This is the other company I recomended with silverstone. Also going at a cheap valuation.

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TORONTO - Gammon Gold Inc. (TSX: GAM.TO) says it has an agreement to buy Capital Gold Corp. (TSX: CGC.TO) in an all-share transaction valued at $187 million.

Gammon will issue 0.1028 shares for each Capital Gold common share, with an exchange ratio value of 76 cents US.

Gammon said that is a 29 per cent premium of 10-day volume weighted average trading prices.

The two companies said after markets closed Thursday that they have signed a letter of intent for the deal. Closure requires due diligence, Capital Gold shareholder and other common regulatory approvals.

Gammon Gold is a Nova Scotia-based mid-tier gold and silver producer with properties in Mexico. It's flagship project is Ocampo in Chihuahua State.

Capital Gold is a Toronto-based gold production and exploration company with Mexican subsidiaries, through which it owns all of the El Chanate gold property in Sonora, Mexico.

Gammon shares closed up 43 cents or 4.7 per cent at $9.59 on the TSX prior to the announcement Thursday, while Capital Gold shares ended the day up two cents or 2.5 per cent at 81 cents.