Caledonia Reports Financial Results for the 1999 First Quarter and the 1998 Year End.

MISSISSAUGA, Ontario--(BUSINESS WIRE)--May 20, 1999--

Caledonia Mining Corporation of Toronto (OTC BB:CALVF)(TSE:CAL) announces its financial results for the quarter ended March 31, 1999 and the fiscal year ended December 31, 1998. Results are reported in Canadian dollars.

First Quarter 1999

The 1999 first quarter recorded a net income of $5.2 million ($0.108 per share) as compared to a net loss of $0.8 million ($0.024 per share) for the same period of 1998. The quarter ending March 31, 1999 showed an increase in gross profit from mine operations at the Filon Sur gold mine to $1.0 million from $0.8 million in 1998, despite a decline in the gold price. The improved operating results reflect the impact of the expanded operation and favourable weather conditions which enabled production targets to be exceeded. Revenue from sales increased to $4.3 million during the first quarter of 1999 from $2.5 million during the same period of 1998.

With the finalization of the debt restructuring of the Corporation during the first quarter of 1999, Caledonia has recognized a gain of $5.3 million in income resulting from the conversion of long term debt to equity.

A summary of the results for the first quarter ended March 31, 1999 as compared to March 31, 1998 is as follows:

(in thousands) -0-

                                            March 31,   March 31,
                                                 1999        1998
                                           ----------------------
Revenue from sales                            $ 4,346    $  2,494

Gross profit from mine operations             $   973    $    796

Net (loss) -  before gain on debt retirement  $  (110)   $   (808)

Net income (loss) for the period              $ 5,158    $   (819)

Earnings (loss) per share for the period      $ 0.108    $ (0.024)

Year End 1998

Revenue from sales increased significantly in 1998 to $15.5 million from $11.1 million in 1997 due to increased gold and silver production resulting from the plant expansion at the Filon Sur gold mine, offset in part by a decline in the gold price received. Consequently the gross profit from mine operations in 1998 increased to $2.8 million from $1.2 million in 1997. After expenses, the Corporation incurred a loss of $4.4 million before write-downs, down from the loss of $9.7 million before write-downs recorded in 1997.

Due to the continuing low gold price, the Corporation recorded write-downs of $46.0 million on capital assets and mineral properties in 1998 down from a similar charge of $48.4 million in the prior year. The net loss in 1998 of $50.4 million ($1.35 per share) has been reduced from a net loss of $58.1 million ($1.78 per share) in 1997.

A summary of the results for the year ended December 31, 1998 as compared to 1997 is as follows:

(in thousands) -0-

                                                 1998        1997
                                           ----------------------
Revenue from sales                           $ 15,523    $ 11,106

Gross profit from mine operations            $  2,771    $  1,249

Net (loss) for the year - before write-downs $ (4,439)   $ (9,650)

Net (loss) for the year - after write-downs  $(50,437)   $(58,095)

(Loss) per share - after write-downs         $  (1.35)   $  (1.78)

The 1999 first quarter results and the Corporation's 1998 annual report have been mailed to shareholders on May 20, 1999.