TORONTO (miningweekly.com) – Amex- and TSX-listed Capital Gold has agreed to merge with Canadian junior Nayarit Gold for shares, the firms announced on Thursday.

Both companies have gold exploration assets in Mexico and Capital owns and operates the El Chanate mine in the country. Nayarit recently completed a preliminary economic assessment on its own flagship Orion property.

The firms have agreed that, subject to a number of conditions, including shareholder approval on both sides, Nayarit shares will become exchangeable into Capital Gold stock at a ratio of 0,134048 Capital Gold shares for each one Nayarit share.

Once the transaction closes, which is expected to be in May this year, Nayarit shareholders will own about 19,97% of the combined company.

"We anticipate that the proposed business combination will significantly strengthen both companies and add shareholder value through additional mineral and human resources, and synergies on many levels," said Capital Gold president John Brownlie.

After the merger, the board of Capital Gold will comprise its existing directors, plus one nominee from Nayarit.

Brownlie will continue to serve as president and Nayarit CEO Colin Sutherland and strategic adviser Bradley Langille will join the company as senior officers.

"We believe the combination with Capital Gold creates both near-term and long-term value for our shareholders," Sutherland commented in a statement.

"The quality of the respective assets, the strength of the management teams, along with our combined proven track record of building value creates an exciting platform for the future."

Shares in Capital Gold slid 2,14% on Thursday, to C$3,65 apiece by 15:58 in Toronto.

Nayarit declined 3,85%, to C$0,50 a share.

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