Gammon Gold Announces a Significantly Expanded Two Year, $26 to $29 Million, 135,000 to 150,000 metre, Exploration Program Supported by Gammon's Strengthened Financial Position
HALIFAX, May 16 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and
AMEX:GRS): is pleased to announce that the Company's 2008-2009 Exploration
Program has been significantly expanded up to $29 million and will target
reserve & resource expansions at our producing Ocampo and El Cubo mines as
well as resource expansions at our highly prospective advanced exploration
property, Guadalupe y Calvo.
The significant upturn in operational performance at Ocampo and El Cubo
is continuing to drive significant improvements in the Company's cash flow
profile, which combined with the current financial position is expected to be
more than sufficient to fully fund this expanded Exploration Program.
In addition to the reserve & resource expansion objectives at Ocampo and
El Cubo, a large portion of the increased funding will be allocated to an
accelerated two year diamond drilling program at Guadalupe y Calvo of up to
50,000 metres that will support the completion of an Advanced Scoping Study by
mid-2009, which subject to underlying results, has been engineered to
facilitate the full transition into a Feasibility program to accelerate the
development of this exciting prospective property.
Over the past two years the Company has primarily focused its attention
and financial resources on the construction and commissioning of the Ocampo
mine and subsequently there has been minimal exploration activity conducted
during this period. However, the ongoing performance improvements at both
Ocampo and El Cubo have advanced to such a degree that management can now
leverage the improving cash flow profile to fully fund this expanded
exploration program.
"The increased $26 to $29 million 2008-2009 exploration program
demonstrates the confidence we have in both our cash flow profile and in the
potential of our assets. With the Company's improved financial foundation, we
are now in a better position than ever before to focus on an important value
lever of the business that has been largely inactive for the past two years."
stated Rene Marion, Chief Executive Officer of Gammon Gold. He continued, "The
augmented exploration program will enhance our ability to target reserve and
resource expansions at our producing mines, Ocampo and El Cubo, that will
further increase the potential for improved production profiles in the future.
In addition, the increased funding will also allow us to further accelerate
the development of our exciting advanced exploration project, Guadalupe y
Calvo. The continued development of our highly prospective assets and land
package is integral to our organic growth vision and we are now in a stronger
position than ever to execute on the longer term supporting strategy."
Ocampo Exploration Program
--------------------------
The goal of the exploration program at Ocampo is to replace depleted
reserve inventory and target further expansions of our resource model that
will increase the potential for both, increasing the property's production
profile and extending the mine's life. Approximately 16% of the total 2007
production was mined outside of reserves & resources (20% of the underground
ore), which illustrates both the continuity of the orebody and the high
potential to add to reserves. Only 20% of the Ocampo land package has been
explored to date with many highly prospective areas targeted for follow up
exploration.
The $7.5 to $8.5 million, 2008-2009 Exploration Program at Ocampo is a
four stage design that includes:
- A development and drilling program at the advanced exploration Santa
Eduviges underground target, which is located beneath the Ocampo open
pits and has the potential to become a third, long term source of mill
feed;
- An increase in exploration development to 14,000 metres in the Ocampo
underground mine, aimed at expanding the original 7 veins to the
targeted 21 veins;
- A 50,000 to 55,000 metre diamond drilling program in the underground
mine to further delineate five new vein targets and to identify down
dip extensions of seven veins; and
- The targeted follow up on several areas of interest and known anomalies
that have not been previously explored including the Cerro Colorado
vein lying parallel to the Ocampo vein structures and the Pinos Altos
deposit, as well as five greenfield targets: La Olvidada, La Fe; La
Estrella Extension, Picacho Extension and El Penole.
El Cubo Exploration Program
---------------------------
The goal of the 2008-2009 Exploration Program at El Cubo is to replace
depleted reserves and potentially increase the property's production profile.
During 2006 and 2007, 40% of the gold and silver production was mined outside
of reserves & resources and this trend continued in Q1 2008, when
approximately 24% of the first quarter production was mined outside of
reserves and resources. As with Ocampo, there is high potential exploration
opportunity at El Cubo with little of the land position having been explored
to date with only 700 hectares of El Cubo's 8,500 hectares of total
concessions currently being utilized.
The expanded 2008-2009, $5 to $6 million Exploration Program includes:
- A 40,000 to 45,000 metre drilling program that will focus on the
further delineation of identified drill priorities at: Villalpando, La
Loca/Dolores, San Nicolas and secondary targets at: San Francisco
Poniente, Imaculada, Vein 178, Soledad, Milenio, La Luz, Villalpando
del Alto and Tuberos;
- Optimal drilling design to accelerate exploration efforts through
initiating drilling from the 600 metre haulage level that will allow
the Company to test the down dip extension of these known structures;
and
- Accelerating the potential development of the Fenix deposit.
Guadalupe y Calvo Exploration Program
-------------------------------------
The goal of the 2008-2009 Exploration Program at Guadalupe is to update
the resource estimate and conduct metallurgical testwork and mine designs to
complete a scoping study for a potential open pit and underground operation.
During 2007, the Company initiated a surface channel sampling program and a
15-hole (2,400 metre) exploration drilling program on the Guadalupe y Calvo
Exploration project. Based on results to date, the Company has decided to
significantly expand and accelerate the exploration program by increasing the
diamond drilling budget from $1.5 million to a revised $8 to $9 million which
is in addition to additional funding of approximately $5 to $6 million for an
advanced pre-feasibility scoping study. The diamond drilling program has been
expanded to 45,000 to 50,000 metres to support the completion of the Advanced
Scoping Study by mid-2009 which subject to underlying results, has been
engineered to facilitate the full transition into a Feasibility program to
accelerate the development of this exciting property.
The Guadalupe y Calvo Project contains current non-revised inferred
resources of 1.08-million ounces of gold and 45.6-million ounces of silver or
2.02 million gold equivalent ounces (Pincock, Allen and Holt, Nov. 2002). This
estimate is based on exploration work completed on the Rosario and Nankin
structures and does not address other mineralized structures on the property
nor the potential for strike extensions that are known to be present within
the project boundaries.
Significant potential exists at the Guadalupe y Calvo property with high
grade intercepts discovered near surface and at depth. After reviewing the
results of a prior 37-hole drill program as well as results to date from its
current program, the Company believes the mineralized structure remains open
along strike and at depth.
About Gammon Gold
Gammon Gold Inc. is a Nova Scotia based mid-tier gold and silver producer
with properties in Mexico. The Company's flagship Ocampo Project in Chihuahua
State achieved commercial production in January 2007. Gammon Gold also
operates its El Cubo operation in Guanajuato State and has the promising
development Guadalupe y Calvo property in Chihuahua State. The Company remains
100% unhedged.
Cautionary Statement
Cautionary Note to US Investors - The United States Securities and
Exchange Commission permits US mining companies, in their filings with the
SEC, to disclose only those mineral deposits that a company can economically
and legally extract or produce. This press release uses certain terms, such as
"measured," "indicated," and "inferred" "resources," that the SEC guidelines
strictly prohibit US registered companies from including in their filings with
the SEC. US Investors are urged to consider closely the disclosure in Gammon
Gold's Annual Report on Form 40-F (File No. 001-31739), which may be secured
from Gammon Gold, or from the SEC's website at http://www.sec.gov/edgar.shtml.
No stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.
Certain statements included herein, including information as to the future
financial or operating performance of the Company, its subsidiaries and its
projects, constitute forward-looking statements. The words "believe",
"expect", "anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "forecast", "may", "will", "schedule" and
similar expressions identify forward-looking statements. Forward-looking
statements include, among other things, statements regarding targets,
estimates and assumptions in respect of gold and silver production and prices,
operating costs, results and capital expenditures, mineral reserves and
mineral resources and anticipated grades, recovery rates, future financial or
operating performance, margins, operating and exploration expenditures, costs
and timing of the development of new deposits, costs and timing of
construction, costs and timing of future exploration and reclamations
expenses. Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by the Company,
are inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors could cause
the Company's actual results to differ materially from those expressed or
implied in any forward-looking statements made by, or on behalf of, the
Company. Such factors include, among others, known and unknown uncertainties
and risks relating to additional funding requirements, reserve and resource
estimates, commodity prices, hedging activities, exploration, development and
operating risks, illegal miners, political and foreign risk, uninsurable
risks, competition, limited mining operations, production risks, environmental
regulation and liability, government regulation, currency fluctuations, recent
losses and write-downs, restrictions in the Company's loan facility,
dependence on key employees, possible variations of ore grade or recovery
rates, failure of plant, equipment or process to operate as anticipated,
accidents and labour disputes. Investors are cautioned that forward-looking
statements are not guarantees of future performance and, accordingly,
investors are cautioned not to put undue reliance on forward-looking
statements due to the inherent uncertainty therein.
For further information: please visit the Gammon Gold website at
www.gammongold.com or contact: Rene Marion, Chief Executive Officer, Gammon
Gold Inc., (902) 468-0614; Anne Day, Director of Investor Relations, Gammon
Gold Inc., (902) 468-0614
