Gammon Gold and Capital Gold Sign Definitive Merger Agreement
PRESS
RELEASE
▇▇▇▇▇▇
Gold and Capital Gold Sign Definitive Merger Agreement
October
1, 2010 – Toronto, ON and New York, New York – ▇▇▇▇▇▇ Gold Inc. (“▇▇▇▇▇▇
Gold”) (NYSE: GRS, TSX: GAM) and Capital Gold Corporation (“Capital Gold”) (TSX
and NYSE AMEX: CGC) have entered into a definitive merger agreement pursuant to
which ▇▇▇▇▇▇ Gold will offer to acquire all of the issued and outstanding common
shares of Capital Gold in a cash and share transaction (the “Acquisition”). The
total consideration for the purchase of 100% of the fully diluted in-the-money
shares of Capital Gold is approximately US$288 million or US$4.57 per Capital
Gold share based on ▇▇▇▇▇▇ Gold’s closing price on September 24, 2010 on the
NYSE.
The
Acquisition has the unanimous support of both companies’ Boards of Directors and
Officers and strengthens ▇▇▇▇▇▇’▇ position as a leading Mexico focused, growing
gold producer.
Under the
terms of the Acquisition, each common share of Capital Gold will be exchanged
for 0.5209 common shares of ▇▇▇▇▇▇ Gold and a cash payment in the amount of
US$0.79 per share. Based on the September 24, 2010 closing price of Capital
Gold’s shares on the NYSE AMEX, the acquisition price represents a 20% premium
to the close on September 24th and a
30% premium to the 20-day volume weighted average price on the NYSE AMEX ending
on that date.
Capital
Gold owns and operates the El Chanate gold mine located in Sonora, Mexico as
well as the Orion development project in Nayarit, Mexico.
Commenting
on behalf of Capital Gold, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman of the Board of Directors
stated; “The Capital Gold team should be congratulated for their many
achievements. They have transformed the El Chanate gold mine from a small
exploration property to a low cost, quality asset with tremendous upside
potential. They have increased reserves at El Chanate by 1.3 million gold ounces
(535%) since 2002, and there is additional potential yet to be realized.” He
continued, “This is an exciting value-add transaction that allows Capital Gold
shareholders to participate in both the future success of El Chanate and
▇▇▇▇▇▇’▇ well established portfolio of gold assets. Both ▇▇▇▇▇▇ Gold and Capital
Gold have operating teams that possess extensive experience in Mexico, which
supported by ▇▇▇▇▇▇ Gold’s strong financial foundation will allow El Chanate and
Orion’s potential to be fully realized. The Capital Gold Board of Directors is
confident that the shareholders of both companies will benefit from this
business combination and we look forward to the continued success of the
combined companies.”
Commenting
on behalf of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, President and CEO, stated; “We anticipate
that this transaction will transform ▇▇▇▇▇▇ Gold into a well diversified Mexican
gold producer with an attractive suite of operating assets and an enhanced
pipeline of development and exploration stage projects that will increase our
exposure to gold in a positive gold price environment. Following the
transaction, we anticipate ▇▇▇▇▇▇ Gold will be among the lowest cost producers
in the industry with an exciting organic growth profile.” He continued, “We
believe that our offer to Capital Gold shareholders is highly compelling as it
offers an attractive opportunity and provides ongoing participation in a large,
well-funded, liquid, producing company focused on Mexico. Both sets of
shareholders will also be able to participate in the substantial operating and
financial synergies we expect to derive from this transaction. This transaction
positions ▇▇▇▇▇▇ to become a leading consolidator in the attractive but
fragmented Mexican gold sector.”
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▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & Company, Incorporated has provided a fairness opinion to the
Board of Directors of Capital Gold that the consideration offered pursuant to
the Acquisition is fair, from a financial point of view, to the shareholders of
Capital Gold. The Board of Capital Gold unanimously recommends that holders of
Capital Gold shares vote in favour of the Acquisition. The senior officers and
directors of Capital Gold have agreed to vote in favour of the
Acquisition.
The
Acquisition will be completed by way of a merger under the General Corporation
Law of the State of Delaware. After completion of the Acquisition, it is
expected that current Capital Gold shareholders will own approximately 20% of
▇▇▇▇▇▇ Gold on a fully diluted basis. The transaction is subject to receipt of
approval of holders of at least 50% plus one of the outstanding Capital Gold
shares, and, if required by law, approval by shareholders excluding directors
and officers holding approximately 1.1% of Capital Gold shares, who are entitle
to change of control payments, regulatory approvals, and the satisfaction of
certain other customary conditions.
The
transaction is expected to close in late 2010.
If the
transaction is not completed, Capital Gold has agreed to pay a break fee of
US$10.3 million to ▇▇▇▇▇▇ Gold under certain circumstances. Capital Gold may
also be entitled to a break fee of up to US$2.0 million under certain
circumstances. Capital Gold has, among other things, agreed to provide ▇▇▇▇▇▇
Gold with certain other customary deal protections, including a non-solicitation
provision and a right to match.
▇▇▇▇▇▇
▇▇▇▇’s lead financial advisor is Dundee Securities. UBS Securities Canada Inc.
has also been retained as an advisor. Its Canadian legal counsel is Fasken
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and its U.S. legal advisor is ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP.
Capital Gold’s financial advisor is Cormark Securities Inc., its Canadian legal
counsel is ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP and its U.S. legal advisor is ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& Schole LLP.
Conference
Call and Webcast Details
A webcast
and conference call will be held on Friday
October 1, 2010 starting at 10:45
am Eastern Time (11:45 am Atlantic Time).
Conference
Call Access:
●
Toll Free: ▇-▇▇▇-▇▇▇-▇▇▇▇
When the
Operator answers please ask to be placed into the ▇▇▇▇▇▇ Gold Conference
Call.
Archive
Call Access:
If you
are unable to attend the conference call, a replay will be available until
midnight October 7, 2010 by dialing the appropriate number below:
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● Local
Toronto Participants:
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1-416-849-0833
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Passcode:
14967986
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●
North America Toll Free:
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▇-▇▇▇-▇▇▇-▇▇▇▇
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Passcode:
14967986
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Live
Webcast:
The event
will be broadcast live on the internet via webcast. To access the webcast please
follow the link provided below: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇/▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇.▇▇▇?▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
Archive
Webcast:
The
webcast will be archived for 90 days by following the link provided
below:
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▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇/▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇.▇▇▇?▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
or via the Company’s website at ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇.
About
▇▇▇▇▇▇ Gold
▇▇▇▇▇▇
Gold Inc. is a mid-tier gold and silver producer with properties in Mexico.
▇▇▇▇▇▇’▇ flagship ▇▇▇▇▇▇ Property in Chihuahua State achieved commercial
production in January 2007. ▇▇▇▇▇▇ also owns the suspended El Cubo mine in
Guanajuato State and has the promising ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ development property in
Chihuahua State. ▇▇▇▇▇▇ recently completed option purchase agreements to acquire
the Mezquite Project in Zacatecas State, Mexico and the Venus project located
north of the ▇▇▇▇▇▇ mine. ▇▇▇▇▇▇ also recently signed a definitive agreement to
acquire the Los ▇▇▇▇▇ Project in Chihuahua State. Since 2008, the Company has
increased its Mexican land position by over 59% and has made strategic
investments in Golden Queen Mining Co. Ltd. and Corex Gold Corporation. The
Company’s Executive Office is located in Toronto, Ontario.
About
Capital Gold
Capital
Gold Corporation (CGC) is a gold production and exploration company. Through its
Mexican subsidiaries and affiliates, it owns 100% of the “El Chanate” gold mine
located near the town of Caborca in Sonora, Mexico. On August 2, 2010, Capital
Gold acquired Nayarit Gold Inc. Capital Gold is focused on optimizing the El
Chanate operations and advancing the Del Norte deposit in the Orion District in
the State of Nayarit, Mexico. Capital Gold also owns and leases mineral
concessions near the town of ▇▇▇▇▇, also located in Sonora, that are undergoing
exploration for gold and silver mineralization. Additional information about
Capital Gold and the El Chanate Gold Mine is available on the company’s website,
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Important
Additional Information Regarding the Acquisition will be filed with the
SEC.
This
press release is not, and is not intended to be, a solicitation of proxies or an
offer of securities. The parties will file a joint proxy statement/prospectus
with the Securities and Exchange Commission (the “SEC”) and ▇▇▇▇▇▇ Gold will
file a management information circular with Canadian Securities regulatory
authorities. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THESE
SEC AND CANADIAN SECURITIES REGULATORY FILINGS WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ACQUISITION AND THE
PARTIES TO THE ACQUISITION. Investors and security holders may obtain a free
copy of these SEC and Canadian securities regulatory filings (when available)
and other documents filed by Capital Gold or ▇▇▇▇▇▇ Gold at the SEC Web site
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇
or ▇▇▇.▇▇▇▇▇.▇▇▇,
as applicable. These SEC and Canadian securities regulatory filings and other
documents also may be obtained for free, as applicable, from Capital Gold by
directing such request to Capital Gold Corporation, Investor Relations, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at Capital Gold’s Web site at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
or from ▇▇▇▇▇▇ Gold by directing such request to ▇▇▇▇▇▇ Gold, Inc., Investor
Relations, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, B3J 2Z1, Canada or at ▇▇▇▇▇▇ Gold's Web site at ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Forward
Looking Statements
This
press release contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws. The use of any of
the words “plans”, “expects”, or “does not
expect”, “is expected”, “budget”, “scheduled”, “anticipates”, or “does not
anticipate”, “continue”, “estimates”, “forecasts”,
“objective”, “ongoing”, “may”, “will”,
“project”, “should”, “believe”, “intends” or variations
of such words and phrases or statements are intended to identify forward-looking
information or statements. Forward-looking information is based on the opinions
and estimates of management at the date the information is made, and is based on
a number of assumptions and subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking information. More particularly and
without limitation, this press release contains forward-looking statements and
information concerning the Acquisition and definitive agreement. The
forward-looking statements and information are based on certain key expectations
and assumptions made by ▇▇▇▇▇▇ Gold and Capital Gold. Although ▇▇▇▇▇▇ Gold and
Capital Gold believe that the expectations and assumptions on which such
forward-looking statements and information are based are reasonable, undue
reliance should not be placed on the forward-looking statements and information
because neither of them can give any assurance that it will prove to be correct.
Since forward-looking statements and information address future events and
conditions, by their very nature they involve inherent risks and uncertainties.
There are risks also inherent in the nature of the Acquisition, including
whether the completion of the Acquisition will ultimately occur, whether the
anticipated synergies of the acquisition will occur, incorrect assessment of the
value of the respective properties of each of ▇▇▇▇▇▇ Gold and Capital Gold, and
failure to obtain the required security holder, regulatory, third party and
other approvals. Readers are cautioned that the foregoing list of factors is not
exhaustive. There may be other factors that cause actions, events or results not
to be anticipated, estimated or intended. The forward-looking statements and
information contained in this press release are made as of the date hereof.
There can be no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such information. Neither ▇▇▇▇▇▇ Gold nor Capital Gold undertake
any obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or otherwise,
except in accordance with applicable securities laws.
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For
further information please contact:
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▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇
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Chief
Executive Officer
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Investor
Relations Manager
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▇▇▇▇▇▇
Gold Inc.
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Capital
Gold Corporation
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▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Director
of Investor Relations
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Chief
Financial Officer
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▇▇▇▇▇▇
Gold Inc.
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Capital
Gold Corporation
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▇▇-▇▇▇
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