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