Gammon Gold Releases 3-Year Operational Outlook and Reserve and Resource Update



    TSX: GAM / AMEX:   GRS / BSX: GL7

    HALIFAX, March 31 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and
AMEX:  GRS) today issued a 3-year operational outlook for the years 2008 to 2010
and updated estimates on the Reserves and Resources(1) at its operating mines
and advanced exploration project.
    Mr. Rene Marion, CEO of Gammon Gold stated "As per the Company's
commitment we are reporting today our 3-year outlook for 2008 to 2010
inclusive as well as Reserve and Resource updates for each of our key assets.
Our production estimates anticipate a 17% to 20% compounded annual growth rate
in gold equivalent production over 2007's actual production." Mr. Marion
continued, "We have only explored 20-30% of our land position at Ocampo and El
Cubo so together with current exploration programs at Ocampo and El Cubo and
with the acceleration of our drilling campaign at our advanced Guadalupe y
Calvo exploration property, we believe that we should be able to augment our
Reserves and Resources from the stated 2007 year end figures, potentially
increasing the Company's future production profile in the longer term."
    Mr. Russell Tremayne, Chief Operating Officer of Gammon Gold stated, "The
rigorous approach applied to the 2007 year end Reserve and Resource
calculations underpins our production and cash cost outlook which positions us
well to achieve our 3-year outlook through the execution of the productivity
initiatives implemented to date driven by a seasoned team to execute the
growth strategy. Furthermore, we are forecasting meeting our budget forecast
for Q1 production, at lower costs than budgeted."
    Mr. Tremayne continued, "I am particularly pleased that the new open pit
designs remain consistent with the 2005 optimization with a strip ratio of
approximately 3 to 1. The accelerated pre-stripping activities that commenced
in the second half of 2007 will ensure optimal mine sequencing allowing the
increased liberation of ore reserve mining areas that is expected to ensure
higher ore production levels following 2008."
    Mr. Marion continued, "The newly assembled senior management team remains
confident in the quality of our assets and our ability to successfully execute
our growth strategy. The management team is currently designing an accelerated
exploration program at Ocampo and El Cubo to develop targets to further expand
the Company's Reserves and Resources. The entire Gammon team remains steadfast
in our commitment to continue to drive operational and financial performance
in the quarters and years ahead."

    Consolidated 3-Year Operational Outlook

    The following table provides a 3-year view of the Company's anticipated
production and total cash costs for each of 2008, 2009 and 2010.

    
                                   Table 1.
                       Three Year Operational Outlook

    -------------------------------------------------------------------------
                                 Gammon Gold
    -------------------------------------------------------------------------
    Production                   2008              2009              2010
    -------------------------------------------------------------------------
    Gold Ounces              139-155k oz       168-184k oz       197-213k oz
    -------------------------------------------------------------------------
    Silver Ounces        5,848-6,621k oz   7,283-8,055k oz   8,717-9,490k oz
    -------------------------------------------------------------------------
    Gold Equivalent(1)       245-275k oz       300-330k oz       355-385k oz
    -------------------------------------------------------------------------
    Cash Cost
     per Ounce(2)                2008              2009              2010
    -------------------------------------------------------------------------
    Gold Equivalent(1)       $480-515/oz      $435-$470/oz      $395-$430/oz
    -------------------------------------------------------------------------
    Gold (Silver
     byproduct
     credit) (2)             $230-300/oz      $145-$210/oz       $70-$135/oz
    -------------------------------------------------------------------------

    Notes:

    (1) Assumes a 55.17 silver to gold ratio ($800/oz for gold and
        US$14.50/oz for silver)
    (2) Assumes metal price of US$14.50/oz for silver

    The Company expects 2008 production of 245 thousand-275 thousand gold
equivalent ounces at a total cash cost of $480-515 per gold equivalent ounce
with capital expenditures of between $50 to $55 million. The budgeted increase
in production associated with improvements in total cash costs will be driven
by a number of factors including:

    - the continued implementation of optimal mining & processing methods
      supported by a Quality Assurance / Quality Control Program
    - aggressive cost containment efforts throughout the organization
      including the optimization of the workforce and reduction of key
      consumables
    - continued preventative maintenance programs to maximize fixed and
      mobile equipment availability
    - continued development of the Ocampo underground throughout 2008
    - continued positive impact from production bonus schedules

    Growth in subsequent years will be achieved through the completion of
expansionary projects that are anticipated to be substantially completed in
the latter part of 2008, primarily:

    - completion of the ramp up of the underground to 1,900 tonnes per day
    - commence production at Santa Eduviges as the second underground mine at
      Ocampo
    - continued operations at the Picacho, Plaza de Gallos and Refugio Pits
      at Ocampo of 100 thousand tonnes per day
    - the expansion of the Ocampo Mill facility to 2,600 tonnes per day that
      can accommodate the additional ore feed from both the underground and
      the high grade ore from the open pit
    - expansion of the Ocampo heap leach pad
    - access to 20 megawatts of power in early 2009 that will provide a both
      a more economical and reliable power source
    - drilling program in the latter part of 2008 to replace depleted
      Reserves
    - ongoing costs control measures

    Reserve & Resource Update

    Note: The reader is cautioned that the 2007 year end Measured & Indicated
Resources are reported exclusive of Reserves while the 2005 year end Measured
& Indicated Resources were reported inclusive of Reserves.

    Consolidated

    Depletion from mining activities in 2006 and 2007 of 555 thousand gold
equivalent ounces would reduce the 2005 year end Reserves from 5,140 to
4,585 thousand gold equivalent ounces. 2007 year end Reserves of
3,679 thousand gold equivalent ounces is 906 thousand gold equivalent ounces
lower than the 2005 depleted Reserves (for a reduction of approximately 20%).
    As noted above, the 2005 year end Measured and Indicated Resources of
6,339 thousand gold equivalent ounces were reported inclusive of Reserves and
therefore is not directly comparable to the 2007 year end Measured and
Indicated Resources of 799 thousand gold equivalent ounces. The reader is
cautioned that since mining recoveries and mining dilutions are included in
the Proven and Probable Reserves, one can not add the 2007 year end Proven and
Probable Reserves to the 2007 year end Measured and Indicated Resources to
compare to the 2005 year end Measured and Indicated Resources as these
included in situ Reserves.

    Ocampo

    Reserves

    2007 year end Proven & Probable Reserves stand at 52,138 thousand tonnes
at 0.87 grams per tonne gold, 40 grams per tonne silver for an average gold
equivalent grade of 1.69 grams per tonne using a silver to gold ratio of
48.33:1, resulting in 2,836 thousand contained gold equivalent ounces. 2007
year end Proven & Probable reserve tonnages have declined by 13,758 thousand
tonnes (a reduction of approximately 21%) from the 2005 year end Reserves not
considering the mining and processing of 8,252 thousand tonnes during 2006 and
2007. Depleting for mining in 2006 and 2007 the reduction in Proven and
Probable tonnage is 5,506 thousand tonnes (a reduction of approximately 8%).
Refer to Figure 1 below.

                                   Figure 1
                   2005 Year End to 2007 Year End Proven &
                   Probable Reserve Tonnage Reconciliation

    http://files.newswire.ca/258/Figure_1.doc

    Gold equivalent grade reduced by 13% from the 2005 year end Reserves to
1.69 grams per tonne. The reduction in grades occurred in both the open pit
and the underground as dilution assumptions changed to those representative of
the experience gained through mining in 2006 and 2007. The ore depletion for
2006 and 2007 production in conjunction with the reduction in grades reduced
the contained gold equivalent ounces equivalent ounces from 4,190 thousand
gold equivalent ounces to 2,836 thousand gold equivalent ounces (a reduction
of approximately 32%). Accounting for 2006 and 2007 depletion through
operations, the net reduction is 908 thousand gold equivalent ounces (a
reduction of approximately 24%). These reductions are primarily attributable
to the following:

    - 194 thousand gold equivalent ounce reduction in the underground due to
        - Mining 12 thousand tonnes at 3 g/t gold and 185 g/t silver outside
          of Reserves (an additional 26 thousand gold equivalent ounces);
        - Re-interpretation of the Rosario underground vein (a reduction of
          190 thousand gold equivalent ounces); and,
        - More conservative underground dilution assumptions (a reduction of
          30 thousand gold equivalent ounces)
    - 665 thousand gold equivalent ounce reduction in the open pit due to
        - Inaccuracies to the original surface topography in the open pit (a
          reduction of 150 thousand gold equivalent ounces);
        - Calibration of modeling techniques to improve the reconciliation of
          historical mining by restricting the impact of higher grade
          intercepts (a reduction of 250 thousand gold equivalent ounces);
        - Increase of the gold equivalent cut off grade in the open pit from
          0.2 to 0.3 g/t (a reduction of 90 thousand gold equivalent ounces);
          and
        - Inaccurate interpolation from surface trenching to ore intercepts
          some 50-75m below surface in the open pit (a reduction of
          175 thousand gold equivalent ounces)
    - 45 thousand gold equivalent ounce reduction in miscellaneous changes

    Refer to Figure 2 for a reconciliation of the Proven and Probable gold
equivalent Reserves to the 2005 year end figures.

                                  Figure 2
                   2005 Year End to 2007 Year End Proven &
               Probable Reserve Gold Equivalent Reconciliation

    http://files.newswire.ca/258/Figure_2.doc

    Measured & Indicated Resources

    Note: The reader is cautioned that the 2007 year end Measured & Indicated
Resources are reported exclusive of Reserves while the 2005 year end Measured
& Indicated Resources were reported inclusive of Reserves.
    2007 year end Measured & Indicated Resources stand at 29,056 thousand
tonnes at 0.30 grams per tonne gold and 13 grams per tonne silver for a gold
equivalent grade of 0.56 grams per tonne (at a gold to silver ratio of
48.33:1) for 521 thousand contained gold equivalent ounces. Several changes in
modeling methodology were employed for the 2007 Resources including changes in
open pit block sizing and the placement of greater restrictions on projections
of high grade intercepts. The Company will further assess these Resources
throughout 2008 and will decide at year end if some of the lost Resources may
be converted to Reserves or Resources for the 2008 year end Reserves.

    Inferred Resources

    The 2007 year end Inferred Resources stand at 23,716 thousand tonnes at
1.82 grams per tonne gold and 93 grams per tonne silver for a gold equivalent
grade of 3.75 grams per tonne at a silver to gold ratio of 48.33:1 for
2,861 thousand contained gold equivalent ounces. The total reduction in
Inferred Resources of 2,826 thousand gold equivalent ounces represents a 50%
reduction over 2005 year end. Some 61% of these reductions, (some
1,882 thousand gold equivalent ounces) are attributable to the underground
operations, with the remaining attributable to the open pit. The primary
reasons for the reduction in Inferred Resources are primarily due to the
increased restrictions applied to the projections of high grade intercepts or
to the lack of engineering studies to investigate the possibility of
conversion of near pit blocks to underground extraction.

    El Cubo

    Reserves

    2007 year end Proven & Probable Reserves stand at 4,271 thousand tonnes at
3.03 grams per tonne gold, 150 grams per tonne silver for an average gold
equivalent grade of 6.14 grams per tonne using a silver to gold ratio of
48.33:1, resulting in 843 thousand contained gold equivalent ounces. 2007 year
end Proven & Probable reserve tonnages have only declined by 8% (382 thousand
tonnes) from the 2005 year end Reserves despite mining and processing
1,154 thousand tonnes during 2006 and 2007 as 52% of the tonnage mined
(603 thousand tonnes) during 2006 and 2007 were mined out of Reserves and
169 thousand tonnes were added at zero grade for changes in dilution
assumptions. In order to have a more conservative approach to Reserves, the
projection for Probable Reserves was reduced from 40 m to 30 m. This change
accounts for approximately half of the tonnage reduction.

    Refer to Table 2 and Figure 3 below.

                                   Table 2
                   2006 and 2007 Production Reconciliation

                              -----------------------------------------------
                                              MINED ORE 2006 - 2007

                                     Tonnes        Ag.        Au.   Oz.Au.Eq.
    -------------------------------------------------------------------------
          2006 production           436,417      3.33     130.27      84,582
          2007 production           717,510      2.04     107.90      98,558
                                  ---------- --------- ---------- -----------
                    total         1,153,927      2.53     116.36     183,140

    mined out of reserves           602,555      1.76      72.55      73,756

                        %                52%                              40%
    -------------------------------------------------------------------------

                                   Figure 3
                   2005 Year End to 2007 Year End Proven &
                   Probable Reserve Tonnage Reconciliation

    http://files.newswire.ca/258/Figure_3.doc

    Gold equivalent grade reduced by 3% from the 2005 year end Reserves from
6.36 grams per tonne to 6.14 grams per tonne. A full reconciliation of the
contained gold equivalent ounces is provided in Figure 4.

                                   Figure 4
                   2005 Year End to 2007 Year End Proven &
               Probable Reserve Gold Equivalent Reconciliation

    http://files.newswire.ca/258/Figure_4.doc

    Proven & Probable Reserves reduced by 11% from the 2005 year end Reserves,
however, the containment of the reduction to 11% is considered quite favorable
due to:

    1. Little exploration development or drilling had been conducted in the
       two year period from 2005 to 2007
    2. 40% of the ounces processed during the two year period was mined
       outside of Reserves
    3. Search distances for Indicated and therefore Probable Reserves were
       reduced by 25% from 10m-50m to 10m-40m

    Measured & Indicated Resources

    Note: The reader is cautioned that the 2007 year end Measured & Indicated
Resources are reported exclusive of Reserves while the 2005 year end Measured
& Indicated Resources were reported inclusive of Reserves.
    2007 year end Measured & Indicated Resources stand at 2,346 thousand
tonnes at 2.62 grams per tonne gold and 51.43 grams per tonne silver for a
gold equivalent grade of 3.69 grams per tonne (at a gold to silver ratio of
48.33:1) for 278 thousand contained gold equivalent ounces. Slight additions
to El Cubo Measured & Indicated Resources (26,000 gold equivalent ounces) were
offset by the exclusion of 109,000 gold equivalent ounces from the 2007 year
end Measured & Indicated Resources from Las Torres that was included in the
2005 year end Measured & Indicated Resources. The Las Torres gold equivalent
ounces were excluded from the 2007 year end statement as current management,
in keeping with best practices, could not validate the Resources in the
archives due to insufficient time. In 2008, management will endeavor to source
the underlying supporting data from the archives and address whether these
Resources should be added back to reportable Measured & Indicated Resources in
the 2008 year end Reserves & Resource statements. Figure 5 provides the
complete 2005 year end reconciliation to the 2007 year end Measured &
Indicated Resources.

                                   Figure 5
                  2005 Year End to 2007 Year End Measured &
                           Indicated Reconciliation

    http://files.newswire.ca/258/Figure_5.doc

    Inferred Resources

    The 2007 year end Inferred Resources stand at 3,105 thousand tonnes at
4.87 grams per tonne gold and 200 grams per tonne silver for a gold equivalent
grade of 9.0 grams per tonne at a silver to gold ratio of 48.33:1 for
899 thousand contained gold equivalent ounces. All of the 2007 year end
Inferred Resources are included under the El Cubo Mine. The exclusion of gold
equivalent ounces from the 2007 year end statement has reduced the gold
equivalent ounces from the 2005 year end statement by 661 thousand gold
equivalent Inferred ounces as 225 thousand ounces from the Phoenix,
60 thousand ounces from the Las Torres and 376 thousand ounces from the El
Cubo properties were removed from the Inferred Resources category in the 2007
year end statement as management, in keeping with best practices, could not
validate the Inferred Resources in the archives. In 2008, management will
endeavor to source the underlying supporting data from the archives and
address whether these Inferred Resources should be added back to reportable
Measured & Indicated Resources in the 2008 year end Reserves & Resource
statements.

    Guadalupe y Calvo

    2007 year end Inferred Resources stand at 11,800 thousand tonnes at
2.84 grams per tonne gold and 120 grams per tonne silver. These Resources lie
in the Rosario bulk tonnage and underground deposits in addition to the
Nankin. Inferred Resources have not changed from 2005 year end, however, the
gold equivalent ratio used in the 2005 year end report has changed from
65.07:1 to the current 48.33:1, resulting in the increase in contained gold
equivalent ounces of 240 thousand ounces for a 2007 year end of 2,020 thousand
gold equivalent ounces. The 2005 Guadalupe y Calvo Inferred Resource estimate
was based on the 2002 Pincock, Allen & Holt report and does not include
results from the 2003 Mexgold 37 hole (10,000 meter) drilling program nor the
current 15-hole (2,400 meter) drilling program the Company initiated in late
2007 (see press release issued by the Company on March 3, 2008). The drilling
program is designed to target the high grade core to further test the
continuity of the high grade mineralisation along the Rosario and Nankin
veins. As the structure remains open along strike and at depth, the objective
of the drilling program is focused on expanding the property's Resources and
better definition of the vein structures, conduct metallurgical testwork and
to complete a scoping study for a potential open pit and underground
operation.

    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 mineral Reserves
and mineral Resources and anticipated grades, recovery rates, targets,
estimates and assumptions in respect of gold and silver production and prices,
the ability to convert mineral Resources into mineral Reserves in future,
operating costs, results and capital expenditures, future financial or
operating performance including gold equivalent production and cash costs,
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.

    (1) The reader should refer to the Annual Information Form for the year
        ended 2007 that is posted on the Company's website at
        www.gammongold.com or under the Corporation's profile at
        www.sedar.com


    Mineral Reserves and Mineral Resources

    At December 31, 2007, Gammon's total proven and probable gold equivalent
Reserves were 3.7 million gold equivalent ounces. Mineral Reserves and Mineral
Resources have been calculated as at December 31, 2007 in accordance with
definitions adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum and incorporated into National Instrument 43-101 (see "Definitions"
below). Calculations for the Ocampo property have been prepared by employees
of Gammon Gold Inc. under the supervision of Abdullah Arik, B.Sc., MS, Mintec,
inc., and Glenn R. Clark, P. Eng. of Glenn R. Clark & Associates Limited, who
are the qualified persons with respect to those Reserves and Resources.
Calculations for the El Cubo property have been prepared by employees of
Gammon Gold Inc. under the supervision of Jose L. Lee, Ph.D., Director of
Exploration, Gammon Gold Inc. and Glenn R. Clark, P. Eng. of Glenn R. Clark &
Associates Limited who are the qualified persons with respect to those
Reserves and Resources. Reserves for the Ocampo and El Cubo properties have
been calculated using an assumed gold price of $580 per ounce and a silver
price of $12.00 per ounce for a gold equivalent ratio of 48.33:1. Resources at
the Ocampo and El Cubo properties have been calculated assuming a gold price
of $850 per ounce and a silver price of $15.44 and have been summarized at a
gold equivalent ratio of 48.33:1 (as per Reserves). The Guadalupe y Calvo
inferred Resources assumed a gold price of $300 per ounce and a silver price
of $4.61 per ounce and have been summarized at a gold equivalent ratio of
48.33:1 (as per Reserves). The full technical report on Guadalupe y Calvo
Project dated November 25, 2002 was prepared by Clancy J. Wendt and Mark G.
Stevens, C.P.G., Pincock, Allen & Holt in accordance with NI 43-101. The
information on the exploration work done on the property since the date of the
Pincock, Allen & Holt report is summarized in the material change report filed
by Mexgold on August 16, 2005. Jim McGlasson, C.P.G. and P.Geo, is the
qualified person responsible for all technical data reported in that material
change report pursuant to NI 43-101. The full text of both reports is
available under the Corporation's profile at www.sedar.com. Reserve
calculations incorporate current and/or expected mine plans and cost levels at
each property. Varying cut-off grades have been used depending on the mine and
type of ore. Gammon Gold's normal data verification procedures have been
employed in connection with the calculations. For the cut-off grades used in
the calculation of Reserves, see - "Notes to the Reserves, Resources and
Reconciliation Tables."
    Gammon reports its Reserves in accordance with the National Instrument
43-101 as required by Canadian securities regulatory authorities. While the
terms "measured", "indicated" and "inferred" mineral Resources are required
pursuant to National Instrument 43-101, the SEC does not recognize such terms.
Canadian standards differ significantly from the requirements of the SEC, and
mineral resource information contained herein is not comparable to similar
information regarding mineral Reserves disclosed in accordance with the
requirements of the SEC. Investors should understand that "inferred" mineral
Resources have a great amount of uncertainty as to their existence and great
uncertainty as to their economic and legal feasibility. In addition, investors
are cautioned not to assume that any part or all of Gammon's mineral Resources
constitute or will be converted into Reserves.
    Although the Company has carefully prepared and verified the mineral
reserve figures presented below and elsewhere in this Annual Information Form,
such figures are estimates, which are, in part, based on forward-looking
information, and no assurance can be given that the indicated level of mineral
will be produced. Estimated Reserves may have to be recalculated based on
actual production experience. Market price fluctuations of gold and silver as
well as increased production costs ore reduced recovery rates, may render the
present proven and probable Reserves unprofitable to develop at a particular
site or sites for periods of time. See "Risk Factors" and "Forward-Looking
Information".

    Definitions
    -----------

    A mineral resource is a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the Earth's crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge. Mineral Resources
are sub-divided, in order of increasing geological confidence, into inferred,
indicated and measured categories.
    An inferred mineral resource is that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence, limited sampling and reasonably assumed but not verified geological
and grade continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
    An indicated mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics can
be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.
    A measured mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape, physical characteristics are so
well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
    A mineral reserve is the economically mineable part of a measured or
indicated mineral resource demonstrated by at least a preliminary feasibility
study. This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the
time of reporting that economic extraction can be justified. A mineral reserve
includes diluting materials and allowances for losses that may occur when the
material is mined. Mineral Reserves are sub-divided in order of increasing
confidence into probable mineral Reserves and proven mineral Reserves.
    A probable mineral reserve is the economically mineable part of an
indicated and, in some circumstances, a measured mineral resource demonstrated
by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction
can be justified.
    A proven mineral reserve is the economically mineable part of a measured
mineral resource demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified.

    Ocampo Proven & Probable Reserves (5)(6)(8)(9)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (2)
    -------------------------------------------------------------------------
    Northeast Area
    -------------------------------------------------------------------------
    Proven             3.46    172    7.01    2,296     255   12,682     518
    -------------------------------------------------------------------------
    Probable           2.20    184    6.00      764      54    4,509     147
    -------------------------------------------------------------------------
    Total Northeast
     Area Proven &
     Probable          3.15    175    6.76    3,060     309   17,191     665
    -------------------------------------------------------------------------
    Open Pit Area(10)
    -------------------------------------------------------------------------
    Proven             0.78     35    1.50   22,276     559   25,067   1,077
    -------------------------------------------------------------------------
    Probable           0.69     28    1.27   26,802     595   24,128   1,094
    -------------------------------------------------------------------------
    Total Open Pit
     Area Proven &
     Probable          0.73     31    1.38   49,078   1,153   49,195   2,171
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Proven       1.03     48    2.02   24,572     814   37,749   1,595
    -------------------------------------------------------------------------
    Total Probable     0.73     32    1.40   27,566     649   28,637   1,241
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Ocampo
     Proven &
     Probable          0.87     40    1.69   52,138   1,463   66,386   2,836
    -------------------------------------------------------------------------


    El Cubo Proven & Probable Reserves (5)(6)(8)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (2)
    -------------------------------------------------------------------------
    El Cubo
    -------------------------------------------------------------------------
    Proven             3.19    176    6.83    1,352     139    7,645     297
    -------------------------------------------------------------------------
    Probable           3.14    146    6.17    2,180     220   10,256     432
    -------------------------------------------------------------------------
    Total El Cubo
     Proven &
     Probable
     Reserves          3.16    158    6.42    3,532     359   17,901     729
    -------------------------------------------------------------------------
    Las Torres
     (Underground)
    -------------------------------------------------------------------------
    Proven             1.83    212    6.22      191      11    1,302      38
    -------------------------------------------------------------------------
    Probable           2.60     82    4.30      549      46    1,446      76
    -------------------------------------------------------------------------
    Total Las Torres
     Proven &
     Probable
     Reserves          2.40    116    4.79      740      57    2,748     114
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Proven       3.03    180    6.76    1,543     150    8,946     335
    -------------------------------------------------------------------------
    Total Probable     3.03    133    5.79    2,728     266   11,703     508
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Proven
     Probable
     Reserves          3.03    150    6.14    4,271     416   20,649     843
    -------------------------------------------------------------------------


    Total Summary of Proven & Probable Reserves (5)(6)(8)(9)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (2)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Proven       1.15     56    2.30   26,115     964   46,695   1,930
    -------------------------------------------------------------------------
    Total Probable     0.94     41    1.80   30,294     914   40,340   1,749
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total Proven &
     Probable          1.04     48    2.03   56,409   1,878   87,035   3,679
    -------------------------------------------------------------------------


    Ocampo Measured, Indicate & Inferred Resources(4)(5)(6)(8)(9)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (3)
    -------------------------------------------------------------------------
    Northeast Area
    -------------------------------------------------------------------------
    Measured           2.94    197    7.02      393      37    2,495      89
    -------------------------------------------------------------------------
    Indicated          2.16     84    3.89      301      21      810      38
    -------------------------------------------------------------------------
    Total Northeast
     Area Measured
     & Indicated       2.60    148    5.67      694      58    3,305     126
    -------------------------------------------------------------------------
    Inferred           4.44    258    9.77    5,573     796   46,166   1,751
    -------------------------------------------------------------------------
    Open Pit Area(10)
    -------------------------------------------------------------------------
    Measured           0.21      8    0.37    9,419      64    2,342     112
    -------------------------------------------------------------------------
    Indicated          0.26     10    0.46   18,942     155    6,138     282
    -------------------------------------------------------------------------
    Total Open Pit
     Area Measured &
     Indicated         0.24      9    0.43   28,361     219    8,480     395
    -------------------------------------------------------------------------
    Inferred           1.02     43    1.90   18,143     595   24,884   1,110
    -------------------------------------------------------------------------
    Summary -
     Measured &
     Indicated
    -------------------------------------------------------------------------
    Total Measured     0.32     15    0.64    9,813     101    4,837     201
    -------------------------------------------------------------------------
    Total Indicated    0.28     11    0.52   19,243     176    6,947     320
    -------------------------------------------------------------------------
    Total Measured &
     Indicated         0.30     13    0.56   29,056     278   11,785     521
    -------------------------------------------------------------------------
    Summary -
     Inferred
    -------------------------------------------------------------------------
    Total Inferred     1.82     93    3.75   23,716   1,391   71,049   2,861
    -------------------------------------------------------------------------


    El Cubo Measured, Indicate & Inferred Resources (4)(5)(6)(8)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (3)
    -------------------------------------------------------------------------
    El Cubo
    -------------------------------------------------------------------------
    Measured           1.89     64    3.21       66       4      136       7
    -------------------------------------------------------------------------
    Indicated          1.77     75    3.32      180      10      435      19
    -------------------------------------------------------------------------
    Total El Cubo
     Measured &
     Indicated
     Resources         1.80     72    3.29      246      14      571      26
    -------------------------------------------------------------------------
    Inferred           4.87    200    9.00    3,105     486   19,945     899
    -------------------------------------------------------------------------
    Las Torres
    -------------------------------------------------------------------------
    Measured              -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Indicated             -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Total Las Torres
     Measured &
     Indicated
     Resources            -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Inferred              -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Phoenix Pit
    -------------------------------------------------------------------------
    Measured              -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Indicated          2.72     49    3.73    2,100     184    3,308     252
    -------------------------------------------------------------------------
    Total Phoenix
     Pit Measured &
     Indicated         2.72     49    3.73    2,100     184    3,308     252
    -------------------------------------------------------------------------
    Inferred              -      -       -        -       -        -       -
    -------------------------------------------------------------------------
    Summary -
     Measured &
     Indicated
    -------------------------------------------------------------------------
    Total Measured     1.89     64    3.21       66       4      136       7
    -------------------------------------------------------------------------
    Total Indicated    2.64     51    3.70    2,280     194    3,744     271
    -------------------------------------------------------------------------
    Total Measured
     & Indicated       2.62     51    3.69    2,346     198    3,879     278
    -------------------------------------------------------------------------
    Summary -
     Inferred
    -------------------------------------------------------------------------
    Total Inferred     4.87    200    9.00    3,105     486   19,945     899
    -------------------------------------------------------------------------


    Guadalupe y Calvo Estimate of Inferred Resources (4)(5)(6)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Deposit Location   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (1)
    -------------------------------------------------------------------------
    Rosario Bulk
     Tonnage
     (at 75% of
     available
     tonnes)           1.60     96    3.08   10,700     566   33,100   1,251
    -------------------------------------------------------------------------
    Rosario
     Underground
     (at 33% of
     available
     tonnes)          18.50    435   25.19      700     393    9,200     583
    -------------------------------------------------------------------------
    Rosario
    -------------------------------------------------------------------------
    Total Rosario
     Inferred          2.64    117    4.43   11,400     959   42,300   1,834
    -------------------------------------------------------------------------
    Nankin
     Underground
     (at 33% of
     available
     tonnes)           9.25    260   13.25      400     118    3,300     186
    -------------------------------------------------------------------------
    Nankin
    -------------------------------------------------------------------------
    Total Nankin
     Inferred          9.25    260   13.25      400     118    3,300     186
    -------------------------------------------------------------------------
    Summary -
     Inferred
    -------------------------------------------------------------------------
    Total Rosario
     and Nankin
     Inferred          2.84    120    4.69   11,800   1,077   45,600   2,020
    -------------------------------------------------------------------------


    Total Summary of Measured, Indicated and Inferred Resources (4)(5)(6)(8)
    -------------------------------------------------------------------------
                                                                        Gold
                                      Gold                              Equi-
                                      Equi-            Gold   Silver  valent
    Mineral Category   Gold Silver  valent   Tonnes  Ounces   Ounces  Ounces
                       (g/t)  (g/t)   (g/t)  (000's) (000's)  (000's) (000's)
                         (7)    (7)     (7)                               (3)
    -------------------------------------------------------------------------
    Summary -
     Measured &
     Indicated
    -------------------------------------------------------------------------
    Total Measured     0.33     16    0.66    9,879     105    4,973     208
    -------------------------------------------------------------------------
    Total Indicated    0.54     15    0.85   21,523     370   10,691     591
    -------------------------------------------------------------------------
    Total Measured
     & Indicated       0.47     16    0.79   31,402     475   15,664     799
    -------------------------------------------------------------------------
    Summary -
     Inferred
    -------------------------------------------------------------------------
    Total Inferred     2.38    110    4.65   38,621   2,954  136,594   5,780
    -------------------------------------------------------------------------

    Notes to the Mineral Reserves & Reserves Table

    (1)  The Guadalupe y Calvo inferred Resources assumed a gold price of
         $300 per ounce and a silver price of $4.61 per ounce and have been
         summarized at a gold equivalent ratio of 48.33:1 (as per Reserves)
    (2)  Gold equivalent calculations use the reserve metal prices of $580/oz
         for gold and $12.00/oz for silver for a gold to silver ratio of
         48.33:1
    (3)  Gold equivalent calculations use the resource metal prices of
         $850/oz for gold and $15.44/oz for silver for a gold to silver ratio
         of 48.33:1
    (4)  These mineral Resources are in addition to mineral Reserves. Mineral
         Resources that are not mineral Reserves do not have demonstrated
         economic viability when calculated using mineral reserve
         assumptions.
    (5)  Mineral Reserves ("Reserves") have been calculated in accordance
         with NI 43-101, as required by Canadian securities regulatory
         authorities. In addition, while the terms "measured", "indicated and
         "inferred" mineral Resources are required pursuant to NI 43-101, the
         SEC does not recognize such terms. Canadian standards differ
         significantly from the requirements of the SEC, and mineral
         Resources disclosed in accordance with the requirements of the SEC.
         Investors should understand that "inferred" mineral Resources have a
         great amount of uncertainty as to their existence and great
         uncertainty as to their economic and legal feasibility. In addition,
         investors are cautioned not to assume that any part or all of
         Gammon's mineral Resources constitute or will be converted into
         Reserves.
    (6)  Mineral Reserves and Resources have been calculated as at December
         31, 2007.
    (7)  Grade represents an average, weighted by reference to tons of ore
         type where several recovery processes apply.
    (8)  The metallurgical recovery applicable at each property and the
         cut-off grades used to determine Reserves as at December 31, 2007
         are as follows:

                                         Au        Ag
                                   Metallur- Metallur-
                                      gical     gical
                                   Recovery  Recovery           Cut-off Grade
         Mine                            (%)       (%)                    g/t
         --------------------------------------------------------------------
         Ocampo Open-Pit Mill            96        92        greater than 2.5
         Ocampo Open-Pit Fine Crush      82        72    greater than 0.7-2.5
         Ocampo Open-Pit Coarse Crush    60        35    greater than 0.3-0.7
         --------------------------------------------------------------------
         Ocampo Underground              96        92                     2.0
         --------------------------------------------------------------------
         El Cubo                         84        81                    2.92

         All ores at Ocampo demonstrate similar metallurgical recoveries
         regardless of whether oxides are sulfides.

    (9)  The Ocampo Open-Pit strip ratio is 3:1
    (10) The basis for the reserve estimation is the Learchs-Grossman pit
         optimization ("LGPO") methodology.
    




For further information:

For further information: Rene Marion, Chief Executive Officer, Gammon
Gold Inc., (902) 468-0614; Anne Day, Director of Investor Relations, Gammon
Gold Inc., (902) 468-0614; www.gammongold.com

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GAMMON GOLD INC.

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