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AM Gold And Capella Extend Letter Of Intent To Combine

February 4, 2011

AM Gold Inc. (“AM Gold”) - (TSX-V: AMG; Frankfurt: AMX) and Capella Resources Ltd. (“Capella”) - (TSX-V: KPS) announce that the parties have extended the termination date of the Letter of Intent (the “LOI”) originally announced on January 18, 2011.

The termination date of the LOI has been extended from February 3, 2011 to March 5, 2011 to allow both parties to complete their respective due diligence reviews and to negotiate and execute the definitive agreement for the transaction.

About AM Gold Inc.

AM Gold Inc. is a publicly held resource company based in Vancouver, Canada.  The Company is listed on the TSX Venture Exchange under the symbol “AMG” and is quoted on the Frankfurt Exchange under the symbol “AMX”.  The Company is focused on creating shareholder value through the development of the Company's flagship gold and gold-copper projects in the Yukon and Peru while building a portfolio of quality pipeline projects in North and South America.  The Company's Red Mountain gold property is located in central Yukon Territory approximately 55 kilometres northwest of the community of Mayo in the Tintina Gold Belt.  AM Gold holds an 80% interest in Red Mountain with an option to acquire 100% ownership of the 52 contiguous claims that constitute the property and cover approximately 1,168 hectares.  AM Gold's Pinaya gold-copper project is located approximately 775 kilometres southeast of the city of Lima, Peru in the Tintaya Gold Belt.  The Company maintains 100% ownership of 35 mining concessions covering the 19,200 hectare Pinaya land position.  AM Gold’s corporate offices are located Suite 305 – 369 Terminal Avenue, Vancouver, British Columbia, V6A 4C4 (phone: 604-646-0067).

About Capella Resources Ltd.

Capella Resources Ltd. is a publicly traded, junior exploration and mineral development company with a strong portfolio of precious and base metal projects in Chile, USA and Atlantic Canada.  Capella has a 100% interest in the Lajitas and Nevada gold-copper properties located in the Maricunga Gold and Copper District and approximately 700 kilometres northwest of Santiago, Chile.  The properties comprise ten exploration claims and six exploitation claims totalling a cumulative 3,500 hectares in area. Capella holds a 100% interest in the Tinton Gold Project located 15 kilometres west-northwest of the famous and historic Homestake Mine in the Black Hills at Lead, South Dakota.

The Tinton property consists of 1,270 hectares contained in 157 unpatented mining claims. The Company also holds 2,834 mineral exploration claims covering an aggregate land area of over 50,879 hectares in Atlantic Canada (Nova Scotia, New Brunswick and Newfoundland and Labrador).  Capella’s head office is located at 108F Trider Crescent, Dartmouth, Nova Scotia, B3B 1R6 (phone:  902-468-8280).

For More Information

For further information on AM Gold, please contact Murray Caruth at 1-604-646-0067 or by email at [email protected], or visit AM Gold’s website at: http://amgold.ca.

For further information on Capella, please contact Mike McCleave at 902-468-8280 or toll free at 1-877-342-7474, or visit Capella’s website at: http://www.capellaresources.com.

On behalf of the Board of AM Gold Inc.

(signed) “Mark Lawson”

Mark Lawson
On behalf of the Board of Capella Resources Ltd.

(signed) “Richard Bachman”
Richard Bachman
President and CEO

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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