Timmins Gold Mails Letter to Capital Gold Shareholders

March 9, 2011

PRESERVE YOUR RIGHT TO A BETTER DEAL - VOTE NOW AGAINST THE PROPOSED GAMMON MERGER

Dear Capital Gold Stockholder:

As the March 18 Capital Gold Special Meeting approaches, we urge you tocarefully consider what's at stake: The Capital Gold Board of Directorsis asking you to surrender your shares to Gammon in a transaction thatdelivers significantly less value than an existing proposal. Timmins hasa superior offer on the table that both attractively rewards yourinvestment in Capital Gold and allows you to participate in the growthand value creation of the combined company going forward. Under Timmins'proposal, each share of Capital Gold common stock would be exchangedfor 2.27 common shares of Timmins. Based on the average of therespective closing share prices for the last 60 trading days, Timmins'proposal has a value of US$5.57 per Capital Gold share and exceeds thevalue of the Gammon offer by US
.54 per Capital Gold share, or about11%.

We believe the combination of Timmins and Capital Gold deliversstrategic benefits that will enhance the value of your Capital Goldstock. The combined company will be a Mexico-focused, mid-tier goldproducer with combined proven and probable reserves of approx. 2.2million oz. of gold, and will benefit from:

--  Re-rating upside potential;
--  Stronger market presence, liquidity and trading volume;
--  Market cap of over $700 million, before potential re-rating;
--  Management team with a track record of building shareholder value;
--  Experienced operations team based in the region; and
--  Enhanced exploration opportunities.

THE CHOICE IS CLEAR - USE YOUR GOLD PROXY CARD TO VOTE BY TELEPHONE OR INTERNET AGAINST THE GAMMON TRANSACTION NOW.

DO NOT USE CAPITAL GOLD'S WHITE PROXY CARD.

CAPITAL GOLD AND GAMMON ARE DISTORTING THE FACTS TO GET YOUR VOTE - DON'T BE MISLED!

The Board of Directors of Capital Gold has made various unsubstantiatedstatements about the comparative attributes of the Timmins proposalversus the Gammon Gold offer.

ASK YOURSELF: Why are Gammon and Capital Gold asking you to cast acrucial vote on March 18 before Gammon releases its 2010 financialresults, including important information with respect to ongoingstripping costs, and before Gammon discloses the all-in costs to restartEl Cubo at the end of March?

THE TRUTH ABOUT GAMMON - POOR PERFORMANCE, MISSED TARGETS AND EROSION OF SHAREHOLDER VALUE

Throughout the sale process, Capital Gold appears to have favored Gammonover all other bidders. Capital Gold allowed Gammon a six-month headstart to negotiate a transaction, refused to engage in meaningfuldialogue with Timmins and announced a restrictive, off-market deal withGammon when the value of Timmins' proposal exceeded the Gammon offer byUS
.44 per Capital Gold Share. Capital Gold then refused to declareTimmins' proposal superior to force Gammon to increase its bid, evenwhen the value of the Timmins' proposal exceeded the Gammon offer bymore than US$1.00 per Capital Gold Share.

What Timmins and many others have been asking is: Why Gammon? A look atGammon's track record raises major concerns. If you don't believe us,see what others have said:

"Gammon Gold was the third worst performing S&P/TSX index stock of 2010." Globe and Mail, December 31, 2010

"'Why not all gold miners are alike': Yamana and Kinross are standoutsfor their gains of 131% and 135% respectively. Meanwhile Gammon Gold ...stands out for its 9.8% decline. Yes, even if you had made a prescientbet on gold at the start of the remarkable five year bull market in theprecious metal, you would have nothing to show for your wisdom but a bigheadache." David Berman, Globe and Mail, March 31, 2010

"With a history of disappointing and a plethora of investment choicesavailable within the gold space, many investors have shied away from GAMsince the start of the year." Dan Rollins, UBS Securities, November 15,2010

"We maintain our neutral rating (of Gammon) as we continue to view thepotential Capital Gold transaction as dilutive to NAV. We are alsobecoming concerned with the continued underground mining at belowreserve grades." Tony Lesiak, Macquarie Equities Research, December 8,2010

The Capital Gold Board of Directors argues that Gammon offers a betterdeal than Timmins. It's time to take a hard look at the facts.

Premium to Market?

Capital Gold's Board of Directors claims that the Gammon offerrepresents a premium to market. In reality, both Gammon's and Timmins'proposals exceeded the trading value of Capital Gold at the time theproposals were announced. However, based on the average of therespective closing share prices for the last 60 trading days, Timmins'proposal has a value of US$5.57 per Capital Gold share and exceeds thevalue of the Gammon offer by US
.54 per Capital Gold share.

SINCE SEPTEMBER 24, 2007, THE SHARE PRICE OF TIMMINS HAS APPRECIATED BY287% AND THE SHARE PRICE OF GAMMON GOLD HAS DECLINED BY 24%.

Balance Sheet Strength?

Gammon's cash on hand represents the remaining proceeds of a US$115million private placement Gammon completed in October 2009. At the endof that quarter, December 31, 2009, Gammon reported that it had US$128million of cash on hand. As of the date of Gammon's last publishedfinancial statements, September 30, 2010, Gammon had only US$107 millionof cash on hand. This is a decline of 17%. So look closely at thissupposed cash cow. Gammon is actually cash negative over the last sevenquarters despite record gold and silver prices over the same period anddespite the fact that it benefited from US$14 million of cash proceedsfrom the exercise of stock options. Look closer and you will see that asof September 30, 2010, Gammon's payables exceeded receivables by US$38million and that Gammon had long term debt of US$33 million. When youcombine that with the US$48 million cash component of Gammon's proposalto acquire Capital Gold, Gammon's net cash position - if it succeeds inacquiring Capital Gold - would be negative US$12 million. In addition,Gammon has also budgeted US$45 million for exploration in 2011. Based onGammon's disclosure, it appears that Gammon will use all of itsexisting cash and will either need to raise more equity or borrowheavily to meet its current obligations, fund its planned capitalexpenditures, and close a transaction with Capital Gold.

In addition to what Gammon has disclosed, there are a number of unknownsthat Gammon has not disclosed. For example, Gammon has not disclosedany estimate for restarting operations at its El Cubo mine. But lookwhat Macquarie Equities Research had to say on February 24, 2011: "Therestart of the El Cubo Mine will encompass several one-time chargesincluding collective bargaining charges and severance payments, whichwill likely be realized in Q410."

Gammon has also not accrued any charge for a potential judgment in theongoing class action lawsuit in Ontario which claims damages for"Reckless Misrepresentation" in connection with Gammon's C$20 per share,C$200 million bought deal in April 2007. The claim for damages, whilenot proven, alleges that "...as a result of the defendants'misrepresentations ... Class Members purchased Gammon shares pursuant tothe Prospectus at substantially inflated prices, and sustained losseswhen Gammon belatedly disclosed the truth."

So if you think Gammon is a cash cow, look again.

Operating Synergies?

Gammon Gold does not have current operations in Northern Sonora whereCapital Gold's El Chanate mine is located. They claim that theredeployment of used equipment is an important synergy that makes Gammona good deal. Do you think so? We don't! Moreover, Gammon managementwill have to dedicate substantial time and effort to the restart of ElCubo, which we expect will detract from their ability to makeimprovements at El Chanate.

Strong Management Team with Operating Track Record?

Gammon's own financial adviser, UBS Securities, observed in November2010 that Gammon management has a "history of disappointing". See foryourself.

--  Fiscal year 2009 guidance was 185,000 to 205,000 ounces of gold and
actual production was 136,309 ounces of gold - a 26% miss from the low
end of their range.
--  Fiscal year 2010 guidance was 150,000 to 180,000 ounces of gold and
actual production was 103,220 ounces of gold - a 31% miss from the low
end of the range.
Mining operations at the Ocampo open pit required capitalized strippingcosts of US$22.6 million in fiscal 2009. In its September 30, 2010MD&A, under the heading Cash Flow, Gammon stated, "Current yearcapital expenditures were greater than the prior year due to an increasein capitalized stripping costs ..." Combining capitalized andnon-capitalized stripping would result in a strip ratio of at least 10to 1, the cost of which has contributed significantly to Gammon'sdeclining cash balance. The real question that Capital Gold'sstockholders should be asking is when will this "history ofdisappointing" end?

Visibility as a Mid-Tier Producer?

Capital Gold's letter to its shareholders on March 1 stated that Gammon"provides better re-rating potential." Capital Gold's own adviser,Cormark, disagreed. Compared to the Gammon deal, it said:

"...the long term valuation re-rating was potentially greater under atransaction with Timmins Gold" Gammon F-4, February 15, 2011, p. 60

Exposure to Large Resource and Reserve Base at Ocampo and El Cubo?

In 2009, after 115,000 meters of drilling at Ocampo, the Globe and Mailnoted that "the result was actually a decrease in ounces" (DavidBerman, Globe and Mail, March 31, 2010). Gammon's own disclosure revealsthat its reserve grades are declining annually.

Unlike Gammon's "History of Disappointing" Timmins has:

--  Been cash flow positive from operations since its first quarter of
production in April 2010;

--  Lowered its cash costs from US$697 in its first quarter of production to
US$439 for the third quarter of production ended December 31, 2010;

--  Paid, out of cash flow, seven payments on its gold loan totaling US$15.7
million (only five payments remain);

--  Met its initial production target made at the commencement of production
at the San Francisco mine of an annual production rate of 80,000 oz. Au;

--  Increased its annual production target to 100,000 oz. Au;

--  Increased reserves by 28%(i);

--  Raised the crusher throughput from 11,500 tonnes per day to
approximately 14,000 tonnes per day (and has started the expansion to
take capacity to 18,000 tonnes per day in July, 2011);

--  Increased the heap leach pad capacity from 25 to 32 hectares to receive
an additional 10 million tonnes; and

--  Staked the mineral rights to an additional 95,000 hectares of claims
along the highly prospective Sonora-Mojave megashear structural province
in Northern Sonora (these claims form a 65 km exploration corridor
between Timmins' mine and Capital Gold's El Chanate mine).

SEND A MESSAGE TO THE CAPITAL GOLD BOARD THAT YOU WILL NOT SETTLE FOR INFERIOR VALUE

In making your decision, ask yourself:

--  Why did the Capital Gold board sign an agreement with Gammon when there
was a better offer on the table?
--  Why did the Capital Gold board not force Gammon to increase its offer
when presented with a superior proposal?
--  Why is the Capital Gold board facing a litany of lawsuits alleging
breach of fiduciary duty to Capital Gold stockholders and a flawed
process?
--  Why didn't the Capital Gold board listen to the input from their major
shareholders who have signed agreements to support Timmins' proposal,
when considering which transaction would have the better chance of
shareholder approval?

We believe that Gammon and the Capital Gold board have not, and indeedcannot, provide Capital Gold stockholders with convincing answers tothese questions.

VOTE AGAINST THE GAMMON TRANSACTION NOW TO PRESERVE YOUR RIGHT TO A BETTER DEAL

We believe that the proposed acquisition of Capital Gold by Gammonundervalues your investment. We believe that Capital Gold stockholderswill see significant greater short-term and long-term value through acombination with Timmins Gold.

YOUR VOTE IS IMPORTANT

We urge you to USE THE ENCLOSED GOLD PROXY CARD TO VOTE AGAINST theCapital Gold board's proposal to adopt the plan of merger with Gammonand send a message to the Capital Gold board that it should give properconsideration to all proposals it receives.

Preserve your right to a better deal.

Sincerely,

"Bruce Bragagnolo"

Bruce Bragagnolo, Chief Executive Officer

Timmins Gold Corp.