Caledonia Mining Corporation Grant of Options

Caledonia Mining Corporation ("Caledonia" or "the Company") (TSX: CAL) (OTCQX: CALVF) (AIM: CMCL) announces that it has, effective September 10, 2012, granted share purchase options over ordinary shares of nil par value in the Company ("Ordinary Shares") to its directors, officers and employees, and directors and employees of certain of its subsidiary companies. A total of 9,319,000 new options have been granted with 5-year terms, exercisable from September 10, 2012 until September 10, 2017 at a price of $0.09 (Cdn.) per Ordinary Share. Options were granted to the following directors of the Company:

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                                Number of    Total options   Total options
Name of                         new options  held following  as % of issued
 director       Position        granted      grant           share capital
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Christopher
 Harvey         Director        400,000      2,400,000       0.47
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                Director,
                President &
                Chief Executive
Stefan Hayden   Officer         1,400,000    10,400,000      2.05
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James Johnstone Director        400,000      2,400,000       0.47
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                Director,
                Chairman &
Carl Jonsson    Secretary       400,000      3,000,000       0.59
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                Director, V-P
                Finance & Chief
                Financial
Steve Curtis    Officer         1,200,000    6,300,000       1.24
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Robert Babensee Director        400,000      2,650,000       0.52
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Richard
 Patricio       Director        900,000      900,000         0.18
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Leigh Wilson    Director        900,000      900,000         0.18
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John Kelly      Director        900,000      900,000         0.18
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Caledonia has in place a floating Option Plan ("the Plan") pursuant to which it has previously had 30,540,000 options issued. The newly granted options will bring the total number of options outstanding to 39,859,000 - equivalent to approximately 7.85% of Caledonia's issued share capital. Pursuant to the Plan, Caledonia has the authority to issue options equal to 10% of its issued share capital.



Contacts:

Caledonia Mining Corporation

Mark Learmonth
+ 27 11 447 2499
marklearmonth@caledoniamining.co


Canaccord Genuity Limited
John Prior / Sebastian Jones
+ 44 20 7523 8350

Newgate Threadneedle

Beth Harris / Josh Royston

+44 20 7653 9850

CHF Investor Relations
Stephanie Fitzgerald
+1 416 868 1079 x 222
stephanie@chfir.com