CAPITAL GOLD CORP

CAPITAL GOLD CORP deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

CAPITAL GOLD CORP's exchange filed to remove a class of its securities from listing.

listing compliance notice

The Gammon merger closed on April 8, 2011, and Capital Gold is now a wholly-owned Gammon subsidiary. Each share was cancelled and converted into 0.5209 Gammon shares plus $1.09 cash, apart from shares held by holders who properly exercised appraisal rights. Shares are delisted from NYSE AMEX, and the company says it will file Form 15 to suspend reporting. On April 7 it repaid and terminated the Standard Bank credit agreement (July 17, 2008), with an immaterial early termination fee. Directors Cooper, Cutler, Huber, Sutherland and Hazlitt resigned, and Sutherland, Hazlitt and Chipman left their officer roles; Hazlitt and Chipman will serve Gammon for a 60-day transition. This resolves the Gammon thread, and the Timmins offer did not prevail. The merger agreement was amended three times (Oct 29, 2010, March 9, 2011, March 17, 2011).

business combination

On March 17, 2011 Capital Gold and Gammon amended the merger agreement (Amendment No. 3) to raise the cash part of the price by $0.30, from $0.79 to $1.09 per share; all other terms are unchanged. At the March 18 special meeting, stockholders voted to adjourn until April 1, 2011 so they have time to review the higher offer and a proxy supplement. This improves the Gammon terms and delays the vote that was scheduled for March 18. The filing does not say why the price was raised (that would be an inference).

material agreement

Capital Gold filed its definitive proxy statement/prospectus for the Gammon merger, first mailed around February 17, 2011. A special stockholder meeting is set for March 18, 2011, with a February 14, 2011 record date. Holders would receive 0.5209 Gammon shares plus US$0.79 cash per share, worth about US$5.34 per share based on Gammon's February 14, 2011 NYSE close. The agreement was amended on October 29, 2010, and the text visible here does not say what changed. Current holders would own about 20% of Gammon on a fully diluted basis, Capital Gold's shares would stop trading on NYSE Amex and the TSX, and the board unanimously recommends a vote in favour. Approval needs a majority of outstanding shares plus a majority of votes cast excluding certain people receiving change-of-control payments; abstentions count as votes against. Gammon shareholders do not need to vote. This moves the Gammon deal toward its vote.

business combination

Capital Gold's press release, filed on Schedule 14D-9, responds to an unsolicited exchange offer from Timmins Gold Corp., which filed an F-4 on February 10, 2011. Timmins had proposed an all-stock deal at 2.27 Timmins shares per Capital Gold share. The board says it rejected it after due diligence, citing Timmins' limited cash (about $4 million at December 31, 2010), operational concerns at its San Francisco Mine, thin management, and conditions on the offer. The board reaffirms its unanimous recommendation of the Gammon transaction. This continues the Gammon thread and adds a competing bid; the claims about Timmins are Capital Gold's own statements.

business combination

On October 1, 2010, Capital Gold agreed to be acquired by Gammon Gold Inc. Each Capital Gold share would be converted into 0.5209 Gammon common shares plus US$0.79 in cash, and Capital Gold would survive as a wholly-owned Gammon subsidiary. Capital Gold shares would be cancelled in the exchange, leaving holders only the right to the merger consideration. The deal needs a Capital Gold stockholder majority vote. Officers and directors have agreed to vote in favour, and the company has agreed not to solicit rival bids, though it may respond to an unsolicited superior proposal and give Gammon five business days to counter. This is a new thread that follows the August 2010 Nayarit acquisition; closing is subject to stockholder approval and other conditions, and the text visible here is truncated before those conditions and any termination fee.

material agreement

The Nayarit deal closed on August 2, 2010, making Nayarit a wholly-owned subsidiary of Capital Gold, after an Extension Agreement dated July 6, 2010. Capital Gold issued 12,454,354 shares to Nayarit holders and reserved 1,621,981 and 903,483 shares for former Nayarit warrants and options. Nayarit holders now own about 20.4% on a non-diluted basis, so existing holders are diluted by about that share. There were 61,223,853 shares outstanding on August 2, 2010. Colin Sutherland signed an employment agreement at $225,500 a year, and he and Bradley Langille signed six-month lock-ups. Bradley Langille was not made a senior executive. This resolves the pending Nayarit thread.

asset acquisition disposition

Capital Gold said the SEC declared its Nayarit S-4 effective on June 8, 2010, and moved its stockholder meeting to July 2, 2010 (the earlier plan was June 11). It also reported quarterly results to April 30, 2010: revenue of $17,525 thousand (up 41%) and net income of $2,779 thousand, which included $2,284 thousand of one-time severance charges. Cash cost per ounce sold rose to $403 from $263 a year earlier. Gold sold was 15,745 oz versus 13,347 oz. The filing gives a mix of dates for the record date (May 3 and May 5) and the text is inconsistent on this.

business combination

Capital Gold filed its S-4 registration statement for the Nayarit deal, registering 18,148,476 shares: about 12,099,135 for Nayarit shareholders, plus 4,830,938 and 1,218,403 reserved for former Nayarit warrants and options. Nayarit holders would own about 19.97% of Capital Gold on a non-diluted basis, so existing Capital Gold holders would be diluted by about that share. Shareholder votes are still to be scheduled, and approval needs a majority of Capital Gold votes cast.

business combination

On February 10, 2010 Capital Gold signed a business combination agreement to acquire Nayarit Gold Inc., a Canadian exploration company with concessions in Nayarit, Mexico, through an amalgamation with a new subsidiary. Nayarit shareholders would get 0.134048 Capital Gold shares per Nayarit share (ratio reflects a recent 4-for-1 reverse split of Capital Gold stock). Both boards approved it; it needs shareholder votes and must close within 120 days of the agreement. This is the Mexican acquisition strategy now becoming a concrete deal, and is a new share-issuing transaction for existing holders; Nayarit's John Brownlie (Capital Gold's COO) is a party to the agreement.

material agreement

the New York Stock Exchange certified CAPITAL GOLD CORP's securities for listing, clearing them to begin trading.

listing compliance notice

Capital Gold reported an updated reserve estimate for El Chanate from its consultant IMC: 43.1 million tonnes at 0.66 g/t, with 913,400 contained ounces and about 586,000 ounces expected to be recovered (64.2% recovery). It uses a $750 gold price versus $550 in the prior estimate, and replaces the 832,000 oz reserve in the earlier context. The company also says the new crusher/conveyor (May 2009) and leach pad/ADR work (January 2009) should lift output to about 70,000 oz per year in 2009.

resource reserve update

On July 1, 2008 AngloGold Ashanti North America told the company it would not use its one-time right to take a 51% interest in El Chanate under the December 15, 2000 Stock Purchase Option Agreement. This resolves the back-in right attached to the 2001 acquisition, so the company keeps 100% of El Chanate. Its chairman called it the best possible outcome and said the company wants to grow through acquisition, exploration and possible expansion of El Chanate. The press release states proven and probable reserves of 832,000 ounces of gold.

farm in farm out agreement

On August 15, 2006 the company's Mexican subsidiaries signed a credit agreement with Standard Bank for up to US$12.5 million to build El Chanate. It bears interest at LIBOR plus 4.00%, is guaranteed by the company, and is secured on the subsidiaries' assets. It is repayable in fourteen quarterly payments, with the first payment expected after start-up criteria are met, which management believes will be in the first quarter of 2008. This completes the loan negotiated through the earlier hedging agreements, although borrowing cannot start until Mexican collateral documents are formalised. As a fee the bank received 1,150,000 shares and a warrant over 12,600,000 shares at $0.317. The board also adopted a shareholder rights plan (a poison pill, with rights triggered at 20% ownership, expiring August 15, 2016) and bylaw amendments, including removing the right of 10% holders to call a special meeting. The rights plan lapses unless shareholders approve it by February 4, 2007.

capital raising announcement

On April 3, 2006 the company signed a second and final gold price protection agreement with Standard Bank plc. It agreed to sell 60,963.50 ounces of gold forward at $500 per ounce quarterly from March 2007 to September 2010, and to buy call options on the same volume at $535. It posted about $2.1 million cash collateral, returnable when the loan agreement is signed and funding conditions are met. Together with the earlier agreement, 121,927 ounces are covered and about $4.27 million collateral is posted. This completes the expected hedging required for the proposed Standard Bank credit agreement, which is still being negotiated.

material agreement

On February 10, 2006 the company issued 12,780,000 shares and warrants over 3,195,000 shares to 37 investors for about $3,195,000, again through IBK Capital Corp. (9% fee, agent warrants over 934,000 shares). The warrants are exercisable at $0.30 for eighteen months. Separately, Standard Bank Plc extended its commitment letter for a senior project finance facility of up to US$12 million for El Chanate until April 30, 2006. The filing also lists 2,955,004 shares issued in December 2005 and January 2006 on exercise of warrants and options. This is another equity raise continuing the El Chanate funding effort, and the bank loan is still not finalised.

capital raising announcement

The company closed a private placement on February 8 and 10, 2005 of 27,200,004 shares plus warrants over the same number of shares to 20 investors, for about $6.8 million. IBK Capital Corp. was placement agent, paid a 9% cash fee and received warrants over 2,702,000 shares. The investor warrants are exercisable at $0.30 for two years. The press release says proceeds are mainly for building the El Chanate open-pit gold project in Sonora, Mexico, with initial site work to start immediately. This funds the project but issues many new shares, diluting existing holders (inference).

capital raising announcement

The company (then filing as Leadville Mining & Milling Corporation) exercised on June 29, 2001 its option to buy 100% of Minera Chanate, S.A. de C.V. from AngloGold North America Inc. and AngloGold (Jerritt Canyon) Corp. The option was obtained effective December 15, 2000. Minera Chanate holds mining concessions in Sonora, Chihuahua and Guerrero, Mexico. Before closing it dropped 24 of its 106 concessions after due diligence and plans to drop up to 30 more, leaving 52, so the land held will be smaller than previously reported. Financial statements for the acquisition are to follow by amendment. The filing does not state a purchase price.

asset acquisition disposition