Capital Gold poised to build mine at El Chanate

Vancouver A US$12-million loan facility and a newly signed deal with a Mexican mining contractor set the stage for Capital Gold (CGLD-Q) to bring constructing a mine at its El Chanate gold project in northern Sonora State, Mexico. The company expects to close the financing package, which includes a US$12-million facility from Standard Bank, in early January. Mine construction would follow, with open-pit mining carried out by a local mining contractor. The Mexican contractor will perform all mining-related activities other than crushing.

A 2003 feasibility study envisioned a modest-sized, heap-leach operation capable of producing an estimated 47,857 oz. gold annually over a 62-month mine life. Capital costs are estimated at about US$14 million. The project is easily accessible from the Mexican highway, and is near power and water sources.

The study was based on reserves of 13.5 million tonnes grading 0.827 grams gold per tonne, or about 357,957 contained oz. gold. This estimate was based on a gold price of US$375 per oz., and in light of recent gold prices, the company says reserves have increased in value over initial projections.

Capital Gold reports that it has been given conditional approval for its shares to be listed for trading on the Toronto Stock Exchange. The New York-based company expects to qualify for listing in early 2006.