Caledon Resources

Click here to download Caledon Resources Plc Interim Statement - Period ending June 30, 2006

Caledon Overview:

A Bold Transition from Explorer to Producer

Caledon Resources plc is a public company listed on the Alternative Investment Market of The London Stock Exchange (trading symbol: "CDN").

This year to date, 2006, has witnessed an enormous amount of activity following the decision to develop or seek a producing asset that would transform Caledon into a company with near term positive cash flow for the benefit of shareholders. After a prolonged search for such an asset an announcement was made concerning the Cook underground coal mine in Queensland Australia.

On 19 June 2006, the Company heralded its transition into resource production, by announcing its intention to acquire the Cook Colliery and related mining operations (�Cook Mine�) in Australia, from Xstrata Coal Pty Ltd (�Xstrata�). Caledon expects to increase the current Cook mine production to 1.5 million tonnes per annum (Mtpa) within a period of two years. As part of the asset sale, Xstrata has quoted an in-situ resource (Measured and Indicated, JORC standard) of 126 million tonnes of coal for the Cook Mine. This is derived from two seams which are currently accessible via existing and active underground workings. Preliminary due diligence conducted by Caledon, using SRK Engineering as an external consultant, has confirmed that at least 40 million tonnes of premium coking coal, equivalent to 20 years of mine life at an ultimate mining target rate of 2 Mtpa, is readily accessible from existing and active Cook underground mine workings.

In addition to the proposed acquisition of the Cook Mine, Caledon�s directors have been simultaneously working to acquire a further coal deposit adjacent to the Cook Mine, leading to our recent announcment regarding Minyango, on September 29, 2006. The Minyango project area is situated in a region of strategic importance within the Bowen Basin and is surrounded by some of Queensland�s premier coking and thermal coal mining operations.

This acquisition, Caledon�s second in the coking coal business announced since June this year, is part of the Company�s long term growth strategy in the coking coal industry. Caledon�s acquisition of the undeveloped Minyango Coal deposit, estimated to contain resources (inferred) totalling over 500 million tonnes of coal, is expected to provide a platform for Caledon�s future growth and performance, potentially adding significant production to that envisaged from the neighbouring Cook Mine. The Minyango deposit is located about 15 km from the Cook coal preparation plant, and shares a common boundary with the northern end of the Cook mine lease.

Completion of the two acquisitions remain subject to various regulatory filings, shareholder approvals and financings. The Company remains on schedule to complete both transactions during the fourth quarter of 2006.

The move from being an exploration only business to one which will focus on both production and exploration underlines the Company�s stated mission �to maximise shareholder value through the acquisition and development of an advanced-stage resource assets�.

Chinese Business

Over the past three years, Caledon has acquired and explored four separate gold projects in southern China. Of the four projects, Mojiang, situated in southwestern Yunnan province, has been the Group�s primary exploration focus for the last 12 months. Given the advanced nature of exploration at Mojiang, with over 7,000m of drilling completed as at June 2006, the Group�s focus has been on defining mineralisation continuity at Mojiang.

Caledon has agreed heads of terms with Hodges Resources Limited, providing that, subject to agreeing a formal agreement, in consideration for a complete transfer to Hodges of Caledon's ownership in the Chinese Operations, which the Directors and the Proposed Directors hope to conclude shortly after Admission, Caledon will be issued ordinary shares in Hodges. These shares will make Caledon the largest shareholder of Hodges, with an ownership interest of approximately 14.9 per cent. The heads of terms provide that Caledon will be given the right to appoint two directors to the board of directors of Hodges

Completion of the deal with Hodges would allow Caledon to maintain a direct interest in and some management control of its Chinese assets whilst providing the Company with enhanced ability to focus its senior management and financial resources on completing its growth strategy in the coal industry following completion of the Coal acquisitions in Australia.

September 29, 2006
Minyango Acquisition: Queensland, Australia - Half-billion tonne inferred coal resource