NEW YORK, March 17, 2011 /PRNewswire/ -- Capital Gold Corporation (Amex: CGC; TSX: CGC) acknowledges that, on March 15, 2011, Timmins Gold Corp. ("Timmins") added $0.25 in cash to its unsolicited offer for Capital Gold Corp. ("Capital Gold"). Also on March 15, 2011, Gammon Gold Inc. ("Gammon") announced that it was proposing to amend its merger agreement with Capital Gold to increase the cash component of the merger consideration to be paid to Capital Gold's stockholders by $0.30, from $0.79 to $1.09. The Board of Directors of Capital Gold has considered both bids and unanimously reaffirms its support of the merger with Gammon, as increased.
Steve Cooper, Chairman of the Board of Directors stated, "The Board has carefully considered both proposals and believes that the Gammon transaction continues to be the best transaction reasonably available to its stockholders. The Board urges Capital Gold stockholders to support the Gammon transaction."
Capital Gold notes that the addition of cash to the Timmins bid comes as a result of a loan from Sprott Resource Lending Partnership, the terms of which Timmins has not yet disclosed. Capital Gold believes that this loan introduces further risk to Timmins' financial position. In addition, Capital Gold continues to be concerned that Timmins does not have sufficient capital to execute its business plan.
Capital Gold currently intends to convene its previously scheduled Special Meeting at 10 a.m. on March 18, 2011, solely for the purpose of having Capital Gold's stockholders vote on an adjournment of the Special Meeting to a later date, in order to permit Capital Gold and Gammon to complete an amendment to the merger agreement and to prepare and distribute a supplement to the definitive proxy statement/prospectus, and to give Capital Gold's stockholders additional time to consider the revised price and to review the supplement to the definitive proxy statement/prospectus. The date, time and place at which the Special Meeting will be reconvened for purposes of voting on the merger with Gammon will be announced in the near future, and the parties expect that the supplemental proxy statement/prospectus will be available early next week. The adjournment will preserve the February 14, 2011 record date for the determination of stockholders entitled to receive notice of and vote at the Special Meeting and permit Capital Gold's stockholders to vote on, and if it is approved, permit the parties to close, the Gammon merger in an expeditious manner.In order to ensure that Capital Gold's stockholders are able to vote on the Gammon merger at such adjourned meeting, the company is urging all holders who have not voted or who had previously voted Against on Timmins gold card to vote today For Proposal 2 on the WHITE proxy card. Capital Gold also announced that in an alert to its clients yesterday, ISS announced the revised terms of the Gammon merger and the Timmins proposal and did not change its recommendation that stockholders vote FOR the Gammon merger and the adjournment proposal on the WHITE card.