Report of Foreign Issuer (6-k)

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Of the Securities Exchange Act of 1934

For the month of November 2014

Commission File Number: 000-13345

CALEDONIA MINING CORPORATION

(Translation of registrant’s name into English)

Suite 1000

36 Toronto Street

Toronto, ON, M5C 2C5

Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F x Form 40-F _____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _____ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ______

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Caledonia Mining Corporation

(Registrant)

By: /s/ Steve Curtis

Name: Steve Curtis

Title: VP Finance, CFO, Director

Dated: November 13, 2014

Exhibit Index

Exhibit	Description

99.1	Financial Statements
99.2	MDA
99.3	Certificate - CEO
99.4	Certificate - CFO

Exhibit 99.1

Caledonia Mining Corporation

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

To the Shareholders of Caledonia Mining Corporation:

Management has prepared the information and representations in this interim report. The unaudited condensed consolidated interim financial statements of Caledonia Mining Corporation (“Group”) have been prepared in accordance with International Accounting Standard 34 (“IAS 34”) Interim Financial Reporting and, where appropriate, these statements include some amounts that are based on best estimates and judgment. Management have determined such amounts on a reasonable basis in order to ensure that the unaudited condensed consolidated financial statements are presented fairly, in all material respects.

The Management Discussion and Analysis (“MD&A”) also includes information regarding the impact of current transactions, sources of liquidity, capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

The Group maintains adequate systems of internal accounting and administrative controls, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information is produced.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting (“ICOFR”). Any system of ICOFR, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

At September 30, 2014, management evaluated the effectiveness of the Group’s ICOFR and concluded that such ICOFR was effective and there were no material weaknesses or changes in internal controls identified by management.

As part of their monitoring and oversight role, the Audit Committee performs a review and conducts discussions with management. No material exceptions were noted based on the additional procedures and no evidence of fraudulent activity was found.

The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal control. The Audit Committee is composed of three independent directors. This Committee meets periodically with management and the external auditor to review accounting, auditing, internal control and financial reporting matters.

These condensed consolidated financial statements have not been reviewed by the Group’s auditors.

The unaudited condensed consolidated interim financial statements for the period ended September 30, 2014 were approved by the Board of Directors and signed on its behalf on November 5, 2014.

(Signed) S. E. Hayden	(Signed) S. R. Curtis

President and Chief Executive Officer	Vice-President, Finance and Chief Financial Officer

Caledonia Mining Corporation

Condensed consolidated statements of profit or loss and other comprehensive income

In thousands of Canadian dollars (except for earnings per share amounts)

Unaudited			For the 3 months ended September 30						For the 9 months ended September 30
	Note		2014			2013			2014			2013

Revenue				13,492			16,591			46,110			52,999
Less: Royalty				(945	)		(1,165	)		(3,230	)		(3,651	)
Production costs		6		(7,174	)		(6,872	)		(23,730	)		(21,493	)
Depreciation				(1,029	)		(835	)		(3,112	)		(2,458	)
Gross profit				4,344			7,719			16,038			25,397
Administrative expenses		7		(1,754	)		(1,153	)		(5,361	)		(5,853	)
Foreign exchange gain				389			-			517			-
Gain on sale of property, plant and equipment				52			-			57			-
Results from operating activities				3,031			6,566			11,251			19,544
Finance income				11			18			11			18
Finance cost				(27	)		(30	)		(97	)		(80	)
Net finance costs				(16	)		(12	)		(86	)		(62	)
Profit before income tax				3,015			6,554			11,165			19,482
Income and other tax expense				(1,747	)		(1,965	)		(4,284	)		(5,618	)
Profit for the period				1,268			4,589			6,881			13,864
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences for foreign operations				2,562			(331	)		2,408			2,216
Other comprehensive income for the period, net of income tax				2,562			(331	)		2,408			2,216
Total comprehensive income for the period				3,830			4,258			9,289			16,080
Profit attributable to:
Shareholders of the Company				1,112			3,733			5,377			11,381
Non-controlling interests				156			856			1,504			2,483
Profit for the period				1,268			4,589			6,881			13,864
Total comprehensive income attributable to:
Shareholders of the Company				3,637			3,052			7,769			13,619
Non-controlling interests				193			1,206			1,520			2,461
Total comprehensive income for the period				3,830			4,258			9,289			16,080
Earnings per share
Basic earnings per share			$	0.022		$	0.072		$	0.105		$	0.219
Diluted earnings per share			$	0.022		$	0.072		$	0.105		$	0.219

The accompanying notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.

Signed on behalf of the Board: “S.E. Hayden” - Director and “S.R.Curtis” - Director

Caledonia Mining Corporation

Condensed consolidated statements of financial position

(In thousands of Canadian dollars)

			Unaudited			Audited
As at			September 30,			December 31,
	Note		2014			2013
Assets
Property, plant and equipment		8		37,374			33,448
Total non-current assets				37,374			33,448

Inventories		9		6,877			6,866
Prepayments				261			177
Trade and other receivables		10		3,063			3,889
Cash and cash equivalents		11		27,852			25,222
Total current assets				38,053			36,154
Total assets				75,427			69,602

Equity and liabilities
Share capital				57,607			57,607
Reserves				158,461			156,069
Retained loss				(158,625	)		(161,651	)
Equity attributable to shareholders				57,443			52,025
Non-controlling interests				621			(51	)
Total equity				58,064			51,974

Liabilities
Provisions				2,093			1,572
Deferred tax liability				8,365			8,522
Total non-current liabilities				10,458			10,094

Trade and other payables				4,052			4,600
Income taxes payable				1,855			1,138
Bank Overdraft		11		998			1,796
Total current liabilities				6,905			7,534
Total liabilities				17,363			17,628
Total equity and liabilities				75,427			69,602

The accompanying notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.

Signed on behalf of the Board: “S.E. Hayden” - Director and “S.R.Curtis” - Director

Caledonia Mining Corporation

Condensed consolidated statements of changes in equity

For the nine months ended September 30

(expressed in thousands of Canadian dollars)

Unaudited	Share Capital			Investment Revaluation Reserve		Foreign Currency Translation Reserve			Contributed Surplus		Share based Payment Reserve		Retained Loss			Total			Non-controlling interests (NCI)			Total Equity

Balance at December 31, 2012		197,137			5		(2,010	)		-		15,682		(153,399	)		57,415			(1,796	)		55,619
Transactions with owners:
Reduction of stated capital		(140,000	)		-		-			140,000		-		-			-			-			-
Dividend paid		-			-		-			-		-		(5,200	)		(5,200	)		(738	)		(5,938	)
Shares issued		470			-		-			-		-		-			470			-			470
Total comprehensive income:
Profit for the period		-			-		-			-		-		11,381			11,381			2,483			13,864
Other comprehensive income		-			-		2,238			-		-		-			2,238			(22	)		2216
Balance at September 30, 2013		57,607			5		228			140,000		15,682		(147,218	)		66,304			(73	)		66,231
Balance at December 31, 2013		57,607			-		319			140,000		15,750		(161,651	)		52,025			(51	)		51,974
Transactions with owners:
Dividend paid		-			-		-			-		-		(2,351	)		(2,351	)		(848	)		(3,199	)
Total comprehensive income:
Profit for the period		-			-		-			-		-		5,377			5,377			1,504			6,881
Other comprehensive income		-			-		2,392			-		-		-			2,392			16			2,408
Balance at September 30, 2014 Unaudited		57,607			-		2,711			140,000		15,750		(158,625	)		57,443			621			58,064

The accompanying notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.

Signed on behalf of the Board: “S.E. Hayden” - Director and “S.R.Curtis” - Director

Caledonia Mining Corporation

Condensed consolidated statements of cash flows

(In thousands of Canadian dollars)

Unaudited			For the 3 months ended September 30						For the 9 months ended September 30
Cash flows from operating activities	Note		2014			2013			2014			2013

Cash flows generated from operating activities		12		5,057			7,067			15,453			18,138
Advance payment				-			-			-			(1,987	)
Interest received				11			18			11			18
Interest paid				(27	)		(30	)		(97	)		(80	)
Tax paid				(1,410	)		(1,785	)		(3,851	)		(6,198	)
Cash from operating activities				3,631			5,270			11,516			9,891

Cash flows from investing activities
Property, plant and equipment additions				(1,379	)		(3,362	)		(4,961	)		(8,470	)
Proceeds from sale of property, plant and equipment				72			-			72			-
Net cash used in investing activities				(1,307	)		(3,362	)		(4,889	)		(8,470	)

Cash flows from financing activities
Dividend paid				(1,312	)		(488	)		(3,199	)		(5,938	)
Proceeds from shares issued				-			-			-			470
Net cash used in financing activities				(1,312	)		(488	)		(3,199	)		(5,468	)
Net increase/(decrease) in cash and cash equivalents				1,012			1,420			3,428			(4,047	)
Cash and cash equivalents at beginning period				25,842			22,475			23,426			27,942
Cash and cash equivalents at end of period		11		26,854			23,895			26,854			23,895

The accompanying notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.

Signed on behalf of the Board: “S.E. Hayden” - Director and “S.R.Curtis” - Director

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

1 Reporting entity

Caledonia Mining Corporation (the “Company”) is a company domiciled in Canada. The address of the Company’s registered office is Suite 4009, 1 King Street West, Toronto, Ontario, M5H 1A1, Canada. The Condensed Consolidated Interim Financial Statements of the Group as at and for the nine months ended September 30, 2014 comprises the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group is primarily involved in the operation of a gold mine and the acquisition, exploration and development of mineral properties for the exploration of base and precious metals.

2 Basis for preparation

(a) Statement of compliance

These unaudited Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all the information required for full annual financial statements. Accordingly, certain information and disclosures normally included in the annual Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) have been omitted or condensed. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2013.

(b) Basis of measurement

The Condensed Consolidated Interim Financial Statements have been prepared on the historical cost basis except for the following item in the statement of financial position:

equity-settled share-based payment arrangements are measured at fair value on grant date.

These Condensed Consolidated Interim Financial Statements are presented in Canadian dollars, which is the functional currency of the Company. All financial information presented in Canadian dollars has been rounded to the nearest thousand unless otherwise stated.

3 Use of estimates and judgements

Management makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and assumptions are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

3 Use of estimates and judgements - (continued)

In preparing these Condensed Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at December 31, 2013.

The Condensed Consolidated Interim Financial Statements should be read in conjunction with the Group’s annual financial statements for the year ended December 31, 2013.

4 Significant accounting policies

The same accounting policies and methods of computation have been applied consistently to all periods presented in these Condensed Consolidated Interim Financial Statements as compared to the Group’s annual financial statements for the year ended December 31, 2013. In addition, the accounting policies have been applied consistently by the Group entities.

5 Blanket Zimbabwe Indigenisation Transaction

During 2012 the Group, to comply with Zimbabwean law that requires indigenous Zimbabweans own at least 51% of the Blanket Mine, entered into agreements to transfer a 51% ownership interest in Blanket Mine as follows:

·	Sold a 16% interest to the National Indigenisation and Economic Empowerment Fund (“NIEEF”) for US$11.74 million.

·	Sold a 15% interest to Fremiro, which is owned by Indigenous Zimbabweans, for US$11.01 million.

Sold a 10% interest to Blanket Employee Trust Services (Private) Limited (BETS) for the benefit of present and future managers and employees for US$7.34 million. The shares in BETS are held by the Blanket Mine Employee Trust (Employee Trust) with Blanket Mine’s employees holding participation units in the Employee Trust.

·	And donated a 10% ownership interest to the Gwanda Community Share Ownership Trust (Community Trust). In addition Blanket Mine paid a non-refundable donation of US$1 million to the Community Trust.

The Group facilitated the vendor funding of these transactions which are repaid by way of dividends from Blanket Mine. 80% of dividends declared by Blanket Mine are used to repay such loans and the remaining 20% unconditionally accrues to the respective Indigenous Shareholders.

Outstanding balances on the facilitation loans attract interest at a rate of 10% over the 12-month LIBOR. The timing of the repayment of the loans depends on the future financial performance of Blanket Mine and the extent of future dividends declared by Blanket Mine.

The facilitation loans relating to the group were declared by Caledonia Holdings Zimbabwe (Blanket Mine’s parent company) to a wholly-owned subsidiary of Caledonia Mining Corporation as a dividend in specie on February 14, 2013 and withholding tax amounting to US$1.504 million was paid and expensed on March 5, 2013.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

5 Blanket Zimbabwe Indigenisation Transaction – (continued)

Accounting treatment

The directors of Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a wholly owned subsidiary of the Company, performed an assessment, using the requirements of IFRS 10: Consolidated Financial Statements (IFRS 10), and concluded that CHZ should continue to consolidate Blanket Mine and accounted for the transaction as follows:

·	Non-controlling interests (NCI) are recognised on the portion of shareholding upon which dividends declared by Blanket Mine accrue unconditionally to equity holders as follows:

(a)

20% of the 16% shareholding of NIEEF;

(b)

20% of the 15% shareholding of Fremiro;

(c)

100% of the 10% shareholding of the Community Trust.

·	This effectively means that NCI is recognised at Blanket Mine level at 16.2% of the net assets.

The remaining 80% of the shareholding of NIEEF and Fremiro is recognised as non-controlling interests to the extent that their attributable share of the net asset value of Blanket Mine exceeds the balance on the facilitation loans including interest. At September 30, 2014 the attributable net asset value did not exceed the balance on the respective loan accounts and thus no additional NCI was recognised.

The transaction with the BETS is accounted for in accordance with IAS 19 Employee Benefits (profit sharing arrangement) as the ownership of the shares does not ultimately pass to the employees. The employees are entitled to participate in 20% of the dividends accruing to the 10% shareholding in Blanket Mine if they are employed at the date of such distribution. To the extent that 80% of the attributable dividends exceed the balance on the BETS facilitation loan they will accrue to the employees at the date of such declaration.

·	The Employee Trust and BETS are structured entities which are effectively controlled and consolidated by Blanket Mine. Accordingly the shares held by BETS are effectively treated as treasury shares in Blanket Mine and no NCI is recognised.

USD 000's	Shareholding			NCI Recognised			NCI subject to facilitation loan			Balance of facilitation loan at 30 September 2014 #		Dec, 31 2013
NIEEF		16	%		3.2	%		12.8	%		11,627		11,742
Fremiro		15	%		3.0	%		12.0	%		11,445		11,360
Community Trust		10	%		10.0	%		-			-		-
BETS ~		10	%		-	*		-	*		7,630		7,573
		51	%		16.2	%		24.8	%	US$30,702		US$30,675

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

5 Blanket Zimbabwe Indigenisation Transaction – (continued)

The balance on the facilitation loans is reconciled as follows:

	USD 000’s
Subscription price funded on loan account – at 5 September 2012		30,090
Interest accrued		4,478
Dividends used to repay loans		(3,866	)
Balance at September 30, 2014		30,702

*The shares held by BETS are effectively treated as treasury shares (see above).

~ Accounted for under IAS19 Employee Benefits.

# Facilitation loans are accounted for as equity instruments and are accordingly not recognised as loans receivable (see above).

Advance dividends

In anticipation of completion of the underlying subscription agreements, Blanket Mine agreed to an advance dividend arrangement with NIEEF and the Community Trust as follows:

(a)	Advances to the Community Trust against their right to receive dividends declared by Blanket Mine on their shareholding as follows:

A US$2 million payment on or before September 30, 2012;

A US$1 million payment on or before February 28, 2013; and

A US$1 million payment on or before April 30, 2013.

These advance payments were debited to a loan account bearing interest at a rate of 10% over the 12-month LIBOR. The loan is repayable by way of set off of future dividends on the Blanket Mine shares owed by the Community Trust.

(b)	An advance payment of US$1.8 million to NIEEF against their right to receive dividends declared by Blanket Mine on their shareholding. The advance payment was debited to an interest-free loan account and was repayable by way of set off of future dividends on the Blanket Mine shares owned by

NIEEF. Whilst any amount remained outstanding on the NIEEF dividend loan account, interest on the NIEEF facilitation loan was suspended.

The advance dividend payments were recognised as distributions to shareholders and they are classified as equity instruments. The loans arising are not recognised as loans receivable, because repayment is by way of uncertain future dividends to be declared.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

5 Blanket Zimbabwe Indigenisation Transaction – (continued)

The movement in the advance dividend loans is reconciled as follows in USD 000’s:

	NIEEF			Community Trust			Total
	US$			US$			US$
Balance at January 1, 2013		1,800			2,062			3,862
Paid		-			2,000			2,000
Interest accrued		-			346			346
Dividends used to repay advance dividends		(1,442	)		(901	)		(2,343	)
Balance at December 31, 2013		358			3,507			3,865
Paid		-			-			-
Interest accrued		-			276			276
Dividends used to repay advance dividends		(358	)		(604	)		(962	)
Balance at September 30, 2014		-			3,179			3,179

6 Production costs

	September 30 2014		September 30 2013

Salaries and wages		8,120		7,418
Consumable materials		12,668		11,402
Site restoration		28		73
Exploration		313		272
Safety		402		340
On mine administration		2,199		1,988
		23,730		21,493

7 Administrative expenses

	September 30 2014		September 30 2013

Investor relations		360		504
Management contract fee		768		546
Professional consulting fees		452		-
Audit fee		141		276
Legal fee and disbursements		510		362
Accounting services fee		23		23
Listing fees		161		35
Travel		244		248
Donation to scholarship fund and other donations		10		2,030
Directors fees		275		252
Salaries and wages		1,539		1,017
Zambian holding costs		449		-
Other		429		560
		5,361		5,853

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

8 Property, plant and equipment

	Land and buildings		Mineral properties being depreciated		Mineral properties not depreciated		Plant and equipment			Fixtures and fittings		Motor vehicles			Total

Cost

Balance at January 1, 2013		4,534		11,325		10,838		19,346			1,196		1,782			49,021
Additions		3,240		2,695		4,451		979			85		288			11,738
Foreign exchange movement		378		971		1,031		1,151			25		149			3,705
Balance at December 31, 2013		8,152		14,991		16,320		21,476			1,306		2,219			64,464
Additions		-		1,961		1,464		1,428			90		18			4,961
Disposals		-		-		-		(35	)		-		(10	)		(45	)
Foreign exchange movement		697		734		862		1,233			51		246			3,823
Balance at September 30, 2014		8,849		17,686		18,646		24,102			1,447		2,473			73,203

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

8 Property, plant and equipment - (continued)

	Land and buildings		Mineral properties being depreciated		Mineral properties not depreciated		Plant and equipment			Fixtures and fittings		Motor vehicles			Total
Depreciation and Impairment losses

Balance at January 1, 2013		978		2,028		-		7,759			982		803			12,550
Depreciation for the year		272		620		-		2,016			70		298			3,276
Impairment		399		-		13,713		91			-		-			14,203
Foreign exchange movement		85		178		620		20			11		73			987
Balance at December 31, 2013		1,734		2,826		14,333		9,886			1,063		1,174			31,016
Depreciation for the period		421		702		-		1,656			63		270			3,112
Disposals		-		-		-		(21	)	`-			(9	)		(30	)
Foreign exchange movement		151		178		806		437			28		131			1,731
Balance at September 30, 2014		2,306		3,706		15,139		11,958			1,154		1,566			35,829
Carrying amounts
At December 31, 2013		6,418		12,165		1,987		11,590			243		1,045			33,448
At September 30, 2014		6,543		13,980		3,507		12,144			293		907			37,374

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

9 Inventories

	September 30		December 31
	2014		2013

Consumable stores		6,877		5,995
Gold in progress		-		871
		6,877		6,866

Inventory is comprised of gold in circuit at Blanket and consumable stores utilised by Blanket Mine.

10 Trade and other receivables

	September 30		December 31
	2014		2013

Bullion sales receivable		1,464		1,662
VAT receivables		855		1,331
Deposits for stores and equipment and other receivables		744		896
Current portion		3,063		3,889

The bullion receivable was received shortly after the delivery of the gold and therefore discounting was not considered significant.

11 Cash and cash equivalents

	September 30			December 31
	2014			2013

Bank balances		27,852			25,222
Cash and cash equivalents in the statement of financial position		27,852			25,222
Bank overdrafts used for cash management purposes		(998	)		(1,796	)
Cash and cash equivalents in the statement of cash flows		26,854			23,426

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

12 Cash flow information

Non-cash items and information presented separately on the cash flow statement:

	September 30			September 30
	2014			2013

Profit for the period		6,881			13,864
Adjustments for:
Net finance costs		86			62
Income tax expense		4,284			5,618
Site restoration		28			37
Depreciation		3,112			2,458
Foreign exchange		(517	)		954
Cash generated by operations before working capital changes		13,874			22,993
Inventories		431			(477	)
Prepayments		(33	)		(32	)
Trade and other receivables		1,502			(3,356	)
Trade and other payables		(321	)		(990	)
Cash generated by operating activities		15,453			18,138

13 Related parties

Transactions with key management personnel

Key management personnel compensation:

	9 months to September 30					Balance at September 30
	2014			2013		2014		2013

Management fees, allowances and bonus paid or accrued to a company for management services provided by the Group’s President		671			453		-		-
Rent for office premises paid to a company owned by members of the President’s family.		51	(1)		29		-		-

On July 15, 2014 Caledonia served six months notice on Epicure Overseas S.A. for the termination of the contract between Caledonia and Epicure for the provision of the services of Caledonia’s President and Chief Executive Officer. Negotiations are in progress for alternative arrangements to secure the continuing services of the President and Chief Executive Officer.

We note that, because management compensation may be considered to be a related party transaction for purposes of the financial statements, the related party note to the audited financial statements may still continue to make reference to the Epicure contract.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the nine months ended September 30, 2014

(expressed in thousands of Canadian dollars)

13 Related parties – (continued)

(1)	Rent paid for the office premises had not been escalated since 2010. During the third quarter of 2014 the current market related rent was established and a new one year rental agreement was entered into.

14 Operating Segments

The Group's operating segments have been identified based on geographic areas. The Group has four reportable segments as described below, which are the Group's strategic business units. The strategic business units are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal management reports on at least a quarterly basis. The following geographical areas describe the operations of the Group's reportable segments: Corporate, Zimbabwe, South Africa and Zambia. The accounting policies of the reportable segments are the same as described in note 4.

The Zimbabwe operating segments comprise an operating gold mine. The Zambia segments consist of the discontinued Nama copper project and cobalt project. The South Africa geographical segment comprises a gold mine under care and maintenance as well as sales made by Greenstone Management Services Proprietary Limited to the Blanket Mine.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management report that are reviewed by the Group's CFO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the period ended September 30, 2014

(In thousands of Canadian dollars)

14 Operating Segments – (continued)

2014	Corporate			Zimbabwe			South Africa			Zambia			Inter-group eliminations adjustments			Total

External Revenue		4,069			46,109			9,686			-			(13,754	)		46,110
Royalty		-			(3,230	)		-			-			-			(3,230	)
Production costs		-			(23,950	)		(5,584	)		(220	)		6,024			(23,730	)
Management fee		-			(3,389	)		-			-			3,389			-
Administrative expenses		(2,660	)		(218	)		(2,034	)		(449	)		-			(5,361	)
Depreciation		-			(3,069	)		(14	)		(100	)		71			(3,112	)
Other (expense)/income		-			(10	)		67			-			-			57
Foreign exchange gain/(loss)		45			-			1,138			-			(666	)		517
Finance income		11			-			-			-			-			11
Finance expense		-			(97	)		-			-			-			(97	)
Segment profit before income tax		1,465			12,146			3,259			(769	)		(4,936	)		11,165
Income tax expense		(651	)		(3,049	)		(584	)		-			-			(4,284	)
Segment profit after income tax		814			9,097			2,675			(769	)		(4,936	)		6,881
Geographic segment assets:
Current assets		26,282			13,030			13,444			105			(14,808	)		38,053
Non-current		55			38,794			345			-			(1,820	)		37,374
Intercompany assets		70,719			1,679			4,233			-			(76,631	)		-
Expenditure on property, plant and equipment		-			5,036			37			-			(112	)		4,961
Geographic segment liabilities :
Current liabilities		(677	)		(5,974	)		(1,280	)		-			1,026			(6,905	)
Non-current liabilities		-			(9,746	)		(712	)		-			-			(10,458	)
Intercompany liabilities		(8,898	)		(1,291	)		(38,728	)		(27,714	)		76,631			-

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

For the period ended September 30, 2014

(In thousands of Canadian dollars)

14 Operating Segments – (continued)

2013	Corporate			Zimbabwe			South Africa			Zambia			Inter-group eliminations adjustments			Total

External Revenue		5,499			52,999			11,045			-			(16,544	)		52, 999
Royalty		-			(3,651	)		-			-			-			(3,651	)
Production costs		-			(21,952	)		(6,660	)		-			7,119			(21,493	)
Management fee		-			(3,593	)		-			-			3,593			-
Administrative expenses		(2,179	)		(2,409	)		(1,265	)		-			-			(5,853	)
Depreciation		-			(2,621	)		(21	)		-			184			(2,458	)
Other income/expense		-			1			(1	)		-			-			-
Finance income		18			-			-			-			-			18
Finance cost		-			(80	)					-			-			(80	)
Segment profit before income tax		3,338			22,287			(495	)		-			(5,648	)		19,482
Income tax expense		-			(4,289	)		(1,329	)		-			-			(5,618	)
Segment profit after income tax		3,338			17,998			(1,824	)		-			(5,648	)		13, 864
Geographic segment assets:
Current assets:		15,568			10,919			9,786			43			-			36,316
Non- Current assets:		55			29,677			525			13,437			-			43,748
Expenditure on property, plant and equipment		-			6,395			8			2,340			(273	)		8,470
Intercompany assets		58,373			-			3,601			-			(61,974	)		-
Geographic segment liabilities:
Current liabilities		(210	)		(5,185	)		(1,525	)		(7	)		-			(6,927	)
Non-current liabilities		-			(6,702	)		(201	)		-			-			(6,903	)
Intercompany liabilities		(2,986	)		(863	)		(35,853	)		(22,272	)		61,974			-

Major customer

Revenues from Fidelity Printers and Refiners in Zimbabwe amounted to $46,110 for the period ended September 30, 2014. In 2013, revenue from the two refineries used amounted to $52, 999.

Directors and Management at November 13, 2014

BOARD OF DIRECTORS	OFFICERS
L.A. Wilson (1) (2) (3) (4) (5) (7) - Chairman	S. E. Hayden
Non- executive Director	President and Chief Executive Officer
New York, United States of America	Johannesburg, South Africa

S. E. Hayden (3) (4) (5) (6) (7)	S. R. Curtis
President and Chief Executive Officer	Vice-President Finance and Chief Financial Officer
Johannesburg, South Africa	Johannesburg, South Africa

J. Johnstone (2) (5) (6) (7)	D. Roets (6) (7)
Retired Mining Engineer	Chief Operating Officer
Gibsons, British Columbia, Canada	Johannesburg, South Africa

S. R. Curtis (4) (5) (7)	Dr. T. Pearton (6) (7)
Vice-President Finance and Chief Financial officer	Vice-President Exploration
Johannesburg, South Africa	Johannesburg, South Africa

J. L. Kelly (1) (2) (3) (7)	J.M. Learmonth (5) (7)
Non- executive Director	Vice-President Business Development
New York, United States of America	Johannesburg, South Africa

R. Patricio (2) (3) (7)	DSA Corporate Services Inc.
Non- executive Director	Company Secretary
Toronto, Ontario, Canada	36 Toronto Street – Suite1000
	Toronto, Ontario, M5C 2C5
J. Holtzhausen (1) (2) (5) (6) (7) - Chairman Audit Committee
Non- executive Director	Board Committees
Cape Town, South Africa	(1) Audit Committee
	(2) Compensation Committee
	(3) Corporate Governance Committee
	(4) Nominating Committee
	(5) Disclosure Committee
	(6) Technical Committee
	(7) Strategic Planning Committee

CORPORATE DIRECTORY as at November 13, 2014

CORPORATE OFFICES	SOLICITORS
Canada - Head Office	Borden Ladner Gervais LLP
Caledonia Mining Corporation	Suite 4100, Scotia Plaza
Suite 4009, 1 King West	40 King Street West
Toronto, Ontario M5H 1A1	Toronto, Ontario M5H 3Y4 Canada
Tel: +1 416 369-9835 Fax:+1 416 369-0449
info@caledoniamining.com
	AUDITORS
South Africa	KPMG Inc
Greenstone Management Services (Proprietary) Limited	85 Empire Road
P.O. Box 834	Parktown 2193
Saxonwold 2132	South Africa
South Africa	Tel: +27 83 445 1400, Fax: + 27 11 647 6018
Tel: +27 11 447-2499 Fax: +27 11 447-2554
	REGISTRAR & TRANSFER AGENT
Zambia	Computershare
Caledonia Mining (Zambia) Limited	100 University Ave, 8th Floor,
P.O. Box 36604	Toronto, Ontario, M5J 2Y1
Lusaka, Zambia	Tel:+1 416 263 9483
Tel:+26 0 1 29-1574 Fax: + 26 0 1 29 -2154
	BANKERS
Zimbabwe	Canadian Imperial Bank of Commerce
Caledonia Holdings Zimbabwe (Limited)	6266 Dixie Road
P.O. Box CY1277	Mississauga, Ontario L5T 1A7 Canada
Causeway, Harare
Zimbabwe	NOMAD
Tel: + 26 34 701 152/4 Fax: +26 34 702 248	Numis Securities Limited
	The London Stock Exchange Building
CAPITALIZATION at November 13, 2014	10 Paternoster Square
Authorised: Unlimited	London EC4M 7LT
Shares, Warrants and Options Issued:	Tel: +44 207 260 1000
Common Shares: 52,117,908
Warrants: Nil	JOINT BROKERS (AIM)
Options: 2,796,920	Numis Securities Limited

SHARES LISTED	WH Ireland
Toronto Stock Exchange Symbol “CAL”	24 Martin Lane
NASDAQ OTCQX Symbol "CALVF"	London EC4R ODR
London “AIM” Market Symbol “CMCL”	Tel: +44 207 220 1751

Exhibit 99.2

CALEDONIA MINING CORPORATION	NOVEMBER 13, 2014
Management’s Discussion and Analysis

This management’s discussion and analysis (“MD&A”) of the consolidated operating results and financial position of Caledonia Mining Corporation ("Caledonia” or the “Company”) is for the fiscal quarter ended September 30, 2014 (“Q3 2014” or the “Quarter”) and the period ended November 13, 2014. It should be read in conjunction with the Unaudited Condensed Consolidated Interim Financial Statements of Caledonia for the nine months ended September 30, 2014 (“the Unaudited Condensed Consolidated Interim Financial Statements”) which are available from the System for Electronic Data Analysis and Retrieval at www.sedar.com or from Caledonia’s website at www.caledoniamining.com. The Unaudited Condensed Consolidated Interim Financial Statements and related notes have been prepared in accordance with International Accounting Standard 34 (“IAS 34”) Interim Financial Reporting. In this MD&A, the terms “Caledonia”, the “Company”, “we”, “our” and “us” refer to the consolidated operations of Caledonia Mining Corporation and our subsidiaries unless otherwise specifically noted or the context requires otherwise.

Note that all currency references in this document are to Canadian Dollars, unless otherwise stated.

TABLE OF CONTENTS

1.	Overview		3
2.	Highlights		3
3.	Summary Financial Results		5
4.	Operations at the Blanket Gold Mine, Zimbabwe		9
	4.1.	Safety, Health and Environment (“SHE”)	9
	4.2.	Social Investment and Contribution to the Zimbabwean Economy	9
	4.3.	Gold Production	10
	4.4.	Costs	11
	4.5.	Underground	12
	4.6.	Metallurgical Plant	12
	4.7.	Capital Projects	12
	4.8.	Indigenisation	13
	4.9.	Opportunities and Outlook	14
5.	Exploration and Project Development		15
6.	Investing		16
7.	Financing		16
8.	Liquidity and Capital Resources		16
9.	Off-Balance Sheet Arrangements, Contractual Commitments and Contingencies		17
10.	Non-IFRS Measures		18
11.	Related Party Transactions		21
12.	Critical Accounting Policies		21
13.	Financial Instruments		23
14.	Dividend Policy and Other Shareholder Information		23
15.	Securities Outstanding		24
16.	Risk Analysis		24
17.	Forward-Looking Statements		26
18.	Controls		27
19.	Qualified Person		27

OVERVIEW

Caledonia is an exploration, development and mining corporation focused on Southern Africa. Following the implementation of indigenisation at the Blanket Gold Mine (“Blanket” or the “Blanket Mine”) in September 2012, Caledonia’s primary asset is a 49% legal ownership in Blanket, an operating gold mine in Zimbabwe. Caledonia continues to consolidate Blanket, as explained in Note 5 to the Unaudited Condensed Consolidated Interim Financial Statements, accordingly operational and financial information of the Blanket Mine is consolidated in the Group results. Caledonia’s shares are listed in Canada on the Toronto Stock Exchange (symbol - “CAL”), on London’s AIM (symbol - “CMCL”) and are also traded on the American OTCQX (symbol - “CALVF”).

2.	HIGHLIGHTS

	Quarter 3		Nine months to September 30
	2013	2014	2013	2014	Comment
Gold produced (oz)	12,042	9,890	34,102	31,354	Lower production due to lower grades and tonnes mined
On Mine cash cost (US$/oz)1	558	698	599	656	On mine cash costs increased in the Quarter and 9 months to September 30, 2014 compared to the comparable quarters due to lower ounces sold
All-in sustaining cost (“AISC”) (US$/oz)1	867	1,021	972	938	AISC increases in Q3 2014 compared to Q3 2013 due to higher on-mine costs and higher administration costs offset somewhat by lower sustaining capex. AISC in the 9 months to September 30, 2014 is lower than the comparable period mainly due to lower sustaining capital investment
Gold Sales (oz)	12,042	9,890	35,594	33,323	Sales for the nine months to September 30, 2013 and 2014 include work in progress brought forward from the prior year.
Average realised gold price (US$/oz)1	1,330	1,256	1,435	1,266	The lower realised gold price in the Quarter and the 9 months to September 30, 2014 compared to the comparative periods was due to the lower gold price and the effect of the 1.5% settlement discount payable to Fidelity Printers and Refiners from January 1, 2014.
Gross profit ($’m)2	7.7	4.3	25.4	16.0	Lower gross profits due to the lower received gold price and lower sales
Net profit attributable to shareholders ($’m)	3.7	1.1	11.4	5.4	Lower net attributable profit due to the lower received gold price, lower sales, higher costs and a higher income tax charge which includes an adjustment for the dis-allowance of royalties for income tax and withholding tax on dividends remitted from Zimbabwe.
Adjusted basic earnings per share3 (cents)	7.2	1.0	25.1	8.8	Adjusted eps excludes profit or loss arising on foreign exchange and deferred tax

1	Non-IFRS measures such as “on-mine cash cost per ounce” “all-in sustaining cost per ounce” and “average realised gold price” are used throughout this document. Refer to Section 10 of this MD&A for a discussion of non-IFRS measures.

2	Gross profit is after deducting royalties, production costs and depreciation but before administrative expenses.

3	Adjusted earnings per share (“EPS”) is a non-IFRS measure which aims to reflect Caledonia’s ordinary trading performance. Refer to Section 10 of this MD&A for a discussion of non-IFRS measures

	Quarter 3		Nine months to September 30
	2013	2014	2013	2014
Cash and cash equivalents ($’m)	23.9	26.9	23.9	26.9	Cash is net of the Zimbabwean overdraft which was drawn as to $0.99m at September 30, 2014
Cash from operating activities ($’m)	5.3	3.6	9.9	11.5	Caledonia remains cash generative, despite the lower sales and received gold price. Cash from operating activities in Q3 2014 was lower than in Q3 2013 due to lower sales, lower gold price and higher costs. For the 9 months to Sept 30, 2014, cash from operating activities was higher than the comparative period due to the cessation of advance dividend payments by blanket to one of its indigenous shareholders and a lower tax payments
Payments to the community and Zimbabwe government ($’m)	3.6	3.1	15.9	9.7	Payments to the community and the Zimbabwean government are lower in 2014 than 2013 due to the cessation of advance dividend payments to one of Blanket’s indigenous shareholders, the non-recurrence of a donation to the Presidential Fund which was made in Q2 2013 and lower taxes and royalty payments due to lower gold price and lower profitability.

Dividend Policy and Shareholder Matters

On November 25, 2013 Caledonia announced a revised dividend policy in terms of which it intends to pay a dividend of 6 Canadian cents per share in 2014, split into 4 equal quarterly payments of 1.5 Canadian cents per share. The first quarterly dividend was paid on January 31, 2014 and subsequent quarterly dividends were paid at the end of April, July and October. It is currently envisaged that the existing dividend policy of 6 cents per annum paid in equal quarterly instalments will be maintained in 2015. Caledonia will consider further dividends thereafter in the context of the prevailing commercial environment and expects to provide guidance for dividend payments in 2016 at or about the time of the dividend which is expected to be paid in August 2015.

Strategy and Outlook

On November 3, 2014, Caledonia announced its revised investment plan (“Revised Plan”) and production projections for the Blanket Mine.

Caledonia’s Board and Management have completed a review of alternative expansion and diversification plans for Caledonia. Both the Board and Management have also addressed the revised production projections for the Blanket Mine and the possible benefits of diversifying Caledonia's production base.

Caledonia has concluded the best returns on investment remain at the Blanket Mine in Zimbabwe, which continues to be cash generative in the current adverse market conditions and also offers significant investment returns that exceed alternative investment opportunities.

The objectives of the Revised Plan are to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up. The infrastructure improvements will include the development of a “Tramming Loop” and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080 meters.

The increased investment pursuant to the Revised Plan is expected to give rise to production from inferred resources of approximately 70-75,000 ounces in 2021, this being in addition to projected production in 2021 from proven and probable mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blanket’s long term operational efficiency, flexibility and sustainability.

A preliminary economic assessment (the “PEA”) has been prepared in respect of the inferred resources which is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be classified as mineral reserves. There is no certainty that the PEA will be realised. The PEA and a revised supporting NI43-101 will be posted on SEDAR before December 17, 2014

3.	SUMMARY FINANCIAL RESULTS

The table below sets out the unaudited consolidated profit and loss for the three and nine months ended September 30, 2014 and 2013 prepared under IFRS.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (unaudited) (In thousands of Canadian dollars except per share amounts)
	For the 3 months ended September 30						For the 9 months ended September 30
	2013			2014			2013			2014
	$			$			$			$
Revenue		16,591			13,492			52,999			46,110
Royalty		(1,165	)		(945	)		(3,651	)		(3,230	)
Production costs		(6,872	)		(7,174	)		(21,493	)		(23,730	)
Depreciation		(835	)		(1,029	)		(2,458	)		(3,112	)
Gross profit		7,719			4,344			25,397			16,038
Administrative expenses		(1,153	)		(1,754	)		(5,853	)		(5,361	)
Foreign exchange gain.		-			389			-			517
Gain on sale of property, plant and equipment		-			52						57
Results from operating activities		6,566			3,031			19,544			11,251
Net finance expense		(12	)		(16	)		(62	)		(86	)
Profit before income tax		6,554			3,015			19,482			11,165
Income tax expense		(1,965	)		(1,747	)		(5,618	)		(4,284	)
Net profit for the period		4,589			1,268			13,864			6,881
(Loss)/profit on foreign currency translation		(331	)		2,562			2,216			2,408
Total comprehensive income for the period		4,258			3,830			16,080			9,289

Profit attributable to:
Owners of the Company		3,733			1,112			11,381			5,377
Non-controlling interests		856			156			2,483			1,504
		4,589			1,268			13,864			6,881
Total comprehensive income attributable to:
Owners of the Company		3,052			3,637			13,619			7,769
Non-controlling interests		1,206			193			2,461			1,520
		4,258			3,830			16,080			9,289
Earnings per share (cents)
Basic		7.2			2.2			21.9			10.5
Diluted		7.2			2.2			21.9			10.5

Adjusted earnings per share (cents)(i)
Basic		7.2			1.0			25.1			8.8
Diluted		7.2			1.0			25.1			8.8

(i)	Adjusted earnings per share (“EPS”) is a non-IFRS measure which aims to reflect Caledonia’s ordinary trading performance. Refer to Section 10 for a discussion of non-IFRS measures

Revenues in Q3 2014 were lower than Q3 2013 due to the lower realised gold price and the reduced number of ounces of gold sold. 9,890 ounces of gold were sold in Q3 2014, 18% fewer than in Q3 2013. The average realised gold price in Q3 2014 was US$1,266 per ounce, 12% lower than the average realised price per ounce in Q3 2013. The realised gold price in 2014 represents 98.5% of the value of the gold that is received by Blanket in terms of its sale agreement to Fidelity Printers and Refiners Ltd (“Fidelity”). Changes to Zimbabwean legislation in January 2014 required all Zimbabwean gold producers to sell their production to Fidelity. Prior to this change, Blanket sold its gold to a non-Zimbabwean refiner and received 100% of the value of the gold contained. There was no work in progress at the end of Q3 and Q3 sales did not include any work in progress brought forward. Gold production is discussed in Section 4.3 of this MD&A.

Production costs in the Quarter were $7,174,000, representing an on-mine cash cost4 of US$698 per ounce of gold produced compared with US$624 per ounce in the preceding quarter. The all-in sustaining cost4 per ounce of gold produced in the Quarter was US$1,021 compared to US$881 per ounce of gold in the preceding quarter. Further discussion of production costs is set out in Section 4.4 of this MD&A.

Administrative expenses in the Quarter were $1,754,000 compared to $1,153,000 in Q3 of 2013 (the “comparative period”) and $1,706,000 in the preceding quarter and are analysed in Note 7 to the Unaudited Condensed Consolidated Interim Financial Statements. Administrative expenses in the comparative period included a donation of US$2 million to the Presidential Scholarship Fund as part of Blanket’s Corporate and Social investment Programme. The administrative expense in the Quarter reflects increased wages and salaries resulting from the strengthening of the management team, professional consulting fees and the holding costs of Caledonia’s office in Zambia, which are no longer capitalised. Caledonia’s management team has been strengthened by the appointment of the Chief Operating Officer in August 2013, and the appointment of an individual to assist in the areas of project management and mine design, and an assistant to the CFO.

The foreign currency gain is a non-cash item which reflects the profit arising on the translation into the functional currency of both the Canadian and South African entities where the cash balances they hold are in currencies other than their functional currency.

The taxation charge includes Zimbabwean income tax on the profits arising at Blanket, Zimbabwean withholding tax on payments out of Zimbabwe, South African income tax on inter-company profits arising in South Africa and UK tax on interest earned on facilitation loans granted in Zimbabwe. Intercompany profits are eliminated on consolidation, but the tax payable on such profits is not. The Zimbabwean income tax charge in Q3 of 2014 also reflects a change in the regulations which means that the royalty payable to the Zimbabwe government is no longer allowable as a deduction for the purposes of calculating income tax. The royalty rate from January 1, 2013 to September 30, 2014 was 7%. With effect from October 1, 2014 the royalty rate has been reduced to 5% which effectively neutralises the adverse effect arising from the dis-allowance of the royalty deduction. The tax charge shown in the condensed consolidated statement of profit or loss is high when compared to reported profit before tax and includes non-cash items such as deferred taxation. The tax payments shown in the consolidated statement of cash flows (discussed below) reflect a lower percentage of reported profit before tax.

The non-controlling interest is the profit attributable to Blanket’s Indigenous Zimbabwean shareholders and reflects their participation in the economic benefits generated by Blanket from the effective date of the indigenisation and is explained in Note 5 of the Unaudited Condensed Consolidated Interim Financial Statements.

The adjusted earnings per share4 aims to reflect Caledonia’s ordinary trading performance and is calculated on the share of profit attributable to Caledonia shareholders excluding foreign exchange profits or losses.

Risks that may affect Caledonia’s future financial condition are discussed in Section 16 of the MD&A.

4	Non-IFRS measures such as “on-mine cash cost per ounce”, “all-in sustaining cost per ounce” and “adjusted earnings per share” are used throughout this document. Refer to Section 10 of this MD&A for a discussion of non-IFRS measures.

The table below sets out the consolidated statements of cash flows for the three and nine months to September 30, 2014 and 2013 prepared under IFRS.

Consolidated Statement of Cash Flows (unaudited) (In thousands of Canadian dollars)
	For 3 months ended September 30						For 9 months ended September 30
	2013			2014			2013			2014
	$			$			$			$
Cash flows from operating activities
Cash flows generated from continuing operations		7,067			5,057			18,138			15,453
Advance dividend paid		-			-			(1,987	)
Tax paid		(1,785	)		(1,410	)		(6,198	)		(3,851	)
Interest paid		(12	)		(16	)		(62	)		(86	)
Net cash from operating activities		5,270			3,631			9,891			11,516

Cash flows from investing activities
Property, plant and equipment additions		(3,362	)		(1,379	)		(8,470	)		(4,961	)
Proceeds from sale of property, plant and equipment		-			72			-			72
Net cash used in investing activities		(3,362	)		(1,307	)		(8,470	)		(4,889	)

Cash flows from financing activities
Dividends paid		(488	)		(1,312	)		(5,938	)		(3,199	)
Proceeds from shares issued		-			-			470			-
Net cash from (used in) financing activities		(488	)		(1,312	)		(5,468	)		(3,199	)

Net increase/(decrease) in cash and cash equivalents		1,420			1,012			(4,047	)		3,428
Cash and cash equivalents at beginning of period		22,475			25,842			27,942			23,426
Cash and cash equivalents at end of period		23,895			26,854			23,895			26,854

Cash generated from operating activities is analysed in note 12 to the Unaudited Condensed Consolidated Interim Financial Statements. Cash generated from operating activities was lower in the Quarter compared to the Q3 2013 due to lower gold sales and the lower realised gold price.

Tax paid in the three months to September 30, 2014 includes $314,000 of withholding tax paid on remittances from Zimbabwe and an adjusting payment of $807,000 arising from the change to Zimbabwe tax regulations which means that the royalty paid to the Zimbabwe government is no longer allowable for the purposes of calculating income tax. The remaining taxation payment for the Quarter of $289,000 represents approximately 10% of Caledonia’s profit before tax for the quarter. Tax paid in the nine months to September 30, 2014 includes $750,000 of withholding tax and the adjusting payment of $807,000 arising from the changed Zimbabwe tax regulations. The residual tax payment represents approximately 21% of Caledonia’s profit before tax for the nine months to September 30, 2014.

Investment in property, plant and equipment in Q3 of 2014 and the first nine months of 2014 were lower than in the respective comparative periods. The reduction was due mainly to reduced investment that is required to sustain current operations which reflects the good condition of the plant and equipment following intensive investment in previous years. Blanket’s capital projects are described in Sections 4.7 and 5 of this MD&A.

The dividends paid in the Quarter and the nine months to September 30, 2014 primarily relate to the quarterly dividends of 1.5 cents per share which were paid by Caledonia in terms of the quarterly dividend policy which was announced in November 2013. The consolidated dividends also includes $848,000 of dividends that were paid to Blanket’s indigenous shareholders after retentions to repay the facilitation loans as described in Section 4.8 of this MD&A.

At September 30, 2014, Caledonia’s cash was held with banks primarily in the United Kingdom, Canada and in non-resident accounts in South Africa.

The table below sets out Caledonia’s consolidated statements financial position at September 30, 2014 and December 31, 2013 prepared under IFRS.

Condensed Consolidated statements of Financial Position (unaudited)
(In thousands of Canadian dollars)	As at	December 31,		September 30,
		2013		2014
		$		$
Total non-current assets			33,448		37,374
Inventories			6,866		6,877
Prepayments			177		261
Trade and other receivables			3,889		3,063
Cash and cash equivalents			25,222		27,852
Total current assets			36,154		38,053
Total assets			69,602		75,427

Total non-current liabilities			10,094		10,458
Trade and other payables			4,600		4,052
Bank overdraft			1,796		998
Income taxes payable			1,138		1,855
Total liabilities			17,628		17,366
Capital and reserves			51,974		58,064
Total equity and liabilities			69,602		75,427

The increase in non-current assets reflects investment at Blanket to sustain the current level of production, investment in Blanket’s capital projects and satellite properties. Blanket’s capital projects are discussed in section 4.7 of this MD&A. Blanket’s exploration and development projects are discussed in section 5 of this MD&A.

Inventories at September 30, 2014 comprise consumable stores, which include the build-up of stock of consumables and other equipment for use at Blanket’s capital projects. Inventories at December 31, 2013 also included $871,000 of gold in progress.; there was no gold in progress at September 30, 2014.

Trade and other receivables includes Value Added Tax receivable, bullion sales receivables and deposits for stores and equipment as analysed in Note 10 to the Unaudited Condensed Consolidated Interim Financial Statements.

Non-current liabilities includes a liability for deferred taxation and a provision for rehabilitation at the Blanket and Eersteling5 Mines if and when they are permanently closed.

The following information is provided for each of the eight most recent quarterly periods ending on the dates specified. The figures are extracted from underlying unaudited Condensed Consolidated Interim Financial Statements that have been prepared using accounting policies consistent with IFRS.

5	Eersteling Mine is a South African gold property, which has been held on a care and maintenance basis for several years pending the identification of a purchaser.

(Thousands of Canadian dollars except per share amounts)	Dec 31, 2012		Mar 31, 2013		June 30, 2013		Sept 30 2013		Dec 31, 2013			Mar 31 2014		June 30 2014		Sept 30 2014
Revenue from operations		17,612		19,218		17,190		16,591		12,114			17,063		15,555		13,492
Profit/(loss) after tax from operations		3,950		5,530		3,055		4,589		(14,354	)		3,091		2,522		1,268
Earnings/(loss) per share – basic (cents)		6.4		9		5.8		7.2		(27.7	)		4.7		3.5		2.2
Earnings/(loss) per share – diluted (cents)		6.4		9		5.8		7.2		(27.7	)		4.7		3.4		2.2
Cash and cash equivalents		27,942		25,189		22,475		23,895		23,426			26,714		25,842		26,854

Quarterly results fluctuate materially from quarter to quarter primarily due to changes in production levels and gold prices but also due to the recording of impairments and other unusual costs such as indigenisation. Significant changes relating to prior quarters are discussed in the relevant MD&A’s and financial statements.

4.	OPERATIONS AT THE BLANKET GOLD MINE, ZIMBABWE

4.1	Safety, Health and Environment (“SHE”)

The following safety statistics have been recorded for the Quarter and the preceding seven quarters.

Blanket Mine Safety Statistics
Incident Classification	Q4 2012	Q1 2013	Q2 2013	Q3 2013	Q4 2013	Q1 2014	Q2 2014	Q3 2014
Fatal	0	0	0	1	0	0	0	0
Lost time injury	3	2	1	7	2	1	2	2
Restricted work activity	7	0	7	5	9	6	4	12
First aid	5	4	2	2	0	3	2	4
Medical aid	1	2	3	2	3	2	2	2
Occupational illness	0	0	0	0	0	0	0	0
Total	16	8	13	17	14	12	10	20
Incidents	10	12	12	11	17	10	6	4
Near misses	5	3	4	7	3	2	2	4
Disability Injury Frequency Rate (i)	0.81	0.52	0.25	1.75	0.46	0.24	0.49	0.49
Total Injury Frequency Rate (ii)	4.34	2.09	3.25	4.00	3.20	2.86	2.46	4.94
Man-hours worked (thousands)	738	767	801	800	865	840	812	810
(i) A measurement of total injuries, deaths and permanent disability occurring per 200,000 man-hours worked. (ii) A measurement of all accidents that have occurred regardless of injury or not expressed per 200,000 man-hours worked. This includes accidents that could have caused injuries.

The number of incidents in the Quarter doubled compared to the previous quarter. Most of the incidents in the period were attributable to rock falls and could have been prevented by adequate inspections of the work face. Those involved in such incidents and their supervisors have been re-trained. There were no significant adverse environmental issues during the Quarter.

4.2	Social Investment and Contribution to the Zimbabwean Economy

Blanket’s investment in community and social projects which are not directly related to the operation of the mine or the welfare of Blanket’s employees, the payments made to the GCSOT in terms of Blanket’s indigenisation, and payments of royalties, taxation and other duties, charges and fees to the Government of Zimbabwe and its agencies are set out in the table below.

Payments to the Community and the Zimbabwe Government (US$’000’s)
Period	Year	Community and Social Investment		Payments to GCSOT		Payments to Zimbabwe Government		Total
Year 2011	2011		306		-		13,614		13,920
Year 2012	2012		416		3,000		20,569		23,985
Quarter 1	2013		5		1,000		4,584		5,589
Quarter 2	2013		2,135		1,000		3,555		6,690
Quarter 3	2013		7		-		3,646		3,653
Quarter 4	2013		-		-		3,569		3,569
Year 2013	2013		2,147		2,000		15,354		19,501
Quarter 1	2014		-		-		3,026		3,026
Quarter 2	2014		5		-		3,617		3,622
Quarter 3	2014		-		-		3,090		3,090

The final installment of the advance dividend payments that were payable to GCSOT in terms of Blanket’s indigenisation transaction was made in the second quarter of 2013. No further dividends will be payable to GCSOT until the advance dividends have been repaid by the offset of future dividends on Blanket shares that are owned by GCSOT. From January 1, 2014, Blanket has sold its gold production to Fidelity a subsidiary of the Reserve Bank of Zimbabwe. Blanket is paid 98.5% of the value of the gold it delivers to Fidelity, the balance of 1.5% is retained by Fidelity and is included in the payments shown above.

4.3 Gold Production

Tonnes milled, average head grades, recoveries and gold produced and the average realised price per ounce during October 2014, the Quarter, the preceding 6 quarters and 2012 are shown in the table below.

Blanket Mine Production Statistics
	Year	Tonnes Milled (t)		Gold Head (Feed) Grade (g/t Au)		Gold Recovery (%)		Gold Produced (oz)		Average Realised Price per Ounce of Gold Sold (US$/oz) 6
Year	2012		363,315		4.16		93.7		45,464		1,666
Quarter 1	2013		86,502		4.04		93.3		10,472		1,600
Quarter 2	2013		101,174		3.82		93.2		11,587		1,373
Quarter 3	2013		99,386		4.03		93.6		12,042		1,330
Quarter 4	2013		105,258		3.63		93.1		11,429		1,277
Year	2013		392,320		3.88		93.3		45,527		1,402
Quarter 1	2014		92,846		3.67		93.6		10,241		1,269
Quarter 2	2014		99,229		3.74		94.1		11,223		1,271
Quarter 3	2014		98,575		3.34		93.4		9,890		1,256
October	2014		35,588		3.27		92.9		3,500		1,206

Gold production in the Quarter was lower than previous quarters primarily due to the lower head grade. Although showing improvement, gold production in October 2014 continued to be affected by lower grade. Underground production tonnages and grades are discussed further in Section 4.5 of this MD&A, gold recoveries are discussed in Section 4.6 of this MD&A.

6	Non-IFRS measures such as “average realised gold price” are used throughout this d1ocument. Refer to Section 10 of this MD&A for a discussion of non-IFRS measures. The average realised price of gold is after deduction of 1.5% of the gold value by Fidelity.

4.4 Costs

A narrow focus on the direct costs of production (mainly labour, electricity and consumables) does not fully reflect the total cost of gold production. Accordingly, cost per ounce data for the Quarter, the preceding quarters in 2014 and for 2013 and 2012 have been prepared in accordance with the Guidance Note issued by the World Gold Council on June 23, 2013 and is set out in the table below on the following bases:

i.	On-mine Cash Cost per ounce, which shows the on-mine cash costs of producing an ounce of gold;

ii.

All-in Sustaining Cost per ounce, which shows the operating cost per ounce plus additional costs incurred outside the mine (i.e. at offices in Harare, Johannesburg and Toronto) and the costs associated with maintaining the operating infrastructure and resource base (i.e. “Sustaining Capex”) that are required to maintain production at the current levels; and

iii.	All-in Cost per ounce, which shows the all-inclusive Sustaining cost per ounce plus the additional costs associated with activities that are undertaken with a view to increasing production.

Blanket: Cost per Ounce of Gold Sold (US$)
	3 Months to September 30				9 Months to September 30
	2013		2014		2013		2014
On-Mine cash cost (ii)		558		698		599		656
Royalty(i)		93		92		100		90
Community costs relating to ongoing production		-		-		0		0
Permitting costs related to current operations		3		3		3		3
3rd party smelting, refining and transport costs		7		3		7		2
Operating cost per ounce		660		795		709		750
Corporate general and administrative costs (incl. share based remuneration)		94		168		158		147
Reclamation and remediation of operating sites		2		2		2		2
Exploration and study costs		2		2		1		3
Capital expenditure		110		54		102		37
All-in Sustaining Cost per ounce (ii)		867		1,021		972		938
Costs not related to current production
Community costs		8		0		62		0
Permitting costs		3		1		3		1
Exploration and study costs		3		2		2		2
Capital expenditure		107		77		73		93
All-in Cost per ounce		987		1,102		1,112		1,035

The on-mine cash cost per ounce of gold sold is calculated on the basis of sales and not production. The on-mine cash cost per ounce and operating cost per ounce in the Quarter and the 9 months to September 30, 2014 was higher than the comparative periods due to the lower sales, approximately 50% of Blanket’s costs are fixed, therefore lower sales means that fixed costs are spread across fewer ounces. Corporate general and administrative costs in the Quarter were higher than the comparative quarter because the quarter to September 30, 2014 includes a full charge for the new Chief Operating Officer who was recruited in August 2013 and several support staff who were recruited to support him later in 2013. General and administrative expenses in 2014 also include the continued costs of the Zambian operation which were capitalised in 2013. Sustaining capital expenditure in the quarter and 9 months to September 30, 2014 was lower than the comparative quarters due to the general good condition of Blanket’s plant and equipment, which meant that sustaining investment could be reduced. Community costs in the 9 months to September 30, 2013 were unusually high and included the donation of US$2 million to the Presidential fund in Zimbabwe. No further contribution or donations of this size or nature have been made. Capital expenditure that is not related to current production reflects the scheduled investment in Blanket’s capital and exploration projects as described in sections 4.7 and 5 of the MD&A.

4.5 Underground

AR South continued to be the most important production area during the Quarter with ore being trammed on the 18 Level and 22 Level haulages.

Production in the Quarter was adversely affected by lower than planned grades: the average head grade achieved in the Quarter was 3.34g/t compared to a target of 3.84g/t. The lower average grade was due to depletion of the AR South ore body between 630m and 510m, a zone that had previously provided high tonnages at higher than average grades. Average grades were further adversely affected by unexpected low grade zones in the AR Main ore body, especially on the upper levels (680m and 695m) which is where the active stopes are currently located. Strict grade controls have been introduced at the remaining mining areas so as to achieve an economic grade.

Tonnage in the Quarter was slightly lower than the previous quarter and approximately 9% below target because production from low grade areas was reduced in the Quarter. This policy has now been reversed and all stopes yielding above the pay limit are now being mined. Tonnage was also adversely affected because new sections were still in development at the start of the Quarter

As set out in Sections 4.7 and 4.10 on November 3, 2014 Caledonia announced the revised investment plan (the “Revised Plan”) for Blanket Mine. The objectives of the Revised Plan are to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up. The infrastructure improvements will include the development of a “Tramming Loop” parallel to the existing 750 haulage and allowing one-way travel and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080 meters.

Underground development activities continued throughout the Quarter and the total development advance was 1,560 meters compared to a planned advance of 1,694 meters. The shortfall against plan was due to poor breaking efficiencies and lost shifts. Installation of the new Centac compressor remains stalled by the inability of the Zimbabwe Electricity Transmission and Distribution Corporation (“ZETDC”), the state-owned electricity distribution company, to service their faulty transformer and equipment. The transformer has been repaired but keeps on tripping the mine’s power supply. ZETDC is redesigning the power supply to the Centac compressor to be a standalone unit and hopefully the problem can be resolved before the end of 2014.

4.6 Metallurgical Plant

During the Quarter, the metallurgical plant continued to operate at better than budgeted efficiency despite the low and inconsistent feed grade, overall recovery in the Quarter was 93.4% compared with 94.1% in the previous quarter and the budgeted rate of 93.0%. Recoveries remain better than plan due to the sparging of oxygen in the CIL system, which improved recovery and also reduced cyanide consumption. The PSA plant which produces oxygen has been re-commissioned and produces oxygen at approximately half of the cost of purchased liquid oxygen. All equipment operated to expectations and no significant unplanned downtime was experienced during the Quarter.

4.7 Capital Projects

The main capital developments are:

the haulage extension on 22 Level from AR Main to Lima;

the No. 6 Winze Project - Shaft Deepening from 750 to the 1,080 meter level; and

the Tramming Loop.

Further information on these Projects is set out below.

22 Level Haulage Extension

The 22 Level haulage extension will link the Blanket and Lima Sections over a distance of 2,000 metres on the 22 Level (750 meters below surface) and will allow for the accelerated commencement of mining in any new mining areas defined above 750 meters. Crosscuts from the 22 Level Haulage are also being developed to provide drilling platforms for the exploration drilling below 750 meters for resource definition purposes. Work on the 22 Level Haulage extension project and its associated crosscuts is being carried out simultaneously with normal mining production.

During the Quarter, the 22 Level haulage advanced a further 106 metres towards Lima (82 meters in the preceding quarter) against a plan of 154 meters. Work on the haulage was temporarily suspended to allow for development at Eroica between 750m and 630m. This will be a new mining area and is estimated to contain 310,000 tonnes at a grade of 3.47g/t.

No. 6 Winze Project - Shaft Deepening to 1080 m

The No. 6 Winze project will provide access to the 3 Blanket resource bodies below 22 Level, i.e. Blanket 2 Ore Body, Blanket 4 Ore Body and Blanket Quartz Reef. The pre-production capital cost of this project is estimated to be US$5 million, which will be funded from Blanket’s internal cash flows. Work on this project continues using a crew which specialises in mechanised shaft sinking. Sinking of the new shaft extension has reached 840 metres, however progress on sinking has been hampered by the continued inability to clear waste rock within one shift after each blast which has resulted in the daily advance being less than planned. In terms of the Revised Plan, sinking of the No. 6 Winze will be suspended when it reaches 26 Level (860m below surface) to allow for earlier mining of the resources between 26 and 22 Levels. Further deepening of the No. 6 Winze will recommence after the Central Shaft has been completed and will be deepened down to 980 m

Tramming Loop

The Tramming Loop is being developed on 22 Level to improve underground logistics. Work on the Loop commenced at the end of October 2014. Of the 800 meters to be advanced 16 meters had been completed at November 7, 2014.

4.8 Indigenisation

Transactions that implemented the Indigenisation of Blanket were completed on September 5, 2012 following which Caledonia owns 49% of Blanket and has received a Certificate of Compliance from the Government of Zimbabwe which confirms that Blanket is fully compliant with the Indigenisation and Economic Empowerment Act.

As a 49% shareholder Caledonia receives 49% of Blanket’s dividends plus the repayment of vendor facilitation loans which were extended by Blanket to certain of the Indigenous Shareholders and which carry interest at LIBOR plus 10%. The vendor facilitation loans are repaid by way of dividends from Blanket Mine. 80% of the dividends declared by Blanket Mine which are attributable to the beneficiaries of the vendor facilitation loans are used to repay such loans and the remaining 20% unconditionally accrues to the respective Indigenous Shareholders. It is anticipated that Blanket will suspend dividend payments until early 2016 as a result of which the repayment of facilitation loans by Blanket’s indigenous shareholders will also be suspended. During this period, there will be a moratorium on the interest roll-up on the outstanding facilitation loans. The interest moratorium will have no effect on either Caledonia’s cash receipts or its reported earnings as interest on the facilitation loans is not recognized in Caledonia’s financial statements.

The outstanding balance of the facilitation loans as at September 30, 2014 was US$30.7 million (June 30, 2014, US$30.9 million). Blanket’s dividend payments in the Quarter which were used to repay the facilitation loans were approximately the same as the interest which accumulated on the loans. The overall level of the facilitation loans at September 30, 2014 is broadly as anticipated when the indigenisation transactions were concluded in September 2012. The vendor facilitation loans are not shown as receivables in Caledonia’s Audited Financial Statements because in terms of accounting standards, these loans are effectively equity instruments as their only means of repayment is via dividend distributions from Blanket. Caledonia continues to consolidate Blanket for accounting purposes. Further information on the accounting effects of indigenisation at Blanket is set out in Note 5 to the Financial Statements and in a Frequently Asked Questions page which is available on Caledonia’s website.

4.9 Opportunities and Outlook

On November 3, 2014 Caledonia announced it’s Revised Plan and production projections for the Blanket Mine.

The Revised Plan includes a revised life of mine plan for the Blanket Mine (the “LOM Plan”) in terms of which it is anticipated that the approximate production from existing proven and probable mineral reserves above 750 m level will be as set out below.

Approximate production from proven and probable mineral reserves above 750m (per LOM Plan)
	2015		2016		2017		2018		2019		2020		2021
Tonnes milled (‘000)		430		460		430		380		230		100		50
Gold production (k.oz)		42		45		43		39		23		10		6

The new Central Shaft and the deepening of No 6 winze will provide access to the current inferred mineral resources below 750 meters and allow for further exploration, development and mining in these sections along the known Blanket strike, which is approximately 3 kilometers in length. The PEA has been prepared in respect of the inferred mineral resources below 750 meters. Based on the PEA, additional approximate production from current inferred mineral resources (excluding the projected production set out above) may be achieved in the following indicative ranges:

Possible production from inferred mineral resources below 750m (per PEA)
	2015		2016		2017		2018		2019		2020		2021
Tonnes milled (‘000)		0		35		160		215		390		550		600
Gold production (k.oz)		0		4-5		20-22		27-30		46-50		63-67		70-75

It should be noted that Canadian rules do not allow production from inferred resources to be added to those from proven and probable reserves for reporting purposes.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realised. Diamond drilling and development will continue with the objective of increasing confidence in order to upgrade the categorization of the resources.

The LOM Plan and the PEA have been reviewed by Minxcon Consulting, an independent mining consulting company. A technical report prepared in compliance with National Instrument 43-101 which summarizes the revised LOM Plan and the PEA will be filed on SEDAR before December 17, 2014. The most important assumptions on which the PEA is based include, a gold price of US$1,200 per ounce, achievement of the targeted production set out above and the accuracy of the projected capital costs.

It is also intended to continue exploration at two of Blanket’s satellite projects, Mascot and GG. No production forecasts are attributed to mining activity at either GG or Mascot at this stage as neither of these currently have defined NI43-101 mineral reserves or resources.

5 EXPLORATION AND PROJECT DEVELOPMENT

Caledonia’s primary exploration activities are focussed on the growth and development of Blanket Mine and its satellite properties.

5.1 Blanket Exploration

Exploration activities at Blanket Mine target the depth extension of the current Blanket Mine Section and AR Main ore bodies and involves drilling from 18 and 22 Levels below the current depth of mine activities.

Drilling during 2013 located the Blanket “4 Ore Body” on strike of the “2 Ore Body”, which adds substantially to the strike of mineralized zones present in this area and which will be fully evaluated using the access gained via the No. 6 Winze. During the Quarter two further exploration holes were drilled into the Blanket Section below 750 meters. Exploration drilling into the AR Main zone below 22 Level (750 m) continues to be adversely affected by frequent mechanical breakdowns and the drill manufacturer has been asked to remediate what appear to be certain design flaws in the equipment. All of the holes drilled in the Quarter intersected mineralisation. Further drill intersections will be required before a reliable quantitative assessment of the resource can be made.

Caledonia has a conservative approach to accruing new resources: only resource blocks with an estimated grade in excess of the current pay limit are taken into inventory.

5.2 Satellite Prospects

Blanket Mine has exploration title holdings in the form of registered mining claims in the Gwanda Greenstone Belt totalling 78 claims, including a small number under option, covering properties with a total area of about 2,500 hectares. Included within these claim areas are 18 previously operated small gold mines which warrant further exploration, i.e. the Satellite Projects. Blanket’s main exploration efforts on these satellite properties are focused at this stage on the GG Project and the Mascot Project Area which, based on past production records, are likely to have the greatest potential.

GG Project

The GG Project is located approximately seven kilometers southeast of Blanket Mine. Surface drilling programs have been carried out at the GG Project over the past eight years consisting of 24 diamond-cored holes totalling 6,360m of drilling. Two zones of gold mineralization have been established down to a depth of at least 300m, each with a potential strike length of up to 150m. Current activities involve the definition of the extent and characteristics of this mineralization.

During Q1 2014 the development on the 120 meter level was completed to approximately 160 meters east of the shaft and four drill cubbies were completed from which horizontal and inclined holes were drilled into the two zones (North and South zones) that were identified by surface drilling. This drilling intersected the identified zones, with the North zone hosting the more extensive mineralization. In Q2 2014 strike development was done on 120m level along the North Zone and exposed a highly altered shear system hosted in a khaki-grey phyllitic lava with ubiquitous acicular arsenopyrite mineralisation. Within an envelope 40 metres long by 10 metres wide, chip sample sections taken at 2 meter intervals returned an average gold value of approximately 3.5 g/t. The identified zone displays a “pinch and swell” structure and plunges steeply to the north at about 85 degrees. In Q3, development reached the North Zone where the mineralisation that had been identified by drilling in previous quarters was opened up exposing a mineralised zone over a strike of 50 meters over which chip sampling returned an average value of [3.9g/t] over an average width of 4 meters. Locally the mineralisation reaches a width on 10 meters and it is open on strike. Based on this encouraging result further horizontal development has been suspended so that the shaft can be deepened. In the Quarter the shaft has been sunk from 120m to 150m with the longer term objective of sinking to 240m and developing a second haulage on 210m. This haulage will be to establish grade continuity with the above zone, allow for resource estimation and carry out up-dip development for future production in the event of a satisfactory outcome.

As noted in the previous quarters, metallurgical test work continues on fresh material from this zone. The test work has confirmed that the ore is refractory and test work continues to optimise recovery.

Mascot Project Area

Mascot was previously mined to a depth of approximately 250 meters, exploiting an east-west trending mineralised body the extent of which decreased at depth but which was accompanied by a doubling in width. Previous surface drilling undertaken by Blanket has indicated the existence of two further mineralised zones, one to the north and one to the south of the mined out area.

In the previous quarter, underground development on Levels 1 and 2 (60m and 90 m below surface respectively) confirmed the existence of potentially payable mineralisation in the North zone. In Q2 and Q3 of 2014 development continued along the North Parallel on the 150m level. The above development has provided access to resources over a strike extent of 80 meters and a vertical extent of 90 meters. Mine de-watering has continued, with the objective of accessing higher grade material below the current workings in 2015. Work continues on trying to find a reliable source of water for further development once the shaft has been de-watered.

INVESTING

An analysis of Caledonia’s investment in the Quarter, the preceding quarters in 2014 and 2013 and 2012 is set out below.

Capital Investment
			2012 Year		2013 Year		2014 Q1	2014 Q2	2014 Q3
Total Investment	$	C’000		7,909		11,738	2,032	1,550	1,379
Nama Project (i)	$	C’000		3,614		2,637	-	-	-
Blanket	$	C’000		4,280		9,066	2,032	1,550	1,341
(i) Nama is a base metal exploration project in Zambia which was fully impaired at December 31, 2013.

All investment at Blanket is funded from Blanket’s internal cash flows.

FINANCING

Caledonia financed all its operations using funds on hand and those generated by its operations. No equity financing took place in the Quarter and none is currently planned. Blanket has an unsecured US$2.5 million loan facility in Zimbabwe which is repayable on demand. At September 30, 2014 this facility amounted to US$895,000.

8.	LIQUIDITY AND CAPITAL RESOURCES

An analysis of Caledonia’s capital resources as at September 30, 2014 and each of the preceding 5 quarters is set out below.

Liquidity and Capital Resources (Thousands of Canadian dollars)
As at	June 30 2013		Sept 30 2013		Dec 31 2013		Mar 31 2014		June 30 2014		Sept 30 2014
Gross Cash and cash equivalents in the statement of financial position		22,475		25,099		25,222		26,714		25,842		27,852
Overdraft		-		1,204		1,796		-		-		998
Cash and cash equivalents in the statement of cash flows		22,475		23,895		23,426		26,714		25,842		26,854
Working capital		27,257		29,389		28,620		31,380		30,626		31,148

Movements in Caledonia’s net cash, the overdraft and working capital and an analysis of the sources and uses of Caledonia’s cash are discussed in Section 3 of this MD&A.

The overdraft facility is held by Blanket with a Zimbabwean Bank and is unsecured and repayable on demand.

The Company’s liquid assets as at September 30, 2014 exceed its planned and foreseeable commitments as set out in Section 9 of this MD&A.

9.	OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL COMMITMENTS AND CONTINGENCIES

There are no off balance sheet arrangements apart from the facilitation loans of US$30.9 million which are not reflected as loans for IFRS purposes (refer Note 5 of the Unaudited Condensed Consolidated Interim Financial Statements). The company has the following contractual obligations at September 30, 2014.

Payments due by Period (Thousands of Canadian dollars)
Falling due	Within 1 year		1-3 Years		4-5 Years		After 5 Years		Total
Current liabilities		4,052		-		-		-		4,052
Purchase obligations		510		-	Nil		Nil				510

In addition to the committed purchase obligations set out above, Blanket currently intends to invest approximately US$50 million between November 13, 2014 and December 2017 which is not yet committed. The committed and uncommitted investment will be used to maintain Blanket’s existing operations and capital projects and the satellite projects which are discussed in Sections 4.7 and 5.3 of this MD&A respectively. Committed and uncommitted purchase obligations will be met from the cash generated from Blanket’s existing operations. Caledonia has no obligations in respect of capital or operating leases. As of September 30, 2014, Caledonia had potential liabilities for rehabilitation work on the Blanket and Eersteling Mines7 – if and when those mines are permanently closed – at an estimated discounted cost of $2,093,000 ($1,572,000 – 2013).

7	Eersteling Mine is a South African gold property, which has been held on care and maintenance basis for several years pending the identification of a suitable purchaser.

10.	NON-IFRS MEASURES

Throughout this document, we have provided measures prepared in accordance with IFRS in addition to some non-IFRS performance measures for investors who use them to evaluate our performance. Since there is no standard method for calculating non-IFRS measures, they are not a reliable way to compare Caledonia against other companies. Non-IFRS measures should be used along with other performance measures prepared in accordance with IFRS. We have defined below the non-IFRS measures we have used in this document and provide a reconciliation of such non-IFRS measures to the IFRS measures we report.

Cost per ounce

Non-IFRS performance measures such as “On-Mine cash cost per ounce”, “All-in sustaining cost per ounce” and “All-in cost per ounce” are used in this document. Management believes these measures assist investors and other stakeholders in understanding the economics of gold mining over the life-cycle of a mine. These measures are calculated on the basis set out by the World Gold Council in a Guidance Note published on June 23, 2013 and accordingly differ from the previous basis of calculation. The table below reconciles “On – mine cash cost per ounce”, “All-in sustaining costs per ounce” and “All-in costs per ounce” to the production costs shown in the financial statements which have been prepared under IFRS.

Reconciliation of IFRS Production Costs to Non-IFRS cost per Ounce
	3 Months to 30 September						9 months to 30 September
	2013			2014			2013			2014
Production costs (IFRS) (C$’000’s)		6,872			7,174			21,493			23,730
Less site restoration costs (C$’000’s)		(24	)		(9	)		(73	)		(28	)
Less exploration costs (C$’000’)		(112	)		(80	)		(272	)		(290	)
Reallocated admin costs		(114	)		586			(272	)		804
Realisation charges		(76	)		(22	)		(224	)		(77	)
Non-Blanket production costs		(26	)		(106	)		(75	)		(317	)
Inter company profit elimination		342			3			1,001			128
Adjusted production costs (C$’000’s)		6,862			7,546			21,578			23,950
Exchange rate (C$/US$)		1.02			1.09			1.01			1.10
On-mine Production costs (US$’000’s )		6,714			6,900			21,317			21,815
Gold Sales (oz)		12,042			9,890			35,594			33,323
On-mine cash cost (US$/oz)		558			698			599			656
Royalty (US$’000’s)		1,120			908			3,567			2,991
Permitting costs (US$’000’s)		32			26			102			85
Refining and 3rd party smelting (US$’000’s)		80			26			242			68
Administrative expenses (C$’000’s) (i)		1,153			1,816			5,705			5,354
Exchange rate		1.02			1.09			1.01			1.10
Administrative expenses (US$’000’s)		1,128			1,661			5,631			4,887
Reclamation and remediation of operating sites (US$’000)		21			19			62			56
Exploration and study costs (US$’000’s)		18			23			42			94
Sustaining capital investment (US$’000’s)		1,322			537			3,637			1,233
All-in Sustaining cost (US$’000)		10,453			10,100			34,599			31,270
Gold sales (oz)		12,042			9,890			35,594			33,323
All-in sustaining cost per ounce (US$/oz)		867			1,021			972			938
Costs not related to current production
Community costs (US$’000’s)		100			-			2,200			-
Permitting (US$’000’s)		31			14			92			41
Exploration (US$’000’s)		36			21			3182			83
Capital investment (US$’000’s)		1,285			763			2,613			3,100
All-in Costs (US$’000’s)		11,887			10,897			39,586			34,494
Gold Sold (oz)		12,042			9,890			35,594			33,323
All-in Costs per ounce (US$/oz)		987			1,102			1,112			1,035

Average realised gold price per ounce

“Average realised gold price per ounce” is a non-IFRS measure which, in conjunction with the cost per ounce measures described above, allows stakeholders to assess our performance. The table below reconciles “Average sales price per ounce” to the Revenue shown in the financial statements which have been prepared under IFRS.

Reconciliation of Average Received Gold Price per ounce to IFRS
	3 Months to 30 September					9 months to 30 September
	2013		2014			2013			2014
Revenue (IFRS) (C$’000’s)		16,591		13,492			52,999			46,110
Less miscellaneous income		-		-			(947	)		-
Revenue from precious metal sales (C$’000s)		16,591		13,492			52,052			46,110
Exchange rate (C$/US$)		0.97		0.92			0.98			0.92
Revenue from precious metal sales (US$’000’s)		16,013		12,436			51,083			42,233
Revenues from sales of silver (US$’000s)		-		(15	)		(20	)		(51	)
Revenues from sales of gold (US$’000s)		16,013		12,421			51,063			42,181
Gold ounces sold		12,042		9,890			35,594			33,323
Average realised gold price per ounce (US$)		1,330		1,256			1,435			1,266

The average realised gold price from Q1 of 2014 is after deduction of 1.5% of the value of the gold delivered to and sold by Fidelity, in terms of Blanket’s sale agreement with Fidelity.

Adjusted earnings per share

“Adjusted earnings per share” is a non-IFRS measure which management believes assists investors in understanding the company’s underlying performance. The table below reconciles “adjusted earnings per share” to the Profit/Loss attributable to Owners of the Company shown in the financial statements which have been prepared under IFRS.

Reconciliation of Adjusted Earnings per Share to IFRS Profit/(Loss) Attributable to Owners of the Company

(C$’000’s except per share numbers)

	Q1 2013	Q2 2013	Year 2013			Q1 2014	(i)	Q2 2014		Q3 2014
Profit/(loss) attributable to owners of the company (IFRS)	4,593	3,055		(3,055	)	2,425		1,840		1,112
Blanket Mine Employee Trust adjustment (refer Note 18 to the Consolidated Financial Statements)	-	-		(105	)	(35	)	(56	)	(64	)
Add back amounts attributable to owners of the company in respect of:
Indigenisation expenses, advance dividends, donations etc.	-	1,640		1,640		-		-		-
Foreign exchange (profit)/loss	-	-		(1,677	)	(257	)	129		(389	)
Asset impairment	-	-		14,203		-		-		-
Deferred tax	-	-		2,185		-		-		(155	)
Withholding tax on distributions in specie	1,531			1,531		-		-		-
Adjusted profit	6,124	4,695		14,722		2,133		1,913		504
Weighted average shares (m)	51.5	51.8		51.5		52.1		52.1		52.1
Adjusted eps (cents)	11.9	9.1		28.3		4.1		3.7		1.0

(i)	Q1 2014 Figures have been re-stated

11.	RELATED PARTY TRANSACTIONS

Caledonia had the following related party transactions which are recorded on the basis of IFRS:

	9 months ended September 30, 2014		9 months ended September 30, 2013
	$	’000	$	’000
Rent paid to Bastian Investments CC, a company owned by members of the President’s family for the rental of the Company’s Johannesburg office facilities. The rental tenancy is on a monthly basis.		51		29

Additional information on related party transactions is set out in note 13 to the unaudited condensed consolidated interim financial statements. On July 15, 2014 Caledonia served six months’ notice on Epicure Overseas S.A. for the termination of the contract between Caledonia and Epicure for the provision of the services of Caledonia’s President and Chief Executive Officer. Negotiations are in progress for alternative arrangements to secure the continued services of the President and Chief Executive Officer. Rent paid for the office premises in Johannesburg has not been escalated since 2010. During the third quarter of 2014, the current market-related rent for the premises was established and a new one-year rental agreement was entered into.

12.	CRITICAL ACCOUNTING POLICIES

Caledonia's accounting policies are presented in the audited consolidated financial statements for the year ended December 31, 2013 which have been publicly filed on SEDAR at www.sedar.com. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts represented in the consolidated financial statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

i) Indigenisation transaction

The indigenisation transaction of the Blanket Mine (1983)(Private) Limited (“Blanket Mine”) required management to make significant judgements and assumptions which are explained in Note 5 of the Annual Financial Statements that are available on SEDAR at www.sedar.com

ii) Site restoration provisions

The site restoration provision has been calculated for the Blanket Mine based on an independent analysis of the rehabilitation costs as performed in 2012 and based on the internal assessment for Eersteling Gold Mining Corporation Limited. Estimates and assumptions are made when determining the inflationary effect on current restoration costs and the discount rate to be applied in arriving at the present value of the provision. Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis upon which to estimate the future liability. These estimates take into account any material changes to the assumptions that occur when reviewed by management. Estimates are reviewed annually and are based on current regulatory requirements. Significant changes in estimates of contamination, restoration standards and techniques will result in changes to provisions from period to period. Actual rehabilitation costs will ultimately depend on future market prices for the rehabilitation costs which will reflect the market condition at the time the rehabilitation costs are actually incurred. The final cost of the currently recognized site rehabilitation provisions may be higher or lower than currently provided for.

iii) Exploration and evaluation (“E&E”) expenditure

The application of Caledonia’s accounting policy for exploration and evaluation expenditures requires judgements when determining which expenditures are recognised as exploration and evaluation assets (“E&E properties”).

Caledonia also makes estimates and assumptions regarding the possible impairment of E&E properties by evaluating whether it is likely that future economic benefits will flow to Caledonia, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If information becomes available suggesting that the recovery of expenditures is unlikely, the amount capitalized is written off in profit or loss in the period the new information becomes available.

iv) Income taxes

Significant estimates and assumptions are required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Caledonia records its best estimate of the tax liability including any related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

Caledonia also applies judgement in recognizing deferred tax assets relating to tax losses carried forward to the extent that there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilized or sufficient estimated taxable income against which the losses can be utilized. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

v) Share-based payment transactions

Caledonia measures the cost of equity-settled, share based payment transactions with employees, directors as well as with Indigenisation Shareholders (refer note 5 and 20 of the Annual Financial Statements) by reference to the fair value of the equity instruments on the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the appropriate valuation model, considering the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield.

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of Caledonia’s stock options.

vi) Impairment

At each reporting date, Caledonia determines if impairment indicators exist, and if present, performs an impairment review of the non-financial assets held in Caledonia. The exercise is subject to various judgemental decisions and estimates. Financial assets are also reviewed regularly for impairment.

vii) Functional currency

The functional currency of each entity in Caledonia is determined after considering various primary and secondary indicators which require management to make numerous judgement decisions. The determination of the functional currency has a bearing on the translation process and ultimately the foreign currency translation reserve.

13.	FINANCIAL INSTRUMENTS

Credit risk

The carrying amount of financial assets as disclosed in the statements of financial position and related notes represents the maximum credit exposure.

The trade receivable relate to gold bullion sold to Fidelity Printers and Refiners before quarter end. The amount was settled in October 2014.

Impairment losses

None of the trade and other receivables is past due at the period-end date.

Liquidity risk

All trade payables and bank overdraft have maturity dates that are expected to mature in under 6 months.

Currency risk

As Caledonia operates in an international environment, some of Caledonia’s financial instruments and transactions are denominated in currencies other than the Canadian Dollar. The results of Caledonia’s operations are subject to currency transaction risk and currency translation risk. The operating results and financial position of Caledonia are reported in Canadian dollar in Caledonia’s consolidated financial statements.

The fluctuation of the Canadian dollar in relation to other currencies will consequently have an impact upon the profitability of Caledonia and may also affect the value of Caledonia’s assets and liabilities and the amount of shareholders’ equity.

Caledonia has certain financial assets and liabilities denominated in foreign currencies. Caledonia does not use any derivative instruments to reduce its foreign currency risks. To reduce exposure to currency transaction risk, Caledonia maintains cash and cash equivalents in the currencies used by Caledonia to meet short‐term liquidity requirements.

Interest rate risk

Interest rate risk is the risk borne by an interest-bearing asset or liability due to changes in interest rates. Unless otherwise noted, it is the opinion of management that Caledonia is not exposed to significant interest rate risk as it has no debt financing apart from short term borrowings in Zimbabwe. Caledonia’s cash and cash equivalents include highly liquid investments that earn interest at market rates. Caledonia manages its interest rate risk by endeavouring to maximize the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. Caledonia’s policy focuses on preservation of capital and limits the investing of excess funds to liquid term deposits in high credit quality financial institutions.

14.	DIVIDEND POLICY AND OTHER SHAREHOLDER INFORMATION

Caledonia paid its inaugural dividend of 5 Canadian cents per share in February 2013 following a capital re-structure which was approved by shareholders in January 2013 which allowed it to make dividend payments. The inaugural dividend did not relate to any specific accounting period. Caledonia paid a further dividend of 5 Canadian cents per share in April 2013 in respect of the earnings for the year to December 31, 2012

On November 25, 2013 Caledonia announced a revised dividend policy pursuant to which it intends to pay a dividend of 6 Canadian cents per share in 2014, split into 4 equal quarterly payments of 1.5 Canadian cents per share. The first quarterly dividend was paid on January 31, 2014; the second quarterly dividend was paid on April 30, 2014; the third quarterly dividend was paid on July 31, 2014; the fourth quarterly dividend was paid on October 30, 2014.

Caledonia, due to its strong balance sheet, expects to continue the existing dividend policy of 1.5 Canadian cents per quarter in 2015. Caledonia will consider further dividends thereafter in the context of the prevailing commercial environment and expects to provide guidance for dividend payments in 2016 at or about the time of the dividend which is expected to be paid in August 2015. Caledonia’s net cash position is expected to reduce from current levels as a result of the suspension of dividend payments by Blanket (as set out in Section 4.8) and the consequent suspension of repayment of facilitation loans by Blanket’s indigenous shareholders. It is anticipated that Caledonia will continue to maintain a robust net cash position and the temporary suspension of dividend payments by Blanket will not have any bearing on the continuation of Caledonia’s dividend policy. It is not expected that any capital raisings or borrowings will be required.

Effective December 5, 2013 Caledonia appointed Computershare as its Transfer Agent in Canada and as the Registrar. Following the appointment of Computershare, shareholders in the USA and UK now receive their dividends denominated in US Dollars and Pounds Sterling respectively; all other shareholders will be paid in Canadian dollars. Computershare also offers DRS services for Caledonia shareholders who do not wish to hold their shares in nominee accounts in the name of their financial adviser or stock-broker. Shareholders who wish to participate in the DRS should contact Computershare using the contact details set out below:

Computershare Canada and USA	Toll-free North American Number 1-800-564-6253 For Shareholders outside North America 1-514-982-7555
Computershare UK	+44 (0)870 702 0000

On April 12, 2013, the one-for-ten share consolidation was implemented pursuant to the special resolution passed at the special meeting of Caledonia shareholders held on January 24, 2013.

15.	SECURITIES OUTSTANDING

As at November 13, 2014 Caledonia had 52,117,908 common shares outstanding. Outstanding options to purchase Common Shares (“Options”) are as follows:

Number of Options		Exercise Price ($)		Expiry Date (1)
	1,646,000		1.30	Jan 31, 2016
	30,000		0.70	May 11, 2016
	930,920		0.90	Aug 31, 2017
	190,000		0.72	Nov 21, 2018
	2,796,920

(1)

Options expiring during a “closed period” will have the expiry date extended, in terms of the option plan, by 10 days following the cancellation of the closed period.

As Caledonia’s Option Plan allows the granting of options for the number of Common Shares equal to 10% of the issued shares, Caledonia could grant Options on a further 2,414,878 shares.

16.	RISK ANALYSIS

The business of Caledonia contains significant risk due to the nature of mining, exploration and development activities. Risks such as interest rate, foreign exchange and credit risks are considered in Notes 6 and 24 to the Condensed Consolidated Interim Financial Statements for the year ended December 31, 2013. Caledonia’s business contains significant additional risks due to the jurisdictions in which it operates and the nature of mining, exploration and development. Included in the risk factors below are details of how management seeks to mitigate the risks where this is possible.

Liquidity risk: The Company needs to generate capital to be able to continue to invest in properties and projects without raising third party financing. Caledonia currently has significant cash resources and continues to generate sufficient cash to cover all of its anticipated investment needs.

Exploration Risk: The Company needs to identify new resources to replace ore which has been depleted by mining activities and to commence new projects. Blanket has embarked on development and exploration programmes as set out in sections 4.7 and 5. No assurance can be given that exploration will be successful in identifying sufficient mineral resources of an adequate grade and suitable metallurgical characteristics that are suitable for further development or production.

Development Risk: The Company is engaged in development activities at Blanket Mine and the Satellite properties. Construction and development of projects are subject to numerous risks including: obtaining equipment, permits and services, changes in regulations, currency rate changes, labour shortages, fluctuations in metal prices and the loss of community support. There can be no assurance that construction will commence or continue in accordance with the current expectations or at all.

Production Estimates: Estimates for future production are based on mining plans and are subject to change. Production estimates are subject to risk and no assurance can be given that future production estimates will be achieved. Actual production may vary from estimated production for a variety of reasons including un-anticipated variations in grades, mined tonnages and geological conditions, accident and equipment breakdown, changes in metal prices and the cost and supply of inputs and changes to government regulations.

Mineral Rights: The Company’s existing licences and permits are in good standing. The Company has to pay fees etc. to maintain its rights and licence. No assurance can be given that the Company will be able to make payments by the required date or will meet development and production schedules that are required to protect licences.

Metal Prices: The Company’s operations and exploration and development projects are heavily influenced by the prices of gold, which is particularly subject to fluctuation. Caledonia has not adopted any strategies to control the effect of mineral price fluctuations because the Company’s cash resources currently exceed its planned and foreseeable commitments as set out in Section 9.

Increasing input costs: Mining companies generally have experienced higher costs of steel, reagents, labour and electricity and from local and national government for levies, fees, royalties and other direct and indirect taxes. Blanket’s planned growth should allow the fixed cost component to be absorbed over increased production, thereby helping to alleviate somewhat the effect of any further price increases.

Illegal mining: There has been an increase in illegal mining activities on properties controlled by Blanket. This gives rise to increased security costs and an increased risk of theft and damage to equipment. Blanket has received adequate support and assistance from the Zimbabwean police in investigating such cases.

Electricity supply: Zimbabwe produces and imports less electricity than it requires and has insufficient funds to adequately maintain or upgrade its distribution infrastructure. This has historically resulted in frequent interruptions to the power supply at Blanket Mine. Blanket has addressed the issue of interrupted power supply by installing stand-by generators and by entering into an un-interrupted power supply arrangement with the state-owned electricity company in return for paying a premium tariff. However, the continued failure of the state-owned distribution company to maintain its equipment continues to hamper Blanket’s ability to install new equipment at Blanket Mine.

Succession planning: The limited availability of mining and other technical skills and experience in Zimbabwe and the difficulty of attracting appropriately skilled employees to Zimbabwe creates a risk that appropriate skills may not be available if, for whatever reason, the current skills base at the Blanket Mine is depleted. The Caledonia management team has recently been augmented so that, if required, it could provide appropriate support to Blanket if this was required.

Country risk: The commercial environments in which the Company operates is unpredictable. Potential risks may arise from unforeseen changes in government policies and regulations relating to exploration and mining activity, military repression and civil disorder, all or any of which may have a material adverse effect on operations (including the ability to export geological samples for assay and analysis on a timely basis) and/or the ability of Caledonia to receive payments. Management believes that it has minimised such risks by complying fully with all relevant legislation and by obtaining all relevant regulatory permissions and approvals.

Gold marketing arrangements: In terms of regulations introduced by the Zimbabwean Ministry of Finance in January 2014, all gold produced in Zimbabwe must be sold to Fidelity, a company which is controlled by the Zimbabwean authorities. Accordingly, all of Blanket’s production has been sold to Fidelity. Blanket has received all payments due from Fidelity in full and on time. However the requirement to sell to Fidelity increases Blanket’s credit risk because Fidelity has failed to pay Blanket in the past.

17. FORWARD LOOKING STATEMENTS

Information and statements contained in this MD&A that are not historical facts are “forward-looking information” within the meaning of applicable securities legislation that involve risks and uncertainties relating, but not limited to, Caledonia’s current expectations, intentions, plans, and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “target”, “intend”, “estimate”, “could”, “should”, “may” and “will” or the negative of these terms or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Examples of forward-looking information in this MD&A include: production guidance, estimates of future/targeted production rates, planned mill capacity increases, estimates of future metallurgical recovery rates and the ability to maintain high metallurgical recover rates, timing of commencement of operations and Caledonia’s plans and timing regarding further exploration, drilling and development, the prospective nature of exploration and development targets, the ability to upgrade and convert mineral resources to mineral reserves, capital costs, our intentions with respect to financial position and third party financing and future dividend payments. This forward-looking information is based, in part, on assumptions and factors that may change or prove to be incorrect, thus causing actual results, performance or achievements to be materially different from those expressed or implied by forward-looking information. Such factors and assumptions include, but are not limited to: failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, success of future exploration and drilling programs, reliability of drilling, sampling and assay data, assumptions regarding the representativeness of mineralization being inaccurate, success of planned metallurgical test-work, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, changes in government regulations, legislation and rates of taxation, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors.

Potential shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Such factors include, but are not limited to: risks relating to estimates of mineral reserves and mineral resources proving to be inaccurate, fluctuations in gold price, risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, power outages, explosions, landslides, cave-ins and flooding), risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards, employee relations; relationships with and claims by local communities and indigenous populations; political risk; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including the risks of obtaining or maintaining necessary licenses and permits, diminishing quantities or grades of mineral reserves as mining occurs; global financial condition, the actual results of current exploration activities, changes to conclusions of economic evaluations, and changes in project parameters to deal with un-anticipated economic or other factors, risks of increased capital and operating costs, we are affected by environmental, safety or regulatory risks, expropriation, the Company’s title to properties including ownership thereof, increased competition in the mining industry for properties, equipment, qualified personnel and their costs, risks relating to the uncertainty of timing of events including targeted production rate increase and currency fluctuations. Shareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Caledonia reviews forward-looking information for the purposes of preparing each MD&A, however Caledonia undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

18.

CONTROLS

Caledonia maintains adequate systems of internal accounting and administrative controls, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information is produced.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting (“ICOFR”). Any system of internal controls over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

During the year ended December 31, 2013 we appointed an assistant to the Chief Financial Officer (“CFO”) to assume responsibility for the preparation of Caledonia’s consolidated financial statements and the CFO will now oversee the reporting process which will enhance the ICOFR. This represented a material change in our internal controls.

At September 30, 2014 we have tested our ICOFR and management has evaluated the effectiveness of Caledonia’s internal control over financial reporting and concluded that such internal control over financial reporting was effective and there were no material weaknesses.

Segregation of Duties

Management has concluded, and the Audit Committee has agreed that the hiring of additional staff needs to be constantly addressed and assessed in light of risks to ICOFR and the costs associated with additional staff. There have been no changes in the Corporation’s internal controls over financial reporting since the year ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

The Corporation has a Disclosure Committee consisting of six Directors, and has disclosure controls and procedures which it follows in an attempt to ensure that it complies with all required disclosures on an adequate and timely basis. The Corporation’s Directors and Management, and the Disclosure Committee, are making all reasonable efforts to ensure that the Corporation’s disclosures are made in full compliance with all of the applicable rules, regulations and requirements. All reasonable efforts are also being made to ensure that the Corporation’s disclosure controls and procedures provide reasonable assurance that material information relating to the Corporation, including its consolidated subsidiaries, is made known to the Corporation’s Certifying Officers by others within those entities.

19. QUALIFIED PERSON

Dr. Trevor Pearton, B.Sc. Eng. (Mining Geology), Ph.D. (Geology), Pr.Sci.Nat., F.G.S.S.A., VP Exploration is the Corporation’s qualified person as defined by NI 43-101. Dr. Pearton is responsible for the technical information provided on this MD&A except where otherwise stated.

Exhibit 99.3

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Stefan Edward Hayden, Chief Executive Officer of Caledonia Mining Corporation, certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Caledonia Mining Corporation (the “issuer”) for the interim period ended September 30, 2014.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1	Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the 1992 Internal Control – Integrated Framework – published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2

N/A

5.3

N/A

6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2014 and ended on September 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 13, 2014

“Stefan Edward Hayden”

_______________________

Stefan Edward Hayden

Chief Executive Officer

Exhibit 99.4

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Steven Roy Curtis, Chief Financial Officer of Caledonia Mining Corporation, certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Caledonia Mining Corporation (the “issuer”) for the interim period ended September 30, 2014.

5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

(b)

5.1	Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the 1992 Internal Control – Integrated Framework – published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2

N/A

5.3

N/A

6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2014 and ended on September 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.