FOR:  CALEDONIA MINING CORPORATION

TSX SYMBOL:  CAL
OTC Bulletin Board SYMBOL:  CALVF
AIM SYMBOL:  CMCL

September 4, 2009

Caledonia Reduces Exercise Price of Outstanding Options

TORONTO, ONTARIO--(Marketwire - Sept. 4, 2009) - Caledonia Mining Corporation ("Caledonia")
(TSX:CAL)(OTCBB:CALVF)(AIM:CMCL) proposes to reduce the exercise price of 32,580,000 share purchase
options currently outstanding from exercise prices averaging approximately $0.1719 per share to $0.07
per share. These share purchase options are in favour of directors, officers and service providers.
This reduction recognises the fact that the existing options are all substantially "out of the money"
due to the reduced trading price of Caledonia's shares which, in common with most other publicly
traded shares, has been adversely affected by the recent economic and market downturn. The existing
option arrangements no longer provide an incentive to directors, officers and service providers and is
the reason for this proposal.

The Toronto Stock Exchange rules require that options with reduced exercise prices cannot be exercised
at the reduced prices until the reduction has been approved by the shareholders. The reduction will be
submitted to the shareholders for approval at the next general meeting of Caledonia's shareholders.

For more information, please visit: www.caledoniamining.com.

FOR FURTHER INFORMATION PLEASE CONTACT:

Caledonia Mining Corporation
Mark Learmonth
VP Corporate Development and Investor Relations
+27 11 447 2499
marklearmonth@caledoniamining.com
www.caledoniamining.com

OR

BuckBias
Alex Buck
+44 7932 740 452

OR

RBC Capital Markets
Martin Eales
+44 20 7029 7881

Caledonia Mining Corp