Gammon Reports Third Quarter and Key Updates on Operations and Confirms
Guidance for 2009

HALIFAX, Oct. 6 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE: GRS): Gammon is pleased to provide an update on operations following the full commissioning of the Ocampo capital expansion program. The expansion program and final commissioning was largely completed in the latter half of the third quarter and has resulted in month over month improvements in our key business performance indicators:

    
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    Ocampo Mine (100%)                        Jul-09      Aug-09      Sep-09
    ------------------                        ------      ------     -------
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    Underground - Average ore
     tonnes per day                              488         577         676
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    Open Pit - Average total
     tonnes per day                           93,507      97,061      98,677
    -------------------------------------------------------------------------
    Mill - Average ore tonnes
     per day                                   2,299       2,515       3,046
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    Heap Leach - Average ore
     tonnes per day                            4,101       6,934       7,399
    -------------------------------------------------------------------------
    Average heap leach gold
     equivalent oz. per day
     (55:1)                                      129         125         179
    -------------------------------------------------------------------------
    Average mill gold
     equivalent oz per day
     (55)                                        261         294         394
    -------------------------------------------------------------------------
    Total average gold
     equivalent oz. per day
     (55:1)                                      390         419         573
    -------------------------------------------------------------------------


    Q4 Forecast
    -----------

    During the fourth quarter the Company is expecting to produce
approximately 80,000 gold equivalent ounces at cash costs of US$380 to US$400
per gold equivalent ounce. The fourth quarter is expected to be the first
quarter where Ocampo begins to realize the impact on production from the
capital expansion program through:

    - During the first four days of October, the Company has produced an
      average of 1,037 gold equivalent (55:1) ounces per day;

    - The continued ramp up of the Ocampo underground, which is expected to
      reach targeted levels of 1,200 tonnes per day by the end of the year;

    - The commissioned Phase III expansion of the Ocampo mill processing
      facility which should allow the Company to increase capacity over the
      fourth quarter;

    - As a result of the increased tonnage of underground ore being sent to
      the mill facility, a greater proportion of higher grade open pit ore is
      currently being directed to the Ocampo heap leach facility. This is
      expected to increase heap leach production; and

    - The re-optimization of the Ocampo heap leach facility which is expected
      to allow the Company to benefit from the increased 12,000 tonnes per
      day stacking capacity over the entire fourth quarter.

    Q3 and Key Operational Highlights
    ---------------------------------

    - Assuming a 55:1 gold equivalent ratio, total cash costs for the third
      quarter have decreased by 36% over the same period in 2008. For the
      nine-month period total cash costs have decreased by 24% over the same
      period in 2008.

    - Following the first half reinvestment and reorganization program at
      Ocampo, and the arrival of two new long hole drills on October 1,
      production from the underground mine is expected to continue to
      increase towards the year-end target of 1,200 tonnes per day;

    - This program has enabled underground operations to establish a
      significant production inventory of 8 working stopes and developed
      access to ready-to-be drilled or in-process-drilling inventory of
      approximately 245,000 tonnes. This is a significant operational
      improvement when compared to the beginning of the year when operations
      only had 2-3 working stopes and developed access to ready-to-be
      drilled or in-process-drilling inventory of approximately 70,000
      tonnes;

    - Ocampo is anticipating an increased proportion of underground ore in
      future mill feed, which is expected to result in less reliance on open
      pit ores that are typically lower grade. The targeted increases in
      higher grade underground production rates are expected to increase head
      grades to the mill. The expected decrease in open pit ore being sent to
      the mill is expected to result in a greater portion of the higher grade
      open pit tonnage being rerouted to the heap leach facility for
      processing that will increase the head grades to the heap leach;

    - Open pit productivities and equipment fleet availability continue to
      exceed plan which has resulted in production rates across the open pit
      operations continuing to exceed 100,000 tonnes per day in the month of
      October;

    - The third and final phase of the mill expansion was fully commissioned
      by the end of the quarter. The mill facility can now treat up to 3,400
      tonnes per day as compared to the average processing volume 1,200
      tonnes per day in 2007, a 183% increase;

    - The re-optimization of stacking design capacity at the existing heap
      leach facility was initiated in September. The new design is expected
      to increase current pad capacity by a further 10 million tonnes. This
      has allowed operations to restore daily stacking rates of up to 12,000
      tonnes per day, which combined with the targeted feed grade
      improvement, is expected to significantly increase future heap leach
      metal production;

    - Ocampo was 100% connected to 20 megawatts of electrical grid power on
      July 15, 2009 and is now powered off the Mexican grid network. The
      access to grid power is expected to provide energy savings of
      approximately US$20-25 per gold equivalent ounce;

    - The El Cubo mine continued to increase production rates in the third
      quarter following the Union's first-time adoption of a 7-day continuous
      work schedule, which is expected to improve future productivities and
      operating margins.

    Exploration Highlights

    - To date, the Company has completed 88,291 metres, or 72%, of its
      planned 123,000 metre reserve replacement drilling program at Ocampo;

    - As previously released, the San Amado drilling returned a bonanza grade
      intercept at hole OG-797 of 0.5 meters at 318 grams per tonne gold and
      1,028 grams per tonne silver or 336.68 grams per tonne gold equivalent;

    - As previously released, the drilling program at Santa Eduviges
      underground target has provided some encouraging results with one hole
      reporting over 9.0 metres of 14.57 grams per tonne gold equivalent.
      Given the ongoing drilling success to date, an additional 5,900 metres
      of drilling has been added to the original 4,380 metre program and an
      additional diamond drill will be mobilizing in October;

    - In September, the Company launched a two year, 40,000 metre drilling
      program at the El Cubo operation where the initial drilling will focus
      on four of the 16 drill targets indentified as part of the Company's
      grass roots exploration program.

    Note: The exploration information has been reviewed by Qualified Person,
Mr. Ramon Luna. All sample analyses were performed by ALS-Chemex Laboratories,
based in Vancouver, British Columbia, or in the Ocampo mine lab, using
standard fire assay procedures. The intercepts from OG-797 are the average of
two ALS_Chemex assays on each sample. True widths have not been calculated.

    Corporate Highlights

    - On September 22, 2009 the Company announced the retirement of Mr. Fred
      George as President, Chairman and a member of the Board of Directors of
      Gammon effective October 13, 2009. René Marion, currently Chief
      Executive Officer, will subsequently be appointed as President and
      Chief Executive Officer. Mr. Ron Smith, an independent director, will
      temporarily assume the position of interim Chairman effective October
      13, 2009. Mr. George will remain as a consultant to the Board of
      Directors;

    - On September 22, 2009 the Company also announced the resignation of
      Mr. Canek Rangel from the Board of Directors effective immediately.
      Mr. Rangel has been a member of the Board of Directors for the past 4
      years; and

    - Following the resignations of Fred George and Canek Rangel in
      September, the Nominating Committee of the Board of Directors began the
      process of identifying potential new independent Board members with the
      objective of strengthening the Board, which will be led by an
      independent Chairman.


    Third Quarter 2009 Production Highlights
    ----------------------------------------
    (all amounts are in U.S. dollars)

    -------------------------------------------------------------------------
                                        OCAMPO                  EL CUBO
    Three Months Ended              Sept        Sept        Sept        Sept
                                   30/09       30/08       30/09       30/08
    -------------------------------------------------------------------------
    Gold ounces produced          24,807      26,054       7,392       8,042
    Silver ounces produced       961,975     988,289     317,382     383,834
    Gold equivalent ounces
     produced                     39,708      42,916      12,227      14,605
    Gold ounces sold              22,219      25,961       7,639       7,953
    Silver ounces sold           925,666     969,647     323,586     369,217
    Gold equivalent ounces
     sold                         36,631      42,303      12,674      14,270
    -------------------------------------------------------------------------
    Total cash costs per gold
     equivalent ounce*            $433        $724        $697        $853
    Total cash costs per gold
     ounce*                        $85        $639        $511        $860
    Gold to Silver Ratio            64:1        59:1        64:1        59:1
    Realized Gold Price             $970        $864        $974        $826
    Realized Silver Price         $15.11      $14.51      $15.22      $14.31
    -------------------------------------------------------------------------
    Gold equivalent ounces
     produced (55:1)(xx)          42,297      44,023      13,162      15,021
    Total cash costs per gold
     equivalent ounce (55:1)(xx)    $407        $703        $653        $830
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                              CONSOLIDATED
    Three Months Ended                                      Sept        Sept
                                                           30/09       30/08
    -------------------------------------------------------------------------
    Gold ounces produced                                  32,199      34,096
    Silver ounces produced                             1,279,357   1,372,123
    Gold equivalent ounces
     produced                                             51,935      57,521
    Gold ounces sold                                      29,858      33,914
    Silver ounces sold                                 1,249,252   1,338,864
    Gold equivalent ounces
     sold                                                 49,305      56,573
    -------------------------------------------------------------------------
    Total cash costs per gold
     equivalent ounce*                                    $501        $757
    Total cash costs per gold
     ounce*                                               $194        $691
    Gold to Silver Ratio                                    64:1        59:1
    Realized Gold Price                                     $971        $855
    Realized Silver Price                                 $15.15      $14.46
    -------------------------------------------------------------------------
    Gold equivalent ounces
     produced (55:1)(xx)                                  55,459      59,044
    Total cash costs per gold
     equivalent ounce (55:1)(xx)                            $470        $735
    -------------------------------------------------------------------------
    *  Cash costs for the three-month and the nine-month period of 2009
         have not been finalized and are subject to adjustment
    (xx) Comparative performance metrics using the Company's long term gold
         equivalency guidance ratio (55:1)


    Nine Months Ended September 30, 2009 Production Highlights
    ----------------------------------------------------------
    (all amounts are in U.S. dollars)

    -------------------------------------------------------------------------
                                        OCAMPO                  EL CUBO
    Nine Months Ended               Sept        Sept        Sept        Sept
                                   30/09       30/08       30/09       30/08
    -------------------------------------------------------------------------
    Gold ounces produced          81,197      81,779      18,945      28,881
    Silver ounces produced     2,927,156   2,819,298     786,972   1,309,683
    Gold equivalent ounces
     produced                    124,200     133,477      30,338      53,144
    Gold ounces sold              76,355      81,011      18,399      28,631
    Silver ounces sold         2,851,235   2,783,607     785,838   1,288,614
    Gold equivalent ounces
     sold                        118,532     131,858      29,859      52,508
    -------------------------------------------------------------------------
    Total cash costs per gold
     equivalent ounce*            $430        $529        $626        $658
    Total cash costs per gold
     ounce*                       $150        $295        $433        $456
    Gold to Silver Ratio            68:1        54:1        68:1        53:1
    Realized Gold Price             $933        $892        $927        $881
    Realized Silver Price         $13.86      $16.47      $13.66      $16.67
    -------------------------------------------------------------------------
    Gold equivalent ounces
     produced (55:1)(xx)         134,418     133,039      33,253      52,693
    Total cash costs per gold
     equivalent ounce (55:1)(xx)    $398        $530        $572        $664
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                              CONSOLIDATED
    Nine Months Ended                                       Sept        Sept
                                                           30/09       30/08
    -------------------------------------------------------------------------
    Gold ounces produced                                 100,142     110,660
    Silver ounces produced                             3,714,128   4,128,981
    Gold equivalent ounces
     produced                                            154,538     186,621
    Gold ounces sold                                      94,754     109,642
    Silver ounces sold                                 3,637,073   4,072,221
    Gold equivalent ounces
     sold                                                148,391     184,366
    -------------------------------------------------------------------------
    Total cash costs per gold
     equivalent ounce*                                    $470        $566
    Total cash costs per gold
     ounce*                                               $205        $337
    Gold to Silver Ratio                                    67:1        54:1
    Realized Gold Price                                     $932        $890
    Realized Silver Price                                 $13.83      $16.54
    -------------------------------------------------------------------------
    Gold equivalent ounces
     produced (55:1)(xx)                                 167,672     185,732
    Total cash costs per gold
     equivalent ounce (55:1)(xx)                            $434        $568
    -------------------------------------------------------------------------
    *  Cash costs for the three-month and the nine-month period of 2009
         have not been finalized and are subject to adjustment
    (xx) Comparative performance metrics using the Company's long term gold
         equivalency guidance ratio (55:1)
    

"The various expansion initiatives at our flagship Ocampo operation are effectively complete and on the back of the underground redevelopment program and the increased tonnages being realized, we are anticipating a record company-wide production result in the fourth quarter. The expected benefits of the expanded operation are now being realized and we expect improved productivities across a number of key performance indicators. Our operating performance projections for the fourth quarter will showcase just what can be expected from Ocampo in 2010 and we expect to see the Company achieve its full year production and cash cost guidance" stated René Marion, Chief Executive Officer.

    
    2009 Consolidated Operational Outlook
    -------------------------------------

    The Company is forecasting that it will meet the low end of its previous
guidance which is summarized in the table below:

    -------------------------------------------------------------------------
                    2009 Consolidated Operational Outlook
                                                              2009
    -------------------------------------------------------------------------
    Production:
      Gold Ounces                                          150-170koz
      Silver Ounces                                      5,600-6,400koz
      Gold Equivalent Ounces                               235-265koz
    -------------------------------------------------------------------------
    Cash Costs:
      Cash Cost per Gold Equivalent Ounce ($US/oz)        $410-$445/oz
      Cash Cost per Gold Ounce ($US/oz)                   $190-$240/oz
    -------------------------------------------------------------------------
    Assumptions:
      Gold to Silver Equivalency Ratio
       (second half 2009)                                     65:1
      Silver Price (US$/oz)                                  $13.08
      Exchange Rate (Mexican Peso:US Dollar)                 12.5:1
    -------------------------------------------------------------------------
    

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 Guadalupe y Calvo development property in Chihuahua State.

    
                             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 targets, estimates and assumptions in respect of gold and silver production and prices, operating costs, results and capital expenditures, mineral reserves and mineral resources and anticipated grades, recovery rates, future financial or operating performance, margins, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of construction, costs and timing of future exploration and reclamation expenses including, anticipated 2009 results, operating performance projections for 2009 and 2010, our ability to fully fund our business model internally, 2009 gold and silver production and the cash and operating costs associated therewith, the ability to achieve productivity and operational efficiencies, 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: René Marion, Chief Executive Officer, Gammon Gold Inc., (902) 468-0614; Anne Day, Director of Investor Relations, Gammon Gold Inc., (902) 468-0614

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GAMMON GOLD INC.

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