Gammon Gold Releases 3-Year Operational Outlook to 2011 Showing a 67% to 81% Increase in Gold Equivalent Production and a 51% to 54% Reduction in Total Cash Costs from 2007

    HALIFAX, April 8 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and
NYSE:  GRS) today issued a 3-year operational outlook for the years 2009 to

    Consolidated 3-Year Operational Outlook:

    The following table illustrates the Company's low and high range for
anticipated production and cash cost profiles for each of 2009, 2010 and 2011.


            Gammon Gold - 3-Year Consolidated Operational Outlook

    Production        Actual         2009            2010           2011
    Gold Ounces       155koz      185-205koz      200-220koz     200-220k oz
    Silver Ounces   5,779koz  8,170-8,945koz  8,500-9,275koz  9,000-9,775koz
     Ounces           252koz      333-367koz      355-385koz      365-395koz
    Cash Costs
    Cash Cost
     per Gold
     Ounce           $525/oz    $360-$395/oz    $315-$350/oz    $305-$340/oz
    Total Cash
    Cost per
    Gold Ounce       $306/oz    $121-$181/oz    $45-$111/oz     $14-$81/oz
    Gold to Silver
     Ratio              59:1            55:1            55:1            55:1
    Silver Price      $14.66          $12.00          $12.00          $12.00
    Exchange Rate
     Peso:US Dollar)    11:1          12.5:1          12.5:1          12.5:1
    Note: The 3-year consolidated operational outlook does not assume any
    potential production contribution from Guadalupe y Calvo.

    Highlights include:

    - Gold production of between 200,00 to 220,000 ounces in 2011, a 29-42%
      increase in gold production over 2008
    - Silver production of between 9,000,000 to 9,775,000 ounces in 2011, a
      56-69% increase in silver production over 2008
    - Gold Equivalent production of between 365,000 to 395,000 ounces in
      2011, a 45-56% increase in gold equivalent production over 2008, with
      cash costs of between $305 to $340 per gold equivalent ounce, a 35-42%
      reduction over 2008

    Gammon also announces:

    - As of March 23, 2009, Gammon Gold was included in the S&P TSX Global
      Gold Index
    - The first exploration drill hole in 2009 on the Altagracia Target
      (east-southeast extension of the Ocampo Picacho open pit) returned
      16.5 metres at 6.52 g/t gold and 59.1 g/t silver for 7.60 grams per
      tonne gold equivalent, including 9.0 metres at 11.32 g/t gold and 90.7
      g/t silver for 12.97 grams per tonne gold equivalent, less than 40
      metres below surface
    - A total of 23,284 metres of reverse circulation and diamond exploration
      drilling targeting new reserves and resources were completed during
      Q1, 2009
    - Exploration and ore development during Q1, 2009 totaled 2,158 metres

    During 2008, Management's main priority was to increase productivity and
reduce the operational cost structures to improve the Company's working
capital position. Once the Company was satisfied that the more significant
productivity challenges were addressed, attention was then directed to
leveraging a number of expansionary opportunities at Ocampo. As part of the
2008 expansionary program, the Company delineated the existence of significant
high grade mineralization in the open pits that should preferentially be
processed in the milling operations. In order to validate the business case
opportunity, the Company improved reserve drilling densities by 150% (or 25
metres x 40 metres) and secured almost six (6) years of high grade open pit
ore reserves, which allowed the Company to determine the optimal capacity of
the Ocampo mill.
    The Ocampo mill expansion efforts, which are expected to be fully
complete by Q3, 2009, are expected to increase mill capacity by more than 165%
over the 2007 actual processing rates. This allows the Company to confidently
forecast a 3-year growth profile that targets a 67-81% organic increase in
gold equivalent production over 2007 as well as lower quartile industry cash
    With the near-term business initiatives largely addressed, the Company
has now turned its attention to building on the quality reserves confirmed by
the 2008 drilling program. By the end of Q1, 2009, already a total of 23,284
metres of exploration drilling and 2,158 metres of exploration and ore
development have been completed. The 2009 exploration program will focus on
the following initiatives in order to add to the Company's reserve and
resource portfolio in 2009:

    Ocampo 2009 Exploration Program
    - A new mapping effort is underway to map geology and develop new
      targets on remainder of property
    - A top-technology remote sensing study has identified eleven new
      alteration/structure anomalies to be reviewed in the field
    - Surface geochemistry

    Ocampo Open Pit
    - Complete drilling of the resource pit
    - Altagracia surface target

    - San Amado high-grade vein:
      - surface drilling and underground development
    - Santa Eduviges:
      - drilling and development
    - Aventurero SE, Santa Juliana, Rosario SE:
      - drilling and development

    El Cubo 2009 Exploration Program
    - Assembled an international team of 4 geologists to develop new
      exploration targets
    - 3 kilometres of the southeast extension of the Villalpando system is
      currently being mapped and sampled

    Guadalupe y Calvo Exploration Program
    - Database validated
    - Preliminary 90-day column leach results indicate 64% (wall stockwork)
      and 44% (vein low grade) at 5 weeks, subject to recalculation of head
    - New mapping / sampling of underground workings completed
    - New target generation reconnaissance initiated

    Mr. René Marion, CEO of Gammon Gold stated "As per the Company's
commitment, we are today reporting our 3-year outlook for 2009 to 2011. Our
organic production estimates demonstrate a compelling growth profile, which
targets a 12% to 15% compounded annual growth rate in gold equivalent
production over 2008's actual production." Mr. Marion continued, "What is
equally impressive is the forecasted reduction in cash costs of 33% to 40%
from 2008's actual results as Ocampo leverages not only the economies of
scale, but also our continuous improvement initiatives launched in 2008, such
as tying into the main power grid and increasing underground productivities.
Since 2008 was a year of bedding down our operations and reserves, I am
optimistic that the extensive 2009 exploration program will add further
quality ore that could augment our future production forecasts. Considering
that we have only explored less than 20% of this highly prospective property,
the potential for future discoveries is significant."
    Mr. Peter Drobeck, Senior VP Exploration and Business Development stated
"As our drilling program in 2009 shifts to reserve additions and new targets,
I am excited by the early results seen to date. Not only did we discover the
high grade San Amado vein at Ocampo in 2008, we have also begun drilling work
on the Altagracia Target which ranges from 700 to 1,200 metres east-southeast
from the currently-planned Picacho Open Pit, and east of the main North-South
river that runs through the pueblo of Ocampo. This target area consists of
numerous surface anomalies with similar geology to presently-mined open pits,
where limited drilling was completed early in the history of Gammon's
involvement in the district. This hole intersected the Altagracia structure
approximately 50 metres east-southeast of a previous hole (OG-108) that cut
19.8 metres grading 0.58 grams per tonne gold and 13.0 grams per tonne silver,
or 0.81 grams per tonne gold equivalent. It is notable that this
mineralization has a much higher gold to silver ratio than the ores being
mined elsewhere in the district. This discovery is being followed up
immediately by further drilling, as it suggests the potential for new open pit
or underground mineralization that is well outside the presently-envisioned
mining area. Equally encouraging, we have completed out-of-reserve underground
development of over 1,457 metres at the end of March along the down dip
resource extension of the San Juan and San Jose veins that indicate over 5.52
grams per tonne gold and 496 grams per tonne silver as well as 3.43 grams per
tonne gold and 372 grams per tonne silver for each respective vein."
    As released in January, the Company expects 2009 production of 333,000 to
367,000 gold equivalent ounces at a total cash cost of $360-$395 per gold
equivalent ounce.
    The budgeted increase in production and associated improvements in total
cash costs will be driven by a number of factors including:

    - The commissioning of the Phase II and Phase III mill expansions that is
      projected to increase processing rates to 3,300 to 3,400 tonnes per
      day, or 165% higher than the 1,275 tonnes per day rate realized in 2007
    - Increasing the tonnage to the heap leach to a targeted 12,000 to
      14,000 tonnes per day by early 2010, rather than late 2010 as
      previously projected
    - Continued production ramp-up of the Ocampo underground throughput
      during 2009

    The table below summarizes the three-year Key Performance Indicators at
the Ocampo complex that underpin the Company's three year outlook.

    Ocampo 3-Year Key
     Performance Indicators         2009            2010            2011
    Open Pit
    Tonnes per day mined       65,000-80,000   55,000-70,000   60,000-75,000
    Tonnes per day ore           8,000-9,000   20,000-21,000   25,000-26,000
    Gold Grade                 1.50-1.55 g/t     0.7-0.75g/t   0.55-0.60 g/t
    Silver Grade                   60-65 g/t       30-35 g/t       25-30 g/t
    Operating Strip Ratio            2.6-2.8         1.6-1.8         1.3-1.5
    Capital Strip (tonnes)           15,890k
    Tonnes per day mined         1,025-1,050           1,500           1,500
    Gold Grade                   3.0-3.2 g/t     3.0-3.2 g/t     3.0-3.2 g/t
    Silver Grade                 165-175 g/t     165-175 g/t     165-175 g/t
    Tonnes per day mined         2,800-3,000           3,400           3,400
    Gold Grade                   3.8-4.0 g/t     3.1-3.3 g/t     3.0-3.2 g/t
    Silver Grade                 175-185 g/t     145-155 g/t     160-170 g/t
    Heap Leach
    Tonnes per day leached       5,000-7,000   12,000-14,000   12,000-14,000
    Gold Grade                 0.85-0.90 g/t   0.50-0.55 g/t   0.55-0.60 g/t
    Silver Grade                    35-40g/t       25-30 g/t       25-30 g/t
    Tonnes to Stockpile               1,111k          2,259k          4,132k
    Gold Grade                 0.35-0.40 g/t   0.20-0.25 g/t   0.15-0.20 g/t
    Silver Grade                   15-20 g/t       10-15 g/t        5-10 g/t

    During the week of April 13, 2009 Gammon management will be making
presentations as part of a Toronto based marketing tour. The presentation will
be posted to the Company's website at on Monday, April 13,

                             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, 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. 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 legislation. All
statements other than statements of historical fact, included in this release,
including, without limitation, statements regarding potential mineralization
and reserves, exploration results, and future plans and objectives of Gammon
Gold, 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
Gold's expectations include, among others, risks related to international
operations, the actual results of current exploration activities, risks
relates to the completion and integration of acquisitions, 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 Gold's Form 40-F
and Annual Information Form as filed with the United States Securities and
Exchange Commission. Although Gammon Gold 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
    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 Gold does not undertake to
update any forward-looking statements that are included herein, except in
accordance with applicable securities laws.

For further information:

For further information: Scott Perry, Chief Financial Officer, Gammon
Gold Inc., (902) 468-0614; Anne Day, Director of Investor Relations, Gammon
Gold Inc., (902) 468-0614; please visit the Gammon Gold website at

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