Citadel Gold Mines Inc. announces financing

/NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES/

(CGM.H: NEX Exchange)

TORONTO, Dec. 18 /CNW/ - Citadel Gold Mines Inc. (the "Company") announces that, subject to NEX Exchange approval, it plans to complete a non-brokered private placement (the "Private Placement") of $200,000 principal amount of 6% convertible debentures ("Debentures") to Sherfam Inc. ("Sherfam"), a company controlled by Dr. Bernard Sherman, a principal shareholder and related party to the Company.

The Debentures will have a 24-month term, a coupon rate of 6% per annum, and will be convertible into common shares of the Company at Sherfam's option (subject to mandatory conversion on the occurrence of certain events) at a conversion price of $0.10 per share, which represents a conversion ratio of 10,000 common shares for each $1,000 principal amount of Debentures.

The aggregate proceeds to the Company will be $200,000, with the proceeds to be used to repay indebtedness and for general working capital purposes.

Following completion of the Private Placement, Dr. Sherman will continue to control, directly and indirectly, approximately 59.5% of the Company (up to 62.51% of the Company, assuming conversion of the aggregate principal amount of Debentures in exchange for 2,000,000 common shares of the Company).

The terms of the Private Placement were negotiated between the Company and Sherfam and were approved by the board of directors, who determined that the timing and terms of the Private Placement are in the interest of the Company and reasonable in the circumstances.

Subject to receipt of NEX Exchange approval, it is expected that the Private Placement will be completed on or about December 22, 2009.

The NEX Exchange has neither approved nor disapproved of the information contained herein. The statements used in this press release may contain forward-looking statements, and are based on the opinions and estimates of management, or on opinions and estimates provided to, and accepted by, management. These opinions and estimates include those that relate to geological and mining factors, commodity prices, and marketing parameters used by management, and speak only as of the date of this press release. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ, possibly significantly. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual events or results will be consistent with these forward-looking statements. Except as required by applicable law, the Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise. Readers are therefore cautioned not to place undue reliance on any forward-looking statements.

%SEDAR: 00004216E

SOURCE CITADEL GOLD MINES, INC.

For further information: For further information: John Sadowski, President, Citadel Gold Mines Inc., Telephone: (416) 675-8379

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CITADEL GOLD MINES, INC.

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