TORONTO, Aug. 1 /CNW/ - CITADEL GOLD MINES INC. (CGM.H: NEX Exchange). Further to its announcement of June 6, 2006, Citadel Gold Mines Inc. announced today that it has closed, effective as of July 1, 2006, the transaction involving the sale by the Company to Dr. Bernard Sherman, a principal shareholder and related party of the Company, of the Company's general partnership interest in Citabar Limited Partnership and certain claims related to the Surluga Property in Wawa, Ontario and the assumption by Dr. Sherman of certain liabilities of Citadel, for aggregate cash consideration of $250,000 (the "Transaction"). The Transaction will provide the Company with immediate funding in the amount of $250,000 and is expected to provide additional funding on a deferred basis in the amount of up to $270,000, in funds to be received by the Company as a reimbursement of funds previously paid by the Company and held by the Ontario Ministry of Northern Development and Mines Resources in connection with the 1989 closing of mining operations at the Surluga Property. In conjunction with the Transaction, the Company also announced today that it has completed the restructuring of its preferred share and debt structure. Subject to the Company's other obligations, management intends to utilize the proceeds from the completion of the Transaction to launch the Company on a new course by seeking out mineral projects, either at the exploration or development levels, primarily in Canada, but also looking for overseas opportunities. Management of the Company believes that completion of the Transaction represents a new beginning for Citadel, which has been relatively inactive for the last several years. It is expected that the Transaction and the debt restructuring will put the Company in a position to build a more active and visible company by taking advantages of opportunities for exploration and development that exist today in the minerals sector.