Chesapeake to Merge with American Gold Capital Corp.

VANCOUVER, British Columbia -- Metates, Mexico and the Talapoosa, Nevada Gold Project Added to its Pipeline of Advanced Mexican Exploration Projects

Chesapeake Gold Corp. (TSX VENTURE:CKG) ("Chesapeake") and American Gold Capital Corporation (TSX VENTURE:AAU) ("American Gold") are pleased to announce that they have reached an agreement dated as of March 3, 2006 for a business combination of the two companies (the "Letter Agreement").

American Gold, like Chesapeake, is engaged in the exploration, development and acquisition of gold and silver properties, primarily in Mexico and the United States.

The proposed transaction will in the opinion of the management of both companies, provide the combined company with several key advantages:

- A well-financed exploration industry leader with over $40 million in cash and working capital, no debt and a seasoned exploration and management team.

- The largest undeveloped gold and silver deposit in Mexico, the Metates property.

- A disseminated epithermal gold-silver deposit in Nevada USA, the Talapoosa property, with meaningful exploration potential.

- A dominant portfolio of exploration and development mineral projects in Mexico and Central America.

"We believe that the current rising gold price, a trend we expect to continue for many years to come, will provide our shareholders with opportunities to gain significant value from an excellent portfolio of diversified precious metals opportunities. The Metates and Talapoosa gold projects combined with the team that discovered El Sauzal in Mexico and Marlin in Guatemala has one of the best pipelines of gold and silver prospects in the industry," said Chesapeake President Randy Reifel.

Pursuant to the business combination, Chesapeake will issue for every one (1) outstanding common share of American Gold (i) 0.29 Chesapeake common shares ("Shares"), (ii) 0.145 Chesapeake common share purchase warrants ("Warrants") and (iii) 0.29 Chesapeake rights ("Rights"). Based on 30,855,525 outstanding common shares of American Gold this would result in the issuance by Chesapeake of approximately 8,948,102 Shares, 4,474,051 Warrants and 8,948,102 Rights.

Each Warrant will entitle the holder to purchase one (1) Chesapeake common share at $8.00 for a term of 5 years. Each Right will, on or after such date (the "Exchange Date") as the average London PM fix closing trading price of gold for the trading days on such market during any 90 day period is equal to or greater than US$850 per ounce, be exercisable for one (1) Chesapeake common share at $1.00 for a term of five years (which will be extended by one year if the trading price for gold has been at or above US$850 per ounce on any day during the last six months of the five year term).

In the Letter Agreement Chesapeake has agreed to use its best efforts to obtain a stock exchange listing for the Warrants and Rights. If the proposed listing of the Rights is not obtained, within 60 days after the closing of the business combination, the exercise price of the Rights will be reduced to nil. The five year term will be extended by 3 months if the trading price for gold has been at or above US$850 per ounce on any day during the last 90 days of the five year term.

Metates is a very large, low grade gold and silver deposit which Cambior Inc. drilled in the past. In 1996 Independent Mining Corporation of Tucson, Arizona ("IMC") calculated a mineral inventory of Metates and using a 0.70 equivalent gold cut-off, the estimated tonnage and grade was 492 million tones at a grade of 0.74 g/t gold and 18.2 g/t silver. In 2004 Watts, Griffiths and McQuat ("WGM") prepared a technical report for American Gold which included an audit review of the IMC mineral inventory. WGM supported the IMC estimated tonnages and grades of the Metates deposit but due to prevailing low grade gold price at the time of the report the mineral inventory could not be classified as a resource in compliance with NI 43-101 requirements. No recent exploration drilling has been completed on the project. The above resource is considered historic in nature, does not comply with NI 43-101 standards, has not been verified by the Company and therefore should not be relied upon.

The Talapoosa project is a disseminated epithermal gold-silver deposit in Nevada. Extensive exploration and development work has been completed including 71,000 meters of drilling along with metallurgical test work and environmental studies. In 1996 Miramar Mining Corporation, pre-National Instrument 43-101, cited a measured and indicated resource of 42.7 million tons of 0.025 opt gold (1.06 million ounces) and 0.34 opt silver (14.5 million ounces). In 2002 Pincock Allen & Holt reviewed this resource estimate and reported the classification met the definitions as stated by National Instrument 43-101.

If the proposed transaction is completed, it is anticipated that Chesapeake will have a total of 28,685,897 shares issued and outstanding. Of these shares, approximately 68.8% will be held by the existing Chesapeake shareholders and 31.2% will be held by the existing American Gold shareholders. In addition, it is anticipated that American Gold shareholders will hold warrants to acquire approximately 4.5 million additional shares and Rights to acquire a further approximately 9.1 million shares which if fully exercised would represent approximately 53.4 % of the then outstanding shares.

If the proposed transaction is completed the combined company will have approximately $40 million in cash and cash equivalents contributed as to approximately $26 million (65%) by Chesapeake and as to approximately $14 million (35%) by American Gold.

The Board of Directors of both companies have unanimously approved the Letter Agreement. Pursuant to the Letter Agreement, each company has agreed not to solicit third party interest in alternative transactions. Each company has also agreed to pay a $3.0 million break fee to the other if it terminates the Agreement to accept a superior proposal.

The proposed transaction is subject to confirmatory due diligence, the negotiation, settlement and execution of a definitive combination agreement, regulatory approvals including approval of the TSX Venture Exchange, the approval of American Gold shareholders, the approval of the shareholders of Chesapeake, if required, and other conditions. Subject to the satisfaction of these conditions, the business combination is expected to be completed on or before June 30, 2006 or such later date as may be agreed by the parties. However, there can be no assurance that the conditions will be satisfied or that the proposed transaction will be completed as proposed, if at all.

Further information on the proposed transaction is anticipated to be included in an information circular to be sent to the shareholders of American Gold and if required Chesapeake.

The TSX Venture Exchange has not reviewed and has not passed upon the merits of the proposed transaction and has neither approved nor di sapproved the contents of this press release.

American Gold Capital Corporation (TSX VENTURE:AAU)

Chesapeake Gold Corp. (TSX VENTURE:CKG)