GG - Interim Technical Review Report

GG - Interim Technical Review Report W. Mugomo, G.S Chagondah June 2013 Caledonia Mining Corporation Blanket Mine Division Gwanda, Zimbabwe

Preamble • Within Blanket Mine’s minerals claim portfolio are several satellite gold claims within the Gwanda Greenstone Belt that have been explored and developed to different stages . These blocks of claims are all within 50km radius of Blanket Mine. • GG and Mascot are gold prospects located 12km and 35km respectively from Blanket Mine. Technical information at Blanket Mine and in the public domain has indicated that GG and Mascot have produced 2500oz and 16280oz at a grade of 9.2g/t and 5.8g/t respectively. • At both Prospects gold in-soil sampling and IP exploration techniques were employed prior to extensive surface diamond drilling campaigns on the identified anomalies. A total of 6128.76m were completed at Mascot in 1998 on 26 drilling sites compared to 4704.41 metres drilled on 18 holes at GG. • At both localities significant intersections were encountered. • On the basis of the encouraging exploration results, past production records and infra-structure availability, GG and Mascot Prospects were selected and planned for production in view of the relatively low capital cost input and short-term duration to production.

Projects objective • To increase the confidence level on the GG mineral resources and to ensure the Ore Reserves are 43-101 Compliant so that planned production schedules - GG 2013 Q3 could be met.

GG PROSPECT • 3.1) Location & Access • GG Prospect is located within the Gwanda Greenstone Belt approximately 8km west-northwest of Gwanda town, ( Matebeleland South Province -Zimbabwe). • Claims are in gently rolling relief. • Access to the Prospect is via an 9 km tarred road from Blanket Mine to the Kezi turn off from where a road seemingly heading towards Kezi immediately turns right into an all-weather dust road into the old Hotel Farm reaching the Prospect after approximately 3km (figure 1 and appendix 1).

Figure 1. Location map of GG Mine

3.2) Ground Tenure Status • The ground is held in the form of gold claims which are The claim holding covers an area of 162.9ha and is registered in the Bulawayo Mining District. • The claims straddle the Old Hotel farm and Makwenzi farm held by Mrs Saiand Mr Nyathirespectively.

3.3)Work done previously includes: • Traditional geological mapping • Rock chip geochem – on surface outcrops • Gold in-soil geochem • Geophysical work- Induced Polarisation (IP) • Surface drill testing of selected targets • Resource estimation

Figure 2: GG: Surface Drilling Plan and cross-section lines

Figure 3. X section through holes GGD- 5, 9 &10 (looking 060)

Figure 4. X section along holes GGD- 8, 1B &13 (looking 060)

Figure 5. X section along holes GG- 2,3 6 & 11 (looking 060)

Figure 6. X section through holes GGD 12,7 & 7b (looking 060)

Table 1: Summary of GG Surface Diamond Drilling Intersections

4) Current Work • 4.1) Shaft and Underground Development • Shaft sinking commenced in July 2012 & is still in progress with a twofold objective: • Provision of exploration drilling platforms to locate & confirm the previous findings on the nature of mineralisation, the gold tenor and distribution of values. • Facilitate the blocking out of mineable Ore Reserves. • Exploratory drilling platforms have been established on 60mL. • Further drill platforms are also pencilled on 120mL.

5) 60mL diamond drilling objective • The 60mL diamond drilling program was designed to: • Define a preliminary GG Prospect geology model so that useful information could be drawn and used to explore and develop subsequent levels. • Facilitate the blocking out of ore reserves for stoping to meet the 50t daily production call starting from July 2013. • The main target ore zones at GG prospect include: • North Main (underneath mined out pit) • South Main. • 60mL diamond drilling plan • Drill hole planning at 60mL targeted a coincident chargeability IP and Au in-soil geochemical anomaly (fig 7). • The chargeability IP and Au in - soil geochem anomalous zone (GG6, GG7 and GG8) trends north east, refer to appendix 2 and 3.

Figure 7. GG coincident high IP chargeability & geochem Au anomaly

Drilling at 60mL commenced in December 2012. • It comprises of strike perpendicular and fanned horizontal drill holes. • To date a total of 933.31metres has been completed over 11 holes as planned. • All horizontal holes were survey marked on each cubby prior to drilling. • Follow-up down holes at 20 degrees negative inclination are planned for selected sections with encouraging intercepts.

6) Findings 6.1)Drilling Outcome Outlined below is a summary of the drilling outcome.

Figure 8. 60mL drillhole & assay plan

Figure 9.GG Inferred Positions of the mineralised zones

Figure 9a. 60ml Geological Plan

Table 2: 60mL Drilling-Summary of Drill holes and Intersections

Figure 10. 120mL development and assay plan from channel sampling.

6.3) Structure • Gold mineralization at GG prospect like in the entire Gwanda Greenstone Belt is restricted to selected shear zones and/or fault zones within a largely meta-basalt country rock (fig. 11). • The shear zones hosting mineralization at GG prospect are sub-parallel to the east-west regional foliation. • Two fault trends have been identified to be displacing and truncating mineralization (figure 11 ). • Both fault trends appear to be intruded by post mineralization mafic dykes.

Figure 11. GG Geology Map

GG Shaft ore body……A bonanza!!! • Underground development on 60mL, 90mL and 120mL has exposed a bonanza Shaft ore body or is it the South Parallel ore body???? • The ore body is terminated on the west by a north-east trending and easterly dipping mafic dyke, refer to figure 12. • Mapping is ongoing on the 120mL to monitor for exposures and extent of this ore body

Figure 12.GG Shaft ore body longitudinal section and associated development

6.4) Alteration and mineralization • Chloritization, silicification and carbonation appear to be the dominant alteration types associated with shear zones and mineralization. • The gold mineralization is confined to a predominantly sheared and bleached grey-khakish phyllitic unit (magnesium basalts?) and chlorite schists with the foliation following the regional shear, refer to figure 11 above. • Mineralization is hydrothermal in origin and is associated with smokey grey to blackish quartz-carbonate veins which are also foliation parallel in places. • The major sulphide mineral is acicular arsenopyrite with pyrite and pyrrhotite being subsidiary.

6.5) Geology Footprint • The drilling program on 60mL is largely successful as it is intercepting significant intersections albeit without good correlations with previous ore projections from surface drilling. • The reefs appear to be broken along strike (Figure 9a). It is still unclear whether this persists with depth .This development could be resulting from a combination of complex structural deformations/alterations associated with mafic dyke intrusions and faulting or the zone could simply be a broad sub-surface alteration zone that is not persistent with depth. • To date, the campaign has confirmed presence of a broad alteration and mineralized zone as earlier outlined by a coincident high chargeability IP and Au in-soil geochemical anomaly.

7) Conclusions • The 2007 surface drilling highlighted the existence of two consistent major reefs: North Main and South Main with vertical extensions beyond 150m from surface returning significant values with little variations . • 60mL drilling outcome corroborated the findings of the 2007 drilling campaign to a limited extent. The North Main reef occur as discontinuous ore bodies along strike while the South Main is subdued. • Resource polygons from the year 2007 surface drilling campaign indicate a resource of 524 320 tonnes at 3.41g/t over an average true width of 2,93m for North Main and 501 400 tonnes at 4.02 g/t over an average true width of 2.55m for South Main. This resource if successfully upgraded to reserves, represents 34 months of production at 30 000 tonnes per month. • On-reef development at 60mL, 90mL and 120mL have confirmed the presence of the Shaft ore body. This discovery of a bonanza shaft ore bodyis indicative of the growing potential of the GG Prospect. • Underground development and diamond drilling from surface to 120mL have successfully confirmed that IP chargeability and Au in-soil geochemical surveys (GG6, GG7 and GG8) are effective techniques in identifying zones of sulphide mineralization at GG prospect. • Clearly the objective of defining a 43-101 Ore Reserve Compliant to meet the FY13 Q3 production call will not be met within the deadline. The FY13 Q3 production schedule was based on the assumption that GG reefs occur on 60mL and are continuous along strike.

8) Recommendations • The North Main and South Main ore bodies have been defined to a good extent by surface drilling. It is recommended that cross cuts to the two ore shoots be mined off the current 120 metre shaft level with cubby positions for further drilling being sited by the Exploration Department . • Should the GG reefs discontinuous nature along strike persist even at depth, exploration by development, although more costly, is recommended to minimise the over-drilling experienced on 60mL in an effort to re -establish the reef. • There is merit in extending the current planned shaft depth to beyond 120mL. • GG has a significant resource estimate of 450 000 tonnes at a tenor of 3.5g/t below the 120mL. Table 1 and Figures 3, 4, 5 and 6 show indications of the mineralisation on the vertical extensions beyond the 120mL planned depth. • In view of the need for a shaft safety margin (15m radius), a significant amount of the shaft ore body will remain unmined in the event that the shaft is not deepened beyond the planned 120mL.The shaft ore body footwall contact in the west is defined by a steep easterly (±85˚) dipping mafic dyke beyond which there is no mineralisation. Although the shaft ore body appears more developed to the east of the shaft from about 100mL, there is still need to confirm the presence, morphology and attitude of the ore body at 120mL before a decision to deepen the shaft is made. This cautionary step is particularly important if one considers the uncertainty and risk that the presence of the dyke poses.

The shaft when deepened will provide drilling platforms to confirm the 60mL findings and similarly track the footprints of the established reefs at depth. The difficulty in correlation of 60mL short strike length drill intersections associated with broad altered and mineralized shear zones with coincident chargeability IP and Au in-soil anomaly would be resolved by collating information gathered from surface drill holes and 60mL and trending this to 120mL after drilling along carefully selected section lines. This will in turn block out mineable ore reserves between 60mL and 120mL. • Other targets developed from gold in-soil sampling and IP exploration techniques e.g. GG4, GG5 and GG10 which have similar signatures to GG6, GG7 and GG8 and are proximal to the current shaft should be pursued by underground developments. • On the backdrop of GG 6/13, GGD -9, gold in-soil geochem and IP geophysics, surface drilling (with an estimated metreage of 5000m) is proposed (figure 13) to probe the north-east and south-west extensions (based on encouraging pit sampling and recent drilling in GG 12/13) of GG prospect. • In line with general laboratory practice it is recommended that the accuracy and precision of the laboratory be periodically checked.

Figure 12. GG proposed surface drilling

References Mikhailov, A. (1998), Geological map of GG Prospect, Boss Resources (Pvt) Ltd, (Unpublished internal company report). Mpofu, P., (2006). Induced Polarization Surveys, Blanket Mine (1983) Pvt Limited Gwanda, Zimbabwe, Geophysics GPR (Zimbabwe) (Pvt) Ltd, (Unpublished internal company report). Nyagumbo, J., Thomson, B., (2005). Request for Authority to Fund Expenditure (AFE) for GG claims - Drilling, AFE No. BN-05-54, (Unpublished internal company report). Tyndale-Biscoe, R., (1940). The geology of the country around Gwanda, Southern Rhodesia Geological Survey, Bulletin No. 36, 204p. Zizhou, A. P., Sakala, A. E. (2007), GG drill hole sections. END

Appendix 1. Gwanda Greenstone Belt showing location of Blanket Mine claims

Appendix 2. Gradient array IP survey chargeability map

Appendix 3. GG area soil Au geochem

GG - Interim Technical Review Report