Canadian Shield Resources Inc.
TSX VENTURE : CSP

Canadian Shield Resources Inc.

February 01, 2006 19:58 ET

Canadian Shield Announces Private Placement Financing

TORONTO, ONTARIO--(CCNMatthews - Feb. 1, 2006) - Canadian Shield Resources Inc. (TSX VENTURE:CSP) ("Canadian Shield") is pleased to announce a proposed non-brokered private placement offering of up to 8,000,000 Units at $0.125 per Unit for gross proceeds of $1 million. Each Unit is comprised of one common share and one-half non-transferable Warrant. Each whole Warrant entitles the holder to purchase one common share at an exercise price of $0.20 per share for a period of 18 months from the date of closing of the private placement offering. The Warrant is callable, at the option of Canadian Shield, 4 months after the date of closing in the event the common shares trade at or over $0.40 per share for 10 consecutive trading days.

The number of common shares issuable if the private placement is fully subscribed and all Warrants are exercised is 12,000,000 common shares for gross proceeds of $1,800,000.

Qualified selling agents will be paid finders' fees of 7% of the gross proceeds from the Units placed by the agent and Compensation Warrants equal to 6% of the number of Units placed by the agent. Each Compensation Warrant entitles the agent to purchase one common share at an exercise price of $0.20 per share for a period of 18 months from the date of closing of the private placement offering. The Compensation Warrants are callable, at the option of Canadian Shield, 4 months after the date of closing in the event the common shares trade at or over $0.40 per share for 10 consecutive trading days.

The offering is being made under the TSX Venture Exchange Private Placement Policy and is subject to regulatory approval.

The proceeds of the offering will be used for:

(i) drilling at the Humajala Gold Property;

(ii) exploration at the Cerro Cori Copper-Gold Property; and

(iii) working capital and general corporate purposes.

The Humajala Gold Property and the Cerro Cori Copper-Gold Property are both held 100% by Gallant Minerals (Peru) S.A. Ltd ("Gallant Peru"). Canadian Shield owns 66% and Gallant Minerals Limited owns 34% of Gallant Peru. Canadian Shield can increase its ownership in Gallant Peru to 90% upon completion of: (i) cumulative exploration expenditures of US$1.5 million by August 31, 2006 (of which approximately US$1 million have been incurred to date), (ii) a payment of US$175,000, (iii) the issuance of 585,000 common shares of Canadian Shield at a deemed price of CDN$0.40 per share and (iv) the issuance of 585,000 common share purchase warrants of Canadian Shield exercisable at $0.40 per share, expiring August 31, 2007.

About Canadian Shield Resources Inc.

Canadian Shield is focused on the acquisition, exploration and development of strategically located precious metal and base metal properties in Peru. The Company will continue to explore the 2005 CSP Gold Discovery Zone at the Humajala Gold Property and the copper porphyry potential at the Cerro Cori Copper Gold Property. The Company also holds two other properties with major resource potential. Canadian Shield's shares are listed on the TSX Venture Exchange (Trading Symbol CSP: TSX V). For further information, visit www.canadianshieldresources.com.



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