April 28, 2005
via facsimile and U.S. mail
Mr. Mike D. Tombs
Vice-President Finance and Chief Financial Officer
Caledonia Mining Corporation
Unit #9, 2145 Dunwin Drive
Mississauga, Ontario, Canada L5L 4L9
Re: Caledonia Mining Corporation
Form 20-F, Filed April 6, 2005
File No. 000-13345
Dear Mr. Tombs:
We have reviewed the above filing and have the following
accounting and engineering comments. Where indicated, we think
you
should revise your document in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with supplemental information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 20-F for the fiscal year ended December 31, 2004
Item 15. Controls and Procedures
1. We note in your disclosure that your chief executive officer
and
chief financial officer concluded that as of December 31, 2004,
your
disclosure controls and procedures are effective and designed to
ensure that information required to be disclosed in reports filed
or
submitted under the Exchange Act is recorded, processed,
summarized
and reported within the time periods specified in applicable SEC
rules and forms. Revise your future filings to disclose, if true,
that your officers concluded that your disclosure controls and
procedures are also effective to ensure that information required
to
be disclosed in reports filed or submitted under the Exchange Act
is
accumulated and communicated to your management, including your
chief
executive officer and chief financial officer, to allow timely
decisions regarding required disclosure. Refer to Exchange Act
Rule
13a-15(e).
Engineering Comments
General
2. In future filings provide the disclosures required by Industry
Guide 7 (b). In particular, provide:
* The location and means of access to the properties.
* Any conditions that must be met in order to obtain or retain
title
to the properties.
* A brief description of the rock formation and mineralization of
existing or potential economic significance on the properties.
* A description of the present condition of the properties.
* A description of any work completed on the properties.
* The age, details as to modernization, and physical condition of
the
plant and equipment, including all subsurface improvements and
equipment.
* The current state of exploration of the properties.
* The total cost of the properties incurred to date and planned
future costs.
* The source of power that can be utilized at the properties.
* If applicable, provide a clear statement that the properties are
without known reserves and the proposed programs are exploratory
in
nature.
Refer to Industry Guide 7 (b) (1)-(5) for specific guidance.
Industry Guide 7 can be reviewed on the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7.
3. In future filings insert a small-scale map showing the
location,
transportation corridors, and access to the properties. Note that
SEC`s EDGAR program now accepts digital maps, so please include
these
in any future amendments that are uploaded to EDGAR. It is
relatively easy to include automatic links at the appropriate
locations within the document to GIF or JPEG files, which will
allow
the figures and/or diagrams to appear in the right location when
the
document is viewed on the Internet. For more information, please
consult the EDGAR manual, and if you need addition assistance,
please
call Filer Support at 202-942-8900. Otherwise, provide the map to
the staff for our review.
4. In future filings distinguish between "Reserves," which have a
clearly defined technical, legal, and economic meaning and "Non-
reserve" mineralization that may or may never be mined at a profit
for various reasons. In addition, within a "Non-Reserve" section,
disclose the measured and indicated resources separately from the
inferred resources, using separate tables and narratives.
Resources
should only be reported as "in place" tonnage and grade, and
should
not be disclosed as units of product, such as ounces of gold or
pounds of copper. The relative quality, reliability, and risk
associated with each group of estimates must be clearly
distinguished
and conveyed to the average non-technical reader.
Before the Measured and Indicated Resource table, insert the
following including the indenting and bolding:
Cautionary Note to U.S. Investors concerning estimates of Measured
and Indicated Resources. This section uses the terms "measured"
and
"indicated resources." We advise U.S. investors that while those
terms are recognized and required by Canadian regulations, the
U.S.
Securities and Exchange Commission does not recognize them. U.S.
investors are cautioned not to assume that any part or all of
mineral
deposits in these categories will ever be converted into reserves.
Before the Inferred Resource table, insert the following including
the indenting and bolding:
Cautionary Note to U.S. Investors concerning estimates of Inferred
Resources. This section uses the term "inferred resources." We
advise U.S. investors that while this term is recognized and
required
by Canadian regulations, the U.S. Securities and Exchange
Commission
does not recognize it. "Inferred resources" have a great amount
of
uncertainty as to their existence, and great uncertainty as to
their
economic and legal feasibility. It cannot be assumed that all or
any
part of an Inferred Mineral Resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of Inferred
Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. U.S. investors are cautioned not
to
assume that part or all of an inferred resource exists, or is
economically or legally minable.
5. Mineral resources must have "reasonable prospects for economic
extraction." This means that any reportable "resource" estimates
must have been delimited using an economically based "cutoff"
grade
to segregate "resources" from just "mineralization." . In
establishing the cut-off grade, it must realistically reflect the
location, deposit scale, continuity, assumed mining method,
metallurgical processes, costs, and reasonable metal prices. Also
an
economic cutoff grade should enable a mine to distinguish
materials
that can at least cover the mine`s operating costs from those that
will not. In future filings disclose the cutoff grade used to
delimit the tonnage estimates. In addition, disclose the analysis
that substantiates that the cutoffs used were based on reasonable
economic assumptions. Or if the resource estimates are not based
on
economic cutoffs, remove the estimates.
6. Please note that it is the staff`s position that mineral
"reserves" for a mineral property cannot be designated unless:
* Competent professional engineers conduct a detailed engineering
and
economic feasibility study, and the study demonstrates that a
mineral
deposit can be mined at a commercial rate and a profit made. This
is
the "final" or "bankable" feasibility study that is required to
meet
the requirements to designate reserves under Industry Guide 7.
* The company has demonstrated that the mineral property will
receive
its governmental permits, and the primary environmental document
has
been filed with the appropriate governmental authorities.
The staff suggests that the company utilize the historic three
year
average price in any reserve or cash flow analysis to designate
reserves.
Review future filings and revise the disclosure accordingly
throughout the document to ensure that the company does not
prematurely indicate mining plans for a property prior to
completion
of the proper feasibility study and the economic viability
determination has been conducted.
Closing Comments
As appropriate, please amend your filing(s) and respond to
these comments within 10 business days or tell us when you will
provide us with a response. You may wish to provide us with
marked
copies of amendment(s) to expedite our review. Please furnish a
cover letter with your amendment(s) that keys your responses to
our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment(s) and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing(s) reviewed by the staff
to
be certain that they have provided all information investors
require
for an informed decision. Since the company and its management
are
in possession of all facts relating to the company`s disclosure,
they
are responsible for the accuracy and adequacy of the disclosures
they
have made. In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that:
the company is responsible for the adequacy and accuracy of the
disclosure in the filing(s);
staff comments or changes to disclosure in response to staff
comments
do not foreclose the Commission from taking any action with
respect
to the filing; and
the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing(s) or
in
response to our comments on your filing(s).
You may contact Lily Dang at (202) 824-5581 or Barry Stem,
Senior Assistant Chief Accountant at (202) 942-1919 if you have
questions regarding comments on the financial statements and
related
matters. Please contact George (Ken) Schuler, mining engineer, at
(202) 824-5527 or, in his absence, Roger Baer, mining engineer, at
(202) 942-2965, if you have questions regarding engineering
comments.
Please contact me at (202) 942-1870 with any other questions.
Direct
all correspondence to the following ZIP code: 20549-0405.
Sincerely,
H. Roger Schwall
Assistant Director
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Caledonia Mining Corporation
April 28, 2005
page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE