Canadian Shield Resources Inc.

Canadian Shield Resources Inc.

March 20, 2006 10:27 ET

Canadian Shield Resources Inc.: Peru Activity Update

TORONTO, ONTARIO--(CCNMatthews - March 20, 2006) -

Canadian Shield Resources Inc. has

- Completed $1 million private placement financing in March 2006

- The CSP Gold Discovery Zone expanded at the Humajala Gold Property

- Delineated strong 400m long geophysical target coincident with the CSP Gold Discovery Zone

- Defined exploration targets at three other Peruvian properties

- Increased the interest in Gallant Minerals Peru from 33% to 66%

- Completed 80% of the $1.5 million expenditures required to advance to 90% ownership

Canadian Shield Resources Inc. (TSX VENTURE:CSP) ("Canadian Shield" or the "Company") recently completed a $1 million private placement equity financing, A drill program is planned for the Humajala Gold Property.

"The next phase of drilling is designed to test the continuity of the CSP Gold Discovery Zone along a 400 m strike length. The recent geophysical surveys have defined clear targets to depths of 150 m. where surface sampling had already identified gold mineralization. This next phase of drilling, planned for April-May, may enable development of a resource model," said Lynda Bloom, President & CEO.

In November 2005, the Company announced the results of trenching and drilling at the Humajala Gold Property ("Humajala"). The property covers 5600 hectares near the town of Chivay, southern Peru, and is accessible by paved roads. The prospective advanced-argillic silicic alteration zone in pyroclastic andesites has a strike length of over 3.5 km.

Three drill holes and two trenches define the CSP Gold Discovery Zone, an area 120 m in length and 50 m thick that dips approximately 20 degrees into the hillside. As reported previously, the grades as shown in the table below are comparable to grades and widths typical of the larger, open-pit, heap-leach, oxide-gold mines in Peru and Chile.

Hole 0.2 g/t Au cut-off 0.5 g/t Au cut-off
From To From To
(m) (m) Au g/t Metres (m) (m) Au g/t Metres
Trench A 0 63.0 1.20 63.0 7.0 63.0 1.34 56.0
(including 7.0 31.5 2.20 24.5 - - - -
Trench B 0 20.5 0.70 20.5 13.5 20.5 1.81 7.0
HUM-05-020 1.0 29.15 0.48 28.2 1.0 15.7 0.68 14.7
HUM-05-021 7.0 79.0 0.45 72.0 26.5 61.0 0.70 34.5
HUM-05-022 27.4 85.9 0.37 58.5 27.4 57.4 0.53 30.0

Silver assays have been received for selected core intervals from the CSP Gold Discovery Zone. The silver grades are generally between 4 to 6 g/t for the gold mineralized intervals with the exception of the interval that assays 11.6 g/t silver and 0.70 g/t Au over 34.5 m in drill hole HUM-05-021, between 26.5 to 61 m down hole. The silver-rich zone includes a 1.5 m core sample that assayed 57.4 g/t silver and 0.53 g/t gold.

An Induced Polarization / Resistivity survey covering 22.5 km was completed in November 2005. The survey used a multi-separation pole-dipole array to obtain a depth of penetration of 300 meters below the surface at 200-metre line separation. The CSP Gold Discovery Zone lies on the western edge of a distinct high resistivity geophysical anomaly with a strike length of 400 m and projected to a depth of 150 m.

A second strong geophysical anomaly occurs at the southeastern limit of the survey area over a distance of 600 m and is open to the east. The anomaly lies within the favourable geological-geochemical-alteration corridor and has not been previously drill tested.

Additional work is planned to test the copper porphyry potential at the Cerro Cori Copper Gold Property, as well as geological mapping at the Pucarana Gold Property, in the Orcopampa District, and the Ccello Ccello Copper Property in the vicinity of the Humajala Gold Property. All are strategically located in Peru with respect to major mines and deposits. All have large-scale open pit potential.

About Peru

Peru is the 5th largest gold producer and 3rd largest copper producer in the world and mining contributes about half of the country's export revenue. Peru's Ministry of Energy and Mines estimates that almost $4 billion will have been invested in new mine development in Peru in the five years leading up to 2007. Most of the world's largest mining companies have important assets in Peru including Southern Peru Copper Corporation (PCU: NYSE), Barrick Gold Corporation (TSX:ABX), Newmont Mining Corporation (TSX:NMC), Phelps Dodge Mining Company (NYSE:PD), and BHP Billiton (LSE:BLT), demonstrating the economic stability of Peru and the high quality of its ore deposits.

The reported reserves for gold mines in Peru, such as those operated by international mining companies Barrick Gold and Newmont Mining, are generally more than 5 million ounces of gold. These deposits have very large tonnages, in the order of 200 million tonnes, as well as ore reserve grades that are within a relatively small range from 0.7 g/t gold (Barrick's Lagunas Norte mine) to 0.86 g/t gold (Newmont's Yanacocha mine). The Company considers that the Humajala Gold Property has the potential to host similar mineralization.

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. Terence Bottrill, P.Eng., is the Qualified Person for the Humajala 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


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