Caledonia's alluvial diamond program.

TORONTO--(BUSINESS WIRE)--Feb. 20, 1995-- Further to its press release of February 13th, 1995, Caledonia Mining Corporation issues the following additional information on the alluvial diamond program that it conducted in the Coronation Gulf region during 1993 and 1994.

In 1993, Caledonia completed a river and coastal sampling program that was aimed at determining if alluvial diamonds had been transported from the interior of the Slave geological province by fluvial systems and deposited in the river, coastal and offshore areas of the Coronation Gulf. This sampling program revealed kimberlitic indicator minerals that were determined to have been sourced from kimberlite pipes, the same geologic feature as that from which diamonds are sourced. In addition, Caledonia identified three paleo deltas of the Coppermine river that stretch from the coast to 80 kilometres up river.

Caledonia determined that due to the presence of the kimberlitic indicator minerals, it would conduct a bulk sampling program in 1994 that would be aimed at endeavouring to locate diamonds in the present river systems and in the three paleo deltas that were detected inland from the Coronation Gulf in 1993. In addition to sampling the three inland paleo deltas, Caledonia would conduct an offshore seismic survey that would map the ocean floor for the purpose of detecting if paleo deltas existed below the present sea level. Any plans to sample paleo deltas detected under the present sea level would be conditional on diamonds being detected in the three inland paleo deltas.

The offshore seismic survey was planned in three phases covering a period of approximately six weeks. The first phase would complete a very wide spaced regional survey that would use equipment that could map the bedrock, deltaic sediments and marine sediments. The second phase would use the same technique and equipment as phase one, but would be a more focussed and narrower spaced survey in specific areas where phase one had detected evidence of paleo deltas. Phase three would then apply a side scan sonar unit to acquire a photographic image of the ocean floor should this prove useful.

Phase one was completed and did in fact reveal evidence of a large paleo delta located directly offshore of the present Coppermine River delta. Phase two was then implemented and successfully completed the detailed survey of the paleo delta detected in phase one. In addition an in field preliminary analysis of the phase one and two data revealed that the paleo delta was covered by a layer of fine marine sediments of variable thickness averaging about 20 metres that masked the finer features of the delta. The side scan sonar unit planned to be implemented in phase three provides images of the ocean floor and has no capacity to penetrate below the ocean floor. Its ability to assist in determining the finer features of the paleo delta were impaired by the existence of the fine marine sediments. Caledonia, therefore decided not to carry out phase three of the survey and requested the contracting seismic company to then generate its reports on phase one and two for further detailed analysis. These reports were received in November 1994 and subsequently analyzed by Caledonia. It was concluded that a longshore drift concentrating mechanism was unlikely to have been present and that consequently the river channels in the delta would be the most likely resting place for diamonds. It was further concluded that a number of possible sampling sites could be identified from the survey data should Caledonia decide to sample at a future date.

On land, the bulk sampling of the present river systems and the three inland paleo deltas was completed in early September and sent to Saskatchewan Research Council (SRC) in Saskatoon for analysis. 32 bulk samples were taken by three jig/sluice teams that worked double shifts for three to four days at each sample site. Each sample processed between 15 and 30 tonnes of material and retained concentrates of between 200 and 1,000 pounds. SRC completed analysis of all the bulk samples in mid January 1995, after which time analysis and interpretation of the results ensued.

Following this interpretation, Caledonia announced on February 13th, 1995 that it did not recover diamonds in its bulk samples and therefore had decided to give priority in its alluvial diamond program to the rivers draining to the south, east and west of the Bear and Slave geological provinces, where preliminary investigations have been encouraging.

However, because of the immensity of the paleo deltas and the associated river systems in the Coronation Gulf area compared to the relatively small scale of the sampling programs, the fact that diamonds have not been discovered does not mean that diamonds are not present. Consequently, it was concluded that although this area was to be down graded in priority, it still merited retention for the possible processing of sample size fractions which have not been analyzed yet and for a possible future sampling program. Therefore, in January a decision was made and implemented to retain the mineral rights covering the three inland paleo deltas and most of the newly discovered offshore paleo delta.

CONTACT: F.C. HARVEY PRESIDENT or W.G. MACLEOD, VICE-PRESIDENT

905/564-5213 or fax: [phone]