Caledonia Announces Terms of Debenture Conversion.

OAKVILLE, Ontario--(BUSINESS WIRE)--Nov. 3, 1998--Caledonia Mining Corporation of Toronto (TSE:CAL)(OTC BB:CLVF) announced today that it has reached agreement with all the holders of its $20.4 million Canadian Convertible Debentures scheduled to mature on December 15, 1999, for the immediate conversion of 100% of the Convertible Debentures into Caledonia common shares and rights (the "Rights").

Subject to applicable regulatory approval, Caledonia will issue the Rights and 14,593,750 common shares at a conversion price of $1.40 Canadian per share in settlement of 100% of the Convertible Debenture.

The Rights will be registered in the name of the registered holders of the Convertible Debentures and will be non-transferable. The Rights will automatically convert into a new debenture of Caledonia if, and only if, Filon Sur defaults under the Filon Sur project loan and its Lender calls on Caledonia to make a cash payment under the terms of the non-interest bearing convertible promissory note (the "Note") to be issued by Caledonia pursuant to the terms of the Filon Sur loan restructuring announced on Wednesday October 28th, 1998.

Should the Rights convert into debentures, each new debenture will be non-interest bearing, will be for a principal amount equal to no more than one-half of the principal amount of the Convertible Debentures held by the relevant registered holder and will remain in effect until the Note is cancelled, at which point the debentures will have no value and will be cancelled without further liability. If the Rights are not converted, they will automatically expire when the Note is cancelled.

The debenture holders have also agreed that accrued interest on the Convertible Debentures will be paid up to September 15, 1998 in common shares. This will result in a further 717,006 common shares being issued on account of interest at an issue price of $0.287 Canadian per share. A further news release will be issued once the accounting treatment for this transaction has been finalized.

Funds received from future debt or equity financing by Caledonia will not be subject to any possible claims by the Lender of the Filon Sur project loan. This announcement together with the October 28th, 1998 news release referred to above, details a significant reduction in the long and short term consolidated debt of the Corporation.

For further information please contact either:

Steve Poad Vice President Finance Canada

TEL: [phone] FAX: [phone]

Jim Johnstone V-P Operations and COO Canada TEL: [phone] FAX: [phone]

S.E. Hayden Chairman, President & CEO South Africa TEL: [phone] FAX:[phone]

or visit Caledonia on the World Wide Web at: http://www.caledoniamining.com