Caledon Resources 2006

From: Caledon Resources Plc - gsalamis@caledonresources.com
Sent: Thursday, December 21, 2006, 11:30 AM
To: Distribution - Subscribers



Operational update: Cook and Minyango Coal Projects in the Bowen Basin, Queensland Australia


· Handover of the Cook Mine occurred on 15th December


· Key personnel on site preparing to recommence operations.


· Brisbane financial staff engaged and focussing on business and communication systems and interfaces


· First stage drilling at Minyango well advanced with results expected in quarter 1, 2007



Cook


At the Cook mine Caledon has now taken full operational control. Certain qualified members of the previous workforce have transferred to the new operation and the new management including the Senior Site Executive (SSE) are in place laying the ground work for the ramp up to full production in early course. LDO, as contract managers of the mine, have filled all statutory management positions on site with experienced coal industry personnel..


The present focus of the site team is to ensure all statutory requirements are met or exceeded in preparation for cutting coal in the second half of February. Caledon views hitting its targets for commencement of coal production of prime importance; furthermore, the establishment of a high standard of safety at the commencement of operations is a critical component of the longer term success of the project.


In addition to the commissioning activities on site, other key areas of activity are preparation for the commencement of the new linear mining methodology and the detailed design for the wash plant upgrade. Both are on schedule for July and the end 2007 respectively.


In 2007 the Cook Mine is projected to produce approximately 900,000 tonnes of coal with operating cash costs, including all royalties, rail and port charges, estimated at approximately $US 57 per tonne. The company is aggressively evaluating opportunities to reduce the latter with early work showing encouraging signs. Based on existing reserves the Cook Mine is expected to have a minimum 10 year mine with the potential for a substantial increase through the further conversion of significant resources to reserves.


Australian Head Office


The company has appointed a senior commercial manager to oversee the financial activities of the Australian operations; he comes with over 20 years experience in the coal industry. A very strong background in systems and operational interfaces combined with hands on experience with a number of new mine start-ups will add further strength to the management team.


Minyango


Drilling is well advanced at the Minyango coal project situated immediately north of the Cook lease. The company has completed 15 drill holes in a programme designed to further define coal quality and coal seam continuity and thickness of the deposit. Seismic profiling is planned to begin in February 2007. Caledon's stated aim is to outline a portion of the 205 million tonne in-situ coal resource amenable to future mining. In the process, we expect to convert coal resources to reserves with the longer term goal of advancing the project through to feasibility.


George Salamis, Caledon's CEO, said: “The past 11 months have been focused on completing transactions that have transformed Caledon from gold explorer to coal producer. The handover of the Cook coking coal mine on 15th December and the commencement of operations on the ground was a significant milestone for the Company. We are now a few short weeks away from first production, fulfilling our undertaking to our shareholders.”



For more information -


Caledon Resources plc


George Salamis - gsalamis@caledonresources.com


Donal Douglas - ddouglas@caledonresources.com +44 (0) 20 7318 5780


CanaccordAdams Limited (NOMAD & Broker)


Robin Birchall / Andrew Chubb +44 (0) 20 7050 6500


Conduit PR


Lessa Peter/Jos Simson leesa@conduitpr.com/jos@conduitpr.com +44 (0) 20 7429 6666


About Caledon: Caledon is a London AIM listed (AIM: CDN) Company. The acquisition of the Cook Mine and the Minyango coal project, both situated in the Bowen Basin, Queensland Australia, transforms the business of the Caledon Group from gold exploration to a coal producer. Caledon's Cook Mine is host to a mineable reserve of 17 Mt of coking and thermal coal. A 10 year mine plan has been established by the Company with a projected coking and thermal coal production rate of 900,000 tonnes of coal projected for 2007, increasing to 1.5 Mt per annum in 2008 and closer to 2 Mt per annum in 2009. The neighbouring Minyango project is host to over 200 Mt of in-situ extractable coal. Caledon is conducting exploration at Minyango with the goal of converting resources to reserves on the project, with a view to potentially increasing Caledon's production in the near-term.