TORONTO, ONTARIO--(Marketwire - May 18, 2011) - Caledonia Mining Corporation ("Caledonia" or the "Corporation") (News - Market indicators)(OTCBB:CALVF)(AIM:CMCL) is pleased to announce its first quarter 2011 operating and financial results. 

The financial results below are reported in Canadian dollars, except where otherwise stated.

• Gold production increased by 17% to 7,322 ounces compared to 6,235 ounces in the fourth quarter 2010 (Q1 2010: 3,129 ounces). Gold production in April 2011 was 2,737 ounces.

• Average cash cost per ounce of gold produced decreased by 18% to US$648 compared to the fourth quarter 2010 (Q1 2010: US$807).

• Average achieved price per ounce of gold was US$1,397 (Q1 2010: US$1,107).

• Gross Profit for the quarter (i.e. before depreciation, amortization and administrative expenses) nearly doubled to $5,248,000 compared to $2,815,000 in the fourth quarter 2010 (Q1 2010: $449,000).

• At March 31, 2011 the Corporation had net cash and cash equivalents of $1,406,000 (December 31, 2010: $398,000).

• During the quarter Caledonia made considerable progress in removing the remaining constraints to Blanket achieving the targeted annual production rate.

• The 2011 drilling program commenced in March 2011 at the Konkola West area of the Nama base metals project in Zambia.

Commenting on the results, Stefan Hayden, President and CEO, said: "I am very pleased to report a strong first quarter performance for 2011. The increased production coupled with the continued strength in the gold price and a reduction in Blanket's cash cost resulted in a substantial improvement in Caledonia's profitability and cash generation. 

"We have made significant progress during the current quarter to address the remaining constraints which, once solved, should enable us to reach our target of 10,000 ounces per quarter. A new ore pass was raise-bored and commissioned on May 13, 2011. The commissioning of the complete standby generating system commenced on May 16, 2011 and is expected to be completed by the end of May, after which Blanket will be able to maintain full operations during any interruption to the normal power supply. I am confident that Blanket will achieve its targeted quarterly production from the third quarter of 2011. 

"The drilling program at the Nama base metals project in Zambia commenced in March 2011 to identify typical copper-belt type mineralization. This drilling program is expected to be completed by the third quarter 2011.

On May 9 2011, Caledonia submitted its Indigenization Plan to the Government of Zimbabwe and awaits their response." 

Further information regarding Caledonia's exploration activities and operations along with its latest financials and Management Discussion and Analysis may be found at www.caledoniamining.com.