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Friday, 13th March 2009 (1584 views)

Gammon Gold has announced that it has agreed to purchase rival Capital Gold for around $150 million (£107 million).

Under the terms of the all-share deal, Gammon will assume control of the El Chanate gold property in Sonora, Mexico.

The agreement will see Capital Gold shareholders receive 0.1028 of a Gammon Gold share for each share they currently hold, valuing Capital Gold at around $0.76 per share.

The Chanate gold property entered production in July 2007 and the transaction is subject to completion of due diligence, shareholder and regulatory approvals.

Once the deal closes, John Brownlie, currently Capital Gold's chief operating officer and director, is expected to become a director of Gammon Gold.

Based in Halifax, Nova Scotia, Gammon Gold is a mid-tier gold producer with properties in Mexico, including the Ocampo project in Chihuahua State, which achieved commercial production in January 2007, in addition to the El Cubo operation in Guanajuato State and the Guadalupe y Calvo development property in Chihuahua State.

 

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