Gammon Lake Resources Announces 2006 Annual Financial Results



    TSX: GAM / AMEX:   GRS / BSX: GL7

    HALIFAX, April 2 /CNW/ - Gammon Lake Resources Inc. ("Gammon Lake")
(TSX:GAM and AMEX:  GRS) is pleased to announce year-end financial results for
the twelve months ended December 31, 2006. During 2006, the Company recorded
revenue of $73 million and became cash flow positive in the fourth quarter
with cash flow of $6,871,156 from operations. With completion of the
construction of the Ocampo open pit and underground mining projects, the
Company has become a mid-tier producer of gold and silver. Gammon Lake has
continued to strive to build shareholder value, increasing the Company's
market capitalization from $520 million in 2005 to $2.15 billion in 2006. The
Company is now focused on increasing its production profile from 200,000 gold
ounces and 10-million silver ounces in 2007, to 280,000 gold ounces and
15-million silver ounces in 2009 and beyond.
    All figures in Canadian dollars unless otherwise stated.

    
    2006 Highlights, prior to announcement of commercial production in 2007
    -----------------------------------------------------------------------

    - Pre-commercial production cash cost of US$293 per gold equivalent ounce
      for Ocampo production in the fourth quarter 2006. Company reports cash
      cost of US $318 per gold equivalent ounce for the three months ended
      December 31, 2006
    - Pre-Commercial production cash cost of US$355 for the year ended
      December 31, 2006.
    - Revenues of $73 million in 2006
    - Records positive cash flow from operations of $6,871,156 in
      fourth quarter 2006
    - Gold sales of 67,477 gold ounces, and 1,888,324 silver ounces
      (105,243 gold equivalent ounces)
    - Construction of Ocampo Gold-Silver Project, including two major ore
      processing facilities, with commercial production declared in January
      2007
    - Acquired a 100% interest in Mexgold Resources Inc., resulting in the
      acquisition of an additional producing gold and silver mine as well as
      an earlier stage exploration project, all in Mexico

    2006 was a major turning point for the shareholders, management, employees
and board of Gammon Lake Resources Inc. The Company was pleased with its
accomplishments in 2006, and is now positioned to be a significant mid-tier
producer of gold and silver. The Company commenced construction of the Ocampo
mine in late March 2005, with the first foundations poured on site in
September, 2005. During late 2005 and through 2006, the Company completed
construction of two major ore processing facilities including its 11,400 tonne
per day crushing/heap leach circuit and its 1,500 tonne per day mill facility.
During 2006, through its commissioning period, the Ocampo mine sold 51,748
ounces of gold, and 1,302,807 ounces of silver, or 77,804 gold equivalent
ounces. Production from El Cubo for the period August 8, 2006 to December 31,
2006 equaled 15,729 ounces of gold and 585,517 ounces of silver, or 27,439
gold equivalent ounces. On a consolidated basis, the Company produced 67,477
ounces of gold and 1,888,324 ounces of silver (105,243 gold equivalent ounces)
during 2006. For fiscal 2007, the Company is targeting production of 400,000
gold equivalent ounces (200,000 ounces of gold, and 10,000,000 ounces of
silver).
    The Company produced its first dore bar from Ocampo on February 1, 2006
from the heap leach facility. The Company has been mining in the open pit
since January, 2006. During the year, the Company mined 4,272,625 tonnes of
ore and 12,954,869 tonnes of waste, for a 3.03:1 strip ratio. The Company
stacked a total of 2,585,603 tonnes of ore on the heap leach pad with an
average grade of 0.94 grams per tonne gold, and 38.88 grams per tonne silver.
Throughout the commissioning process, the Company had made modifications to
the crushing facility, and processed in excess of 10,000 tonnes of ore per day
in the fourth quarter of 2006. The Company is installing a fourth crusher in
the circuit which will increase the capacity from 11,400 tonnes per day to
13,800 tonnes per day, and expects this work to be completed by Q3 2007. The
Company has recovered a total of 51% of the total gold and 26% of the silver
placed on the pad to date. The heap leach pad contains approximately 24,583
recoverable gold ounces and 1,065,798 recoverable silver ounces as at December
31, 2006.
    The Company commenced its commissioning process of the mill in August,
2006 with the introduction of low- and mid-grade ore. Commissioning continued
through December with the processing of higher grade ore. In December, the
Company shut down the mill for two weeks in order to make final modifications
to the tailings filter plant. This allowed the mill to achieve its designed
capacity of 1,500 tonnes per day. During 2006, the Company processed 100,753
tonnes through the mill, with weighted average grades of 3.79 grams per tonne
gold, and 199.5 grams per tonne silver (7.78 gold equivalent grams per tonne).
During 2006, the mill produced 9,272 ounces of gold, and 415,584 ounces of
silver (17,584 gold equivalent ounces). There were an additional 1,950 ounces
of gold and 155,009 ounces of silver in process at December 31, 2006. The
recoveries in the mill have been at feasibility study levels of 96% for gold
and 93% for silver.
    On August 8, 2006, the Company acquired all of the issued and outstanding
common shares and options of Mexgold Resources Inc. by way of a plan of
arrangement under the Business Corporations Act (Ontario). Under the terms of
the transaction, each Mexgold shareholder, option and warrant holder other
than Gammon Lake received 0.47 of a Gammon Lake common share in exchange for
each Mexgold common share. Gammon Lake Resources Inc. issued 21,838,033 common
shares to the holders of Mexgold common shares on the completion of the
acquisition. A further 5,498,897 Gammon Lake common shares are issuable on the
exercise of the existing Mexgold stock options and a further 186,120 Gammon
Lake common shares are issuable on the exercise of the existing Mexgold
warrants. Through a subsidiary, Mexgold owns the El Cubo gold and silver mine
in Guanajuato State, Mexico.

    Summarized Annual Financial Results

    The following selected information has been extracted from the Company's
audited consolidated financial statements.

    -------------------------------------------------------------------------
    SELECTED ANNUAL INFORMATION      12 months       5 months      12 months
    CDN $ unless otherwise               ended          ended          ended
     stated                       Dec 31, 2006   Dec 31, 2005  July 31, 2005
    -------------------------------------------------------------------------
    Revenue from mining
     operations                  $  72,824,863              -              -
    -------------------------------------------------------------------------
    Production costs excluding
     amortization and depletion  $  43,017,011              -              -
    -------------------------------------------------------------------------
    Gold ounces sold                    67,477              -              -
    -------------------------------------------------------------------------
    Silver ounces sold               1,888,324              -              -
    -------------------------------------------------------------------------
    Average realized gold
     price - US$                 $      606.99              -              -
    -------------------------------------------------------------------------
    Average realized silver
     price - US$                 $       12.18              -              -
    -------------------------------------------------------------------------
    Net loss                     $ (28,692,380) $ (11,607,510) $ (19,375,595)
    -------------------------------------------------------------------------
    Net loss per share, basic
     and diluted(1)              $       (0.33) $       (0.16) $       (0.29)
    -------------------------------------------------------------------------
    Cash flow used in operations $ (22,470,789) $  (3,993,150) $  (8,975,284)
    -------------------------------------------------------------------------
    Total cash costs (per gold
     equivalent ounce) - US$     $         355              -              -
    -------------------------------------------------------------------------
    Cash dividends declared                Nil            Nil            Nil
    -------------------------------------------------------------------------
    Total Assets                 $ 835,241,538  $ 258,955,515  $ 210,348,878
    -------------------------------------------------------------------------
    (1) Net loss per share on a diluted basis is the same as net loss per
        share on an undiluted basis, as all factors which were considered in
        the calculation are anti-dilutive.

    Quarterly Financial Review

    -------------------------------------------------------------------------
    SELECTED QUARTERLY
     INFORMATION (2)                                   FOR THE QUARTER ENDED
                    ---------------------------------------------------------
    CDN$ unless     Three months    Three months  Three months  Three months
     otherwise             ended           ended         ended         ended
     stated            31-Mar-06       30-Jun-06     30-Sep-06     31-Dec-06
    -------------------------------------------------------------------------
    Revenue
     from mining
     operations     $  2,088,038    $ 13,163,868  $ 18,448,372  $ 39,124,585
    -------------------------------------------------------------------------
    Production
     costs          $  3,634,615    $  4,465,924  $ 14,235,584  $ 20,680,888
    -------------------------------------------------------------------------
    Gold ounces
     sold                  2,827          13,672        17,112        33,866
    -------------------------------------------------------------------------
    Silver
     ounces sold          62,629         251,155       435,554     1,138,986
    -------------------------------------------------------------------------
    Average
     realized gold
     price - US$    $     560.58    $     615.97  $     604.42  $     608.53
    -------------------------------------------------------------------------
    Average
     realized silver
     price - US$    $      10.50    $      11.45  $      11.88  $      12.54
    -------------------------------------------------------------------------
    Net loss        $ (5,410,149)   $ (2,445,745) $(16,945,886) $ (3,890,600)
    -------------------------------------------------------------------------
    Net loss per
     share, basic
     and diluted(1) $      (0.07)   $      (0.03) $      (0.18) $      (0.05)
    -------------------------------------------------------------------------
    Cash used in
     operations     $ (9,009,603)   $ (2,031,526) $(18,300,816) $  6,871,156
    -------------------------------------------------------------------------
    Total cash costs
     (per gold
      equivalent
      ounce)
      - US$(2)(4)              -(3) $        219  $        502  $        318
    -------------------------------------------------------------------------
    Cash dividends
     declared                Nil             Nil           Nil           Nil
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    SELECTED QUARTERLY INFORMATION - 2006 (2)

    CDN$ unless                                                        Total
     otherwise
     stated
    -------------------------------------------------------------------------
    Revenue
     from mining
     operations                                                 $ 72,824,863
    -------------------------------------------------------------------------
    Production
     costs                                                      $ 43,017,011
    -------------------------------------------------------------------------
    Gold ounces
     sold                                                             67,477
    -------------------------------------------------------------------------
    Silver
     ounces sold                                                   1,888,324
    -------------------------------------------------------------------------
    Average
     realized gold
     price - US$                                                $     606.99
    -------------------------------------------------------------------------
    Average
     realized silver
     price - US$                                                $      12.18
    -------------------------------------------------------------------------
    Net loss                                                    $(28,692,380)
    -------------------------------------------------------------------------
    Net loss per
     share, basic
     and diluted(1)                                             $      (0.33)
    -------------------------------------------------------------------------
    Cash used in
     operations                                                 $(22,470,789)
    -------------------------------------------------------------------------
    Total cash costs
     (per gold
      equivalent
      ounce)
      - US$(2)(4)                                               $        355
    -------------------------------------------------------------------------
    Cash dividends
     declared                                                            Nil
    -------------------------------------------------------------------------

    (1) Net loss per share on a diluted basis is the same as net loss per
        share on an undiluted basis, as all factors which were considered
        in the calculation are anti-dilutive.
    (2) Comparative information for 2005 is not presented as the Company
        commenced production in 2006.
    (3) The Company did not report cash costs in Q1.
    (4) The exchange rate to calculate USD equivalent is
        CDN$1.00 = US$0.858 at December 31, 2006,
        CDN$1.00 = US$0.8979 at September 30, 2006, and
        CDN$1.00 = USD $0.8931 at June 30, 2006 based on closing
        interbank rates.

    Annual Financial Statements for the 2006 fiscal year ended December 31,
2006 are attached to this release. These should be read in conjunction with
the Notes to the Financial Statements and Management Discussion and Analysis,
posted on SEDAR at www.sedar.com.
    Gammon Lake has restated its United States generally accepted accounting
principles ("US GAAP") reconciliation note with respect to the presentation of
exploration and development costs incurred on its Ocampo Gold-Silver Project
for the five month period ended December 31, 2005 and the year ended July 31,
2005.
    This restatement only pertains to the Company's US GAAP reconciliation and
has no impact on Gammon Lake's previously reported financial results in
accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"). This US GAAP restatement does not impact the Company's operations,
cash flow or available cash and cash equivalents.
    The Company reports in accordance with Canadian GAAP and provides note
disclosure in its annual financial statements with respect to a reconciliation
of net loss, and shareholders' equity of Canadian GAAP to US GAAP. Under
Canadian GAAP, development costs incurred on properties for which mineral
resources have the potential of being economically recovered are capitalized.
Under US GAAP, as interpreted by United States Securities and Exchange
Commission guidelines, all costs incurred before a commercially mineable
deposit has been established, which generally requires the preparation of a
bankable feasibility study, should be expensed as incurred and such property
should be classified as exploration property.
    In concert with its auditors and after having obtained approval from its
board of directors, the results for the five month December 31, 2005 financial
period and July 31, 2005 financial year under US GAAP have been restated to
properly account for exploration costs relating to the Ocampo property.
Accordingly, for the December 31, 2005 financial period, the company increased
its net loss under US GAAP from previously disclosed results by $1,430,634
from a loss of $11,966,422 to $13,397,056 representing a difference of $0.02
per share, and for the July 31, 2005 financial year, the company realized a
net loss of $35,576,464 rather than the previously disclosed net loss of
$32,896,225 representing a difference of $2,680,239 or $0.04 per share. The
shareholders' equity decreased as at December 31, 2005 by $4,110,873 and
July 31, 2005 by $2,680,239. Mineral property and related deferred costs under
US GAAP as at December 31, 2005 decreased by $5,009,161 from $84,997,460 to
$79,988,299 and as at July 31, 2005 decreased by $3,722,239 from $50,801,722
to $47,079,483. The Company decreased its future income taxes under US GAAP
for the December 31, 2005 financial period by $898,288 to nil and for the July
31, 2005 period by $1,042,000 to $632,288 from the previously disclosed
$1,674,288.
    The Company will present a restatement of its US GAAP reconciliation note
with respect to the five months ended December 31, 2005 and the year ended
July 31, 2005 in its filing of the amended financial statements for those
periods.
    Because of this restatement, the US GAAP reconciliation note in the
Company's previously filed financial statements with respect to the five month
period ended December 31, 2005 and the year ended July 31, 2005 should not be
relied upon.

    Conference Call Details

    Gammon Lake would like to remind shareholders that a conference call will
be held on Tuesday, April 3, 2007 at 11:00 am Atlantic Time (10:00 am Eastern
Time) to discuss the financial results. You may join the call by dialing:

    North American Toll Free:  1-866-400-2280
    Outside Canada & US:         416-850-9143

    When the Operator answers; ask to be placed into the Gammon Lake 2006
Financials Conference Call.
    If you are unable to attend the conference call, a playback will be
available for 30 days immediately after the event by dialing 1-866-245-6755 or
416-915-1035 for calls from outside Canada and the US. Enter passcode 788798.
The playback will also be posted on Gammon Lake's website at
www.gammonlake.com approximately two hours after the conference call.

    About Gammon Lake

    Gammon Lake Resources Inc. is a Nova Scotia mid tier gold and silver
producer with properties in Mexico. The Company's flagship Ocampo Project is
now in commercial production. Gammon Lake remains 100% unhedged and is
targeting production of 400,000 gold equivalent ounces (200,000 ounces of gold
and 10-million ounces of silver) in 2007 from the Company's Ocampo and El Cubo
Mines.
    The qualified person responsible for all technical data reported in this
news release is John C. Thornton, Chief Operating Officer. Third party
analytical work was performed by ALS Chemex of Vancouver and Florin Labs of
Reno, Nevada, employing conventional fire assay analysis techniques.

    Cautionary Statement

    Cautionary Note to U.S. Investors - Under a Multi Jurisdictional
Disclosure System (the "MJDS") adopted by the United States, Gammon Lake is
permitted to prepare its mining disclosure in accordance with applicable
Canadian securities laws. Consequently, this press release referred to herein,
may contain disclosure that is different than, or in some cases not permitted
by U.S. securities laws. For example, the United States Securities and
Exchange Commission (the "SEC") permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that a company
can economically and legally extract or produce. Under Canadian securities
laws, Gammon Lake is permitted to use certain terms, such as "measured,"
"indicated," and "inferred" "resources," that the SEC guidelines strictly
prohibit U.S. registered companies from including in their filings with the
SEC. U.S. Investors are urged to consider closely the disclosure in Gammon
Lake's Annual Report on Form 40-F (File No. 001-31739), which may be obtained
from Gammon Lake, 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.
    This News Release includes certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable Canadian
securities legislation. All statements other than statements of historical
fact, included in this release, including, without limitation, statements
regarding the annualized production run rate at the Ocampo and El Cubo Mines,
potential mineralization and reserves, exploration results, and future plans
and objectives of Gammon Lake Resources, are forward-looking statements (or
forward-looking information) that involve various risks and uncertainties.
There can be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause actual
results to differ materially from Gammon Lake's expectations include, among
others, risks related to international operations, the actual results of
current exploration activities, conclusions of economic evaluations and
changes in project parameters as plans continue to be refined as well as
future prices of gold and silver, as well as those factors discussed in the
section entitled "Risk Factors" in Gammon Lake's Form 40-F and Annual
Information Form as filed with the United States Securities and Exchange
Commission. Although Gammon Lake has attempted to identify important factors
that could cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated or intended.
    There can be no assurance that such statements will prove to be accurate
as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Gammon Lake does not undertake to
update any forward-looking statements that are included herein, except in
accordance with applicable securities laws.

    -------------------------------------------------------------------------
    Gammon Lake Resources Inc.
    Consolidated Balance Sheets
                                   December 31    December 31        July 31
    Unaudited                             2006           2005           2005
    -------------------------------------------------------------------------
    Assets
    Current
      Cash and cash equivalents  $   3,427,063  $   6,701,543  $  35,400,349
      Restricted cash                1,320,752              -              -
      Receivables
        Commodity taxes             14,036,491      9,558,654      5,332,406
        Trade / other                3,506,646      2,747,728        129,772
      Inventories:
        Supplies                     9,525,376      2,056,963              -
        Ore stockpiles               5,628,522              -              -
        Ore in process              38,773,078              -              -
      Prepaids and deposits            903,716        289,736        947,344
      Due from related companies             -        626,228        229,700
                                 -------------- -------------- --------------
                                    77,121,644     21,980,852     42,039,571

    Deposits on capital equipment    1,223,154      1,762,696      9,138,768
    Long term investment (Note 4)            -     10,632,000     10,422,000
    Deferred compensation              997,571              -              -
    Long term ore inventory in
     stockpile                       2,380,888              -              -
    Mining interests and capital
     assets (Note 5)               628,592,613    224,579,967    148,748,539
    Goodwill                       124,925,668              -              -
                                 -------------- -------------- --------------
                                 $ 835,241,538  $ 258,955,515  $ 210,348,878
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    -------------------------------------------------------------------------
    Liabilities
    Current
      Payables and accruals      $  35,950,905  $  10,552,274  $   3,609,306
      Current portion of
       long-term debt and
       capital leases               78,065,578     24,935,455              -
                                 -------------- -------------- --------------
                                   114,016,483     35,487,729      3,609,306
    Long term debt and capital
     leases (Note 6)                74,126,093     21,203,828      8,581,300
    Employee future benefits
     (Note 8)                        3,757,638        276,126        213,738
    Future income taxes (Note 9)    82,149,543      7,336,000      8,121,000
                                 -------------- -------------- --------------
                                   274,049,757     64,303,683     20,525,344
                                 -------------- -------------- --------------
    Shareholders' Equity
    Capital stock (Note 10)        551,067,338    218,974,423    204,065,585
    Contributed surplus (Note 10)   83,394,693     20,255,279     18,728,309
    Deficit                        (73,270,250)   (44,577,870)   (32,970,360)
                                 -------------- -------------- --------------
                                   561,191,781    194,651,832    189,823,534
                                 -------------- -------------- --------------
                                 $ 835,241,538  $ 258,955,515  $ 210,348,878
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Gammon Lake Resources Inc.
    Consolidated Statements of Operations and Deficit

                                 Twelve months    Five months  Twelve months
                                         ended          ended          ended
                                   December 31    December 31        July 31
    Unaudited                             2006           2005           2005
    -------------------------------------------------------------------------

    Revenues from mining
     operations                  $  72,824,863  $           -  $           -
                                 -------------- -------------- --------------
    Expenses
      Production costs excluding
       amortization & depletion  $  43,017,011  $           -  $           -
      Refining costs                   595,882              -              -
      General and administrative    32,024,366     12,614,847     20,131,038
      Amortization and depletion    21,264,785        212,755        175,345
                                 -------------- -------------- --------------
                                    96,902,044     12,827,602     20,306,383
                                 -------------- -------------- --------------
    Loss before other items        (24,077,181)   (12,827,602)   (20,306,383)
                                 -------------- -------------- --------------

    Interest on long term debt   $  (5,977,943) $    (242,845) $           -
    Foreign exchange (loss)/gain    (1,697,560)       672,524        312,172
    Gain/(loss) on equity
     investment                        571,062        210,000     (1,226,000)
    Interest and sundry                890,192        201,413      1,423,576
                                 -------------- -------------- --------------
                                    (6,214,249)       841,092        509,748
                                 -------------- -------------- --------------
    Loss before income taxes     $ (30,291,430) $ (11,986,510) $ (19,796,635)
    Future income tax recovery
     (Note 9)                      (1,599,050)      (379,000)      (421,040)
                                 -------------- -------------- --------------
    Net loss                     $ (28,692,380) $ (11,607,510) $ (19,375,595)
                                 -------------- -------------- --------------
    Loss per share (Note 11)     $       (0.33) $       (0.16) $       (0.29)
                                 -------------- -------------- --------------

    -------------------------------------------------------------------------

    Deficit, beginning of period $ (44,577,870) $ (32,970,360) $ (13,594,765)

    Net loss                       (28,692,380)   (11,607,510)   (19,375,595)
                                 -------------- -------------- --------------
    Deficit, end of period       $ (73,270,250) $ (44,577,870) $ (32,970,360)
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Gammon Lake Resources Inc.
    Consolidated Statements of Cash Flows

                                 Twelve months    Five months  Twelve months
                                         ended          ended          ended
                                   December 31    December 31        July 31
    Unaudited                             2006           2005           2005
    -------------------------------------------------------------------------
    Cashflows from (used in)
     operating activities
      Net loss                   $ (28,692,380) $ (11,607,510) $ (19,375,595)
      Amortization and depletion    21,264,785        603,245        537,540
      Unrealized foreign exchange
       gain                         (2,267,313)      (675,791)      (876,706)
      Stock option expense          17,879,591      6,598,970     13,974,680
      Employee future benefits         445,022         62,388              -
      Future income tax recovery    (1,599,050)      (379,000)      (421,040)
      Accrued interest on long
       term debt                       916,415        190,139              -
      (Gain)/loss on long term
       equity investment              (571,062)      (210,000)     1,226,000
      Change in non-cash operating
       working capital (Note 14)   (29,846,797)     1,424,409     (4,040,163)
                                 -------------- -------------- --------------

                                   (22,470,789)    (3,993,150)    (8,975,284)
                                 -------------- -------------- --------------

    Cashflows from (used in)
     investing activities
      Acquisition of Investment
       (Note 3)                     (7,375,000)             -              -
      Cash acquired on acquisition
       of Mexgold (Note 3)          23,761,336              -              -
      Advances (to) from related
       companies                       626,228       (396,528)       155,001
      Decrease/(Increase) in
       deposits on capital
       equipment                       539,542      7,376,072     (8,962,503)
      Expenditures on mining
       interests and related
       deferred costs and
       acquisition of capital
       assets                     (120,409,276)   (73,623,829)   (66,043,615)
                                 -------------- -------------- --------------
                                  (102,857,170)   (66,644,285)   (74,851,117)
                                 -------------- -------------- --------------

    Cashflows from (used in)
     financing activities
      Repayment of capital lease
       obligation                   (2,167,709)      (150,209)             -
      Proceeds from long-term debt  93,869,892     34,977,000              -
      Repayment of related
       company advances             12,949,432              -              -
      Net proceeds from issuance
       of capital stock                      -              -    103,931,580
      Proceeds from exercise of
       options and warrants         18,722,616      7,111,838      2,274,230
                                 -------------- -------------- --------------
                                   123,374,231     41,938,629    106,205,810
                                 -------------- -------------- --------------

    Net (decrease)/increase
     in cash and cash equivalents   (1,953,728)   (28,698,806)    22,379,409

    Cash and cash equivalents
      Beginning of year              6,701,543     35,400,349     13,020,940
                                 -------------- -------------- --------------
      End of year                $   4,747,815  $   6,701,543  $  35,400,349
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    -------------------------------------------------------------------------
    




For further information:

For further information: Bradley H. Langille, Chief Executive Officer,
Gammon Lake Resources Inc., (902) 468-0614; Jodi Eye, Investor Relations,
Gammon Lake Resources Inc., (902) 468-0614; www.gammonlake.com

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