Caledonia to acquire Scottish gold company.

TORONTO, Ontario--(BUSINESS WIRE)--Jan. 13, 1995-- CALEDONIA MINING CORPORATION (TSE-CAL, NASDAQ-CALVF) is pleased to announce that, subject regulatory approvals and certain other conditions, it has signed an agreement to purchase a 100% direct interest plus certain loans in Fynegold Exploration Limited, a gold exploration company based in Scotland.

The consideration for the purchase is $US 4.25 million plus 500,000 common shares of Caledonia. The transaction is expected to be completed by January 26th, 1995.

Fynegold has precious metal exploration and development licenses and rights covering approximately 60,000 acres located in the central highlands of Scotland, stretching north from Loch Fyne for a distance of about 40 kilometres. These rights are contiguous in both the south and the north with similar rights held by Caledonia over an additional 170,000 acres. Caledonia also holds exploration rights over 31,000 acres in the Strath of Kildonan, northern Scotland.

Fynegold has completed a feasibility study for the development of a mine at Cononish near Tyndrum in the central highlands, where exploration and underground development work has outlined proven, probable and possible reserves of 750,000 tonnes at 7.99 g/t gold and 42.99 g/t silver. Caledonia considers the potential for finding additional reserves in the Cononish area to be very good. Planning permission for the Cononish project was approved by the Stirlingshire district council on December 8th, 1994. It is Caledonia's intention to proceed with the project as soon as adequate financing has been arranged. The mine is expected to commence production at a rate of 23,000 ounces of gold equivalent per annum, at an initial capital cost of about $16 million and a direct operating cost of about $US 200 per ounce.

In addition to the Cononish orebody, Fynegold has discovered significant gold showings at 36 other locations scattered throughout its licence areas. Little or no follow-up work has been carried out at these locations as Fynegold had elected to concentrate its efforts on the development of the Cononish project. Previous regional exploration work carried out by Caledonia on its adjoining central highland license areas showed them to be highly prospective for precious metals. The pooling of the Fynegold and Caledonia land holdings results in a land package of about 230,000 acres, stretching for 80 kilometres, with excellent potential for the discovery of further orebodies.

Following completion of the aforementioned acquisition and the completion of the acquisition of the Eersteling and Barbrook gold mines in South Africa (News Release dated December 22, 1994) Caledonia will have approximately 27.1 million shares on issue and cash reserves of about $16.1 million.

    CONTACT:  D. S. MACLEOD, CHAIRMAN   TEL: [phone]
              F. C. HARVEY, PRESIDENT   FAX: [phone]