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Capital Gold Corp. (CGC) and Nayarit Gold Enter Into Merger Agreement

Capital Gold Corp. and Nayarit Gold Inc. today jointly announced that they have entered into an agreement with respect to a proposed business combination in an all-share transaction. The board of directors of both firms will recommend approval of the deal to their shareholders, which must also approve the merger.

Nayarit shareholders will receive 0.134048 shares of Capital Gold for each share of Nayarit they own. After the merger, Nayarit shareholders will own nearly 20% of the new merged company. Pending shareholder and regulatory approvals, the transaction is expected to close in May 2010.

Both companies are involved in metals mining in Mexico. Capital Gold owns 100% of the El Chanate gold property in Sonora, Mexico. The company has also begun exploration of 4,100 hectares of near the town of Saric, 50 miles from El Chanate. Nayarit Gold is a Canadian company with its flagship property in the Orion District in the state of Nayarit, Mexico. There is an assessment showing that the 105,000 hectares have the potential for the mining of 1.182 million tons of gold and silver.

The management of both companies believes that the merger will benefit all shareholders. Nayarit’s CEO and president, Colin Sutherland, expressed the thoughts of both managements saying, “We believe the combination with Capital Gold creates both near-term and long-term value for our shareholders. The quality of the respective assets, the strength of the management teams, along with our combined proven track record of building value creates an exciting platform for the future.”

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