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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Wednesday, April 1, 2009

Gammon Gold & Capital Gold Merger

The Capital Gold BoD must be reading the Gold Stock Strategist. Ending merger talks makes sense for Capital Gold given the discounted value represented by the Gammon Gold offer.

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Capital Gold Corporation Announces End of Merger Discussions with Gammon Gold

Approximately 15,000 Ounces of Gold Produced for the First Three Months

NEW YORK, March 31 /PRNewswire-FirstCall/ -- Capital Gold Corporation reported today that the Letter of Intent with Gammon Gold, originally announced on March 12, was allowed to expire. The Board of Directors of Capital Gold made the decision not to proceed with the signing of the definitive agreement, and further negotiations will not take place.

El Chanate gold production continues at steady rate and the mine has produced approximately 15,000 ounces of gold for the first three months of 2009. The first major components of the new crushing plant have arrived on site. Once the new crusher is installed and online by late June, production at El Chanate is estimated to achieve a monthly rate of 6,000 ounces.

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Jennings cut Capital Gold's target price to C$1.75, which is about US$1.39. This is closer to my estimate of $1.50 per share based on 2009 cash flow multiple. Given Capital Gold's resource base, any buyout below $2.00 per share would be less than fair value IMHO.

Congratulations to Capital Gold shareholders.

Best,

The Gold Stock Strategist.

1 comment:

Anonymous said...

Sprott takes $10MM position in Metanor Resources.

http://sectornewswire.com/release040309pmrmto.htm

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