TORONTO, April 11, 2011 /PRNewswire-FirstCall/ -- Gammon
Gold Inc. ("Gammon") (TSX:GAM) (NYSE:GRS): Gammon is pleased to
report operating results for the first quarter of 2011. All amounts
are in U.S. dollars unless otherwise indicated.
Gammon concluded the first quarter on plan, with record
underground production, record margins, record operating cashflow
and record net free cash flow. The Company begins the second
quarter with El Cubo mining and
development commencing mid-April and the acquisition of Capital
Gold complete. The Company now has three 100% owned operating mines
and two advanced development projects in Mexico that will underpin our peer-leading
growth targets in 2011 and beyond.
First Quarter and Subsequent Highlights
- Record operating cash flow of approximately $50 million at Ocampo
- Record net free cash flow of approximately $24 million at Ocampo, the third consecutive quarter of
positive net free cash flow
- A cash position of $119 million
as of March 31, 2011
- Gold equivalent production of 49,853 gold equivalent ounces at
cash costs of $383 per gold
equivalent ounce, for a record margin of $1,002 (72%) at the gold equivalency ratio of
43:1 realized during the quarter
- Gold production of 25,882 ounces at cash costs of negative
$570 per ounce1 for a record margin
of $1,955 (141%) per gold
ounce(1)
- Silver production of 1,035,174 ounces at cash costs of
negative $15.70 per ounce2 for a
record margin of $48 (149%) per
silver ounce(2)
- Gold equivalent production of 44,703 ounces at cash costs of
$429 per ounce for a record margin of
$957 (69%) per gold equivalent ounce
using the Company's long-term gold equivalency ratio of 55:1
- Effective April 8, 2011 the
Company completed the acquisition of Capital Gold Corp.
- Underground development and mining at the El Cubo mine will commence in mid-April with
processing of production ore scheduled for the third quarter
1. Using silver revenues as a by-product cost credit.
2. Using gold revenues as a by-product cost credit.
"Ocampo continued to perform to
planned levels in the first quarter and delivered another quarter
of record margins, strong operating cash flow, and the third
consecutive quarter of positive net free cash flow. The strong
performance of Ocampo continues to
be underpinned by the exceptional performance of the underground
operations, averaging 1,968 tpd during the quarter and reaching a
record 2,103 tpd for the entire month of March," stated
Rene Marion, President and Chief
Executive Officer. He continued, "With El Cubo re-commissioning
ahead of schedule and the Capital Gold acquisition complete, the
Company is well positioned for growth in 2011 and beyond."
2011 Operational Guidance
In 2011, the Company expects to produce 117,000 to 134,000
ounces of gold and 4.84 to 5.56 million ounces of silver, or
205,000 to 230,000 gold equivalent ounces from the Ocampo and El
Cubo mines assuming a gold equivalency ratio of 55:1. Total
cash costs for 2011 at the two mines are expected to be
$455 to $485 per gold equivalent
ounce assuming a gold equivalency ratio of 55:1.
Capital Gold provided guidance for fiscal year 2011 for the El
Chanate mine of 65,000 to 70,000 gold ounces at total cash costs of
$485 per gold ounce. Using the
production attributable to Gammon from El Chanate for the balance
of the year, production for 2011 is forecasted to be 255,000 to
290,000 gold equivalent ounces at a total cash costs of
$455 to $485 per gold equivalent
ounce assuming a gold equivalency ratio of 55:1.
2011 Operational Guidance
Ocampo Mine
Gold Production (ounces) 107,000 to 119,000
Silver Production (ounces) 4,290,000 to 4,730,000
Gold eq. Production (ounces) 185,000 to 205,000
Total Cash Costs per Gold eq. ounce $425-$455
El Cubo Mine
Gold Production (ounces) 10,000 to 15,000
Silver Production (ounces) 550,000 to 825,000
Gold eq. Production (ounces) 20,000 to 30,000
Total Cash Costs per Gold eq. ounce $700-$730
Consolidated (Ocampo and El Cubo)
Gold Production (ounces) 117,000 to 134,000
Silver Production (ounces) 4,840,000 to 5,555,000
Gold eq. Production (ounces) 205,000 to 235,000
Total Cash Costs per Gold eq. ounce $455 to $485
El Chanate Mine*
Gold Production (ounces) 50,000 to 55,000
Total Cash Costs per Gold ounce $485
Consolidated (Ocampo, El Cubo and El Chanate*)
Gold Production (ounces) 167,000 to 189,000
Silver Production (ounces) 4,840,000 to 5,555,000
Gold Eq. Production (ounces) 255,000 to 290,000
Total Cash Costs per Gold Eq. Ounce $455-$485
Assumes a gold equivalency ratio of 55:1
Assumes a foreign exchange rate of 12.0 Mexican pesos to one U.S. dollar
* Attributable production
2011 Analyst Day Webcast
A live webcast of the Company's Analyst Day presentations will
be held on April 11, 2011 starting at
10:00 a.m. Eastern Time. The webcast
of the presentations can be accessed through the following link:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3390640.
The webcast will be archived for 365 days.
About Gammon Gold
Gammon Gold Inc. is a publicly traded mid-tier gold and silver
producer engaged in the mining, development, exploration and
acquisition of resource properties in North America. The Company owns and operates
three producing mines in Mexico,
the Ocampo mine in Chihuahua
State, the El Chanate project in Sonora State, and the El Cubo mine in Guanajuato State. Gammon Gold
also owns the Guadalupe y Calvo advanced exploration property in
Chihuahua State and the Orion advanced exploration property in the
State of Nayarit, and has six
exploration properties in various states throughout Mexico. Gammon's executive office is located
in Toronto, Ontario Canada.
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
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", "target",
"continue", "estimate", "may", and similar expressions identify
forward-looking statements. Forward-looking statements include,
among other things, statements regarding anticipated future
financial and operational performance, the future price of gold and
silver, the timing of re-commissioning and re-commencement of
production at El Cubo, the
de-risking of operations, future exploration results of its
exploration and development program at Guadalupe y Calvo, the
Company's ability to delineate additional resources and reserves as
a result of such program, and the company's ability to mine such
targets by mid-2011, statements regarding its financial exposure to
litigation, 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 completion of the Ocampo expansion program and improvements to
the heap leach pad, costs and timing of the development and
commencement of production of new deposits, costs and timing of
construction, costs and timing of future exploration and
reclamation expenses including, anticipated 2011 results, operating
performance projections for 2011, our ability to fully fund our
business model internally, 2011 gold and silver production and the
cash and operating costs associated therewith, the ability to
achieve productivity and operational efficiencies, 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.
For further information:
For further information please visit the Gammon Gold website at
http://www.gammongold.com or contact:
Rene Marion Anne Day
Chief Executive Officer Director of Investor Relations
Gammon Gold Inc. Gammon Gold Inc.
+1-647-260-8880 +1-647-260-8880
SOURCE Gammon Gold Inc.