. Financing In the quarter, Caledonia raised $5 million, before closing costs, through the sale of up to 20 million units under a private placement financing. Each unit was priced at $0.25 and comprised one common share of Caledonia and one half common share warrant. Each full warrant entitled the holder to purchase one common share of Caledonia at a price of $0.35 for a period of eighteen months from the date of closing. The funds raised are being used to finance full production of the Barbrook Gold Mine, Caledonia's ongoing exploration activities in Southern Africa, and for general corporate purposes. On behalf of the Board of Directors (signed) S.E. Hayden, Chairman of the Board, President and Chief Executive Officer November 25th 2003 FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected. Risk and uncertainties about Caledonia's business are more fully described in the Management's Discussion and Analysis published in Caledonia's Annual Report, Form 20F and the Annual Information Form. CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
SEPTEMBER 30, DECEMBER 31, (UNAUDITED) 2003 2002 - ----------- ------------ ----------- ASSETS Current Cash and short term deposits $ 4,228 $ 1,864 Accounts receivable 269 113 Prepaid expenses 126 117 ------------ ----------- 4,623 2,094 INVESTMENT AT COST 79 79 CAPITAL ASSETS 8,123 7,715 MINERAL PROPERTIES 16,070 14,879 ------------ ----------- $ 28,895 $ 24,767 ------------ ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 916 $ 1,267 Loan payable 25 69 ------------- ------------ 941 1,336 PROVISION FOR SITE RESTORATION 524 506 NON-CONTROLLING INTEREST 774 774 ------------- ------------ 2,239 2,616 ------------- ------------ SHAREHOLDERS' EQUITY (note 1) Share capital 156,596 149,623 Contributed surplus 209 209 Broker compensation warrants 395 177 Deficit (130,544) (127,858) ------------- ------------ 26,656 20,151 ------------- ------------ $ 28,895 $ 24,767 ============= ============
On behalf of the Board: ________________________ Director (signed) J. Johnstone ________________________ Director (signed) F. C. Harvey CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ----------- --------- --------- --------- --------- --------- --------- DEFICIT, Beginning of period ($129,472) ($124,364 ($122,812 ($127,858 ($123,527 ($122,332 NET (LOSS) FOR THE PERIOD (1,072) (536) (465) (2,686) (1,373) (945) --------- --------- --------- --------- --------- --------- DEFICIT, End of period ($130,544) ($124,900 ($123,277 ($130,544 ($124,900 ($123,277 ========= ========= ========= ========= ========= =========
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ------------ ------- ------- ------- ------- ------- ------- REVENUE AND OPERATING COSTS Revenue from sales $ 259 $ 2 $ 11 $ 312 $ 32 $ 44 Operating costs 921 143 149 2,225 346 162 ------- ------- ------- ------- ------- ------- GROSS MARGIN (LOSS) (662) (141) (138) (1,913) (314) (118) ------- ------- ------- ------- ------- ------- COSTS AND EXPENSES General and administrative 378 472 257 1,006 1,060 779 Interest 33 - 26 97 24 64 Other expense (income) (note 2) (1) (77) 44 (330) (23) (16) ------- ------- ------- ------- ------- ------- 410 395 327 773 1,061 827 ------- ------- ------- ------- ------- ------- (LOSS) BEFORE NON-CONTROLLING INTEREST (1,072) (536) (465) (2,686) (1,375) (945) Non-controlling interest - - - - (2) - ------- ------- ------- ------- ------- ------- NET (LOSS) FOR THE PERIOD ($1,072) ($ 536) ($ 465) ($2,686) ($1,373) ($ 945) ======= ======= ======= ======= ======= ======= (LOSS) PER SHARE Basic ($0.004) ($0.003) ($0.003) ($0.012) ($0.008) ($0.006) ======= ======= ======= ======= ======= =======
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2003 2002 2001 2003 2002 2001 - ----------- ------- ------- ------- ------- ------- ------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net (loss) for the period ($1,072) ($ 536) ($ 465) ($2,686) ($1,373) ($ 945) Items not involving cash Change in provision for site restoration - - - 18 (2) - Non-controlling interest - - - - - - ------- ------- ------- ------- ------- ------- (1,072) (536) (465) (2,668) (1,375) (945) Change in non-cash working capital balances (180) (169) (264) (516) (83) (98) ------- ------- ------- ------- ------- ------- (1,252) (705) (729) (3,184) (1,458) (1,043) ------- ------- ------- ------- ------- ------- INVESTING ACTIVITIES Purchase of investment - - - - (79) - Expenditures on capital assets (214) (159) 51 (408) (186) 51 Expenditures on mineral properties (110) (46) - (1,191) (59) - ------- ------- ------- ------- ------- ------- (324) (205) 51 (1,599) (324) 51 ------- ------- ------- ------- ------- ------- FINANCING ACTIVITIES Loan payable - - - (44) (1,030) - Issue of share capital and compensation warrants net of issue costs 4,671 1,448 668 7,191 4,120 960 ------- ------- ------- ------- ------- ------- 4,671 1,448 668 7,147 3,090 960 ------- ------- ------- ------- ------- ------- INCREASE (DECREASE) IN CASH FOR THE PERIOD 3,095 538 (10) 2,364 1,308 (32) CASH AND CASH EQUIVALENTS, beginning of period 1,133 860 53 1,864 90 75 ------- ------- ------- ------- ------- ------- CASH AND CASH EQUIVALENTS, end of period $ 4,228 $ 1,398 $ 43 $ 4,228 $ 1,398 $ 43 ======= ======= ======= ======= ======= =======
CALEDONIA MINING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) CERTIFICATION The Chief Executive Officer and the Vice President Finance confirm the veracity and soundness of these financial and operating results and have provided the board of directors with confirmation supporting this. 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 mineral resources and cash flows are based upon engineering and geological estimates and financial estimates including gold prices and operating costs. Actual results could differ from those estimated. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company together with all its subsidiaries. The Company's principal consolidated subsidiaries are Barbrook Mines Limited (100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned) ("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and Caledonia Western Limited (all 100% owned) (collectively known as "Caledonia Zambia"). FINANCIAL DISCLOSURE NOTE The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Company. The interim consolidated financial statements should be read in conjunction with the year end 2002 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. 1. SHARE CAPITAL Issued and Outstanding On January 6, 2003, the Company concluded a private placement financing for $3.0 million gross proceeds comprised of 12,000,000 units. Each unit is comprised of one common share and one half common share purchase warrant issued at $0.25 per unit. In addition, a total of 1,200,000 whole broker warrants were issued with each warrant exchangeable for one whole common share. Whole warrants are exchangeable for shares at $0.33 per share for a period of one year from closing. A total of 6,720,000 units and 672,000 whole broker warrants were closed on December 31, 2002 for gross proceeds of $1,680,000. The balance of the private placement of $1,320,000 was closed on January 6, 2003. The remaining 528,000 broker compensation warrants were issued upon closing at an assigned value of $0.11 per warrant for a total consideration of $58,000. Share issue costs associated with the January 6, 2003 closing amounted to $119,000 and have been charged to share capital. During the third quarter of 2003, the Company concluded a private placement financing for $5.0 million gross proceeds comprised of 20,000,000 units. Each unit is comprised of one common share and one half common share purchase warrant issued at $0.25 per unit. In addition, a total of 2,000,000 whole broker warrants were issued with each warrant exchangeable for one whole common share. Whole warrants are exchangeable for shares at $0.35 per share for a period of eighteen months from the date of closing. The 2,000,000 broker compensation warrants issued upon closing were assigned a value of $0.08 per warrant for total consideration of $160,000. Share issue costs of $540,000 and have been charged to share capital. During the first nine months of the year a total of 7,405,706 common share were issued pursuant to the exercise of common share purchase warrants for total proceeds of $1,446,000 and 106,475 common shares were issued for the exercise of stock options for proceeds of $40,000. As of September 30, 2003 the Company has 244,587,452 common shares outstanding (December 31, 2002 - 211,795,270). The basic loss per share has been calculated based upon a weighted number of common shares outstanding as follows: For the period ended September 30, 2003 - 225,326,974 For the quarter ended September 30, 2003 - 230,502,911 Stock Options Options to purchase common shares have been granted to directors, officers, employees and consultants at exercise prices determined by reference to the market value on the date of grant. Vesting of options is made at the discretion of the board of directors at the time the options are granted. As at September 30, 2003, the Company has stock options outstanding for the purchase of 11,398,700 common shares (as at December 31, 2002 - 12,680,800 common shares). All of the options outstanding are exercisable. A total of 106,475 options were exercised during the first quarter of 2003 for proceeds of $40,000. There were no stock options granted during the first, second or third quarters of 2003. A total of 1,175,625 stock options expired as unexercised during the second quarter. Warrants As of September 30, 2003, the Company has outstanding warrants to purchase an aggregate of 23,136,660 common shares. 2. OTHER EXPENSE (INCOME) Included in other expense (income) is an unrealized foreign exchange gain of $296,000 (2002 - gain of $22,000; 2001 - gain of $46,000) CORPORATE DIRECTORY BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (September 30, 2003) Authorized: Unlimited number of common shares Issued Common Shares: 244,587,452 Warrants: 23,136,660 Options: 11,398,700 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com EX-99.4 6 t12504exv99w4.txt EXHIBIT 99.4 2002 FIRST QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA Mining Corporation ================================================================================ UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA, ONTARIO CANADA, L5L 4L9 TEL: (905) 607-7543 FAX: (905) 607-9806 WORLD WIDE WEB: HTTP://WWW.CALEDONIAMINING.COM PRESIDENT'S REPORT RESULTS OF OPERATIONS SOUTH AFRICA Gold production was resumed at Barbrook on a limited basis in February 2002. Mining from two higher grade areas outside the normal Taylor's mining zone was intended to allow the revised milling circuit to be evaluated on a pilot plant scale and to provide revenue to fund a study into the feasibility of returning the Barbrook mine to commercial gold production at an early date. While the grades recovered are very attractive, the total tonnage mined has been below expectations. However, the mill circuit will provide valuable information which will be incorporated into the feasibility study. Results of this study are expected in the second quarter. In February, Barbrook Mines Limited, a fully owned subsidiary of Caledonia, negotiated a loan for one million South African Rand (Cdn $ 139,860) on the basis of a note convertible into shares of Caledonia. The note can be converted at any time during the period ending on February 14, 2003. The borrowed funds are being used to fund the limited scale high grade mining, the revised milling circuit, and for the mine evaluation study at Barbook. The Eersteling Mine continued on a care & maintenance basis during the quarter. Drilling at the Goedgevonden diamond prospect near Stilfontein in the Klerksdorp district of the North West Province commenced in March. A seven hole drill program is underway which will provide a mini-bulk sample. The sample will be processed by the Klipspringer Diamond Mine dense media separation ("DMS") plant located near Potgietersrus in South Africa. The DMS plant has a Fluid SORTEX diamond circuit for the recovery of diamonds. The conclusions derived from the exploration results will announced during the second quarter. CANADA During March, a $1.56 million exploration program for the 2002 season was approved and funded for the Kikerk Lake property by the other joint-venture partners. Caledonia's current non-participating interest is 35%. One of the program objectives is to collect up to ten tonnes of mini-bulk sample from the Potentilla kimberlite by core drilling and to define the shape and size of the kimberlite body. Potentilla was discovered in September 2001 and returned 230 micro-diamonds and 22 macro-diamonds from a sample of drill core. In addition to the work at Potentilla, Ashton Mining of Canada Inc., the operator, has reported that a detailed airborne magnetic and electromagnetic survey has been completed over an area that includes one unexplained indicator mineral train and Potentilla. Ground geophysical surveys will follow over anomalies identified from the airborne magnetic surveys. Any high priority targets will be drilled before winter breakup. ZAMBIA Preparatory work is being undertaken for the 2002 exploration and drilling program at Mulonga Plain which will commence in June. A drilling contractor is being selected by Motapa Diamonds Inc. which expects that the 15 to 20 hole drill program should start in September. Geophysical and geochemical surveys are also planned over the Mulonga Plain and Kashiji Plain licences. Caledonia holds a 40% non-participating interest in the property. At Kalimba, BHP-Billiton have given notice of their intent to withdraw from the joint-venture agreement. Caledonia intends to review all of the work carried out by BHP-Billiton at Kalimba in conjuction with the previous work carried out by Caledonia. Following this review, the Corporation will seek another JV partner for the Kalimba licence group and the Konkola West licence area. LIQUIDITY On April 2nd 2002 the Corporation announced its intention to raise up to Cdn $3 million through a Private Placement. This transaction was successfully concluded and resulted in the issuance of 20,689,655 shares and 12,058,992 warrants. Each warrant allows the holder to purchase one share of Caledonia for $0.195 until April 12th 2004. The funds raised will be used to reduce debt, fund possible bulk sampling and testing of the Goedgevonden diamond pipe, fund the evaluation and potential resumption of operations at the Barbrook mine, fund the initial prospecting on the Rooipoort, Pruissen and Vier-en-Twintig properties in Northern Transvaal, and for general corporate purposes. Because the funding was not completed until after March 31, 2002, it is not reflected in the quarterly financial statements prepared as of that date. (Signed) S.E. Hayden Chairman, President and Chief Executive Officer May 8, 2002 CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
MARCH 31, DECEMBER 31, 2002 2001 --------- ------------ (Unaudited) ASSETS Current Cash and short term deposits $ 125 $ 90 Accounts receivable 93 89 Prepaid expenses 5 5 --------- --------- 223 184 CAPITAL ASSETS 7,424 7,424 MINERAL PROPERTIES 17,299 17,365 --------- --------- $ 24,946 $ 24,973 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 1,741 $ 1,604 Loans payable 1,342 1,097 --------- --------- 3,083 2,701 PROVISION FOR SITE RESTORATION 1,026 1,026 NON-CONTROLLING INTEREST 787 787 --------- --------- 4,896 4,514 --------- --------- SHAREHOLDERS' EQUITY Share capital 143,986 143,986 Deficit (123,936) (123,527) --------- --------- 20,050 20,459 --------- --------- $ 24,946 $ 24,973 ========= =========
On behalf of the Board: _____________________________ Director (Signed) F. C. Harvey _____________________________ Director (Signed) J. Johnstone CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED MARCH 31 2002 2001 - ----------------------------------- ---- ---- (UNAUDITED) DEFICIT, BEGINNING OF PERIOD ($123,527) ($122,332) NET (LOSS) FOR THE PERIOD (409) (226) --------- --------- DEFICIT, END OF PERIOD ($123,936) ($122,558) ========= =========
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED MARCH 31 2002 2001 - ----------------------------------- ---- ---- (Unaudited) REVENUE AND OPERATING COSTS Revenue from sales $ 9 $ - -------- -------- Operating costs 67 - GROSS (LOSS) (58) - -------- -------- COSTS AND EXPENSES General and administrative 322 232 Interest 24 20 Other expense (income) 5 (26) -------- -------- 351 226 -------- -------- NET (LOSS) FOR THE PERIOD ($ 409) ($ 226) ======== ======== (LOSS) PER SHARE Basic ($ 0.002) ($ 0.001) ======== ========
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED MARCH 31 2002 2001 - ----------------------------------- ---- ---- (Unaudited) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net (loss) for the period ($ 409) ($ 226) Change in non-cash working capital balances 133 155 ------ ------ (276) (71) ------ ------ INVESTING ACTIVITIES Change in mineral properties 66 - ------ ------ FINANCING ACTIVITIES Loan payable 245 - ------ ------ INCREASE (DECREASE) IN CASH FOR THE PERIOD 35 (71) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 90 75 ------ ------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 125 $ 4 ====== ======
Financial Disclosure Note The unaudited interim consolidated financial statements have been presented in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Corporation. The interim consolidated financial statements should be read in conjunction with the year end 2001 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. CORPORATE DIRECTORY BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (March 31, 2002) Authorized: Unlimited number of common shares Issued Common Shares: 165,202,115 Warrants: 17,000,000 Options: 2,525,800 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com EX-99.5 7 t12504exv99w5.txt EXHIBIT 99.5 2002 SECOND QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA MINING CORPORATION ================================================================================ UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA, ONTARIO CANADA, L5L 4L9 TEL: (905) 607-7543 FAX: (905) 607-980 WEBSITE: HTTP://WWW.CALEDONIAMINING.COM PRESIDENT'S REPORT PROPERTIES UPDATE SOUTH AFRICA The geological re-evaluation of the Taylor's section of the Barbrook Mine has been completed. A mining plan is now being developed to initially mine 6,000 tonnes of ore per month from underground together with schedules to increase this mining rate progressively. A development program has been prepared which encompasses the necessary stope preparation as well as exploratory development to test the validity of the geological planning model and to evaluate additional stoping areas. Rehabilitation of the underground, metallurgical plant and surface facilities is in progress and includes the design and construction of revisions to the metallurgical plant to include the PreOx process developed by Caledonia, the resin gold recovery process developed by MINTEK, and the re-establishing of the underground facilities such as ladder-ways, power, water and compressed air circuits. Gold production is expected to commence in the 4th quarter. A mini-bulk sample was collected from seven RC holes drilled into the Goedgevonden kimberlitic pipe. A total of 56 tonnes was collected and processed through a dense media separation plant. The Goedgevonden pipe was confirmed to be diamondiferous and sufficient gem quality diamonds, including a number of pink stones, were recovered to warrant a subsequent 8,000 to 10,000 tonne bulk sampling program. Dependent on regulatory approvals this program will commence during the fourth quarter. Caledonia has acquired the exploration rights over the Syferfontein kimberlite pipe which is approximately one kilometre NE of the Goedgevonden pipe, and other adjacent areas of exploration interest. Reports of work conducted by others in 1997 confirm that the Syferfontein pipe is diamondiferous and recommend a mini-bulk sampling program. Caledonia plans to initiate this program during the fourth quarter. ZAMBIA Caledonia's joint venture partner and operator of the Mulonga Plains JV, the BHP Entity has commenced the geophysical (both airborne and ground) and geochemical surveys on the Mulonga Plain and Kashiji Plain licence areas prior to the commencement of the drilling program during August 2002. CANADA During the quarter, Ashton Mining of Canada ("Ashton") Caledonia's joint-venture partner and operator of the programs, announced the successful collection of a 5.5 tonne mini-bulk sample from the Potentilla kimberlite and the discovery of the Stellaria kimberlite on the Kikerk Lake property in Nunavut. Results from the mini-bulk sample, which is now being processed are expected late in the 3rd quarter. Subsequently, Ashton has reported that the Stellaria kimberlite, located 700 m east of Potentilla is diamondiferous. Drill core from Stellaria was processed in Ashton's North Vancouver laboratory and produced the following results:
Sample Weight Numbers of Diamonds (Kg) --------------------------------------------------- Micro Macro 0.1 - 0.5 mm > 0.5 mm (in two dimensions) (in one dimension) 105.4 66 13 (Note 1)
NOTE 1: One of the macrodiamonds is greater than 0.5 mm in two dimensions and measures 0.8 x 0.6 x 0.4 mm. The summer exploration program at Kikerk Lake has commenced and will investigate a number of unexplained indicator mineral anomalies and will include further prospecting and additional detailed heavy mineral sampling. The program will also include drilling of the Stellaria pipe as well as further drilling along the defined linear geophysical feature associated with Stellaria. The objective is to better define the size and orientation of the kimberlite body and determine if it is a structurally controlled dyke. SHARE CAPITAL CHANGES Caledonia completed a private placement during the second quarter raising net proceeds of $2.7 million. The funds were used to reduce debt by $1.3 million and to finance the activities at the Barbrook mine site. Subsequent to the end of the quarter, 17,000,000 common share purchase warrants were exercised providing a further $1.3 million of financing. 10,000,000 share options were granted to the directors of the Corporation at an exercise price of 23.5 cents and 225,000 share options have been granted to two of the officers of the Corporation at an exercise price of 34.5 cents. (signed) S.E. Hayden Chairman, President and Chief Executive Officer August 26, 2002 CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
JUNE 30, DECEMBER 31, (UNAUDITED) 2002 2001 - ----------- ---- ---- ASSETS CURRENT CASH AND SHORT TERM DEPOSITS $ 860 $ 90 ACCOUNTS RECEIVABLE 99 89 PREPAID EXPENSES 5 5 --------- --------- 964 184 INVESTMENT (NOTE 1) 79 - CAPITAL ASSETS 7,451 7,424 MINERAL PROPERTIES 17,378 17,365 --------- --------- $ 25,872 $ 24,973 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT ACCOUNTS PAYABLE $ 1,700 $ 1,604 LOAN PAYABLE 67 1,097 --------- --------- 1,767 2,701 PROVISION FOR SITE RESTORATION 1,026 1,026 NON-CONTROLLING INTEREST 785 787 --------- --------- 3,578 4,514 --------- --------- SHAREHOLDERS' EQUITY SHARE CAPITAL (NOTE 2) 146,658 143,986 DEFICIT (124,364) (123,527) --------- --------- 22,294 20,459 --------- --------- $ 25,872 $ 24,973 ========= =========
ON BEHALF OF THE BOARD: _________________________ DIRECTOR (SIGNED) J. JOHNSTONE _________________________ DIRECTOR (SIGNED) F. C. HARVEY CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- DEFICIT, BEGINNING OF PERIOD ($123,936) ($122,558) ($123,527) ($122,332) NET (LOSS) FOR THE PERIOD (428) (254) (837) (480) --------- --------- --------- --------- DEFICIT, END OF PERIOD ($124,364) ($122,812) ($124,364) ($122,812) ========= ========= ========= =========
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- REVENUE AND OPERATING COSTS REVENUE FROM SALES $ 24 $ 33 $ 30 $ 33 OPERATING COSTS 136 13 203 13 ------- ------- ------- -------- GROSS PROFIT (LOSS) (112) 20 (173) 20 ------- ------- ------- -------- EXPENSES GENERAL AND ADMINISTRATIVE 266 290 588 522 INTEREST - 18 24 38 OTHER EXPENSE (INCOME) 49 (34) 54 (60) ------- ------- ------- -------- 315 274 666 500 ------- ------- ------- -------- (LOSS) BEFORE NON-CONTROLLING INTEREST (430) (254) (839) (480) NON-CONTROLLING INTEREST (2) - (2) - ------- ------- ------- -------- NET (LOSS) FOR THE PERIOD ($ 428) ($ 254) ($ 837) ($ 480) ------- ------- ------- -------- (LOSS) PER SHARE BASIC ($0.003) ($0.002) ($0.005) ($ 0.003) ======= ======= ======= ========
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES NET (LOSS) FOR THE PERIOD ($ 428) ($ 254) ($ 837) ($ 480) ITEMS NOT INVOLVING CASH (2) - (2) - ------- ------- ------- ------- (430) (254) (839) (480) CHANGES IN NON-CASH WORKING CAPITAL (47) 11 86 166 ------- ------- ------- ------- (477) (243) (753) (314) ------- ------- ------- ------- INVESTING ACTIVITIES PURCHASE OF INVESTMENT (NOTE 1) (79) - (79) - CAPITAL ASSETS AND MINERAL PROPERTIES (106) - (40) - ------- ------- ------- ------- (185) - (119) - ------- ------- ------- ------- FINANCING ACTIVITIES LOAN PAYMENT (1,275) - (1,030) - SHARES ISSUED - NET OF ISSUE COSTS (NOTE 2) 2,672 292 2,672 292 ------- ------- ------- ------- 1,397 292 1,642 292 ------- ------- ------- ------- INCREASE (DECREASE) IN CASH FOR THE PERIOD 735 49 770 (22) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 125 4 90 75 ------- ------- ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 860 $ 53 $ 860 $ 53 ======= ======= ======= =======
CALEDONIA MINING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED) 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 mineral resources and cash flows are based upon engineering and geological estimates and financial estimates including gold prices and operating costs. Actual results could differ from those estimated. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company together with all its subsidiaries. The Company's principal consolidated subsidiaries are Barbrook Mines Limited (100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned) ("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and Caledonia Western Limited (all 100% owned) (collectively known as "Caledonia Zambia"). FINANCIAL DISCLOSURE NOTE The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Company. The interim consolidated financial statements should be read in conjunction with the year end 2001 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. 1. INVESTMENT On May 9, 2002 the Corporation participated in a private placement of Motapa Diamonds Inc. in an amount of $50,000 US ($79,000 Canadian). Motapa Diamonds Inc. is the Corporation's joint venture partner on the Mulonga Plain diamond exploration project in Zambia. 2. SHARE CAPITAL On April 12, 2002 the Corporation completed a private placement for $2,672,000 net of $328,000 of share issue costs. The issue price was $0.145 per unit, each unit being comprised of one common share and one half common share purchase warrant exercisable at $0.195 per whole common share purchase warrant for a period of two years from the issue date. A total of 20,689,655 shares were issued pursuant to the private placement. As of June 30, 2002 the Corporation had 185,891,770 common shares outstanding. The basic loss per share has been calculated based upon a weighted number of common shares outstanding as follows: For the year to date period ended June 30, 2002 - 174,232,406 For the quarter period ended June 30, 2002 - 183,163,464 CORPORATE DIRECTORY BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (June 30, 2002) Authorized: Unlimited number of common shares Issued Common Shares: 185,891,770 Warrants: 29,068,992 Options: 2,525,800 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com EX-99.6 8 t12504exv99w6.txt EXHIBIT 99.6 2002 THIRD QUARTER REPORT [CALEDONIA MINING CORPORATION LOGO] CALEDONIA Mining Corporation ================================================================================ UNIT #9, 2145 DUNWIN DRIVE, MISSISSAUGA, ONTARIO CANADA, L5L 4L9 TEL: (905) 607-7543 FAX: (905) 607-9806 WORLD WIDE WEB: HTTP://WWW.CALEDONIAMINING.COM PRESIDENT'S REPORT RESULTS OF OPERATIONS SOUTH AFRICA The re-equipping and stope development in the Taylors section of Barbrook Mines Limited commenced during the quarter and is continuing into the fourth quarter. The mining program is now operative on stope development ore. The underground mining rate will increase to 6,000 tonnes of ore per month early in 2003. The second phase of the development program which allows access to additional stoping areas and provides a platform to explore and to evaluate other stoping areas has been prepared and will follow the current development program. The evaluation of other areas of the mine for early ore production is continuing. Rehabilitation of the underground, metallurgical plant and surface facilities is progressing well and includes the design and construction of revisions to the metallurgical plant to include the PreOx process developed by Caledonia, the resin gold recovery process developed by MINTEK, and re-establishing of underground facilities such as ladder-ways, services and ventilation circuits. Delivery of the first underground ore and commissioning of the metallurgical plant will commence during the fourth quarter 2002. Planning of the second bulk sampling program of the Goedgevonden kimberlite pipe is well advanced and this sampling will commence around year end. The results from this program will dictate the nature of future bulk sampling and exploration programs. Caledonia has also acquired options over portions of two adjacent areas of interest on the farms Eleazar and Buffeldoorn. Over 20 geophysical targets have been identified and these will be followed up by a geophysical gravity survey and loam sampling and will then be drill tested for kimberlites as necessary. ZAMBIA Eight holes totalling 1,450 meters were drilled on the Mulonga Plain property during the quarter to test a variety of geophysical anomalies. Drilling will be carried out on the Kashiji Plain licence area in the fourth quarter to test a number of targets. Samples from the Mulonga drilling program are currently undergoing petrographic and geochemical analysis. Caledonia's joint venture partner and operator of the programs, the BHP Entity will use these results to develop future drilling programs for Mulonga. CANADA During the quarter, Ashton Mining of Canada ("Ashton") Caledonia's joint-venture partner and operator of the programs, reported diamond results for a 5.83 tonne mini-bulk sample collected from the Potentilla kimberlite in May 2002 by Ashton. Discovered in September 2001, Potentilla is located on the Kikerk Lake property in the Coronation Gulf region of Nunavut. MINI-BULK SAMPLE RESULTS The Potentilla kimberlite contains two phases: an upper kimberlite breccia underlain by hypabyssal kimberlite. The 5.83 tonne mini-bulk sample consisted of 4.48 tonnes of kimberlite breccia and 1.35 tonnes of hypabyssal kimberlite. The previous definition drilling data indicate that Potentilla has maximum surface dimensions of 110 m x 50 m. Bulk sample results were reported by Ashton on September 16th and are summarized as follows: SUMMARY OF DIAMOND RESULTS
DIAMONDS DIAMONDS SAMPLE RECOVERED RECOVERED ESTIMATED DIAMOND KIMBERLITE WEIGHT (>0.8 mm) (>1.0 mm) CONTENT (cpht) TYPE (TONNES) (CARATS) (CARATS) (DIAMONDS > 1.0 mm) - ---- -------- -------- -------- ------------------- Breccia 4.48 1.07 0.86 19.20 Hypabyssal 1.35 0.21 0.16 11.85 ---- ---- ---- ----- TOTAL 5.83 1.28 1.02 17.50
The largest diamond recovered was a 0.34 carat colourless composite crystal with small inclusions and came from the breccia. The second largest diamond, a 0.09 carat stone, was recovered from the hypabyssal phase. A total of 1.02 carats of diamonds larger than 1.00 mm., using a square screen aperture were recovered from the mini-bulk sample. This represents an estimated diamond content of 17.5 carats per hundred tonnes ("cpht"). KIKERK LAKE PROPERTY SUMMER EXPLORATION PROGRAM In addition to the collection of the Potentilla mini-bulk sample, the 2002 summer drilling program also focused on the Stellaria kimberlite. Situated approximately 700 m east of the Potentilla kimberlite, Stellaria was discovered in May 2002 by drilling a vertical hole into a geophysical anomaly having approximate surface dimensions of 160 m x 50 m. In August 2002, a hole was drilled from 40 m northwest of the Stellaria discovery hole at an inclination of 60 degrees from horizontal. After passing through 16 m of glacial overburden and 52 m of dolomitic limestone, the drill intersected 21 m of hypabyssal kimberlite. The drill data suggest that Stellaria may be a 13 metre wide dyke dipping at an angle of 72 degrees to the northwest. Based on indicator mineral and geophysical data, Stellaria has a strike length of less than 400 m. Approximately 100 kg of core was recovered from the Stellaria drill hole and will be processed for microdiamonds at Ashton's North Vancouver laboratory. Three additional holes were drilled into geophysical anomalies along the linear feature without intersecting kimberlite. The summer program also included the collection of more than 250 indicator mineral samples in the vicinity of the Stellaria and Potentilla kimberlites to investigate unexplained geophysical and indicator mineral anomalies. The indicator mineral data will assist in identifying priority targets for drilling in early 2003. Caledonia currently holds a 17.5 percent interest in the Kikerk Lake property. Ashton and Northern Empire Minerals Ltd. hold interests of 52.5 percent and 30 percent respectively. Ashton is the operator of the programs on the Kikerk Lake property. LIQUIDITY During the quarter a total of 17,175,000 common share purchase warrants were exercised providing $1.3 million of financing. At the end of the quarter, debt of one million Rand ($139,860) was converted to 1,165,000 common shares of the Corporation and 291,375 common share purchase warrants. The funds raised were used to further reduce debt and finance activity at the Barbrook mine site. S. E. Hayden Chairman, President and Chief Executive Officer November 8, 2002 CALEDONIA MINING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF CANADIAN DOLLARS)
SEPTEMBER 30, DECEMBER 31, (UNAUDITED) 2002 2001 - ----------- ---- ---- ASSETS CURRENT CASH AND SHORT TERM DEPOSITS $ 1,398 $ 90 ACCOUNTS RECEIVABLE 118 89 PREPAID EXPENSES 5 5 --------- --------- 1,521 184 INVESTMENT (NOTE 1) 79 - CAPITAL ASSETS 7,610 7,424 MINERAL PROPERTIES 17,424 17,365 --------- --------- $ 26,634 $ 24,973 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT ACCOUNTS PAYABLE $ 1,550 $ 1,604 LOAN PAYABLE 67 1,097 --------- --------- 1,617 2,701 PROVISION FOR SITE RESTORATION 1,026 1,026 NON-CONTROLLING INTEREST 785 787 --------- --------- 3,428 4,514 --------- --------- SHAREHOLDERS' EQUITY SHARE CAPITAL (NOTE 2) 148,106 143,986 DEFICIT (124,900) (123,527) --------- --------- 23,206 20,459 --------- --------- $ 26,634 $ 24,973 ========= =========
ON BEHALF OF THE BOARD: ________________________ DIRECTOR (SIGNED) J. JOHNSTONE ________________________ DIRECTOR (SIGNED) F. C. HARVEY CONSOLIDATED STATEMENTS OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- DEFICIT, BEGINNING OF PERIOD ($124,364) ($122,812) ($123,527) ($122,332) NET (LOSS) FOR THE PERIOD (536) (465) (1,373) (945) --------- --------- --------- --------- DEFICIT, END OF PERIOD ($124,900) ($123,277) ($124,900) ($123,277) ========= ========= ========= =========
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- REVENUE AND OPERATING COSTS REVENUE FROM SALES $ 2 $ 11 $ 32 $ 44 OPERATING COSTS 143 149 346 162 ------- ------- ------- ------- GROSS PROFIT (LOSS) (141) (138) (314) (118) ------- ------- ------- ------- EXPENSES GENERAL AND ADMINISTRATIVE 472 257 1,060 779 INTEREST - 26 24 64 OTHER EXPENSE (INCOME) (77) 44 (23) (16) ------- ------- ------- ------- 395 327 1,061 827 ------- ------- ------- ------- (LOSS) BEFORE NON-CONTROLLING INTEREST (536) (465) (1,375) (945) NON-CONTROLLING INTEREST - - (2) - ------- ------- ------- ------- NET (LOSS) FOR THE PERIOD ($ 536) ($ 465) ($1,373) ($ 945) ------- ------- ------- ------- (LOSS) PER SHARE BASIC ($0.003) ($0.003) ($0.008) ($0.006) ======= ======= ======= =======
CALEDONIA MINING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, (UNAUDITED) 2002 2001 2002 2001 - ----------- ---- ---- ---- ---- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES NET (LOSS) FOR THE PERIOD ($ 536) ($ 465) ($1,373) ($ 945) ITEMS NOT INVOLVING CASH - - (2) - ------- ------- ------- ------- (536) (465) (1,375) (945) CHANGES IN NON-CASH WORKING CAPITAL (169) (264) (83) (98) ------- ------- ------- ------- (705) (729) (1,458) (1,043) ------- ------- ------- ------- INVESTING ACTIVITIES PURCHASE OF INVESTMENT (NOTE 1) - - (79) - CAPITAL ASSETS AND MINERAL PROPERTIES (205) 51 (245) 51 ------- ------- ------- ------- (205) 51 (324) 51 ------- ------- ------- ------- FINANCING ACTIVITIES LOAN PAYMENT - - (1,030) - SHARES ISSUED - NET OF ISSUE COSTS (NOTE 2) 1,448 668 4,120 960 ------- ------- ------- ------- 1,448 668 3,090 960 ------- ------- ------- ------- INCREASE (DECREASE) IN CASH FOR THE PERIOD 538 (10) 1,308 (32) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 860 53 90 75 ------- ------- ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,398 $ 43 $1,398 $ 43 ======= ======= ======= =======
CALEDONIA MINING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED) CERTIFICATION The Chief Executive Officer and the Vice President Finance confirm the veracity and soundness of these financial and operating results and have provided the board of directors with confirmation supporting this. 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 mineral resources and cash flows are based upon engineering and geological estimates and financial estimates including gold prices and operating costs. Actual results could differ from those estimated. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company together with all its subsidiaries. The Company's principal consolidated subsidiaries are Barbrook Mines Limited (100% owned) ("Barbrook"), Eersteling Gold Mining Company Limited (96% owned) ("Eersteling") and Caledonia Mining (Zambia) Limited, Caledonia Kadola Limited, Caledonia Nama Limited and Caledonia Western Limited (all 100% owned) (collectively known as "Caledonia Zambia"). FINANCIAL DISCLOSURE NOTE The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim reporting. In the opinion of management all adjustments required for a fair presentation are included in these statements in accordance with the accounting policies of the Company. The interim consolidated financial statements should be read in conjunction with the year end 2001 audited financial statements for the detailed note disclosure which is not materially different to these interim financial statements. CHANGE IN ACCOUNTING POLICY - STOCK-BASED COMPENSATION The Company has adopted the new accounting standard of the Canadian Institute of Chartered Accountants ("CICA") for accounting for stock-based compensation expense effective January 1, 2002 on a prospective basis. Under this standard, compensation expense on stock options granted to non-employees is recorded as an expense in the period the options are vested using the fair value method estimated using the Black-Scholes Option Pricing Model. The Company has elected to follow the intrinsic method of accounting for stock options granted to directors, officers and employees whereby no compensation expense is recorded in the financial statements when stock options are granted if the exercise price of the stock options are granted at market value. Any consideration paid by directors, officers and employees on exercise of stock options or purchases of shares is credited to share capital. However, additional disclosure of the effects of accounting for stock-based compensation to directors, officers and employees as compensation expense, using the fair value method estimated using the Black-Scholes Option Pricing Model, is disclosed as pro-forma information in the Share Capital note which follows. 1. INVESTMENT On May 9, 2002 the Company participated in a private placement of Motapa Diamonds Inc. in an amount of $50,000 US ($79,000 Canadian). Motapa Diamonds Inc. is the Company's joint venture partner on the Mulonga Plain diamond exploration project in Zambia. 2. SHARE CAPITAL Issued and Outstanding On April 12, 2002 the Company completed a private placement for $2,672,000 net of $328,000 of share issue costs. The issue price was $0.145 per unit, each unit being comprised of one common share and one half common share purchase warrant exercisable at $0.195 per whole common share purchase warrant for a period of two years from the issue date. A total of 20,689,655 shares were issued pursuant to the private placement. During the third quarter 17,175,000 common share purchase warrants were exercised. A total of 17,175,000 common shares were issued for proceeds of $1,309,115. In addition, a convertible loan in the amount of $139,860 was converted to 1,165,000 common shares. As of September 30, 2002 the Company has 204,232,270 common shares outstanding (December 31, 2001 - 165,202,115). The basic loss per share has been calculated based upon a weighted number of common shares outstanding as follows: For the year to date period ended September 30, 2002 - 182,095,324 For the quarter period ended September 30, 2002 - 197,564,759 Stock Options Options to purchase common shares have been granted to directors, officers, employees and consultants at exercise prices determined by reference to the market value on the date of grant. Vesting of options is made at the discretion of the board of directors at the time the options are granted. As at September 30, 2002, the Company has stock options outstanding for the purchase of 12,750,800 common shares (as at December 31, 2001 - 2,565,800 common shares). All of the options outstanding are exercisable. Pursuant to the new CICA policy of accounting for stock based compensation, compensation expense on stock options granted to directors, officers and employees, using the fair value method, is disclosed as pro-forma information. The fair value of stock options used to calculate compensation expense is estimated using the Black-Scholes Option Pricing Model with the following assumptions as at September 30, 2002. Risk-free interest rate 3.63% Expected dividend yield nil Expected stock price volatility 40% Expected option life in years 3
The pro-forma effect on net loss and loss per share for the period ended September 30, 2002 of the actual results had the Company accounted for the stock options granted to directors, officers and employees using the fair value method is as follows: Net loss for the period Reported $1,373,000 Compensation expense 754,000 ---------- Pro-forma $2,127,000 ==========
Basic loss per share Reported $ 0.008 Pro-forma $ 0.012
Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options. Warrants As of September 30, 2002, the Company has outstanding warrants to purchase an aggregate of 12,185,366 common shares. CORPORATE DIRECTORY BOARD OF DIRECTORS S. E. Hayden J. Johnstone F. C. Harvey W. I. L. Forrest C. R. Jonsson OFFICERS S. E. Hayden Chairman of the Board, President and Chief Executive Officer F. C. Harvey Technical Director J. Johnstone Vice-President Operations and Chief Operating Officer S. W. Poad Vice-President Finance and Administration J. Smith Vice-President Exploration HEAD OFFICE CANADA - HEAD OFFICE Caledonia Mining Corporation Unit #9 2145 Dunwin Drive Mississauga, Ontario L5L 4L9 Canada Tel: (905) 607-7543 Fax: (905) 607-9806 SHARES LISTED The Toronto Stock Exchange Symbol "CAL' NASDAQ OTC BB Symbol "CALVF" CAPITALIZATION (September 30, 2002) Authorized: Unlimited number of common shares Issued Common Shares: 204,232,270 Warrants: 12,185,366 Options: 12,680,800 SOLICITORS Borden Ladner Gervais LLP Suite 4100, Scotia Plaza 40 King Street West Toronto, Ontario M5H 3Y4 Canada Tupper, Jonsson & Yeadon 1710-1177 West Hastings Street Vancouver, British Columbia V6E 2L3 Canada AUDITORS BDO Dunwoody LLP Chartered Accountants Suite 3200, 200 Bay Street Royal Bank Plaza, South Tower Toronto, Ontario M5J 2J8 Canada REGISTRAR & TRANSFER AGENT Equity Transfer Services Inc. Suite 420 120 Adelaide Street West Toronto, Ontario M5H 4C3 Canada Tel: (416) 361-0152 Fax: (416) 361-0470 BANK Canadian Imperial Bank Of Commerce 6266 Dixie Road Mississauga, Ontario L5T 1A7 Canada INTERNET Web Site: http://www.caledoniamining.com -----END PRIVACY-ENHANCED MESSAGE-----