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.

In the weeks that followed, Timmins was unresponsive to Capital Gold’s due diligence requests

and tried to dictate the depth and scope of Capital Gold’s due diligence review by limiting access

to certain financial and technical information. Capital Gold was never provided access to

Timmins’ financial books and records. Despite these challenges, Capital Gold invested a

considerable amount of time and money reviewing the limited due diligence materials produced

by Timmins and publicly-available information. While individual members of Capital Gold’s

Board based their determination on different reasons, they unanimously determined to terminate

consideration of the Timmins proposal based on the due diligence conducted and determination

made by the Special Committee that the Timmons proposal presented too high a level of

financial risk. Specifically:

According to the information provided (and subsequently publicly disclosed by Timmins),

Timmins had approximately $4 million in available cash on hand as of December 31, 2010, with

current liabilities exceeding current assets. Timmins has set forth its financial requirements for

2011 at the bottom of page 60 of the F-4 to include “exploration expenditures of C$21 million,

capital expenditures of C$5 million for plant and equipment at the San Francisco Mine and

expenditures of C$5 million for general and administrative expenses.” A further $2.55 million in

property option payments are also due in 2011. Should Capital Gold choose to enter into an

agreement with Timmins, additional one-time expenses of approximately $20 million would be

payable, including the Gammon termination fee, change of control payments and advisory fees.

Additionally, with Timmins’ gold loan owing to Sprott Asset Management LP of approximately

$13 million plus Capital Gold’s 2011 capital requirements of approximately $30 million, the

combined entity would have 2011 capital requirements of in excess of $95 million. It is

estimated that a substantial portion of these expenditures would need to be funded from capital

raised from third parties in the public markets.

Capital Gold believes that there is considerable risk associated with Timmins’ ability to raise that

amount of capital. Timmins clearly agrees with this assessment, as the F-4 highlights this risk on

page 38: “Timmins’ inability to access additional capital could have a negative impact on its

growth strategy”. Moreover, even if Timmins were able to raise the necessary funds, given the

volatility of Timmins stock price, it is reasonable to conclude that Timmins may be required to

raise capital at a significant discount to prevailing market prices, which would cause immediate

and perhaps substantial dilution to the proposed all stock consideration to be received by the

Capital Gold stockholders under the Timmins proposal.

In addition to the above financial concerns, the Special Committee unanimously based their

determination on the fact that the information provided by Timmins with respect to its financial

position was not consistent with prior statements thus raising concerns about its management,

internal financial controls, the ability to fund transaction costs and the operations of the

combined company going forward. The Special Committee had the following concerns that led

to their determination to terminate negotiations with Timmins:

To the extent that Capital Gold was permitted to conduct timely due diligence on the operations

of Timmins, the Special Committee noted that Timmins’ principal asset, the San Francisco Mine

in Mexico, is in its initial start-up phase and has yet to reach the operating goals set forth in the

November 2010 Micon Technical Report. Capital Gold has concerns with respect to (i) the short

mine life (ii) the variance in the life of mine grade disclosed and the actual grade that has been

mined to date and what impact that has on the mine life, (iii) the variance in projected life of

mine cash costs and the costs that have been published to date and what impact this will have on

future cash flows and valuations, and (iii) ultimate leach recovery not reaching the life of mine

expectation of 70%.

Capital Gold believes that the risk of operational issues is not insignificant. Timmins clearly

agrees with this assessment, as the F-4 highlights this risk on page 39: “Timmins has a limited

operating history and therefore cannot ensure the long-term successful operation of its business

or the execution of its business plan”.

Timmins’ inability to respond to Capital Gold’s due diligence requests in a timely manner, its

lack of a full time chief financial officer and apparent lack of appropriate internal financial

controls raises significant concerns among members of the Special Committee. In the

assessment of the Special Committee, the management of Timmins lacks sufficient depth to

execute a transformational merger and to operate the combined companies going forward.

Capital Gold has completed sufficient due diligence to determine, in the prudent exercise of its

fiduciary duties and following a full and fair evaluation process, that the proposed exchange

offer made to Capital Gold stockholders on February 10, 2011 by Timmins is not in the best

interests of the Capital Gold stockholders. However, the proposed Timmins exchange offer

remains subject to a number of conditions as set forth in the F-4. The most critical include the

reinstatement of a due diligence condition, a shareholder approval condition on the part of

Timmins’ shareholders and a listing condition (Timmins’ common stock is not listed on any

United States securities exchange), all of which raise material transaction risk in the Timmins

offer.

By contrast, Gammon:

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Capital Gold Corporation (“Capital Gold” or the “Company”) is a gold production and

exploration company. Through its Mexican subsidiaries and affiliates, it owns 100% of the “El

Chanate” gold mine located near the town of Caborca in Sonora, Mexico. On August 2, 2010,

Capital Gold acquired Nayarit Gold Inc. Capital Gold is focused on optimizing the El Chanate

operations and advancing the Del Norte deposit in the Orion District in the state of Nayarit,

Mexico. Capital Gold also owns and leases mineral concessions near the town of Saric, also

located in Sonora, that are undergoing exploration for gold and silver mineralization. Additional

information about Capital Gold and the El Chanate Gold Mine is available on the Company’s

website, www.capitalgoldcorp.com.

The exchange offer proposed by Timmins and referred to in this press release has not

commenced. As required, Capital Gold will file with the Securities and Exchange Commission a

Solicitation/Recommendation Statement on Schedule 14D-9. Capital Gold stockholders are

advised to read the Solicitation/Recommendation Statement on Schedule 14D-9 if and when it

becomes available because it will contain additional important information. Stockholders may

obtain a free copy of the Solicitation/Recommendation Statement on Schedule 14D-9 as well as

any other documents filed by Capital Gold in connection with the proposed exchange offer free

of charge at the SEC’s website at http://www.sec.gov.