Caledon Resources plc – Quarterly Report

Report Highlights
– Significant progress with ramp-up of Magatar Linear Mining System, achieving a record 55,000 tonnes of production for the month of June 2008
– Production for July on track to exceed this level of production – production required to achieve targeted 100,000 tonnes per month rate has been achieved during one shift
– Strong coal prices achieved with current sales based on industry hard coking coal price of US$300 per tonne, adjusted for Cook coal quality
– Driveage of the new drift into the Argo seam at pit bottom is essentially complete – the reconfigured and refurbished Joy wide head miner will commence roadway development in coal in late July which will supplement production
– Full year saleable production expected to be 600,000 – 700,000 tonnes

Cook Operations
Cutting coal using the new Magatar System began on 30 January 2008 and since then efforts have been focused on ramping up the system to full operation.
Significant progress was achieved during the month of June 2008 with record monthly production of 55,000 tonnes (approximately 43% of the quarterly raw coal production).  The ramp-up of production has continued into July with a number of daily shift records set in the first two weeks of the month, including one shift that matched the production required to achieve the 100,000 tonnes per month rate. Caledon’s focus is now on consistently repeating this milestone. The new haulage system has met or exceeded expectations and continues to attract broad industry interest.
The stronger months of June and July have followed lower production in the months of April and May which were impacted by technical issues associated with the new ABM25 continuous miner and delays in crossing a known fault. Both of these issues were resolved in late May allowing the mine to again focus on increasing production. The company has also gained important knowledge from the fault crossing and these insights will be beneficial in reducing the impact of similar circumstances in the future.
As a consequence of the technical issues and delays experienced in April and May, the company’s progress towards its anticipated production of 100,000 tonnes per month has taken longer than was previously anticipated. As a result, Caledon is now forecasting 2008 saleable production to be in the range of 600-700,000 tonnes.  Finalisation of deliveries under 2007 contract prices were completed during May with current sales based on the industry hard coking coal price of US$300 per tonne, adjusted for Cook coal quality.
Drivage of the new drift into the Argo seam at pit bottom is essentially complete with activities now focused on belt and service installation. The reconfigured and refurbished Joy wide head miner will commence roadway development in coal in late July which will supplement production.

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