Gammon Gold Reports Second Quarter Financial Results and Reports Positive
Earnings Before Other Items with Improving Operations Reported from the
Ocampo Mine

TORONTO, Aug. 10 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE: GRS): announces its financial results for the three and six months ended June 30, 2010. All figures reported are in U.S. dollars unless otherwise indicated.

Second Quarter Key Highlights

    
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    - In the second quarter, the Company reported its eleventh consecutive
      quarter of positive operating cash flow. On a consolidated basis, the
      Company reported $15.7 million in operating cash flow, or $0.11 per
      share, including $19.5 million, or $0.14 per share, generated by the
      improving operations at the Ocampo mine.

    - In the second quarter, the Company reported earnings before other items
      of $11.4 million, or $0.08 per share (net of a charge of $1.7 million,
      or $0.01 per share, in accrued severance charges associated with the
      El Cubo mine), as compared to $3.4 million, or $0.03 per share, in the
      same period in 2009, an $8.0 million, or $0.05 per share, improvement
      over the same period in 2009.

    - The Company ended the quarter with cash of $102.7 million, an
      $80.8 million increase in cash on hand since June 30, 2009. As a result
      of the Company's improved cash flow profile, the Company's Balance
      Sheet has been significantly strengthened, which provides management
      with considerable flexibility in advancing additional business
      development plans.

    - During the second quarter, the Ocampo mine produced 44,363 gold
      equivalent* ounces (24,963 gold ounces and 1,066,998 silver
      ounces).

    - During the second quarter, cash costs at Ocampo were $430 per gold
      equivalent* ounce. Utilizing Ocampo's silver revenues as a by-
      product cost credit, second quarter total cash costs were negative
      $33 per gold ounce sold.
    

Ocampo Operations Improving

    
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    - As reported on July 15, 2010, the Ocampo mine reported month-to-month
      improvements in most key operating metrics during the second quarter.

    - During the first quarter a mill redundancy program was launched at
      Ocampo that is designed to help improve recoveries and ensure
      uninterrupted operations during periods of required maintenance. As
      part of the advancement of this program the seventh thickener was
      commissioned in early July and the sixth leach tank will be
      commissioned in August. Both items are key components of the Ocampo
      mill redundancy program and are critical to continued improvements in
      silver recovery efficiencies. The final components of this program are
      expected to be commissioned during the fourth quarter.

    - Installation of an upgraded gear box at the Ocampo overland conveyor
      system, which is expected to allow the conveyor system to reach the
      higher end of the targeted rate of between 10-12,000 tonnes per day,
      was completed in mid-July.

    - 154 workers and 30 key pieces of underground mining equipment from the
      El Cubo mine were redeployed to the Ocampo operation in early July and
      are currently focused on advancing development at the Ocampo
      underground. The positive impact from these additional resources was
      evident in July where underground development increased by 79% to
      2,333 metres as compared to the first quarter monthly average of 1,301
      metres.
    

Consolidated Production and Cash Costs

    
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    - As previously disclosed, the Company's consolidated metal production in
      the quarter was negatively impacted by continued labour disruptions at
      the El Cubo mine that began on June 2, 2010. As a result of this
      disruption, there was negligible production reported from the El Cubo
      mine in June. Operations at El Cubo have been suspended indefinitely
      and the mine has been placed on care and maintenance.

    - During the second quarter, the Company produced 52,506 gold
      equivalent* ounces (29,231 gold ounces and 1,280,201 silver
      ounces).

    - During the second quarter, consolidated cash costs were $494 per gold
      equivalent* ounce. Utilizing silver revenues as a by-product cost
      credit, second quarter total cash costs were $70 per gold ounce sold.
    

Second Quarter Financial Update

    
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    - Revenues for the second quarter were $57.0 million as compared to
      $43.3 million in the same period in 2009. During the quarter the
      Company realized an average gold and silver price of $1,201 per ounce
      and $18.47 per ounce, respectively.

    - As previously reported on August 6, 2010, during the quarter the
      Company recorded a $193.3 million non-cash goodwill and asset
      impairment charge related to the Company's El Cubo mine. The Company
      conducted a long-lived asset impairment test following the indefinite
      suspension of operations on June 17, 2010 that resulted from continued
      labour disruptions by the unionized workforce and rising operating
      costs associated with the failure of the unionized workforce to achieve
      expected productivity levels. The remaining carrying value of El Cubo's
      long-lived assets is $60.9 million. As a result of this impairment
      charge, the Company reported a net loss of $180.3 million, or $1.30 per
      share, as compared to a net loss of $6.8 million, or $0.05 per share in
      the same period in 2009.
    

Recent News

    
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    - On June 1, 2010 the Company acquired 5,000,000 units of Golden Queen
      pursuant to a non-brokered private placement. Each unit consists of one
      common share, one quarter of one share purchase warrant exercisable at
      CAD $1.75, and one quarter of one share purchase warrant exercisable at
      CAD $2.00 for a period of 18 months from the closing date of the
      transaction. The subscription price for the units is CAD $1.60 per unit
      for an aggregate purchase price of CAD $8,000,000. After giving effect
      to the private placement, Gammon Gold will hold approximately 5.3% of
      the issued and outstanding common shares (approximately 7.5% on a fully
      diluted basis) of Golden Queen.

    - On June 17, 2010 the Company announced that due to continued labour
      disruptions at its El Cubo operation as well as the untenable financial
      demands made by the union workforce, it terminated 397 union workers as
      of June 16, 2010 and is in the process of filing criminal charges
      against seven union executives. Operations at the El Cubo mine have
      been suspended indefinitely.

    - On June 18, 2010 the Company announced that it has executed a binding
      Letter of Intent that will give Gammon the option to acquire the
      43,229 hectare block of mineral concessions called the Los Jarros
      Properties from Valdez Gold Inc. The Los Jarros land package is located
      directly north east of Ocampo and lies along the Ocampo-Pinos Altos
      belt. The Ocampo property covers approximately 11,262 hectares and the
      recent addition of option contracts on the Venus properties
      (4,491 hectares), and the Los Jarros properties (43,229 hectares),
      brings Gammon's mineral holdings in this highly competitive camp to
      approximately 58,982 hectares.

    - On June 30, 2010 the Company provided an update on its strategic
      exploration program. Positive results continue to be reported at both
      Ocampo and Guadalupe y Calvo where numerous high-grade drill intercepts
      have been identified at new discoveries during the quarter. At Ocampo
      multiple veins were discovered in the Molinas SW target area, that in
      addition to the excellent potential previously identified to the
      northeast in the San Amado district, and to the SE in the Aventurero
      and Rosario parts of the district, demonstrates that the underground
      mine is open to expansion to the northwest. The first holes from the
      drilling at the Guadalupe y Calvo project have discovered bonanza grade
      mineralization that indicates the potential for underground mining.

    - On July 16, 2010 the Company acquired 4,706,000 units of Corex Gold
      Corporation ("Corex")pursuant to a non-brokered private placement.
      Each unit consists of one common share and one half of one share
      purchase warrant exercisable at CAD $0.90 for a period of 24 months
      from the closing date of the transaction. The subscription price for
      the units is CAD $0.68 per unit for an aggregate purchase price of
      CAD $3,200,080. After giving effect to the private placement, Gammon
      will hold approximately 12% of the issued and outstanding shares
      (approximately 14% on a fully diluted basis) of Corex. Peter Drobeck,
      Senior VP of Explorations and Business Development for Gammon has been
      appointed to the Technical Advisory Board of Corex.
    

"We are encouraged by the positive progress we have made at Ocampo and Guadalupe y Calvo during the quarter. The Ocampo mine is reporting productivity improvements across all unit operations, and our exploration programs at both Ocampo and Guadalupe y Calvo have delivered some very encouraging results. With a view to the future, we have been able to leverage our strong cash position to advance our growth strategy through completing two strategic investments in quality companies as well as three option agreements that significantly strengthen our portfolio of properties in Mexico." stated René Marion, President and Chief Executive Officer. He continued, "With the Ocampo mine running at, or near, targeted levels and the benefits we expect to realize from the additional El Cubo contractor personnel and equipment we have redeployed at Ocampo, we anticipate reporting strengthening performance throughout the second half of 2010."

    
    * Gold equivalent ounces include silver ounces produced and converted
      to a gold equivalent, based on the Company's long-term gold
      equivalency ratio of 55:1
    

Results of Operations

    
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    (all amounts are in U.S. dollars and are in thousands, except ounces,
     per share amounts, average realized prices and total cash costs)
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                                      OCAMPO                 EL CUBO
    Three Months Ended        June 30/10  June 30/09  June 30/10  June 30/09
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    Gold ounces produced          24,963      28,035       4,268       3,080
    Silver ounces produced     1,066,998     976,143     213,203     107,328
    Gold equivalent ounces
     produced (Realized)(1)       41,362      42,495       7,593       4,628
    Gold ounces sold              23,835      28,310       4,316       2,151
    Silver ounces sold         1,036,246   1,023,511     221,437      92,556
    Gold equivalent ounces
     sold (Realized)(1)           39,744      43,616       7,755       3,465
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    Total cash costs per gold
     equivalent ounce(2)            $461        $428        $885        $768
    Total cash costs per gold
     ounce(2)                       ($33)       $164        $643        $648
    Gold to Silver Ratio(3)           65          67          65          71
    Realized Gold Price           $1,203        $922      $1,192        $891
    Realized Silver Price         $18.47      $13.82      $18.47      $12.50
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    Gold equivalent ounces
     produced (55:1)(3)           44,363      45,783       8,143       5,031
    Total cash costs per gold
     equivalent ounce
     (55:1)(2)(3)                   $430        $398        $823        $694
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                                                           CONSOLIDATED
    Three Months Ended                                June 30/10  June 30/09
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    Gold ounces produced                                  29,231      31,115
    Silver ounces produced                             1,280,201   1,083,471
    Gold equivalent ounces
     produced (Realized)(1)                               48,955      47,123
    Gold ounces sold                                      28,151      30,461
    Silver ounces sold                                 1,257,683   1,116,067
    Gold equivalent ounces
     sold (Realized)(1)                                   47,499      47,081
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    Total cash costs per gold
     equivalent ounce(2)                                    $531        $453
    Total cash costs per gold
     ounce(2)                                                $70        $198
    Gold to Silver Ratio(3)                                   65          67
    Realized Gold Price                                   $1,201        $920
    Realized Silver Price                                 $18.47      $13.71
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    Gold equivalent ounces
     produced (55:1)(3)                                   52,506      50,814
    Total cash costs per gold
     equivalent ounce
     (55:1)(2)(3)                                           $494        $420
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    (1) Gold equivalent ounces include silver ounces produced and sold
        converted to a gold equivalent, based on the ratio of the actual
        realized sales prices of the commodities.
    (2) See the Non-GAAP Measures section on page 23 of the 2010 Second
        Quarter Management's Discussion and Analysis.
    (3) Gold equivalent ounces include silver ounces produced and sold
        converted to a gold equivalent, based on the Company's long-term gold
        equivalency ratio of 55:1.


    (all amounts are in U.S. dollars and are in thousands, except ounces,
     per share amounts, average realized prices and total cash costs)
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                                      OCAMPO                 EL CUBO
    Six Months Ended          June 30/10  June 30/09  June 30/10  June 30/09
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    Gold ounces produced          46,818      56,391      10,844      11,553
    Silver ounces produced     2,027,815   1,965,181     536,457     469,590
    Gold equivalent ounces
     produced (Realized)(1)       77,908      84,492      19,108      18,111
    Gold ounces sold              46,241      54,136      10,966      10,760
    Silver ounces sold         2,056,450   1,925,569     540,891     462,252
    Gold equivalent ounces
     sold (Realized)(1)           77,605      81,901      19,286      17,185
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    Total cash costs per gold
     equivalent ounce(2)            $460        $429        $814        $574
    Total cash costs per gold
     ounce(2)                       ($14)       $179        $569        $366
    Gold to Silver Ratio(3)           66          69          65          70
    Realized Gold Price           $1,156        $919      $1,141        $889
    Realized Silver Price         $17.63      $13.26      $17.57      $12.65
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    Gold equivalent ounces
     produced (55:1)(3)           83,688      92,121      20,596      20,091
    Total cash costs per gold
     equivalent ounce
     (55:1)(2)(3)                   $426        $394        $755        $515
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                                                           CONSOLIDATED
    Six Months Ended                                  June 30/10  June 30/09
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    Gold ounces produced                                  57,662      67,944
    Silver ounces produced                             2,564,272   2,434,771
    Gold equivalent ounces
     produced (Realized)(1)                               97,016     102,603
    Gold ounces sold                                      57,207      64,896
    Silver ounces sold                                 2,597,341   2,387,821
    Gold equivalent ounces
     sold (Realized)(1)                                   96,891      99,086
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    Total cash costs per gold
     equivalent ounce(2)                                    $530        $454
    Total cash costs per gold
     ounce(2)                                                $98        $210
    Gold to Silver Ratio(3)                                   66          69
    Realized Gold Price                                   $1,156        $913
    Realized Silver Price                                 $17.63      $13.13
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    Gold equivalent ounces
     produced (55:1)(3)                                  104,284     112,213
    Total cash costs per gold
     equivalent ounce
     (55:1)(2)(3)                                           $492        $415
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    (1) Gold equivalent ounces include silver ounces produced and sold
        converted to a gold equivalent, based on the ratio of the actual
        realized sales prices of the commodities.
    (2) See the Non-GAAP Measures section on page 23 of the 2010 Second
        Quarter Management's Discussion and Analysis.
    (3) Gold equivalent ounces include silver ounces produced and sold
        converted to a gold equivalent, based on the Company's long-term gold
        equivalency ratio of 55:1.
    

The financial statements along with the Management's Discussion and Analysis will be available on the Company's website at www.gammongold.com or www.sedar.com.

The Company's quarterly financial results for the three and six month period ended June 30, 2010 will be released before the market opens on Tuesday, August 10, 2010. The financial statements will be available on the Company's website at www.gammongold.com or www.sedar.com.

A webcast and conference call will be held on Tuesday, August 10, 2010 starting at 10:00 am Eastern Time (11:00 am Atlantic Time). Senior management will be on hand to discuss the results.

Second Quarter 2010 Conference Call

    
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    Conference Call Access:
      - Toll Free: 1-888-231-8191
    

When the Operator answers please ask to be placed into the Gammon Gold Second Quarter 2010 Results Conference Call.

Archive Call Access:

If you are unable to attend the conference call, a replay will be available until midnight August 17, 2010 by dialing the appropriate number below:

    
      - Local Toronto Participants: 1-416-849-0833   Passcode: 84971221
      - North America Toll Free: 1-800-642-1687      Passcode: 84971221
    

Second Quarter 2010 Webcast

    
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Live Webcast:

The event will be broadcast live on the internet via webcast. To access the webcast please follow the link provided below:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3131700

Archive Webcast:

The webcast will be archived for 90 days by following the link provided below:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3131700 or via the Company's website at www.gammongold.com.

About Gammon Gold

Gammon Gold Inc. is a 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 owns the suspended El Cubo mine in Guanajuato State and has the promising Guadalupe y Calvo development property in Chihuahua State. The Company recently completed option purchase agreements to acquire the Mezquite Project in Zacatecas State, Mexico and the Venus Project located north of the Ocampo mine in Chihuahua State, Mexico. It also has recently signed a Letter of Intent to acquire the Los Jarros Project in Chihuahua State, Mexico. Since 2008, the Company has significantly increased its land position by over 59% and has made strategic investments in Golden Queen Mining Co. Ltd. and Corex Gold Corporation. The Company's Executive Office is located in Toronto, Ontario.

    
                             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/A, 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 the carrying value of El Cubo, its financial exposure to litigation, 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, the duration of the suspension of operations at El Cubo and our ability to re-open such operations, the financial and operating effects of the suspension of operations at El Cubo, costs and timing of completion of the Ocampo expansion program and improvements to the heap leach pad, costs and timing of the development and commencement of production of new deposits, costs and timing of construction, costs and timing of future exploration and reclamation expenses including, anticipated 2010 results, operating performance projections for 2010, our ability to fully fund our business model internally, 2010 gold and silver production and the cash and operating costs associated therewith, the ability to achieve productivity and operational efficiencies, the ability to access grid power at Ocampo, further reduction in the open pit stripping ratio and the timing of each thereof. 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.

SOURCE GAMMON GOLD INC.

For further information: For further information: please visit the Gammon Gold website at www.gammongold.com or contact: Scott Perry, Chief Financial Officer, Gammon Gold Inc., 416-646-3825; Anne Day, Director of Investor Relations, Gammon Gold Inc., 902-468-0614

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GAMMON GOLD INC.

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