Gammon Gold Forecasts the Second Quarter Production to be the best in the Company's history, from 17% to 24% increase over Q1 and 45% to 57% increase over Q4

    HALIFAX, June 23 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and
AMEX:  GRS): Gammon advised today that Q2 2008 is continuing to build on the
significant improvements achieved in Q1 2008 such that forecasted production
and cash flow performance are expected to outperform Q1 2008. The strength of
the operating cashflow continues to fund 100% of the expansion capital, the
new aggressive exploration program and allow Gammon to continue with its
accelerated debt repayment program.

    The Company anticipates production in Q2 will increase to between 68,000
to 72,000 gold equivalent ounces at total cash costs of between $475 to $500
per gold equivalent ounce (the lower end of the full year 2008 guidance) which
represents a 44-53% increase over Q3 2007 and a 32-37% improvement over cash
costs in Q3 2007.

    Continued operational improvements underpin the Company's improved cash
flow performance the Company has achieved over the past two (2) quarters. Cash
flow from operations is forecasted to improve to between $15 to $18 million,
which represents an improvement of 242-270% over Q3 2007. Net free cash flow
is forecasted to remain consistent with Q1 2008 levels and represents a
100-113% improvement over Q3 2007. The improved cash profile achieved over the
past two (2) quarters has allowed the Company to fully fund its operations,
capital investment programs and our expanded exploration program as well as to
make unscheduled debt repayments of $5.1 million with an additional debt
repayment of approximately $2 million anticipated in late June 2008
($5.1 million in Q2). The Company's improved cash flow performance to date
exceeds our original target of achieving positive free cash flow status by
Q3 2008.
    "We remain encouraged by the progress we have made in executing our
growth strategy to date and this progress is evident in the improved results
we are forecasting for Q2. The positive results to date have allowed the
Company to fully fund all of our operating working capital requirements
together with the Company's capital expenditure and expanded exploration
investment programs. In fact, cash generations has been so significant that we
are presently scheduled to have completed up to $7.1 million in unplanned debt
facility repayments by the end of June. During the second half of 2008 we will
continue to drive productivity enhancements and expand capacity at Ocampo
through the expansion of the mill facility by 70% to 2,400-2,600 tonnes per
day and the heap leach crushing circuit to 13,000-15,000 tons per day, both of
which are anticipated to be complete by early Q4 and greatly enhance capacity
at Ocampo. At the same time we will increase our focus on driving costs
savings throughout the operation." said Rene Marion, CEO of Gammon Gold.
Mr. Marion continued, "Looking forward to Q3 the Company has implemented a
number of initiatives that are designed to mitigate the impact of the wet
season that have been implemented by a seasoned mine management team that have
dealt with seasonality weather challenges in many areas of the world.
Leveraging that experience allows us to take actions that will help minimize
any impact that inclement weather might have on our operations. We are
confident that we are positioned to manage our operations effectively in Q3
and achieve our production and cash cost targets."
    Recent press releases and corporate presentations can be found on our
corporate website at that provides detailed information
relating to the Company's tremendous progress achieved to date in executing
its growth strategy.

    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
    No stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.
    Certain statements included herein, including information as to the
future financial or operating performance of the Company, its subsidiaries and
its projects, constitute forward-looking statements. The words ''believe'',
"expect", "anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "forecast", "may", "will", "schedule" and
similar expressions identify forward-looking statements. Forward-looking
statements include, among other things, statements regarding targets,
estimates and assumptions in respect of gold and silver production and prices,
operating costs, results and capital expenditures, mineral reserves and
mineral resources and anticipated grades, recovery rates, future financial or
operating performance, margins, operating and exploration expenditures, costs
and timing of the development of new deposits, costs and timing of
construction, costs and timing of future exploration and reclamations
expenses. Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by the Company,
are inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors could cause
the Company's actual results to differ materially from those expressed or
implied in any forward-looking statements made by, or on behalf of, the
Company. Such factors include, among others, known and unknown uncertainties
and risks relating to additional funding requirements, reserve and resource
estimates, commodity prices, hedging activities, exploration, development and
operating risks, illegal miners, political and foreign risk, uninsurable
risks, competition, limited mining operations, production risks, environmental
regulation and liability, government regulation, currency fluctuations, recent
losses and write-downs, restrictions in the Company's loan facility,
dependence on key employees, possible variations of ore grade or recovery
rates, failure of plant, equipment or process to operate as anticipated,
accidents and labour disputes. Investors are cautioned that forward-looking
statements are not guarantees of future performance and, accordingly,
investors are cautioned not to put undue reliance on forward-looking
statements due to the inherent uncertainty therein.

For further information:

For further information: please visit the Gammon Gold website at or contact: Rene Marion, Chief Executive Officer, Gammon
Gold Inc., (902) 468-0614; Anne Day, Director of Investor Relations, Gammon
Gold Inc., (902) 468-0614

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