**EXHIBIT
      10.12**




Capital
      Gold Corporation


76
      Beaver
      Street, 26th Floor


New
      York,
      NY 10005





August 2,
      2006





Sinergia
      Obras Civiles y Mineras, S.A. de C.V.


Daniel
      Gutierrez Perez, CEO


Corretero
      Federal #16 Sn


La
      Colorada Tramo, Hermosillo-


Tecaripa
      Km. 46





Dear
      Mr.
      Gutierrez:





As
      we
      have discussed over the past several days, this letter sets forth the agreement
      we have reached concerning amendments to the November 24, 2005 Mining
      Contract (the “Mining Contract”) between Sinergia Obras Civiles y Mineras,
      S.A. de C.V. (“Sinergia”) and Minera Santa Rita S.A. de C.V. (“MSR”). In
      consideration of the receipt by Sinergia of the $200,000 USD advance referred
      to
      below, Sinergia and MSR agree that the Mining Contract is hereby amended as
      follows:





1.
            Section 5.8
                of the Mining Contract is revised to
                read:





Upon
      the
      date the Work is to commence under the Notice to Proceed, MSR shall make an
      advance payment to Contractor equal to $520,000 minus any payments previously
      made to Contractor (the “Advance Payment”).





3.
            Section 21.2
                of the Mining Contract is hereby revised to read as
                follows:





21.2
            Change
                in Rates





Both
      MSR
      and Contractor acknowledge that MSR’s Mining Plan and Feasibility Study are
      based on Contractor’s rates for mining and equipment set forth in
      Appendix A, and the standby rates set forth in Appendix E. MSR and
      Contractor also acknowledge that the mining rates set forth in Appendix A
      may need to be adjusted for inflation, and are subject to change after
      February 1, 2007. MSR and Contractor agree that, as long as the Notice to
      Proceed is received by Contractor on or before November 1, 2006, with a
      specified date of commencement of the Work not later than February 1, 2007,
      the mining rates set forth in Appendix A shall apply; provided, however,
      that those mining rates shall be adjusted as described in this Section 21.2
      for the rate of inflation between September 23, 2005 and the date of
      commencement of the Work, calculated using the escalation formula set forth
      in
      Section 5.5. For


Sinergia
          Obras Civiles y Mineras, S.A. de C.V.
 Daniel
          Gutierrez Perez, CEO
 August 2,
          2006
 Page
          2


purposes
      of this Section 21.2, the baseline numbers for tires, lubricants,
      replacement parts, interest rates and labor are as set forth in Appendix K
      hereto. For purposes of this Section 21.2, if the escalation percentage
      between September 23, 2005 and the date of commencement of the Work is four
      percent or less, the mining rates set forth in Appendix A shall remain
      unchanged. If that escalation percentage is greater than four percent, the
      mining rates set forth in Appendix A shall be increased by an amount equal
      to one half of the percentage increase in excess of four percent (so that,
      for
      example, if that escalation percentage turns out to be six percent, the mining
      rates for Year 1 and each subsequent year in Appendix A would be
      increased by one percent). After any initial adjustments made to the mining
      rates pursuant to this Section 21.2, subsequent adjustments will be made
      pursuant to Section 5.5. MSR and Contractor further agree that if the
      Notice to Proceed (as that term is defined in Section 21.1) has not been
      received by Contractor on or before 5:00 p.m. Pacific Time on
      November 1, 2006, Contractor shall have the right to terminate this Mining
      Contract. Otherwise, Contractor shall have no right to terminate this Contract
      prior to November 1, 2006. Alternatively, if Contractor has not received
      the Notice to Proceed by November 1, 2006, and if Contractor subsequently
      increases any of its mining, equipment or standby rates, MSR shall have no
      obligation to proceed with Contractor under this Mining Contract, and may
      terminate this Mining Contract at any time after it receives a notice from
      Contractor indicating that any of these rates will be increased and prior to
      the
      date it delivers the Notice to Proceed. Upon termination of this Mining Contract
      pursuant to this Section 21.2, MSR shall have no obligation or liability to
      Contractor for any payments under Sections 5.7 or 5.8, or any other obligations
      or liabilities to Contractor pursuant to this Mining Contract, Contractor shall
      have no obligations or liabilities to MSR under this Mining Contract, and MSR
      shall be free to enter into negotiations for contract mining at the Mine with
      any third party.





In
      consideration of the amendments to the Mining Contract, Capital Gold Corporation
      (“CGC”) has agreed to wire funds in the amount of $200,000 USD to the below
      account belonging to Sinergia:




Sinergia
            Obras Civiles y Mineras, S.A. de C.V.
 Daniel
            Gutierrez Perez, CEO
 August 2,
            2006
 Page
            3




Bank:  JP
      Morgan
      Bank, New York




ABA:  021000021


Beneficiary
      Bank (Mexico):  BBVA
      Bancomer Mexico


Swift
      Code:  BCMRMXMMPYM


Mexico
      Account #:  012760001456790796


Name
      of
      Beneficiary:  Sinergia
      Obras Civiles y Mineras SA DE CV





By
      receipt of the above funds, Sinergia agrees to the following additional
      conditions set forth below:





1.
            Immediately
                following Sinergia’s receipt of the funds transfer above of $200,000 USD,
                Sinergia will provide written confirmation on the receipt of these
                funds
                into account above. In addition, Sinergia will provide written
                confirmation on the transfer of the $200,000 USD to Caterpillar’s bank
                account to satisfy certain past due balances Sinergia possesses with
                Caterpillar.





2.
            The
                $200,000 USD advance payment will be applied against the Advance
                Payment
                of $520,000 USD payable under Section 5.8 of the Mining
                Contract.





If
      any of
      the conditions described in item 1 above are not met immediately following
      the wire transfer of these funds, the full amount of the funds wired above
      ($200,000 USD) will be returned to CGC within three business days after the
      date
      of this letter.





We
      look
      forward to continuing to work with you on this project and its successful
      completion, and believe this letter accurately summarizes the significant terms
      of our agreement. If you have any questions, please let us know. If you agree
      with the terms of this agreement as described in this letter, please sign below.
      Mail one executed copy to us and keep one copy for your files.





Very
      truly yours,





s/Gifford
      A. Dieterle


Gifford
      Dieterle


CEO,
      Capital Gold Corporation, and


President,
      Minera Santa Rita S.A. de C.V.




Sinergia
            Obras Civiles y Mineras, S.A. de C.V.
 Daniel
            Gutierrez Perez, CEO
 August 2,
            2006
 Page
            4





RESPONSE:





This
      letter correctly sets forth the understanding and agreement of
      Sinergia.








s/
      Daniel
      Gutierrez





Daniel
      Gutierrez Perez, CEO







August
      2/06


Date