NEW YORK, Feb. 14, 2011 /PRNewswire/ -- Capital Gold Corporation (TSX: CGC; NYSE Amex: CGC) acknowledges that on February 10, 2011, Timmins Gold Corp. ("Timmins") filed a Form F-4 Registration Statement (the "F-4") to proceed with an unsolicited exchange offer to acquire control of Capital Gold Corporation ("Capital Gold"). In the F-4, Timmins questions Capital Gold's rejection of its previously announced proposal, the due diligence process undertaken by the special committee of the Board of Capital Gold (the "Special Committee") and the Capital Gold Board's unanimous determination to terminate consideration of the Timmins proposal. In response to Timmins' assertions, Capital Gold wishes to provide additional information about the process undertaken, to summarize its concerns about the Timmins' proposal and to highlight a number of the reasons why the Capital Gold Board supports a transaction with Gammon Gold Inc. ("Gammon"). Timmins' Proposal and the Special Committee's Due Diligence Process On December 23, 2010, a representative of Timmins contacted Capital Gold's legal advisor to indicate that the proposal previously made by Timmins for a "merger of equals" remained open. The proposal was not materially different from that made on September 3, 2010, which proposed an all-stock transaction in which each share of Capital Gold's stock would be exchanged for 2.27 shares of Timmins' stock. Notwithstanding the fact that Capital Gold's Board had unanimously determined, on three separate prior occasions, that the Timmins proposal was not superior to the terms set forth in the agreement and plan of merger, dated as of October 1, 2010, by and among Gammon, Capital Gold Acquireco, Inc. and Capital Gold (the "Merger Agreement"), based on the price at which Timmins' stock traded during the month of December 2010 and advice of financial and legal counsel, it was determined that the Capital Gold Board had a fiduciary duty to further explore the Timmins proposal and to determine if it was a superior proposal, as defined in the Merger Agreement. On January 6, 2011, members of the Special Committee and its financial and legal counsel met with representatives of Timmins and its advisors to discuss aspects of the Timmins proposal. During that meeting, Timmins represented that Timmins had sufficient cash available to pay the termination fee and other transaction expenses required by the Merger Agreement and to fund ongoing operations of both Timmins and Capital Gold going forward. During that meeting, Timmins was advised that, in order for the Capital Gold Board to determine if the Timmins proposal was a superior proposal, Capital Gold would need to conduct and be satisfied with the results of comprehensive legal, operational, financial and technical due diligence with respect to Timmins. The Special Committee informed Timmins that such due diligence was necessary because of, among other factors, the "going concern" issue set forth in Timmins' most recent financial statements and concerns that Timmins had insufficient cash to pay the termination fee, other transaction costs, and the ability to finance operations of the combined companies going forward. As such, Timmins was given a due diligence production request, together with a list of detailed financial and operational questions that were appropriate considering the nature of the transaction. After initial resistance from Timmins, a site visit to Timmins' San Francisco Mine was arranged; however, Timmins refused to grant Capital Gold's Chief Financial Officer access to the site or critical financial documents at that time. Subsequent to the site visit, representatives of Capital Gold provided Timmins with a second due diligence request list focused particularly on Timmins' operations.