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Gammon Gold reports highest 2009 gold production rates in Q4 as costs decrease

Last updated: 14:27 13 Jan 2010 EST, First published: 15:27 13 Jan 2010 EST

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Gammon Gold (TSX: GAM, NYSE: GRS) said Q4 marked the best quarterly performance of 2009 with a consolidated gold production of 37,066 oz, up 18% quarter on quarter, while Q4 silver production amounted to 1.48 Moz (million ounces), which is a 17% improvement over Q3.

Gold equivalent production for the quarter amounted to 64,007 oz (ounces), or 17% more than in Q3 using a ratio of 55:1, or a 19% increase to 60,0921 oz using a 62:1 ratio. Total cash costs per oz were down 10% quarter on quarter using a 55:1 ratio, or 11% lower with a 62:1 ratio. The improvement in operating costs was achieved despite non-recurring maintenance costs at the Ocampo mill processing facility, which were partly offset by the mine’s access to lower cost 20 MegaWatt of grid power.

The company has also exceeded its production volume target of 1,200 tonnes per day by 20% as the average volume was at 1,434 t/d in December.

Gammon said that the mine has developed access to ready-to-be drilled or in-process-of-drilling inventory of approximately 200,000 tonnes compared to 70,000 tonnes at the beginning of the year, while the mine was producing from 11 working areas compared to three at the start of the year.

The mine’s heap leach metal production rates, which amounted to 9,775 tonnes per day in Q4, are also expected to increase following the re-optimisation of the Ocampo heap-leach facility.

The El Cubo mine also been able to increase production, reporting rates of 1,830 tonnes per day in Q4, marking an increase of 13% over Q1 2009, while the average production per day in December amounted to 1,876 tonnes per day.

The company reported a cash balance of US$129 million at December 31 2009, after a public offering completed in October raised US$109 million. Gammon has also upped its revolving facility to US$50 million from US$30 million.

“The fourth quarter caps off a transformational year for Gammon Gold. Operations at both mines continue to improve. I am particularly pleased with the continued improvement in underground productivities at both Ocampo and El Cubo, with both operations setting quarterly records...our improved operations, underpinned by our strengthened balance sheet, positions the company well for future growth and success. I believe that 2010 is a year that holds great promise for the company and we are committed to delivering on that potential,” said chief executive Rene Marion.

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