The Shijia Gold Project, Guangxi Province, PRC

                                                            "Tiger-country" at Shijia

                                          One of many surface mine workings in the Shijia area

Caledon has also increased its exposure in Guangxi�s �Golden Triangle� region with the signing of a Letter of Intent to explore 60 square kilometres of exploration and mining tenements in the region�s Baise area. The Baise area project, situated in northwestern Guangxi province, was identified by Caledon geologists as having strong similarities to other disseminated gold projects in the region. Samples taken by Caledon exploration teams, as part of the preliminary due diligence, have consistently graded in the 2 to 5 g/t gold range. Previous small scale miners have reportedly encountered and mined gold grades in excess of 50 g/t from several tenements in the region. To Caledon�s knowledge, the project area has never been drilled.

(Descriptive area report translated from Chinese into English, July 2004)

"Several gold mines at Shijia are located along the eastern limb of Longchuan anticline southeast to Lingyun vortex structure. The Shijia anticline measures over 2200 m long, and is NW�SE striking. The strata within the axis consists of Lower Carboniferous age Yanguan Fm consisting of siliceous rock, carbonaceous mudstone and diabase.

Abundant magmatic rocks such as Indosinian diabase dykes and sills have been exposed. The boundary between the diabase and the country rock is easily recognizable. Various intrusive facies are evident and divided into a marginal fine-grain intrusive phase and internal coarse-grain phase with showing jointing, strong alternation and weathering.

Gold mineralized ore bodies at Shijia occur as stratiform structures, veins and lenses, lying at or near the brecciated contact zone between Lower Carboniferous Yanguan Fm siliceous rock and diabase.. Orebodies consist of altered diabase and lesser altered siliceous country rock. The diabase shows strong to moderate weathering. Alteration types are represented by silicification, sericitization and iron staining. Ferromanganese minerals and iron coatings have filled into the fissures of the joints. Altered siliceous rock (grayish, light yellow, brown yellow and black) displays moderate weathering, and also shows crushed and brecciated textures held together by an iron, siliceous and argillaceous matrix. The thickness of the alteration zone varies much.

Eight mineralized districts and eight ore bodies have been defined. Each ore body is 80�216m long on surface and up to 18.14 m thick. No drilling has been recorded in these zones.

Orebody 2 is 216m long at surface, striking E-W and dipping to north. The horizontal thickness is 4.74�17.29 m thick averaging 9.85 m. The gold grades range from 1.23�5.83g/t averaging 2.98 g/t gold.

Orebody 3, in vein, is 180m long at surface, NE�SE striking and dips to NW. The horizontal thickness is 1.28�9.04 m thick averaging 4.13 m. The gold grade is 1.14�9.79 g/t averaging 6.68 g/t gold.

Generally speaking, host rocks are consist of various phases of diabase. The lithogeneous mineral of siliceous rock is sericite, quartz, pyrite and chlorite, etc. Ore grade rocks, at surface, are almost completely oxidized."