SOURCE: Colombia Goldfields Ltd.

August 29, 2006 16:00 ET

Colombia Goldfields Options More Than Half of Marmato "Golden Mountain"

TORONTO -- (MARKET WIRE) -- August 29, 2006 -- Colombia Goldfields Ltd. (OTCBB: CGDF) ("CGL" or "the Company") today provided exploration and corporate updates including a progress report on its strategy to consolidate the Zona Alta in Colombia's historic Marmato Mountain gold district. Through the Company's Colombian operating subsidiary, Cia Minera de Caldas, S.A. ("Caldas"), Colombia Goldfields has optioned to purchase 62 of a total of 120 legal mining titles on the Zona Alta (52%).

"Optioning these mineral rights is advancing as planned and we anticipate that all properties will be under our control by year's end," said Randy Martin, President & CEO, Colombia Goldfields Ltd. "Now that the majority of the local small miners' claims are optioned, Caldas intends to commence application for a master mining license, which would include all the exploration and mining rights for the Marmato Mountain Development Project."

Marmato Mountain Update

A 1998 scoping study identified the presence of more than five million ounces of gold within the company's area of development at Marmato. Specifically, the study identified an inferred resource of 56 million tonnes grading 1.06 g Au/t and 6.6 g Ag/t at a cutoff grade of 0.5 g Au/t for 1.9 million ounces of gold in the Zona Alta, plus an additional 99 million tonnes of mineral potential grading 1.07 g Au/t and 5.14 g Ag/t for a total of 5.3 million ounces of gold in Zona Alta. The scoping study delineating the deposit was completed by a previous operator and prior to the current technical report standards. Management of Colombia Goldfields believes that the resource estimate in the scoping study is relevant and reliable. The Company has recently retained Micon International Limited to complete a qualified technical report, which will meet current standards, on the Zona Alta and the Caramanta areas. It is expected that this report will be available in late September 2006.

Colombia Goldfields has completed the detailed mapping and sampling of 14 cross cuts in the Zona Alta and is awaiting final analyses. Detailed mapping of the Zona Alta has begun at a scale of 1:2,000 and newly optioned mine tunnels will now be surveyed in detail for accurate location for the upcoming drilling program.

CGL has also commenced a baseline environmental study covering an area of six km(2) and, in the near future, will be submitting an Environmental Impact Assessment to begin the process of permitting for feasibility drilling in Q4 2006 or Q1 2007. The drill program will include both underground and surface drilling.

The Company has completed a census of all the homes in the Marmato district and has begun the process of purchasing homes with legal title from families who wish to relocate to the new Marmato town site or to other safe areas. Prior mud slides have damaged or destroyed many homes which are now condemned. In coordination with the appropriate government authorities these homes will be torn down.

Caramanta Exploration Update

Through a series of transactions, Colombia Goldfields has acquired options to own seven exploration concessions and five mining concessions representing 2,078 hectares (20.78km(2)), collectively referred to as the Caramanta project. The Caramanta project is located approximately three kilometers from the base of Marmato Mountain. The Company is committed to spending $3.0 million on these concessions.

The five mining concessions are referred to as El Salto. CGL has completed regional mapping on El Salto and exploration concession 1343. The Company geologists have moved north of Concession 1343 and have now commenced regional mapping in the area of the Bermejal gold showing.

Colombia Goldfields is currently negotiating with several land owners in the region with a goal of developing a gold district.

Corporate Update

On April 26, 2006 the Company completed a private equity offering of 6,500,666 Units at $1.50 per unit. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock and one warrant to purchase one share at an exercised price of $2.50 for a period of 24 months from the closing date. The net proceeds of the offering were $9,165,939.

In order to complete the existing business plan of property acquisition and resource development, the Company will need to raise additional capital prior to the end of 2006.

The Company recently announced that it has both amended its agreement to purchase RNC (Colombia) Limited ("RNC") and has exercised its option to increase its interest in RNC from 50% to 75% ownership. RNC in turn owns 100% of Caldas.

CGL has the option to acquire the remaining 25% interest in RNC on or before May 1, 2009 for a purchase price equal to 25% of the value of Caldas determined by a bankable feasibility study. The maximum purchase price to be paid is now capped and shall not exceed $15,000,000 plus 4,000,000 shares of Colombia Goldfields common stock. Payment of the $15,000,000 portion of the purchase price can now be made by Colombia Goldfields in either cash or common stock, or any combination thereof.

Effective August 10, 2006 the Company engaged PricewaterhouseCoopers LLP as CGL's independent auditors.

Annual General Meeting

On July 31, 2006, the company held its Annual General Meeting. At that meeting, all the incumbent directors were re-elected and one new director, Mr. David Bikerman, was added to the company's Board of Directors.

Additionally, shareholders approved the increase in the number of shares of common stock authorized for issuance from 50,000,000 to 200,000,000 shares. There are currently 47,415,849 shares outstanding. Shareholders also approved the reincorporation of CGL in the State of Delaware. The increase in authorized capital and reincorporation will facilitate the next raising of funds.

Disclaimer

This release contains forward-looking statements that are based on the beliefs of Colombia Goldfield's management and reflect Colombia Goldfield's current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When used in this release, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," "can," the negative of these words, or such other variations thereon, or comparable terminology, are all intended to identify forward-looking statements. Such statements reflect the current views of Colombia Goldfields with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including, but not limited to, risks and uncertainties pertaining to development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance, or achievement expressed or implied by such forward-looking statements to differ materially from the forward-looking statements.

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