UPDATE 1-Timmins Gold asks Capital Gold to reconsider its offer

Fri Dec 3, 2010 8:44am EST

* Says willing for 'less onerous terms' in agreement

* Timmins values Capital Gold at $4.48/shr

Dec 3 (Reuters) - Timmins Gold Corp TMM.V said it asked the board of Capital Gold CGC.A CGC.TO to reconsider its offer for the company, which has already agreed to be bought by Gammon Gold GAM.TO.

On Oct. 1, Gammon said it would buy rival Capital Gold in a friendly $288 million cash and share deal as the mid-tier miner looks to strengthen its position as a leading Mexico-focused gold producer. [ID:nN01237883]

Timmins, which values Capital Gold at $4.48 per share, said it would be willing to enter into a merger agreement that "imposes far less onerous terms" than the terms contained in agreement with Gammon.

Vancouver-based Timmins said if Capital Gold mergers with it then it would significantly reduce termination fee.

Timmins is looking to create a mid-tier gold producer with the deal.

Capital Gold owns the El Chanate gold mine in Sonora, Mexico as well as the Orion development project in the country's Nayarit province.

Shares of Timmins closed at C$2.10 on Thursday on the Toronto Venture Exchange, while Capital Gold's shares closed at C$4.64 on the Toronto Stock Exchange. Capital Gold has lost more than 5 percent since Gammon made the offer. (Reporting by Aftab Ahmed in Bangalore; Editing by Maju Samuel) (aftab.ahmed@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: aftab.ahmed.reuters.com@reuters.net))