CAPITAL GOLD ANNOUNCES RECORD GOLD PRODUCTION AT ITS EL CHANATE MINE

Capital Gold Corp. produced 4,350 ounces of gold in September at its El Chanate mine in Sonora, Mexico, bringing the combined production for August and September to a record two-month total of 9,100 ounces, over 1,000 ounces more than any previous two months. Meanwhile cash costs for the company's first fiscal year (excluding royalties) were kept to $224 an ounce -- well below industry average of over $400, contributing considerably to the company's bottom line.

In making the announcement, John Brownlie, Capital Gold's chief operating officer, said this represented the company's best production figures since operations began at El Chanate. "As a result of a strong team effort by a dedicated mine staff working with improved process equipment and advanced operating practices, our production has risen to an annualized rate of 55,000 ounces per year," Mr. Brownlie stated.

Mr. Brownlie said that despite these record achievements, Capital Gold, along with so many other publicly traded companies, has been recently affected by extraordinary market conditions. "We are acutely aware that our current share price in no way reflects the company's current strengths and growth potential. We, as well as many other fundamentally sound companies, are caught up in events not of our making, and as a result, our stockholders have been unfairly penalized. Be assured, however, we are a strong and resilient company and we will continue to improve and grow. We have achieved a great deal and are well positioned to restore shareholder value."

1. The company has been producing gold for over a year and continually increases production each quarter.
2. New drilling programs are under way at El Chanate to maximize proven and probable gold reserves. A new 43-101 estimate is anticipated in early 2009.
3. All upgrades are financed through operating cash flow.
4. The company's bank loan has been reconfigured and has a $5-million line of credit available at its discretion.
5. The company has a strong treasury of over $10-million.
6. It has achieved earnings in each of the first three fiscal quarters.

Given this strong performance, it is imperative that Capital Gold obtain a listing on a major national exchange such as the American Stock Exchange (Amex). To facilitate a listing, the company has proposed a reverse split. However, given that the stock price is at a 52-week low, management reserves the right to delay enacting the split if it deems the resulting share price will fall short of the $2 required by the Amex.

Executive vice-president Jeff Pritchard stated: "We have opted to continue with the voting process. It is important to note that, if the proxy is approved, it entitles management to initiate the reverse split. At the same time, it also allows management to delay or curtail the process completely. Investors should rest assured that, in this important matter, we will take the same cautious approach that has resulted in a well-funded and well-managed company with a bright future. The management at Capital Gold has many years of experience, and all can be certain, we will not be distracted by current events in our quest to continue to grow and increase shareholder value."