Capital Gold Corp.

Capital Gold Corporation is a profitable producing gold mining company. Capital Gold owns and operates the El Chanate open pit gold mine in Sonora, Mexico, which is currently producing at an annualized rate of over 60,000 ounces. The company achieved profitability within six months of operation and is today, one of the lowest cost gold producers. The company is focused on continuing to expand gold production at El Chanate, with the goal of becoming the next mid-tier producer in Latin America.

Watch BNN interview Capital Gold's President and COO, John Brownlie, about increasing its reserves more than 60%.

"This morning, Capital Gold Inc. announced the successful startup of the additional crushing unit and leach pad at its El Chanate gold mine in Mexico. Since January 5, the company has been stacking on the new pad and maintaining crushing rates in the order of 14,000–18,000 tons per day (our production estimates currently assume the lower-end of that range). The company also noted that the daily gold in solution reported to the recovery plant has increased to 60,000 oz per year, putting it on track to produce 70,000 oz in calendar 2010.

We are encouraged by the update and note that drilling has also resumed at the Saric property, located a short drive from the mine site. Preliminary drilling results released in early December suggest potential for additional resources there, providing the company with a second avenue for growth, given the project's proximity to the mine site. The plant at El Chanate has the capacity to produce 250,000 oz of annual metal, well above the mine's targeted production rate, so the idea would be to truck load carbon from Saric, thus reducing upfront capex and ongoing opex.

Overall, we view this update as positive.

Our target of $7.00/share has been adjusted for the 1-for-4 share consolidation that took effect yesterday."
    -STUART MCDOUGALL,   JENNINGS CAPITAL INC. (01/26/10)

"As expected, CGC finally announced the rollback of their shares in the market. The common shares of the company were posted for trading at the opening on Monday, Jan. 25, 2010, on a 1 to 4 consolidated basis, which reduces the overall shares outstanding to 48,535,154.

The company also announced that, to meet minimum share price requirements in connection with its NYSE Amex listing application, it was required to do this reverse stock split.

. . .As I have said before, I am not a big fan of rollbacks but I understand what the company is trying to accomplish. CGC is a serious player in the gold production business and is a very profitable company. The nature of their company was no longer suited to the OTCBB market and deserves to have a listing on the AMEX. Overall, this move will be well received in the longer term despite the initial loss of value the rollback has had on current investors. As is usually the case, the stock price takes a significant hit once the rollback has been initiated. Shares of CGC are trading as I write this at $3.23 U.S., which would be $0.81 cents pre-roll back.

I believe the stock could settle a bit more before solidifying at its new rollback level. This would be a good time to pick up shares for the longer term. CGC is a very solid situation moving forward and will do well in time as gold prices move higher.

. . .CGC remains a BUY."
    -   Mining Speculator (01/26/10)

TGR: Why don't we start Part II with some of your current top picks in from the MSG Model?

TW: Absolutely. Two of my standout companies are Capital Gold Corp. (TSX:CGC;OTCBB:CGLD; Frankfurt:CGU) and Fortuna Silver Mines Inc. (TSX.V:FVI), due to their impressive profitability. Capital Gold produced about 50,000 ounces in their year ending July 31 and reported over $10 million in fully taxed net profits. John Brownlie, who has been with the company since 2006, was just made President and COO in September. He is arguably one of the best operators amongst the juniors. He built the El Chanate mine in Sonora on time and on budget. It is now one of the lowest cost mines in the industry with a cash cost of just $330. Its reserves have grown from about 400,000 proven and probable (2P) ounces when the mine was built to more than 1.5 million 2P ounces today. They have just installed a new crusher module and built a second leach pad. They should produce about 70,000 ounces in calendar 2010. The residual leaching from the old pad could add another 20,000 ounces. They are unhedged and at current gold prices will generate cash flow of about $40 million. The stock is selling at less than five times calendar 2010 cash flow and less than eight times earnings.
    -   The Gold Report Interview with Trey Wasser (Pt. II) (01/11/10)

"Shares of CGC are closing in on the $1.00 level as the company continues to grow in stature and strength as the buzz on the street is that several companies are interested in Capital Gold as a takeover.

As we solidify around the $1.00 level, I would expect this would be a good time for the company to do a reverse split and clean up their share structure. I would expect the company to do a 4-to-1 reverse split, which would take our share price to the $4.00 level with only 25% of the current shares outstanding.

This is my opinion; it is warranted at this point and will bring new investors to the table.

As time goes on, and with rising gold prices, shares of CGC have nowhere to go but higher with a distinct possibility of a buy-out at some point.

CGC remains a BUY."
    -   Mining Speculator (01/07/10)

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