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Canasil Samples 2,150 g/t Silver, 5.39% Copper and 1.89% Zinc over 0.90 Metres in Old Workings at the Salamandra Project in Durango State, Mexico

October 18, 2011

Canasil Resources Inc. has issued the following Directors’ Letter to Shareholders In connection with the Company’s upcoming Annual General Meeting to be held on May 25, 2011:

Dear Shareholders,

2010 was a positive year for the mining and mineral exploration industry, and for Canasil. Overall economic conditions continued to improve through 2010 and in 2011 - the Dow Jones Industrial Average Index started the year at 10,500 and was up at 11,500 by year-end 2010 and 12,500 at present. The TSX Composite Index started the year close to 12,000 and was up at 13,500 by the end of the year and 14,000 at present. With the improving economic conditions, and in particular increasing demand from China and other developing economies, the price of commodities and particularly precious metals, increased significantly through the year. Crude oil prices were relatively stable through 2010, trading at $75 per barrel at the beginning of the year and closing at $85. In 2011 the crude oil price has increased to over $110 per barrel. Gold increased from $1,120 to $1,375 by year-end 2010, and on to $1,500 at present. Silver showed the highest increase, outperforming gold by a factor of 2, starting at $17 in January 2010 and on to $29 by December 2010, and $45 at present. Copper prices increased from $3.20 per lb to $4.10 per lb in 2010 and have held up in 2011 with a price of $4.30 per lb at present. Lead and zinc did not show as high an increase – zinc prices have fluctuated, moving from $1.15 per lb in January 2010 down to $1.10 per lb at present. Lead prices showed a small increase form $1.15 per lb in January 2010 to $1.30 per lb at present. Both commodities are expected to show higher future prices due to forecasted demand. The increasing precious metal prices, and high copper prices as well as other commodities such as iron ore and coal, had a positive impact on the mining and exploration industry, with improving results for the major mining companies, and much greater interest for funding exploration companies.

In 2010 Canasil achieved a number of key objectives aimed at recovering from the industry downturn in late 2008 and 2009 in order to re-build the Company’s working capital for a more active operating program. A number of private placements were completed at increasing prices through the year starting in May 2010 at $0.10 and ending in December 2010 at $0.30. A total of $2.95 million in new funding was completed in 2010 from private placements and the exercise of warrants, while maintaining a strong share structure with 58 million shares issued by year-end. This put the Company in a strong financial position by year-end with over $1.6 million in working capital. Earn-in option agreements were signed with MAG Silver Corp. on the Company’s large La Esperanza silver-lead-zinc project, and with Pan American Silver Corp. on the Carina silver-gold project in Durango and Zacatecas States. These agreements provided independent confirmation of the potential of the Company’s projects, as well as the opportunity to fund and advance the projects with industry leading partners. The Company also took advantage of opportunities to expand the claim areas covered by its projects in Mexico and British Columbia, Canada, through the year. These positive developments had a major impact on the Company’s share price and market capitalization. Our share price increased from 10c in January 2010 to 34c by December 2010. With the increasing gold and silver prices, it went on to a high of 58c in March 2011. This resulted in an increase of the Company’s market capitalization from $4 million in January 2010 to over $30 million in March 2011.

These developments have placed the Company in a strong position for advancing its highly prospective mineral exploration projects and creating shareholder value in 2011. In 2010 total exploration and acquisition expenditures in Mexico were $433,283 (2009: $259,715) and in British Columbia $17,663 (2009: $8,354). Currently planned exploration and acquisition expenditures by Canasil in 2011 amount to $750,000. These will be increased in 2011 depending on the completion of further funding. The minimum committed earn-in expenditures by MAG Silver and Pan American Silver this year total $950,000 and the required total first year expenditures under the agreements total $1,115,000. MAG Silver has indicated a 2011 planned budget for expenditures at La Esperanza of $1,125,000. Based on these figures, total currently planned 2011 exploration expenditures will exceed $1,700,000 and may be significantly higher. In 2011 to date, Canasil has already completed over 1,300 line-km airborne geophysical surveys at three large projects in Durango State, Mexico. A 1,500 metre drill program is underway at the Sandra-Escobar silver-gold project in Durango, Mexico, and MAG Silver and Pan American Silver are expected to drill test the La Esperanza and Carina projects in 2011. There are further opportunities for testing the Company’s other drill ready projects in Mexico and in British Columbia, depending on funding opportunities in 2011. These programs will result in multiple opportunities for discovery and value added to the Company’s projects.

The Company will take advantage of higher share prices and funding opportunities to further strengthen its working capital in 2011. This will be done as before with careful attention to maintaining the Company’s share structure and shareholder dilution. The Company has a highly prospective gold-silver-copper-lead-zinc project portfolio in Mexico and British Columbia, Canada. These include several drill ready projects located on well-recognized mineral trends with a history of discoveries and hosting large mineral deposits. Together with our high quality partners, we have a very active exploration program in 2011 which has the potential for generating positive results, leading to improving share prices, trading volumes and further financing opportunities.

We continue to thank all our shareholders and all those associated with the Company for their support and interest.

On behalf of the Board,

“Bahman Yamini”

Bahman Yamini, President, CEO & Director

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