Caledonia And BHP Sign Agreement On Caledonia's Kalimba Group Properties In Northern Zambia

MISSISSAUGA, Ontario August 29, 2000 - Caledonia Mining Corporation of Toronto is pleased to announce that it has signed a letter agreement with BHP World Minerals Inc. on Caledonia's 100% owned Kalimba Group properties in Northern Zambia.

The 1,148 square kilometer Kalimba property includes the Kalimba, Ngosa, Nama and the Luamfula areas which are covered by exclusive Prospecting Licences. These licences are held by a wholly owned Zambian subsidiary of Caledonia and are located immediately to the north west of the Zambian Copperbelt. The Agreement specifically excludes the drilled oxide resources in the Nama and Ngosa licence areas.

BHP can earn a 30% equity interest in Kalimba by spending US$2.5 million within the first four year or Initial Period and may increase its equity interest to 50% by spending an additional US$4.0 million, thereby bringing its total spending during the Initial Period to $6.5 million.

BHP, provided that it has earned a 50% equity interest in Kalimba during the Initial Period, may further increase its equity interest to 75% by completing a feasibility study.

The minimum exploration commitment by BHP during the Initial Period will be US$ 2.5 million.

From 1995 to 1997, Caledonia drilled a total of 350 shallow reverse circulation holes , averaging 120 metres in depth on the Nama and Ngosa areas of Kalimba resulting in the identification of a resource of about 950 million tonnes with a cobalt equivalent grade of 0.029%. Caledonia has also carried out an aero-magnetic and radio-magnetic geophysical survey over the whole of Kalimba. In addition, most of the area has also been covered by geochemical soil sampling. Caledonia intends to continue its development work on the oxide resource. Visit Caledonia on the World Wide Web at: http://www.caledoniamining.com

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