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 May 2015

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
Dated: May 13, 2015	Name: Steve Curtis Title: CEO and Director

Exhibit Index

Exhibit	Description

99.1	Interim Financial Statements/Report
99.2	MD&A
99.3	52-109F2 - Certification of Interim Filings - CEO
99.4	52-109F2 - Certification of Interim Filings - 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 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 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.

At March 31, 2015, management evaluated the effectiveness of the Group’s internal control over financial reporting and concluded that such internal control over financial reporting 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 auditor.

The unaudited condensed consolidated financial statements for the period ended March 31, 2015 were approved by the Board of Directors and signed on its behalf on May 11, 2015.

(Signed) S. R. Curtis	(Signed) M. Learmonth
Chief Executive Officer	Chief Financial Officer

Caledonia Mining Corporation

Condensed consolidated statements of profit or loss and other comprehensive income
(In thousands of Canadian dollar)
For the three months ended March 31,

Unaudited
	Note	2015			2014


Revenue			15,994			17,063
Less: Royalty			(801	)		(1,195	)
Production costs	6		(9,514	)		(8,788	)
Depreciation			(1,038	)		(1,058	)
Gross profit			4,641			6,022
Other income			10			-
Administrative expenses	7		(2,019	)		(1,847	)
Foreign exchange gain			625			257
Operating profit			3,257			4,432
Finance income			-			-
Finance cost			(44	)		(41	)
Net finance costs			(44	)		(41	)
Profit before tax			3,213			4,391
Tax expense			(1,199	)		(1,300	)
Profit for the period			2,014			3,091
Other comprehensive income
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations			4,677			2,134
Other comprehensive income for the period, net of income tax			4,677			2,134
Total comprehensive income for the period			6,691			5,225
Profit attributable to:
Shareholders of the Company			1,554			2,425
Non-controlling interests			460			666
Profit for the period			2,014			3,091
Total comprehensive income attributable to:
Shareholders of the Company			6,151			4,558
Non-controlling interests			540			667
Total comprehensive income for the period			6,691			5,225
Earnings per share
Basic earnings per share ($)			0.03			0.05
Diluted earnings per share ($)			0.03			0.05

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

On behalf of the Board: “S.R Curtis”- Chief Executive Officer and “M Learmonth” - Chief Financial Officer

Caledonia Mining Corporation

Condensed consolidated statements of financial position
(In thousands of Canadian dollar)

Unaudited
			March 31,			December 31,
As at	Note		2015			2014


Assets
Property, plant and equipment		8		47,001			40,388
Total non-current assets				47,001			40,388

Inventories		9		7,998			7,571
Prepayments				684			348
Trade and other receivables		10		4,348			2,040
Income tax receivable				-			111
Cash and cash equivalents				26,094			26,838
Total current assets				39,124			36,908
Total assets				86,125			77,296

Equity and liabilities
Share capital				57,607			57,607
Reserves				164,480			159,883
Retained loss				(158,987	)		(159,759	)
Equity attributable to shareholders				63,100			57,731
Non-controlling interests				1,344			804
Total equity				64,444			58,535

Liabilities
Provisions				3,157			2,888
Deferred tax liability				11,825			10,092
Total non-current liabilities				14,982			12,980

Trade and other payables				4,969			3,791
Income tax payable				1,730			1,990
Total current liabilities				6,699			5,781
Total liabilities				21,681			18,761
Total equity and liabilities				86,125			77,296

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

On behalf of the Board: “S.R Curtis”- Chief Executive Officer and “M Learmonth” - Chief Financial Officer

Caledonia Mining Corporation

Condensed consolidated statements of changes in equity

(expressed in thousands of Canadian dollar)

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

Balance at December 31, 2013		57,607		319		140,000		15,750		(161,651	)		52,025			(51	)		51,974
Transactions with owners:
Dividends paid		-		-		-		-		(3,127	)		(3,127	)		(847	)		(3,974	)
Total comprehensive income:
Profit for the year		-		-		-		-		4,897			4,897			1,668			6,565
Other comprehensive income for the year		-		3,814		-		-		122			3,936			34			3,970
Balance at December 31, 2014		57,607		4,133		140,000		15,750		(159,759	)		57,731			804			58,535
Transactions with owners:
Dividend paid		-		-		-		-		(782	)		(782	)		-			(782	)
Total comprehensive income:
Profit for the period		-		-		-		-		1,554			1,554			460			2,014
Other comprehensive income		-		4,597		-		-		-			4,597			80			4,677
Balance at March 31, 2015 Unaudited		57,607		8,730		140,000		15,750		(158,987	)		63,100			1,344			64,444

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

On behalf of the Board: “S.R Curtis”- Chief Executive Officer and “M Learmonth” - Chief Financial Officer

Condensed consolidated statements of cash flows
(In thousands of Canadian dollar)
For the three months ended March 31,
Unaudited
Cash flows from operating activities	Note	2015			2014


Cash generated by operating activities	11		3,927			6,868
Finance cost paid			(31	)		(41	)
Tax paid			(520	)		(600	)
Cash from operating activities			3,376			6,227

Cash flows from investing activities
Acquisition of Property, plant and equipment			(3,944	)		(2,032	)
Proceeds with disposal of Property, plant and equipment			54			-
Net cash used in investing activities			(3,890	)		(2,032	)

Cash flows from financing activities
Dividend paid			(782	)		(907	)
Net cash used in financing activities			(782	)		(907	)
Net (decrease)/ increase in cash and cash equivalents			(1,296	)		3,288
Cash and cash equivalents at beginning period			26,838			23,426
Effect of exchange rate fluctuations on cash held			552			-
Cash and cash equivalents at end of period			26,094			26,714

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

On behalf of the Board: “S.R Curtis”- Chief Executive Officer and “M Learmonth” - Chief Financial Officer

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

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. These consolidated financial statements of the Group as at and for the period ended March 31, 2015 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 exploration and development of mineral properties for 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, 2014.

(b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for equity-settled share-based payment arrangements measured at fair value on grant date.

These consolidated 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.

3 Use of estimates and judgements

Management makes estimates and assumptions about the future that effect 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

(expressed in thousands of Canadian dollar)

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, 2014.

The condensed consolidated interim financial statements should be read in conjunction with the Group’s annual financial statements for the year ended December 31, 2014.

4 Significant accounting policies

Except as stated otherwise, the same accounting policies and methods of computation have been applied consistently to all periods presented in these interim financial statements as compared to the Group’s annual financial statements for the year ended December 31, 2014. In addition, the accounting policies have been applied consistently by the Group entities.

(i) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market risk free rate applicable to the currency in which the liability will be incurred. The unwinding of the discount is recognised as finance cost.

(ii) Site restoration

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 Company 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 where the time value of money effect is significant. 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.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

5	Blanket Zimbabwe Indigenisation Transaction

On February 20, 2012 the Group announced it had signed a Memorandum of Understanding (“MoU”) with the Minister of Youth, Development, Indigenisation and Empowerment of the Government of Zimbabwe pursuant to which the Group agreed that indigenous Zimbabweans would acquire an effective 51% ownership interest in the Blanket Mine for a paid transactional value of US$30.09 million. Pursuant to the above, the Group entered into agreements with each Indigenisation Shareholder to sell its 51% ownership interest in Blanket Mine as follows:

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

·	A 15% interest was sold to Fremiro, which is owned by Indigenous Zimbabweans, for US$11.01 million.

A 10% interest was sold 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.

·	A 10% interest was donated to the Gwanda Community Share Ownership Trust (Community Trust). Blanket Mine undertook and 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. To facilitate the capital expenditure of a production expansion programme Blanket Mine has suspended dividend payments. A moratorium has been placed on interest until dividends are resumed.

The facilitation loans 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.

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 accordingly the subscription agreements will be accounted for as a transaction with non-controlling interests and share based payments.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

5 Blanket Zimbabwe Indigenisation Transaction-(continued)

Accordingly, on the effective date of the transaction, the subscription agreements were accounted for as follows:

·	Non-controlling interests (NCI) were recognised on the portion of shareholding upon which dividends declared by Blanket Mine will 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 March 31, 2015 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 will be 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	Shareholding			NCI Recognised			NCI subject to facilitation loan			Balance of facilitation loan at March 31, 2015 #		Dec, 31 2014
NIEEF		16	%		3.2	%		12.8	%		11,907		11,907
Fremiro		15	%		3.0	%		12.0	%		11,657		11,657
Community Trust		10	%		10.0	%		-			-		-
BETS ~		10	%		-	*		-	*		7,772		7,772
		51	%		16.2	%		24.8	%	US$31,336		US$31,336

The balance on the facilitation loans is reconciled as follows:

	USD ‘000’s
Balance at December 31, 2014		31,336
Interest accrued &		-
Dividends used to repay loans		-
Balance at March 31, 2015		31,336

& A moratorium has been placed on interest until dividends are resumed by Blanket Mine.

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

~ Accounted for under IAS19 Employee Benefits.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

5 Blanket Zimbabwe Indigenisation Transaction – (continued)

# 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 have been recorded 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 has been debited to an interest-free loan account and is repayable by way of set off of future dividends on the Blanket Mine shares owned by

NIEEF. Whilst any amount remains outstanding on the NIEEF dividend loan account, interest on the NIEEF facilitation loan is suspended.

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

	NIEEF			Community Trust			Total
	US$			US$			US$
Balance at December 31, 2013		358			3,507			3,865
Interest accrued		-			334			334
Dividends used to repay advance dividends		(358	)		(604	)		(962	)
Balance at December 31, 2014		-			3,237			3,237
Interest accrued &		-			-			-
Dividends used to repay advance dividends		-			-			-
Balance at March 31, 2015		-			3,237			3,237

& A moratorium has been placed on interest until dividends are resumed by Blanket Mine.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

6 Production costs

	2015		2014

Salaries and wages		3,602		2,749
Consumable materials		4,792		5,160
Site restoration		-		9
Exploration		106		120
Safety		189		125
On mine administration		825		625
		9,514		8,788

7 Administrative expenses

	2015		2014

Investor relations		120		82
Management contract fee		-		260
Professional consulting fees		41		325
Audit fee		101		67
Legal fee and disbursements		24		51
Accounting services fee		112		8
Listing fees		41		58
Travel		82		86
Directors fees		120		138
Salaries and wages		923		483
Zambia costs		247		260
Other		208		29
		2,019		1,847

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

8 Property, plant and equipment

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

Cost

Balance at January 1, 2014		8,152			14,991		16,320			21,476			-			1,306			2,219			64,464
Additions		592			3,390		1,864			1,921			-			122			19			7,908
Reallocations between asset classes		(640	)		1,834		-			(1,197	)		-			3			-			-
Disposals		-			-		-			(304	)		-			-			(9	)		(313	)
Foreign exchange movement		742			1,689		(2,763	)		2,482			-			(44	)		61			2,167
Balance at December 31, 2014		8,846			21,904		15,421			24,378			-			1,387			2,290			74,226
Additions		47			1,892		519			6			*1,385			43			52			3,944
Disposals		-			-		-			-						-			(57	)		(57	)
Foreign exchange movement		462			2,251		(780	)		2,298			(11	)		94			213			4,527
Balance at March 31, 2015		9,355			26,047		15,160			26,682			1,374			1,524			2,498			82,640

* Two winders were purchased by Greenstone Management Services Proprietary Limited and are currently in the process of refurbishment. The winders are earmarked for installation at the Blanket Mine as part of the Revised plan.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

8 Property, plant and equipment - (continued)

Accumulated depreciation and Impairment losses	Land and buildings		Mineral properties being depreciated	Mineral properties not depreciated		Plant and equipment		Assets under construction	Fixtures and fittings		Motor vehicles		Total


Balance at January 1, 2014	1,734		2,826	14,333		9,886		-	1,063		1,174		31,016
Depreciation for the year	567		810	-		2,088		-	86		357		3,908
Disposals	-		-	-		(236	)	-	-		(9	)	(245	)
Impairment	-		-	-		180		-	16		-		196
Foreign exchange movement	(252	)	358	(930	)	(140	)	-	(65	)	(8	)	(1,037	)
Balance at December 31, 2014	2,049		3,994	13,403		11,778		-	1,100		1,514		33,838
Depreciation for the 3 month period	173		139	-		592		-	26		108		1,038
Disposals	-		-	-		-		-	-		(30	)	(30	)
Foreign exchange movement	182		353	(963	)	1,066		-	31		124		793
Balance at March 31, 2015	2,404		4,486	12,440		13,436		-	1,157		1,716		35,639
Carrying amounts
At December 31, 2014	6,797		17,910	2,018		12,600		-	287		776		40,388
At March 31, 2015	6,951		21,561	2,720		13,246		1,374	367		782		47,001

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

9 Inventories

			December 31
	2015		2014

Consumable stores		7,998		6,932
Gold in progress		-		639
		7,998		7,571

Inventory is comprised of gold in circuit at Blanket and consumable stores utilised by Blanket Mine. Consumables stores are disclosed net of any write downs or provisions of obsolete items.

10 Trade and other receivables

			December 31
	2015		2014

Bullion sales receivable		1,822		-
VAT receivables		1,542		1,169
Deposits for stores and equipment and other receivables		984		871
Current portion		4,348		2,040

The bullion receivable is received shortly after the delivery of the gold and no provision for non-recovery is required.

11 Cash flow information

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

	2015			2014
	$			$
Operating profit		3,257			4,432
Adjustments for:
Profit of sale of property, plant and equipment		(27	)		-
Site restoration		-			76
Depreciation		1,038			1,058
Cash generated by operations before working capital changes		4,268			5,566
Inventories		65			53
Prepayments		(85	)		(5	)
Trade and other receivables		(604	)		96
Trade and other payables		283			1,158
Cash generated by operating activities		3,927			6,868

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

12 Related parties

Transactions with key management personnel

Key management personnel compensation:

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities.

A number of these entities transacted with the Group in the reporting period. The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:

						Balance outstanding
3 months to Mar 31,						As at March 31,
Note		2015		2014		2015		2014
		$		$		$		$
Management fees, allowances and bonus paid or accrued to a company for management services provided by the Group’s former President	(i)		-		227		-		-
Rent for office premises paid to a company owned by members of the former President’s family.	(ii)		-		9		-		-

(i)

On July 15, 2014 Caledonia served a six month notice to Epicure Overseas S.A. for the termination of the contract between Caledonia and Epicure for the provision of the services of Mr. Stefan Hayden, who was at that time Caledonia’s President and Chief Executive Officer (“CEO”). Negotiations for alternative arrangements to secure the continued services of Mr. Hayden as President and CEO failed to reach agreement. Accordingly, on November 18, 2014 Mr. Hayden stepped down as President and CEO and on December 6, 2014, Mr. Hayden resigned as a director of Caledonia. No payments other than the contractual payments that were due to Epicure Overseas SA for the provision of the services of Mr. Hayden during the notice period were made.

(ii)	The contract expires September 2015. Costs relating to the rental for the period amounted to $19,384. The Group’s former president is not considered a related party in terms of IAS 24 for the 3 month period ended March 31, 2015.

13 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.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

13 Operating Segments – (continued)

The Zimbabwe operating segments comprise an operating gold mine. The Zambia segments consist of Nama copper project and cobalt project. The South Africa geographical segment comprise 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.

Information about reportable segments

2015	Corporate			Zimbabwe			South Africa			Zambia			Inter-group eliminations adjustments			Total

External Revenue		-			15,994			2,615			-			(2,615	)		15,994
Royalty		-			(801	)		-			-			-			(801	)
Production costs		-			(9,755	)		(2,277	)		-			2,518			(9,514	)
Management fee		-			(1,449	)		1,449			-			-			-
Other income		-			8			2			-			-			10
Administrative expenses		(469	)		(33	)		(1,270	)		(247	)		-			(2,019	)
Depreciation		-			(1,092	)		(9	)		-			63			(1,038	)
Foreign exchange gain/(loss)		120			-			505			-			-			625
Finance expense		-			(44	)		-			-			-			(44	)
Segment profit before income tax		(349	)		2,828			1,015			(247	)		(34	)		3,213
Income tax expense		-			(950	)		(249	)		-			-			(1,199	)
Segment profit after income tax		(349	)		1,878			766			(247	)		(34	)		2,014
Geographic segment assets:
Current assets Current assets		11,641			16,107			13,945			51			(2,620	)		39,124
Non-Current (excluding intercompany)		55			46,784			1,830			-			(1,668	)		47,001
Expenditure on property, plant and equipment – cash					2,585			*1,416						(57	)		3,944
Intercompany balances																	-
Geographic segment liabilities :
Current liabilities		(835	)		(4,411	)		(1,453	)		-			-			(6,699	)
Non-current (excluding intercompany)		-			(14,266	)		(716	)		-			-			(14,982	)
Intercompany balances		(42,467	)		(2,118	)		(87,749	)		(32,056	)		164,390			-

* Two winders amounting to 1,385,000 were purchased by Greenstone Management Services Proprietary Limited and are currently in the process of refurbishment. The winders are earmarked for installation at the Blanket Mine as part of the Revised plan.

Caledonia Mining Corporation

Notes to the Condensed Consolidated Financial Statements

(expressed in thousands of Canadian dollar)

13 Operating Segments – (continued)

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

External Revenue		-			17,063			2,173			-			(2,173	)		17,063
Royalty		-			(1,195	)		-			-			-			(1,195	)
Production costs		-			(8,760	)		(1,960	)		(64	)		1,996			(8,788	)
Management fee		-			(1,289	)		1,289			-			-			-
Administrative expenses		(974	)		(95	)		(686	)		(92	)		-			(1,847	)
Depreciation		-			(1,013	)		(3	)		(104	)		62			(1,058	)
Foreign exchange gain/(loss)		195			-			282			-			(220	)		257
Finance expense		-			(41	)		-			-			-			(41	)
Segment profit before income tax		(779	)		4,670			1,095			(260	)		(335	)		4,391
Income tax expense		(56	)		(971	)		(273	)		-			-			(1,300	)
Segment profit after income tax		(835	)		3,699			822			(260	)		(335	)		3,091
Geographic segment assets:
Current		12,520			12,148			13,700			51			(1,511	)		36,908
Non-Current (excluding intercompany)		56			41,646			356			-			(1,670	)		40,388
Expenditure on property, plant and equipment – cash		-			6,627			52			107			-			6,786
Intercompany balances		118,502			1,748			33,788			-			(154,038	)		-
Geographic segment liabilities :
Current		(1,146	)		(2,804	)		(1,831	)		-			-			(5,781	)
Non-current (excluding intercompany)		-			(12,291	)		(689	)		-			-			(12,980	)
Intercompany balances		(39,479	)		(1,049	)		(84,187	)		(29,323	)		154,038			-

Major customer

Revenues from Fidelity printers and Refiners in Zimbabwe amounted to $15,994 (2014:$17,063) for the 3 months ended March 31.

Directors and Management at May 11, 2015

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

S. R. Curtis (5) (7)	M. Learmonth (5) (7)
Chief Executive Officer Johannesburg, South Africa	Chief Financial Officer Vice-President Finance and Investor Relations and Corporate Development
	Johannesburg, South Africa

J. Johnstone (2) (5) (6) (7)	D. Roets (6) (7)
Non-executive Director	Chief Operating Officer
Gibsons, British Columbia, Canada	Johannesburg, South Africa

J. L. Kelly (1) (2) (3) (7)	Dr. T. Pearton (6) (7)
Non- executive Director	Vice-President Exploration
New York, United States of America	Johannesburg, South Africa

R. Patricio (2) (3) (7)
Non- executive Director	DSA Corporate Services Inc.
Toronto, Ontario, Canada	Company Secretary
	36 Toronto Street – Suite1000
J. Holtzhausen (1) (2) (5) (6) (7) - Chairman Audit Committee	Toronto, Ontario, M5C 2C5
Non- executive Director
Cape Town, South Africa
	Board Committees
	(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 May 11, 2015

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 – Africa Office	KPMG Inc.
Greenstone Management Services (Pty) Ltd.AUDITORS	85 Empire Road
P.O. Box 834BDO Dunwoody LLP	Parktown 2193
Saxonwold 2132Chartered Accountants	South Africa
South AfricaSuite 3300, 200 Bay Street	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, ZambiaSuite 400 200 University Ave	Tel:+1 416 263 9483
Tel:(260)(1) 29-1574 Fax(260)(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: (263) (4) 701 152/4 Fax: (263)(4) 702 248	Numis Securities Limited
	The London Stock Exchange Building
CAPITALIZATION at March 24, 2015 RBC Capital Markets	10 Paternoster Square
Authorised: Unlimited71 Queen Victoria Street	London EC4M 7LT
Shares, Warrants and Options Issued:	Tel: +44 207 260 1000
Common Shares: 52,117,908Tel: +44 20 7653 4000
Warrants: Nil	JOINT BROKERS (AIM)
Options: 2,125,920 (March, 31 2015)	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

MAY 11, 2015

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 March 31, 2015 (“Q1 2015” or the “Quarter”). It should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Caledonia for the quarter year ended March 31, 2015 (“the Unaudited Condensed Consolidated 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 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

Overview

2.	Highlights

3.	Summary Financial Results

4.	Operations at the Blanket Gold Mine, Zimbabwe

4.1.

Safety, Health and Environment

4.2.

Social Investment and Contribution to the Zimbabwean Economy

4.3.

Gold Production

4.4.

Costs

4.5.

Underground

4.6.

Metallurgical Plant

4.7.

Capital Projects

4.8.

Indigenisation

4.9.

Opportunities

4.10.

Outlook

5.	Exploration and Project Development

Investing

Financing

8.	Liquidity and Capital Resources

9.	Off-Balance Sheet Arrangements, Contractual Commitments and Contingencies

10.	Non-IFRS Measures

11.	Related Party Transactions

12.	Critical Accounting Policies

13.	Financial Instruments

14.	Dividend Policy and Other Shareholder Information

15.	Securities Outstanding

16.	Risk Analysis

17.	Forward-Looking Statements

18.

Controls

19.	Qualified Person

OVERVIEW

Following the implementation of indigenisation at the Blanket Gold Mine (“Blanket” or the “Blanket Mine”) in September 2012, Caledonia’s primary assets 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 Financial Statement, accordingly operational and financial information set out in this MD&A is on a 100% basis, unless otherwise specified.

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

	Q1 2014	Q1 2015	Comment
Gold produced (oz)	10,241	9,960	Gold production on target for the Quarter.
On Mine cash cost (US$/oz)1	651	670	Cost per ounce increases slightly, but remains lower than target.
All-in sustaining cost (US$/oz)1	923	959	AISC expected to fall as corporate administration costs and head office capital expenditure falls.
Gold Sales (oz)	12,210	10,773	Gold sales in Q1 2015 includes work in progress brought forward from the preceding quarter of 813 oz compared to 1,969 oz in the comparative quarter
Average realised gold price (US$/oz)1	1,288	1,200	The lower realised gold price was due to the lower gold price
Gross profit ($’m)2	6.0	4.6	Lower gross profit due to lower sales, lower realised gold price and higher Canadian-dollar denominated production costs.
Net profit attributable to shareholders ($’m)	2.4	1.6	Lower attributable profit due to lower gross profit, offset by reduced taxation charge and an increased foreign exchange gain
Adjusted basic earnings per share3 (cents)	4.1	4.0	Adjusted basic earnings per share excludes foreign exchange profits, deferred tax and expenses of the Zambian operation which is being closed.
Cash and cash equivalents ($’m)	26.7	26.1	Cash position remains robust despite increased capital investment as part of the plan to increase production.
Cash from operating activities ($’m)	6.2	3.4	Strong cash generation in Q1 2015 despite lower sales and the lower realised gold price.
Payments to the community and Zimbabwe government ($’m)	3.0	1.8	Payments including direct and indirect taxes, royalties, licence fees and levies were lower in the Quarter primarily due to lower income tax payable on the reduced profit and higher capex and reduced royalty payments due to the lower prevailing gold price and the reduced royalty rate.

______________________________

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

Dividend Policy and Shareholder Matters

On November 25, 2013 Caledonia announced a revised dividend policy in terms of which it intended 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 2014 and at the end of January and April 2015. 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 Q2 results in August 2015.

Strategy and Outlook

Caledonia’s Board of Directors and Management have reviewed alternative expansion and diversification plans for Caledonia and have concluded the best returns on investment remain at the Blanket Mine in Zimbabwe, which continues to be cash generative in the current market conditions and offers investment returns that substantially exceed alternative opportunities. Accordingly, Caledonia has increased its strategic and operational focus on the Blanket Mine and intends to close and dispose of non-core operations in Zambia and South Africa and to reduce operating and administrative expenses.

On November 3, 2014, Caledonia announced its revised investment plan (“Revised Plan”) and production projections for the 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” 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 an increasing production profile that is expected to result in additional production from resources currently in the inferred category of approximately 70,000-75,000 ounces in 2021, this being in addition to projected production in 2021 from current mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blanket’s long term operational efficiency, flexibility and sustainability.

Exploration Highlights

Exploration continued at the Blanket Mine focussed on the potential to extend the Blanket mineralisation below the 750 meter level and at certain of its satellite properties. Mineralisation was identified at the Eroica and AR Main target zones and work is in progress to incorporate this mineralisation into the mineral resource base for the Blanket Mine. Exploration development and diamond drilling at the two satellite projects, the GG Project and the Mascot Project have established the existence of multiple mineralized zones with potentially favourable gold grades. Further work is being done to define the extent and viability of these mineralized zones.

Safety

Regrettably, an accident occurred on April 30, 2015 at the GG exploration project, as a result of which a contractor died. The Directors and Management of Caledonia and Blanket express their sincere condolences to the family and colleagues of the deceased.

Corporate Governance

Caledonia’s Board continues to ensure that Caledonia adheres to the highest standards of international corporate practice, all aspects of the company’s operations are conducted in a fully transparent manner and communication with shareholders is timely and effective. Caledonia’s Chairman issued a statement on 11 May, 2014 which provides further information on corporate governance matters.

3.	SUMMARY FINANCIAL RESULTS

The table below sets out the unaudited consolidated profit and loss for the quarters ended March 31, 2015 and 2014 prepared under IFRS.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (unaudited)

(in thousands of Canadian dollars except per share amounts)

	Three months ended March 31
	2015			2014
	$			$
Revenue		15,994			17,063
Royalty		(801	)		(1,195	)
Production costs		(9,514	)		(8,788	)
Depreciation		(1,038	)		(1,058	)
Gross profit		4,641			6,022
Other income		10			-
Administrative expenses		(2,019	)		(1,847	)
Foreign exchange gain		625			257
Operating profit		3,257			4,432
Net finance cost		(44	)		(41	)
Profit before tax		3,213			4,391
Tax expense		(1,199	)		(1,300	)
Profit for the period		2,014			3,091

Other comprehensive income
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations		4,677			2,134
Other comprehensive income net of income tax		4,677			2,134
Total comprehensive income for the period		6,691			5,225

Profit attributable to:
Shareholders of the Company		1,554			2,425
Non-controlling interests		460			666
Profit for the period		2,014			3,091

Total comprehensive income attributable to:
Shareholders of the Company		6,151			4,558
Non-controlling interests		540			667
Total comprehensive income for the period		6,691			5,225

Earnings per share (cents)
Basic		2.9			4.7
Diluted		2.9			4.7
Adjusted earnings per share (cents) (i)
Basic		4.0			4.1
Diluted		4.0			4.1

(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 Q1 2015 were lower than Q1 2014 due mainly to the lower gold sales and also due to the lower realised gold price: gold sales in Q1 2015 were 10,773 ounces, 1,437 ounces (i.e. 12%) less than in Q1 2014; the average realised gold price in Q1 2015 was US$1,200 per ounce – 5% lower than the average realised gold price per ounce in Q1 2014. The royalty paid in the Quarter was lower than the first quarter of 2014 (the “comparative quarter”) due to the lower gold price and also due to the reduction in the royalty payable to the Zimbabwe government from 7% to 5% with effect from October 1, 2014.

Production costs in the Quarter were $9,514,000, representing an on-mine cash cost4 of US$670 per ounce of gold and an all-in sustaining cost4 of US$959 per ounce of gold. Further discussion of production costs is set out in Section 4.4 of this MD&A.

Administrative expenses in the Quarter were $2,019,000 compared to $1,847,000 in the comparative period and are analysed in Note 7 to the Unaudited Condensed Consolidated Financial Statements. The majority of Caledonia’s administrative expenses are incurred in US dollars: in US dollar terms, administrative expenses fell by 3% from US$1,679,000 in Q1 of 2014 to US$1,633,000. The reduction was due to lower professional and consulting fees and a reduction in the management contract fee following the termination of the contract of the previous Chief Executive Officer. The effect of these reductions was offset somewhat by an increase in salaried head-count at Caledonia’s office in Johannesburg, South Africa from 10 to 13, bonus payments in the Quarter and a provision for leave pay. Total salaries and wages at the Johannesburg office have stabilised at approximately $210,000 per month. Administrative expenses in the Quarter include $247,000 relating to the office in Lusaka, Zambia. The Lusaka office will be closed at the end of May, 2015, which will give rise to certain one-off termination payments. Thereafter it is anticipated that there will be no significant expenses incurred in respect of Caledonia’s Zambian operations.

The foreign currency gain is a non-cash item which reflects the profit or loss arising on the translation into Canadian dollars of the cash balances that are held in currencies other than the countries functional currency.

The taxation expense in the Quarter was lower than the first quarter of 2014 because the tax charge for the Quarter reflects lower trading profit. Withholding tax payments in the Quarter were also lower because there were no dividend payments by Blanket mine in the Quarter, due to the temporary suspension of the Blanket dividend in 2015 to allow all cash generated at Blanket to be re-invested in the Revised Plan. This meant there was no withholding tax incurred on movements of dividends out of Zimbabwe. Withholding tax continued to be incurred on the management fee received by Greenstone Management Services in South Africa. Of the total tax charge in the Quarter of $1,199,000, $33,000 was South African income tax, $220,000 was Zimbabwean withholding tax on management fees and $946,000 was deferred tax arising from the temporary timing differences in Zimbabwe between the tax and accounting treatments of capital investment.

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 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. The calculation of adjusted earnings per share is set out in section 10 of the MD&A.

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 months to March 31, 2015 and 2014 prepared under IFRS.

Condensed Consolidated Statement of Cash Flows (unaudited)

(in thousands of Canadian dollars)

	Three months ended March 31
	2015			2014
	$			$
Cash flows from operating activities
Cash generated by operating activities		3,927			6,868
Net interest paid		(31	)		(41	)
Tax paid		(520	)		(600	)
Cash from operating activities		3,376			6,227

Cash flows from investing activities
Acquisition of property, plant and equipment		(3,944	)		(2,032	)
Proceeds of disposal of property, plant and equipment		54			-
Net cash used in investing activities		(3,890	)		(2,032	)

Cash flows from financing activities
Dividends paid		(782	)		(907	)
Net cash from (used in) financing activities		(782	)		(907	)
Net increase/(decrease) in cash and cash equivalents		(1,296	)		3,288
Cash and cash equivalents at beginning of the year		26,838			23,426
Effect of exchange rate fluctuations on cash held		552			-
Cash and cash equivalents at year end		26,094			26,714

Cash generated from operating activities is analysed in Note 11 to the Unaudited Condensed Consolidated Financial statements. Cash generated from operating activities was lower in the Quarter compared to the comparable quarter due to the lower sales revenues, as discussed above, and an increase in working capital of $461,000, which was largely due to the normalisation of the metal sales debtor, which was somewhat low at the start of the Quarter. Movements in working capital are discussed below in the review of the Condensed Consolidated Statement of Financial Position.

The lower taxation payment reflects the lower taxation expense in the Quarter as discussed above in the review of the Condensed Consolidated Statement of Profit or Loss. The payment in the Quarter was in respect of a tax liability arising in 2014 at GMS (UK) and the payment of withholding tax arising on the management fee paid by Blanket to Greenstone Management Services in South Africa.

Investment in property, plant and equipment increased from $2.0 million in Q1 of 2014 to $3.9 million. The increase in capital investment was due to the investment in Blanket’s capital projects as described in Sections 4.7 and 5 of this MD&A. An analysis of Caledonia’s capital investment is set out in Section 6 of this MD&A. It is anticipated that the rate of capital investment will increase significantly in future as the Revised Plan is implemented.

The dividends paid in the Quarter relate to the quarterly dividend of 1.5 cents per share which was paid by Caledonia on January 30, 2015 in terms of the quarterly dividend policy which was announced in November 2013. The dividend payment in the comparable quarter of $907,000 also includes amounts paid to Blanket’s indigenous shareholders: there were no payments to Blanket’s indigenous shareholders in the Quarter because Blanket did not pay a dividend in the Quarter.

The exchange rate fluctuation reflects the effect of the devaluation of the Canadian dollar on the value of Caledonia’s cash holdings, which are primarily in US dollars.

The table below sets out the Consolidated Statements of Caledonia’s Financial Position at March 31, 2015 and December 31, 2014 prepared under IFRS.

Condensed Consolidated Statements of Financial Position (unaudited)

(In thousands of Canadian dollars)

	March 31,		December 31,
	2015		2014
	$		$
Total non-current assets		47,001		40,388
Inventories		7,998		7,571
Prepayments		684		348
Income tax receivable		-		111
Trade and other receivables		4,348		2,040
Cash and cash equivalents		26,094		26,838
Total assets		86,125		77,296
Non-current liabilities		14,982		12,980
Trade and other payables		4,969		3,791
Income taxes payable		1,730		1,990
Total liabilities		21,681		18,761
Total equity		64,444		58,535
Total equity and liabilities		86,125		77,296

The increase in non-current assets reflects investment at Blanket of $3.9 million, a net foreign exchange movement of $3.7 million due to the devaluation of the Canadian dollar against the US dollar and depreciation of $0.8 million. Blanket’s capital projects are discussed in section 4.7 of this MD&A; Blanket’s exploration and development projects (i.e. Blanket’s satellite properties) are discussed in section 5 of this MD&A. An analysis of Caledonia’s capital investment is set out in section 6 of the MD&A.

Inventories at March 31, 2015 comprise consumable stores. Inventories at December 31, 2014 also included $639,000 of gold in progress at December 31, 2014; there was no gold in progress at March 31, 2015.

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 Financial Statements. The increase in Trade and other receivables in the Quarter was due to the normalisation of the bullion receivable, which was zero at December 31, 2014.

The increase in trade and other payables reflects the increased value of purchase orders for capital equipment which will be used at Blanket to implement the Revised Plan.

Non-current liabilities comprises a liability for deferred taxation and a provision for rehabilitation at the Blanket and Eersteling5 Mines if and when they are permanently closed. The provision for rehabilitation at Blanket increased as at March 31, 2015 due to the unwinding of the discount rate.

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 financial statements that have been prepared using accounting policies consistent with IFRS.

(Thousands of Canadian dollars except per share amounts)	June 30, 2013		Sept 30, 2013		Dec 31, 2013			Mar 31, 2014		June 30, 2014		Sept 30 2014		Dec 31, 2014			Mar 31, 2015
Revenue from operations		17,190		16,591		12,114			17,063		15,555		13,492		12,972			15,994
Profit/(loss) after tax from operations		3,055		4,589		(14,354	)		3,091		2,522		1,268		(316	)		2,014
Earnings/(loss) per share – basic (cents)		5.8		7.2		(27.7	)		4.7		3.5		2.2		(1.1	)		2.9
Earnings/(loss) per share – diluted (cents)		5.8		7.2		(27.7	)		4.7		3.4		2.2		(1.1	)		2.9
Cash and cash equivalents		22,475		25,099		25,222			26,714		25,842		26,854		26,838			26,094

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.

______________________________

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.

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 six quarters.

Blanket Mine Safety Statistics
Incident Classification	Q3 2013	Q4 2013	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015
Fatal	1	0	0	0	0	0	0
Lost time injury	7	2	1	2	2	1	3
Restricted work activity	5	9	6	4	12	9	5
First aid	2	0	2	2	4	0	3
Medical aid	2	3	3	2	2	1	3
Occupational illness	0	0	0	0	0	0	0
Total	17	14	12	10	20	11	14
Incidents	11	17	10	6	4	19	8
Near misses	7	3	2	2	4	1	0
Disability Injury Frequency Rate (i)	1.75	0.46	0.24	0.49	0.49	0.24	0.67
Total Injury Frequency Rate (ii)	4.00	3.20	2.86	2.46	4.94	4.32	3.15
Man-hours worked (thousands)	800	865	840	812	810	833	889

Total incidents in the Quarter increased by 27 % compared to the previous quarter. Management continues to pay close attention to this area: 42 mine officials were trained in SHE (“HIRA”). Blanket management recognises the continued need to reinforce strict adherence to prescribed operating procedures by all employees. Management continues to encourage employees to disclose “near misses” which, although they did not result in any injury, are an important factor in allowing management to identify areas for improvement in safety procedures.

Regrettably, on April 30, 2015 an accident involving a contractor at the GG satellite project resulted in the death of a contractor. The board and managements of Caledonia and Blanket extend their condolences to the relatives and colleagues of the deceased.

4.2 Social Investment and Contribution to the Zimbabwean Economy

Blanket’s investment in community and social projects other than that which is 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 2012	2012		416		3,000		20,569		23,985
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
Quarter 4	2014		30		-		2,586		2,616
Year 2014	2014		35		-		12,319		12,354
Quarter 1	2015		-		-		1,771		1,771

Payments to the Zimbabwe government were lower in the Quarter due to the lower royalty, income tax and withholding tax payments. Royalty payments were lower due to the lower realised gold price and the reduction in the royalty on gold from 7% to 5% which took effect on October 1, 2014. Income tax payments were lower due to the lower profit and the higher capital investment at the Blanket Mine (100% of capital investment is allowable against income tax). Withholding tax payments were lower because Blanket did not pay a dividend.

4.3	Gold Production

Tonnes milled, average grades, recoveries and gold produced and the average realised price per ounce during the Quarter, the preceding 4 quarters and April 2015 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)
Year	2012		363,315		4.16		93.7		45,464		1,666
Year	2013		392,320		3.88		93.3		45,530		1,402
Quarter 1	2014		92,846		3.67		93.6		10,241		1,268
Quarter 2	2014		99,229		3.74		94.1		11,223		1,265
Quarter 3	2014		98,575		3.34		93.4		9,890		1,252
Quarter 4	2014		100,085		3.47		93.2		10,417		1,180
Year	2014		390,735		3.55		93.4		41,771		1,245
Quarter 1	2015		104,755		3.19		92.7		9,960		1,200
April	2015		34,297		3.33		93.4		2,654		1,185

Gold production in the Quarter was on target according to the revised Life of Mine Plan (“LOMP”) which was released in November 2014. Underground production tonnages and grades are discussed further in Section 4.5 of this MD&A. Gold recovery is discussed in Section 4.6 of this MD&A.

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 and the comparative quarter and for 2012, 2013 and 2014 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:

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 Mine: Cost per Ounce of Gold Sold (US$/oz)
	Year 2012		Year 2013			Year 2014		Q1 2014	Q1 2015
On-Mine Cost (i)		570		613			652	633	670
Royalty(i)		116		98			82	89	60
Permitting costs related to current operations		5		3			3	2	1
3rd party smelting, refining and transport costs		6		7			-	-	-
Operating cost per ounce		698		721			736	724	731
Corporate general and administrative costs (incl. share based remuneration)		90		167			173	138	151
Community costs included in G&A not related to current production		-		(44	)		-	-	-
Reclamation and remediation of operating sites		2		2			2	2	3
Exploration and study costs		-		2			3	3	3
Capital expenditure		67		125			55	44	71
All-in Sustaining Cost per ounce (i)		857		973			969	910	959
Costs not related to current production
Community costs		25		47			-	-	-
Permitting costs		17		2			1	1	1
Exploration and study costs		-		3			2	3	2
Capital expenditure		29		78			89	107	223
All-in Cost per ounce (i)		929		1,103			1,062	1,021	1,185
(i) non-IFRS measure: refer to Section 10 of the MD&A for a discussion of non-IFRS measures

Cost control at Blanket Mine is tight and costs for the quarter are better than the LOMP guidance. The on-mine cash cost per ounce of gold sold is calculated on the basis of sales and not production. Accordingly, the on-mine cost in Q1 of 2014 benefitted from the sale of 1,969 ounces of work in progress compared to only 813 ounces in Q1 of 2015. The royalty cost was lower in the quarter due to the lower realised gold price and the reduction in the royalty rate from 7% to 5% which took effect on October 1, 2014.

Corporate general and administration costs increased in the Quarter compared to the comparable quarter on a per ounce basis due to lower sales in the Quarter. In US dollars, corporate overheads in the Quarter were lower than the comparative quarter. Further reductions in corporate overhead, in total US dollar terms and on a per-ounce basis are expected as the cost reduction measures that have been set in train begin to bear fruit. These measures include terminating Caledonia’s operations in Zambia and closing the office in Lusaka.

Sustaining capital expenditure increased in the Quarter due to the timing of expenditure. It is expected that sustaining capital investment will return to normal levels from the second quarter of 2015.

Capital expenditure that is not related to current production reflects the increased investment in Blanket’s various projects which are discussed in Section 4.7 and 5 of this MD&A.

4.5	Underground

AR South and AR Main continued to be the most important production area during the Quarter with ore being trammed on the 630 and 750 meter haulages. Production tonnages across the entire mining area was slightly higher than the planned levels in the Quarter. Approximately 80% of production is transported on the level 18 and 22 haulages which are now approaching full capacity. Completion of the tramming loop on 22 Level ahead of schedule in the first half of June 2015 will relieve this congestion.

The achieved stoping grade in the Quarter was slightly better than the LOMP: the achieved grade from stope ore in the quarter was 3.28 g/t compared to the target grade of 3.23g/t. The difference between the achieved grade from stope ore and the overall achieved head grade shown in the table in Section 4.3 relates to the over achievement of on-reef development at a lower grade and slightly lower than planned recoveries. The over achievement of on-reef development will create more than planned stoping areas which will add to future flexibility. The introduction of underhand benching instead of long-hole stoping in some stopes has reduced grade dilution, although this has a slight adverse effect on mining costs.

The Centac compressor was commissioned in March after Blanket installed its own transformer so that it did not have to wait any longer for the state-owned electricity provider to repair its faulty equipment. The Centac ran for approximately two weeks during which the underground air pressure increased with a resultant significant improvement in operating efficiency. The Centac suffered a mechanical failure late in March but is expected to be operational again in Quarter 2. Whilst the Centac is offline, the existing compressors are being used. With the Centac running, underground compressed air pressure will almost double which will have a positive effect on production by considerably reducing drilling time.

Underground development continued in the Quarter: 1,545 meters were advanced against a plan of 1,825 meters. The shortfall in development was due to low air pressure for the reasons identified above. Based on the improved work-rate in the period when the Centac was operational, it is expected that this development shortfall will be made up in the remaining quarters of 2015.

4.6	Metallurgical Plant

During the Quarter, recoveries from the metallurgical plant were slightly lower than planned partly due to the lower head grade but mainly because of the unavailability of oxygen to the leach plant when the aging PSA (oxygen production) plant broke down.

4.7 Capital Projects

The main capital developments are:

the Tramming Loop;

the No. 6 Winze Project - Shaft Deepening from 750 to the 930 meter level; and

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

the Central Shaft

Further information on these Projects is set out below.

Tramming Loop

The Tramming Loop is being developed on 22 Level to double the haulage capacity on the level, thereby increasing the amount of ore and waste that can be transported to the No. 4 Shaft. Work on the Loop commenced at the end of October 2014. Of the 800 meters required to complete the loop, 16 meters had been completed at November 7, 2014 and 450 meters had been completed at the end of February 2015. During the Quarter 319 meters were advanced compared to the planned advance of 292 meters, and despite the difficulties with compressed air. This project is expected to be completed in early June 2015, slightly ahead of schedule.

No. 6 Winze Project - Shaft Deepening to 930 meters

The No. 6 Winze Project will provide access to the four Blanket resource bodies below 22 Level, viz. Blanket 1 Ore Body, 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 is being funded from Blanket’s internal cash flows. Removal of waste is now done manually and sinking progress is now at an acceptable rate. The shaft reached 900 meters below surface, which is 30 meters below the main production level where the main station has already been mined. Mining of the two rock handling silos has commenced and sinking of the final 25 meters will commence shortly. The shaft sinking phase of the project is expected to be completed slightly ahead of schedule in June 2015 after which equipping and horizontal development towards the ore bodies will commence. In terms of the revised Life of Mine Plan which was published in November 2014, production from No. 6 Winze is expected to start in January 2016 and progressively increase to the target production of 500 tonne per day in Q1 of 2016.

22 Level Haulage Extension Project

The 22 Level haulage extension will eventually complete the link between all sections of the Blanket Mine from the Blanket Section to Lima Section in the north over a distance of 3,000 metres on the 22 Level (750 meters below surface). Work on the 22 Level haulage has been temporarily suspended so that work can progress with the Tramming Loop.

Central Shaft

The Central Shaft is the main component of the Revised Plan which is discussed in Section 4.9 of this MD&A. The shaft sinking methodology has been amended: instead of the shaft being sunk in two simultaneous phases, the shaft will now be sunk in one single continuous phase from surface to 1,080 meters. The advantage of the change in the methodology is that it is now a standalone project which will have no effect on current production. When the Tramming Loop is completed the extra haulage capacity will not be used to sink a sub-shaft (as originally envisaged) but will allow for increased development in the Eroica and Lime ore bodies which will create extra stoping areas towards the end of 2015. The estimated completion date of the shaft has been moved from mid-2017 to early 2018. This change has no effect on the projected timing for the start of production from the Central Shaft and no adverse effect on economic return arising from the project as set out in the PEA.

Early in 2015 work commenced on clearing the ground so that pre-sink work could commence in late March, 2015. The pre-sink work has progressed well: excavation of the 9m x 9m x 5m void for the shaft collar is largely complete. The slow pre-sink drilling of 1 meter rounds which will be concrete lined to 27 meters below surface is expected to be completed by the end of July after which the length of rounds will be increased to 3 metres and at 40 meters below surface the shaft will be in full sinking mode. In the Quarter, two 3,100 kW double-drum winders were purchased which, once refurbished, will be sufficient for the sinking phase and eventual production with the capacity to hoist from a depth of 2,000 meters below surface.

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. Blanket has suspended dividend payments in 2015 and until early 2016 in order to fund the capital projects provided under the Revised Plan 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 March 31, 2015 was unchanged from the balance as at December 31, 2014 of US$31.3 million, due the combined effect of the suspension of Blanket’s dividends in 2015 and the interest moratorium as set out above. The overall level of the facilitation loans is broadly as anticipated when the indigenisation transactions were concluded in September 2012.

The vendor facilitation loans are not shown as receivables in the Consolidated 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 Consolidated Financial Statements.

4.9	Opportunities and Outlook

Revised Investment Plan to Increase Production

On November 3, 2014 Caledonia announced the Revised Plan and production projections for the 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” and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080 meters.

The Revised Plan provides for proposed investment of approximately US$50 million between 2015 and 2017 and a further US$20 million in the period 2018 to 2020. The increased investment pursuant to the Revised Plan is expected to give rise to an increasing production profile that is expected to result in additional production from resources currently in the inferred category of approximately 70-75,000 ounces in 2021, this being in addition to projected production in 2021 from current mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blanket’s long term operational efficiency, flexibility and sustainability.

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 (koz)		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 (as per PEA)
	2015		2016		2017		2018		2019		2020		2021
Tonnes milled (‘000)		0		35		160		215		390		550		600
Gold production (koz)		0		4-5		20-22		27-30		46-50		63-67		70-75

Canadian regulations do not allow planned production from inferred resources to be added to those from proven and probable reserves for disclosure purposes.

Minxcon completed a scoping level study on Blanket’s revised LOM Plan in the form of a PEA, a summary of which is included in the Technical Report. The key conclusions arising from the PEA are as follows:

the IRR arising from the Revised Plan was calculated at 267 per cent;

the NPV for the Blanket Mine arising from reserves and the inferred resources used in the Revised Plan was calculated at US$147 million; and

of the gold that will need to be produced so that the cumulative cash flow arising from the Revised Plan becomes positive (i.e. the “Payback Area”), only 3 per cent will come from resources that are currently classified as inferred.

The Technical Report was authored by Daan van Heerden, Uwe Englemann, Dario Clemente, Johan Odendaal and Jaco Burger of Minxcon, each of whom is a qualified person who is independent of Caledonia for the purposes of National Instrument 43-101. The Technical Report, which includes the PEA, is available for download on the System for Electronic Data Analysis and Retrieval at www.sedar.com or from Caledonia’s website at www.caledoniamining.com

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 realized. Diamond drilling and development will continue with the objective of increasing confidence in order to upgrade the categorization of the resources. The most important assumptions on which the PEA is based include, a gold price of US$1,250 per ounce, achievement of the targeted production set out above and the accuracy of the projected capital costs.

Exploration

Caledonia intends to continue its exploration efforts both at the Blanket Mine and also at the first two of Blanket’s portfolio of 18 satellite properties: Mascot and GG. Initial resources for both GG and Mascot were identified in the Technical Report. No production forecasts are currently attributed to mining activity at either GG or Mascot pending ongoing metallurgical evaluations. Further information on Blanket’s exploration is set out in Section 5 of this MD&A.

Cost Reduction

Management has taken steps to reduce the level of general and administrative expenses and these are expected to bear fruit in the course of 2015. These steps include a reduction in the cost of Caledonia’s executive management team and the closure of Caledonia’s representative office in Lusaka, Zambia, at the end of May 2015 following the cessation of further exploration at the Nama project. Management continues to evaluate opportunities to reduce the taxation burden on the group outside Zimbabwe.

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 on Blanket Mine target the depth extensions of the current Blanket section ore bodies as well as the AR Main and AR South ore bodies and involves drilling downholes from chambers on 18 and 22 Levels to intersect the depth continuation of these ore bodies.

Drilling activities in the Quarter continue to be hampered by machine breakdowns. To address this issue two new machines have been ordered and are awaiting delivery and an old machine has been refurbished and commissioned to provide support to the existing two machines.

Drilling to identify extensions to the blanket ore body below 750 meters continues to deliver encouraging results. Drilling for the downward extension of the AR Main ore body is in progress. Resource blocks below AR Main have been extended to include additional Inferred resources. The gold grade of these resources is marginally lower than that of the ore body above 22 Level. In the Blanket section infill drilling is in progress. It is anticipated that a significant portion of the Inferred resources will be upgraded to the Indicated category in the coming quarters.

Caledonia has adopted 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. Resources that are below the pay limit are reviewed on an annual basis.

5.2 Blanket 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 workings 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 expected 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 by way of a prospect shaft and level development.

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. The horizontal and inclined drilling intersected the identified zones, with the North zone hosting the more extensive mineralization. In Q2 of 2014 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 of 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 to 240 meters. In Q3 2014 the shaft was sunk from 120m to 150m; in Q4, the shaft was sunk further to 180 meters and development of the station on that level is in progress. In Q1 of 2015 the shaft was deepened to 210 meters, which is expected to be the main production level, and the 210 level station is currently being mined. Sinking of the final 30 meters will take place in May and June 2015, following which haulage development will commence. As noted in Section 9 of this MD&A, negotiations are in progress with Zimbabwean banks for a term facility which would be used, in part, to construct a pilot plant to treat material from GG in order to optimise a treatment process.

Mascot Project Area

The Mascot Project Area includes three sections, viz. the Mascot prospect, the Penzance prospect and the Eagle Vulture prospect. Mascot was previously mined to a depth of approximately 250 meters, exploiting an east-west trending mineralised body the strike 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 90m below surface respectively) confirmed the existence of potentially payable mineralisation on the North Parallel. In Q2 and Q3 of 2014 development continued along the North Parallel on the 150m level. This development has provided access to the mineralized area over a strike extent of 80 meters and a vertical extent of 90 meters. In Q4 development on the North zone reached the 180 meter level.

During Q1 2015 the mine was de-watered and the bottom of the shaft was cleaned to expose the shaft bottom which allows the possibility to deepen the shaft and allow access to the Main Shear at depth which, based on old mine records, had a substantially higher grade than the associated North Parallel and South Shear. If successful, this would improve the economic potential of this project. It is intended to carry out diamond drilling to probe for the extension of the Mascot main body prior to engaging in further shaft deepening. During the period that mining was temporarily suspended to allow for the de-watering process, a larger winder was installed with a 15 meter high head gear and an ore bin.

Alternative sources of water have been identified which are expected to provide sufficient water for further drilling and mining operations.

INVESTING

An analysis of Investment in the Quarter, the preceding four quarters and the years 2013 and 2014 is set out below

Capital Investment
			2013 Year		2014 Q1	2014 Q2	2014 Q3	2014 Q4	2014 Year		2015 Q1
Total Investment	$	C’000		11,738	2,032	1,550	1,379	1,826		6,786	3,944
Nama Project (i)	$	C’000		2,637	-	-	-	107		107	-
Blanket	$	C’000		9,066	2,032	1,550	1,341	1,783		6,627	2,585
Other	$	C’000		35	-	-	38	14		52	1,359
(i) Nama is a base metal exploration project in Zambia which was fully impaired at December 31, 2013. No further exploration is planned at Nama

All investment at Blanket is funded from Blanket’s internal cash flows. The higher level of other investment reflects the purchase of equipment by Greenstone Management Services, which is currently being refurbished before being transferred to Blanket

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 overdraft facility in Zimbabwe which is repayable on demand. At March 31, 2015 this facility was undrawn.

Blanket has commenced discussions with Zimbabwean banks with the objective of increasing the overdraft facility from US$2.5 million to US$5.0 million. The increased facility will provide increased flexibility for Blanket to absorb any unforeseen short term cash flow requirements without recourse to Caledonia.

Blanket has also commenced discussions with Zimbabwean banks for a term loan of up to US$5 million. This loan would be used to commence work on new projects (i.e. in addition to those included in the Revised Plan) such as a pilot plant to treat material from GG.

8.	LIQUIDITY AND CAPITAL RESOURCES

An analysis of Caledonia’s capital resources as at March 31, 2015 and each of the preceding 5 quarters is set out below.

Liquidity and Capital Resources (Thousands of Canadian dollars)
As at	Dec 31 2013		Mar 31 2014		June 30 2014		Sept 30 2014		Dec 31 2014		Mar 31 2015
Gross Cash and cash equivalents in the statement of financial position		25,222		26,714		25,842		27,852		26,838		26,094
Loan Facility		1,796		-		-		998		-		-
Cash and cash equivalents in the statement of cash flows		23,426		26,714		25,842		26,854		26,838		26,094
Working capital		28,620		31,380		30,626		31,148		31,127		32,425

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 Company’s liquid assets as at March 31, 2015 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$31.3 million which are not reflected as loans for IFRS purposes (refer Note 5 of the Unaudited Consolidated Financial Statements). The company has the following contractual obligations at March 31, 2015.

Payments due by Period (Thousands of Canadian dollars)
Falling due	Within 1 year		1-3 Years		4-5 Years		After 5 Years		Total
Trade and other payables		4,969		-		-		-		4,969
Provisions		-		-		-		3,157		3,157
Capital expenditure commitments		2,277		-		-		-		2,277

In addition to the committed purchase obligations set out above, Blanket currently intends to invest approximately US$70 million between November 13, 2014 and December 2020 which is not yet committed. The committed and uncommitted investment will be used to maintain Blanket’s existing operations, implement the Revised Plan and the advance Blanket’s satellite exploration properties which are discussed in Sections 4.7, 4.10 and 5.2 of this MD&A respectively. Committed and uncommitted purchase obligations will be met from the cash generated from Blanket’s existing operations and Blanket’s existing borrowing facility. Caledonia has no obligations in respect of capital or operating leases. As of March 31, 2015, Caledonia had potential liabilities for rehabilitation work on the Blanket and Eersteling Mines6 – if and when those mines are permanently closed – at an estimated discounted cost of $3,157,000 ($2,868,000 – 2014).

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.

______________________________

6 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.

Reconciliation of IFRS Production Costs
	Year 2012			Year 2013			Year 2014			Q1 2014		Q1 2015
Production costs (IFRS) (C$’000’s)		25,653			27,412			30,812		8,788		9,514
Less site restoration costs (C$’000’s)		(43	)		(151	)		(32	)	(25	)	-
Less exploration costs (C$’000’)		(831	)		(393	)		(379	)	(107	)	(106	)
Reversal of claim fee provision (C$’000’s)		-			970			-		-		-
Reallocated admin costs		(247	)		(337	)		(466	)	(208	)	(712	)
Realisation charges (i)		-			(284	)		-		-		-
Non-Blanket production costs		(121	)		(102	)		-		(97	)	-
Inter company profit elimination		1,353			1,332			727		151		240
Adjusted production costs (C$’000’s)		25,764			28,447			30,662		8,502		8,936
Exchange rate (US$1 to C$)		1.00			1.03			1.10		1.10		1.24
On-mine Production costs (US$’000’s )		25,769			27,619			27,969		7,729		7,216
Gold Sales (oz)		45,181			45,048			42,927		12,210		10,773
On-mine Cost (US$/oz)		570			613			652		633		670
Royalty (US$’000’s)		5,262			4,412			3,521		1,084		647
Permitting costs (US$’000’s)		225			135			110		30		16
Refining and 3rd party smelting (US$’000’s) (i)		290			301			-		-		-
Administrative expenses (C$’000’s) (ii)		4,055			7,772			8,157		1,847		2,019
Exchange rate (US$1 to C$)		1.00			1.03			1.10		1.10		1.24
Administrative expenses (US$’000’s)		4,056			7,532			7,441		1,679		1,630
Community cost not related to current production		-			(2,000	)		-		-		-
Reclamation and remediation of operating sites (US$’000)		90			107			75		19		27
Exploration and study costs (US$’000’s)		3			85			120		36		30
Sustaining capital investment (US$’000’s)		3,044			5,653			2,348		538		766
All-in Sustaining cost (US$’000)		38,739			43,844			41,584		11,114		10,332
Gold sales (oz)		45,181			45,048			42,927		12,210		10,773
All-in Sustaining Cost per ounce (US$/oz)		857			973			969		910		959
Costs not related to current production
Community costs (US$’000’s)		1,137			2,100			-		-		-
Permitting (US$’000’s)		785			106			55		14		14
Exploration (US$’000’s)		15			120			106		32		27
Capital investment (US$’000’s)		1,306			3,530			3,833		1,309		2,397
All-in Costs (US$’000’s)		41,981			49,701			45,578		12,468		12,770
Gold Sold (oz)		45,181			45,047			42,927		12,210		10,773
All-in Cost per ounce (US$/oz)		929			1,103			1,062		1,021		1,185

Average realised gold price per ounce

“Average sales 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 Realised Gold Price per Ounce to IFRS
	Year 2012			Year 2013			Q1 2014		Q2 2014		Q3 2014		Q4 2014		Year 2014			Q1 2015
Revenue (IFRS) (C$’000’s)		75,221			65,113		17,063		15,555		13,492		12,972			59,082		15,994
Less miscellaneous income		-			(947	)	-		-		-		-			-		-
Revenue from precious metal sales (C$’000s)		75,221			65,113		17,063		15,555		13,492		12,972			59,082		15,994
Exchange rate (C$/US$)		1.002			0.97		1.10		1.09		1.09		1.14			1.10		1.24
Revenue from precious metal sales (US$’000’s)		75,340			63,216		15,480		14,233		12,401		11,343			53,513		12,937
Revenues from sales of silver (US$’000s)		(72	)		(78	)	(3	)	(31	)	(15	)	(12	)		(61	)	(13	)
Revenues from sales of gold (US$’000s)		75,268			63,138		15,477		14,202		12,386		11,331			53,452		12,924
Gold ounces sold		45,181			45,048		12,210		11,223		9,890		9,604			42,927		10,773
Average realised gold price per ounce (US$)		1 666			1,402		1,268		1,265		1,252		1,180			1,245		1,200

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.


	Year 2012			Year 2013			Q1 2014		Q2 2014	Q3 2014		Q4 2014		Year 2014			Q1 2015
Profit/(loss) attributable to owners of the company (IFRS)		8,721			(3,055	)	2,425		1,840	1,112		(480	)		4,897		1,554
Blanket Mine Employee Trust adjustment (refer Note 18 to the Consolidated Financial Statements)		-			(105	)	-		-	-		(54	)		(54	)	(57	)
Add back amounts attributable to owners of the company in respect of:
Indigenisation expenses, advance dividends, donations etc.		16,034			1,640		-		-	-		-			-		-
Foreign exchange loss/(profit)		3			(1,677	)	(257	)	129	(389	)	(659	)		(1,176	)	(625	)
Asset impairment		330			14,203		-		-	-		196			196		-
Deferred tax		271			2,185							801			801		946
Withholding tax on distributions in specie		-			1,531												-
Reversal of Zambian G&A		-			-		142		198	309		340			989		247
Under accrual for 2013 UK tax		-			(375	)	-		-	-		375			375		-
Prior year adjustment in respect of GMS (SA) tax		(100	)		(100	)						300			300		-
Adjusted profit		25,258			14,247		2,310		2,167	1,032		819			6,328		2,065
Weighted average shares (m)		50.8			52.0		52.1		52.1	52.1		52.1			52.1		52.1
Adjusted EPS (cents)		49.8			27.6		4.4		4.2	2.0		1.9			12.1		4.0

11.	RELATED PARTY TRANSACTIONS

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

	Three months ended March 31, 2015		Three months ended March 31, 2014
	$	’000	$	’000
Directors’ fees paid		104		138

12.	CRITICAL ACCOUNTING POLICIES

Caledonia's accounting policies are presented in the unaudited consolidated financial statements for the period ended March 31, 2015 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.

The recoverability of the carrying amount of the South African and Zambian mineral properties (if not impaired) is dependent upon the availability of sufficient funding to bring the properties into commercial production, the price of the products to be recovered, the exchange rate of the local currency relative to the currency of funding and the undertaking of profitable mining operations. As a result of these uncertainties, the actual amount recovered may vary significantly from the carrying amount.

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 the 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 21 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 paid in full in April 2015.

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; further payments were made at the end of April, August and November 2014 and at the end of January and April 2015. Caledonia will continue to maintain its strong financial position so that it can implement its stated growth strategy and retain the flexibility to take advantage of any further opportunities that may arise without the need to raise third party finance.

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

15.	SECURITIES OUTSTANDING

As at May 11, 2015 the following securities 52,117,908 common shares were outstanding. Outstanding options to purchase Common Shares (“Options”) are as follows:

Number of Options		Exercise Price ($)		Expiry Date (1)
	1,161,000		1.30	Jan 31, 2016
	30,000		0.70	May 11, 2016
	744,920		0.90	Aug 31, 2017
	190,000		0.72	Nov 21, 2018
	2,125,920

(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 3,054,878 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 Consolidated Financial Statements. 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 5.7 and 6. 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 including the implementation of the Revised Plan as set out in section 4.9 of the MD&A. 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.

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 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.

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.

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, Steven Roy Curtis, 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 quarter ended March 31, 2015.

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 January 1, 2015 and ended on March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 13, 2015

“Steven Roy Curtis”

_____________________

Steven Roy Curtis

Chief Executive Officer

Exhibit 99.4

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, John Mark Learmonth, 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 quarter ended March 31, 2015.

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 January 1, 2015 and ended on March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.