Gammon Gold Releases Ocampo Key Operational Indicators for October and November 2007

    TSX: GAM / AMEX:   GRS / BSX: GL7

    Gammon Gold reports improvements on several Ocampo Key Operational
    Indicators in October and November as well as a greater than 30%
    reduction in Ocampo's Total Cash Costs per ounce from Q3 and positive
    operating cash flow in November.

    HALIFAX, Dec. 17 /CNW/ - Gammon Gold Inc. ("Gammon Gold") (TSX:GAM and
AMEX:  GRS): Gammon Gold is pleased to advise that the turnaround at its Ocampo
mine seen during October is continuing and the company feels comfortable in
advising that results should remain in line with the Q4 guidance of an
increase of 10% to 15% in gold equivalent ounce (Au (eq)) production at
Ocampo. Importantly, Ocampo had positive operating cash flow in November of
$11.4 million and combined October and November operating cash flow of
$3.27 million.
    Production at Ocampo continues to increase with October and November
production of 12,751 ounces of gold and 494,988 ounces of silver for a gold
equivalent production of 21,794 ounces. A total of 12,253 ounces of gold and
475,151 ounces of silver were sold during the two months or 20,943 gold
equivalent ounces. During October and November, the company realized an
average gold price of $792.56/oz and an average silver price of $14.49/oz.
Total cash costs in October and November decreased by $276 (34%) from Q3 to an
average of $546 per ounce Au (eq) in October and November, prior to recording
of any potential quarter end adjustments occurring in the normal course of
events. Capital costs over the two months were in line with internal expansion
capital projections at $13.2 million. Operating cash flow for November was
$11.4 million driven by positive earnings and strong management of working

    Average Monthly Gold & Silver (Au eq) Production vs Total Cash Costs per


    Ounces per 200 hours (Man Mth) Worked


    The Company (inclusive of Gammon Gold's El Cubo mine) remains on target
to produce from 51,500 to 54,000 gold equivalent ounces during Q4 at a total
cash cost from $580/oz to $600/oz gold equivalent. Total capital expenditures
at Ocampo and El Cubo is anticipated to range from $9.0 to $11.0 million in
December for a total capital forecast for 2007 of approximately $80 million.
As of December 1, the Company has drawn $25.2 million of its $60 million
revolving facility. As the Company is presently operating cash flow positive,
the revolving facility is expected to be only used to fund a portion of 2008
capital expenditures.
    Mr. Glenn Hynes, CFO of Gammon Gold stated, "We are pleased with the
results of our strategy to accelerate IVA (Mexico Value Added Tax) recoveries
which have decreased by over $13 million in Q4 from a high of approximately
$20 million. It is expected that another $2.4 million will be received in late
December. Additionally, I am encouraged by the operational improvements
gaining traction at Ocampo as this has positively impacted cash flows,
particularly in November. The Company will aggressively manage expenditures in
the months ahead in order to optimize liquidity during this turnaround
    Rene Marion, CEO of Gammon Gold stated, "I am encouraged to see how the
operating team has focused on quality production in the past few months,
starting a hard fought turn-around at Ocampo. The 25% reduction in underground
dilution, continued strengthening of key operational indicators such as daily
mill tonnage, recovery, equipment availability and strong open pit production
all contributed to the improved performance in November." Mr. Marion went on
to say "The open pit continues to perform well. In October and November 10-15%
of the ore mined in the pit went as mill feed, representing 35% of the
contained metal from the pit. It is anticipated that with the planned mill
expansion, the percentage of ounces from the Open Pit will increase. These
results continue to demonstrate that the Ocampo operation is starting to gain
traction in the turnaround."
    Mr. Marion went on to say, "As we look to Q1, 2008, I would like to
highlight the following guidance targeted for El Cubo and Ocampo:"

    Q1 2008 Forecasted Highlights         Ocampo & El Cubo
    Production (oz  Au (eq))              From 56,000 to 62,000
    Total Cash Costs                      In line with Q4 2007
    Expansion and Sustaining Capital      $16-20 Million

    "Based on these projections, the Company is satisfied that it has access
to sufficient liquidity to fully execute its growth strategy through this
turnaround period. I am confident that with the new management team on board,
the exceptional ore bodies we have and the support of our Board of Directors,
we will meet or exceed these indicators."
    Dave Keough, COO of Gammon Gold, added "During Q1 2008 the Company will
update its reserve and resource model and finalize its 2008 Budget, Life of
Mine and mill expansion plans. Access to this more comprehensive and relevant
data will provide management with the necessary data to provide more specific
and longer term cost and production guidance. The Company intends to release
this guidance late in the first quarter of 2008."
    Mr. Keough went on to say, "I am pleased that our efforts in achieving
cost reductions, restructuring and improving productivity are now allowing us
to tangibly realize the benefits from those initiatives as depicted in the
following Ocampo key operational indicators. Additionally, we continue to
target areas where we can target further cost reductions, particularly in
processing, heap leaching and production improvements, particularly in the
Underground and mill."

                           Underground Operations

    Average Grade - Underground g/t


    Tonnes per Day - Underground Production


    Underground Cost per Tonne


                             Open Pit Operations

    Average Tonnes per day - Open Pit


    Feed to the Mill from Open Pit per Month


    Average Open Pit Tonnes per Day - Heap Leach


    Open Pit Cost per Tonne



    Mill Tonnes per Day - Underground and Open Pit


    Mill Availability


    Mill Cost per Tonne


                                 Heap Leach

    Gold and Silver Recovery Heap Leach


    Head Grade Heap Leach


    Heap Leach Cost per Tonne


    Mr. Marion added, "I operate with a results oriented philosophy and it is
encouraging to see the traction that the management team has gained in the
past few months. I believe that the team is aligned and committed and will
continue to deliver increasingly improved results in the months ahead."
    The Company has achieved a number of milestones in recent months that have
evidenced the positive trend of the Company's performance. The collective
efforts of the new mine management and executive teams has brought about this
forward momentum and the Company will continue to focus on executing the
Company's growth strategy in the coming quarters.

    Ocampo Highlights

    During October and November the Company began to realize positive impact
from many of the strategies initiated at Ocampo. Cost reduction efforts
throughout the Ocampo operation began to gain traction and improvements will
continue to be derived from these initiatives in the coming quarters. The
optimization of the Ocampo workforce as well as the reduction of contractors
has provided significant costs savings as well as improved productivity per
man hour and as production increases the project will be targeting lower
costs. Management controls have been strengthened, allowing the Company better
cost management going forward. As a result of the overall improvement in
productivity and costs throughout Ocampo, the Company achieved positive
operational cash flow in November. In October, a $60 million revolving loan
facility was completed in order to finance the Company's growth strategy. The
Company has also enhanced its mine management team to include a new Manager of
Maintenance as well as a Mexican Director of Sustainability (Health, Safety,
and Environmental).

    Ocampo Underground

    During recent weeks the Company has taken delivery of additional
underground equipment that, combined with better mining practices and the
implementation of an incentive based compensation schedule for underground
miners, has and will continue to, improve productivity in the Underground and
subsequently reduce costs. Additional Underground equipment will be utilized
as more mining areas are available. Since July, the Company has achieved
significant reduction in costs per tonne mined and will continue to implement
strategies aimed at further reducing costs. The Company also continued to
develop the Underground that will result in improved access to higher grade
ore in the months to come. This development along with better mine planning
will result in more consistent grades and tonnage being available to the mill.

    Ocampo Open Pit

    The Open Pit continued to benefit from productivity initiatives
implemented in Q3 that resulted in improved productivity where on occasion the
Company mined more than 100,000 tonnes per day. The Company continues to
direct high grade Open Pit ore to the mill in order to take advantage of the
better recoveries and economics of the mill circuit. The Company has achieved
significant improvements in cost per tonne in the Open Pit primarily as a
result of the implementation of improved mining practices and the optimization
of Open Pit equipment.

    Ocampo Mill Circuit

    Mill capacity improved significantly in October and November and has
exceeded current capacity of 1,500 tonnes per day, achieving 1,800 tonnes per
day on occasion, augmented by the additional high grade ore delivered from the
Open Pit. High grade Open Pit Ore will continue to be directed to the mill to
maximize throughput and take advantage of the better economics. Mill
availability improved to over 87% in November and is targeted to reach over
90% in early 2008. Metallurgical recoveries have not been impacted by the
higher throughout and have improved to an average of 96% gold and 89% silver
which further underscores the rationale of sending both high grade Open Pit as
well as Underground ore to the mill to take advantage of the improved
recoveries. Costs per tonne improved significantly and further production
enhancements are available that should allow for additional cost reductions.

    Ocampo Heap Leach Circuit

    Recoveries at the Heap Leach facility continued to improve for both gold
and silver but it is anticipated that as more high grade Open Pit ore is
re-directed to the mill, average Heap Leach recoveries will decline
accordingly. The Company has been able to achieve significant cost reductions
at the Heap Leach facility and continued focus on further reducing costs will
be a priority.
    Mr. Marion continued, "My confidence in the sustainability of our
initiatives over the next 3 months is such that I feel comfortable in
forecasting the following scorecard for the end of Q1 for Ocampo. My goal in
communicating these objectives is to provide shareholders with benchmarks to
measure my performance as CEO as well as that of the Senior Management team."

    - We have targeted Q1 2008 production of between 56,000 to 62,000 gold
      equivalent ounces (inclusive of El Cubo)
    - We have targeted Total Cash Costs for Q1 2008 to be consistent with Q4,
    - Expansion and Sustaining Capital expenditures is anticipated to be
      between $16 and $20 million
    - We are committed to providing an update on 2007 year end reserves and
      resources at the end Q1 2008
    - We also expect to release our 2008 Operating and Total Cash Cost
      guidance together with a 3-year outlook at the end of Q1 2008
    - We have already experienced positive operating cash flow in November
      and we expect to achieve sustained positive operating cash flow in Q1
      2008. We anticipate being Net Free Cash flow positive in the latter
      part of 2008 once expansion capital for the heap leach facility,
      processing facility and the continued development of the Santa Eduviges
      decline is concluded
    - Along with the Senior Management team, the Company will endeavor not to
      take any further accounting provisions in Q1 2008
    - Along with the Board and the Senior Management team, we will develop a
      clear Corporate Mission. Under the Board's guidance, Management will
      execute that strategy in 2008 and beyond.
    - Performance management systems that are aligned with the Mission and
      Strategy to ensure delivery of results both operationally as well as
      corporately have been introduced and will become fully implemented in

    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", "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; Glenn Hynes, Chief Financial Officer, Gammon Gold
Inc., (902) 468-0614

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