Canadian Shield Resources Inc.

Canadian Shield Resources Inc.

July 12, 2007 09:31 ET

Canadian Shield Signs Option on Colpayoc Property Yanachocha District, Northern Peru

TORONTO, ONTARIO--(Marketwire - July 12, 2007) - Canadian Shield Resources Inc. (TSX VENTURE:CSP) ("Canadian Shield" or the "Company") is pleased to announce that it has entered into an option agreement to purchase 100% participating interest in the Colpayoc gold-silver-copper-molybdenum prospect in northern Peru. Colpayoc is comprised of 3 properties held by two owners. Compania Minera Chetilla holds the El Ferrol 15 through 18 and the Ferrol Che exploration licenses with a total of 3,608 hectares. The Francisco Jose IV and Francisco Jose V exploration licenses comprise 680 hectares and are held by Mr. Francisco Jose Santolalla, Lima, Peru.

The Company can earn 100% interest in the properties by spending an aggregate of US$4 million in exploration and making cash payments totalling US$4 million over the option term of 54 months. Each vendor will retain a 2% NSR on all metals produced on their respective properties. Each vendor will receive US$100,000 per year from the date of completion of the option until commercial production starts as a royalty advance which will be deducted over time from ensuing NSR royalties.

Colpayoc is located 15 kilometers west of the city of Cajamarca, capital of the Department of Cajamarca and in the Yanacocha District of northern Peru. The region is greatly endowed with mineral wealth hosting a number of major, advanced stage exploration and development projects coming on stream including, Cerro Corona Project (Goldfields), Minas Conga (a joint venture between Newmont Mining & Buenaventura), Galeno (Northern Peru Copper) and Michiquihay (recently purchased through a state auction by Anglo American for US$403 Million). Of greatest economic importance to the region is the Yanacocha Gold Mine (15 km to the northeast of Colpayoc) presently producing just under 2 million ounces of gold per year. Yanacocha is a Newmont (51.35%) Buenaventura (43.65%), & the World Bank (5%) joint venture project and is the largest gold mine in South America. Table 1 below summarizes characteristics of the projects mentioned including commodity, size and grade of the deposits.

Table 1: Yanacocha District Deposit Summary
Deposit Ownership Deposit Size Cu% Au g/t Mo%
Yanacocha Newmont-Buenaventura
-World Bank 1.25 billion tonnes 0.9
Minas Conga Newmont-Buenaventura 641 million tonnes 0.3 0.8
Galeno North Peru Copper 765 million tonnes 0.64 0.11 0.14
Michiquillay Anglo American 544 million tonnes 0.69 0.1-0.5
Cerro Corona Goldfields 91 million tonnes 0.5 1

Colpayoc was explored in the mid-90's by Newcrest Mining and Granges Resources. Previous work includes surface rock chip sampling, trenching, soil sampling and magnetometry in a 2 x 2 kilometer area. This work delineated zones of highly anomalous gold, silver, copper and molybdenum spatially related to a number of magnetic anomalies. Newcrest drilled 8 diamond drill holes for a total of 1,242 meters. Granges trenched a small area of the overall property with interesting results but did not follow-up with drilling. Balaclava subsequently optioned the property in 1997 and drilled a total of 500 meters in three holes.

The geologic setting of the prospect area consists of early to mid-Tertiary intrusions emplaced in a folded sequence of mid-Cretaceous limestone and calcareous sandstones. Certain phases of the intrusions are mineralized, forming porphyry style alteration, mineralization and skarnification of the surrounding sediments. One drill hole by Newcrest and all three holes by Balaclava encountered significant gold grades over their entire length occurring in a potassic alteration assemblage consisting of quartz-magnetite-pyrite-chalcopyrite stockwork. The weighted average of these 4 holes ran 0.55 g/t gold over 155 meters. All holes ended in significant mineralization with generally increasing copper grade. Hole number one by Balaclava ended in 2.3 g/t gold. The footprint of this porphyry mineralization as defined by surface geochemistry and magnetics is approximately 300 x 400 meters. A number of other magnetic anomalies on the property have yet to be drill tested.

Table 2 & 3 below summarizes the reported results of the past work. This information is recorded in historical reports and also in a National Instrument 43-101 report prepared by Jeff Reeder in 2003.

Table 2: Newcrest Drilling 1995
Hole No. From To Interval (m) Au (g/t) Cu(%) Ag (g/t)
CPD-04 0 70 70 less than 0.1 n/a 43
including 18 46 28 less than 0.1 n/a 72
CPD-06 0 147 147 0.41 0.08
including 50 147 97 0.53 0.1
including 88 147 59 0.61 0.12
Balaclava Drilling 1997
Hole No. From To Interval (m) Au (g/t) Cu(%) Ag (g/t)
RCD01 0 165 165 0.6 0.09 3.8
including 8 52 44 1.1 0.16 5.1
RCD-02 0 165 165 0.6 0.15 6.3
including 66 106 40 1 0.18 7
RCD-03 0 170 170 0.6 0.12 5.1
weighted average = 166.67 meters @ 0.6 g/t Au, 0.12% Cu, 5.0 g/t Ag

Table 3: Highlights of Granges Trenching
Trench No. Length Au (g/t)
T-7 122 0.53
T-8 98 0.47
T-9 206 0.65
T-10 158 0.51
including 25 0.85
preliminary metallurgical tests show leachability ranges between 84% & 94%

In addition to the work performed by the three companies whose results are summarized above, surface sampling results reported by Compania Minera Chetilla on the El Ferrol licenses, includes high-grade gold running up to 37 g/t gold from an outcrop 1 kilometer to the northwest of the Newcrest drilling. The El Ferrol ground to the northwest of all previous work has seen little systematic exploration though mapping has identified numerous surface shows of mineralization.

"The district hosts at least 14 Cu-Au porphyry systems and 19 epithermal precious metal deposits. Colpayoc displays encouraging surface and subsurface mineralization occurring in a highly prospective geologic environment. A mineralized porphyry system intruding limestone sequences similar to what has occurred at Colpayoc offers potential for the formation of a world-class orebody with analogs occurring not only in Peru but throughout the mining world. We are fortunate to have this opportunity to explore a high quality prospect in such a prolific district" said Phil Anderson, VP Exploration.

Canadian Shield will work to expand and improve on the results attained previously. To date there has been no IP carried out on the prospect. IP will be an important tool to integrate into the Company's exploration program and will increase the possibility of finding buried porphyry mineralization that surface sampling has failed to detect.

The table below shows results from composite core samples collected by Canadian Shield from Newcrest's drilling as part of the Company's technical due diligence. Gold, copper and molybdenum values show an acceptable range of variance from reported assays for a preliminary test.

Table 4. Canadian Shield Check Assays

Reported By Drill Hole # Sample Interval Au (ppb) Cu (ppm) Mo (ppm)

Newcrest CPD-1 18 - 24 448 1365 142
CSRI CPD-1 18 - 24 583 1580 219
Newcrest CPD-2 70 - 74 240 63 22.5
CSRI CPD-2 70 - 74 146 100 29
Newcrest CPD-5 66 - 71 195 640 236
CSRI CPD-5 66 - 71 223 620 228
Newcrest CPD-5 106 - 110 80 164 35.5
CSRI CPD-5 106 - 110 116 190 44
Newcrest CPD-6 130 - 134 365 883 43
CSRI CPD-6 130 - 134 487 706 56

Samples were assayed at the ALS-Chemex laboratory located in Lima, Peru.

About Canadian Shield Resources Inc. (TSX VENTURE:CSP)

Canadian Shield is a mineral exploration company building shareholder value through the acquisition of major scale, base and precious metal projects in prolific and established mineral provinces in Latin America. Efforts are primarily focused on Peru, a very prospective region ranking highly in the worlds production of gold (5th), silver (1st), copper (3th), zinc (3rd) and tin (2nd). The Company controls 8 base and/or precious metals projects in Peru and one gold project in Chile through the 90% acquisition of Gallant Minerals - Peru in 2004 and APMX in April 2007. Canadian Shield is focused on project generation and joint venture opportunities to provide shareholders with interests in a broad portfolio of South American mineral properties. The Company's shares are listed on the TSX Venture Exchange (TSX VENTURE:CSP)


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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