Nova Scotia-based Gammon Gold (TSX: T.GAM, Stock Forum) announced after Thursday’s market close that it has entered into an agreement to acquire Capital Gold Corporation (TSX: T.CGC, Stock Forum) in an all-share transaction worth $150 million.

Under the proposed transaction, the company will issue of 0.1028 Gammon Gold shares for each Capital Gold common share outstanding, implying a value for each Capital Gold share of 76 cents.

The letter of intent provides that the parties plan to complete their respective due diligence and negotiate the terms of a definitive agreement by March 31.

Gammon Gold operates the flagship Ocampo Project in Chihuahua State, Mexico, the El Cubo operation in Guanajuato State and has the Guadalupe y Calvo development property in Chihuahua State. Through its Mexican subsidiaries and affiliates, Capital Gold owns 100% of the El Chanate gold property in Sonora, Mexico.

On the Gammon Gold Bullboard Thursday night, casher said:

“seems to be fair for both

capital gold will be at an all time high tomorrow, they are too small to get much further by themselves it will add a good low producing asset to Gammon, while the increase in production should balance the new 20+ million shares issued[sic].”

However, on the Capital Gold Bullboard, as part of a larger post, Trevor4566 noted: “…In my opinion, based on current Gold prices, CGLD should have a market cap somewhere around the $249.6 million area. With 193.1 million shares outstanding, that would value the stock around $1.29 per share[sic]”…

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