TSX: GAM/NYSE: GRS/BSX: GL7
HALIFAX, April 14 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): Gammon is pleased to report preliminary Q1, 2009 operating results as highlighted below:
Consolidated Highlights ----------------------- ------------------------------------------------------------------------- Ocampo El Cubo Consolidated Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 ------------------------------------------------------------------------- Gold ounces produced 28,356 22,779 8,473 10,320 36,829 33,099 Silver ounces produced 989,038 843,462 362,262 467,509 1,351,300 1,310,971 Gold equivalent ounces produced 41,997 38,712 13,483 19,234 55,480 57,946 Gold ounces sold 25,990 21,527 8,609 9,928 34,599 31,455 Silver ounces sold 904,800 796,460 369,696 452,134 1,274,496 1,248,594 Gold equivalent ounces sold 38,487 36,567 13,720 18,532 52,207 55,099 Total cash costs per gold equivalent ounce $391 $462 $524 $549 $426 $491 Total cash costs per gold ounce $140 $130 $290 $220 $177 $158 Gold to Silver Ratio 72.23 52.13 70.09 52.85 71.47 52.42 Realized Gold Price $909 $921 $889 $939 $903 $928 Realized Silver Price $12.58 $17.67 $12.69 $17.77 $12.63 $17.69 Gold equivalent ounces produced (55:1)(x) 46,338 38,115 15,060 18,820 57,772 56,935 Total cash costs per gold equivalent ounce (55:1)(x) $354 $469 $469 $561 $385 $500 ------------------------------------------------------------------------- (x) Comparative performance metrics using the Company's long term gold equivalency guidance ratio (55:1) - Consistent with previously provided guidance, first quarter production of 55,480 gold equivalent ounces was similar to production levels in Q3, 2008 with established operating performance levels meeting those targeted in the Company's full year guidance. - First quarter cash costs of $426 per gold equivalent ounce were significantly lower than the prior year corresponding period, which together with Ocampo's expanding productivity profile, positions the Company well for meeting the cost performance levels targeted in the Company's full year guidance. - Quarterly production is expected to grow significantly as a result of the strategic decision to accelerate the commissioning of the Phase II mill expansion at Ocampo in Q1, 2009. Accordingly, mill utilization in January and February was reduced to between 84% and 88%, so that the mill circuit could be upgraded, including electrics, additional pumps, pumping circuits and process controls to handle the increased flows. - Since commissioning the Phase II mill expansion at Ocampo on March 4, the mill has averaged 2,780 tonnes per day to March 31, at the top-end of the targeted throughput processing level. - Low grade ores were processed during the initial phase of the Ocampo Phase II commissioning until late March so that the circuit could be stabilized without jeopardizing recoveries. Head grades returned to normal levels thereafter and the mill facility alone recovered an average of over 340 ounces a day of gold and 12,870 ounces of silver per day for the last 7 operating days of March. - The gravity circuit equipment associated with Phase III of the Ocampo mill expansion has arrived on site and is currently being installed. - A total of 23,284 metres of exploration drilling has been completed at Ocampo during the quarter. In addition, 2,158 metres of exploration and ore development has been completed during the same period. Currently 4 drills are on site, which is anticipated to grow to 7 or 8 drills during the second quarter. - 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 grams per tonne gold and 59.1 grams per tonne silver for 7.60 grams per tonne gold equivalent, including 9.0 metres at 11.32 grams per tonne gold and 90.7 grams per tonne silver for 12.97 grams per tonne gold equivalent, less than 40 metres below surface.
"As targeted, quarterly production was in line with the Q3, 2008 period despite the required downtime on milling operations and the intentional processing of lower grade materials to effect the accelerated commissioning of the Phase II mill expansion. The expanded mill is now fully commissioned and is performing to design specifications, which together with the in-process Phase III mill expansion, is expected to significantly benefit future quarterly performance levels. Equally important, Company wide cash costs at our 55:1 long term gold equivalency guidance reduced by 23% from the same period in 2008. This performance continues to strengthen the Company's financial foundation and for the sixth consecutive quarter we will be reporting robust positive operating cash flows from consolidated operations which strongly underpins our objective to continue operating as an internally funded business model." stated Rene Marion, Gammon's Chief Executive Officer.
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 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 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", "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 reclamation expenses including, anticipated 2009 results, any decrease in cash costs for Q4 2008 and full year 2008 resulting from a reversal of the mark-to-market valuation adjustment made in Q3 2008, our ability to fully fund our business model internally, 2009 gold and silver production and the cash and operating costs associated thereafter, the ability to achieve productivity and operational efficiencies, the ability to complete the Phase II mill expansion, the connection to the grid power, further reduction in the open pit stripping ratio 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.