Gammon Gold Inc. (TSX:GAM and NYSE:GRS): is pleased to announce that despite the third quarter Mexican rainy season and the planned fewer ounces in production associated with the rainy season that typically impacts the heap leach facility, the mitigation strategies implemented at Ocampo were very effective and resulted in a total gold production improvement of 29% to 34,096 ounces as compared to 26,444 ounces in Q3 2007.
Total silver production also improved by 23% to 1,372,123 ounces as compared to 1,115,233 ounces in Q3 2007, and represents one of the best quarterly production levels in the history of the Company. Despite the adverse gold to silver ratio during the quarter, gold equivalent production improved by 22% to 57,521 ounces as compared to 47,091 ounces in Q3 2007.
Additional recent milestones and achievements also include:
Ocampo
- October average stacking rate of over 11,000 tonnes per day onto the heap leach, which represents the highest on record to date
- October mill processing rate of over 1,850 tonnes per day, which represents the highest average daily rate on record to date
- The mill processing plant capital upgrade to 2,400 - 2,600 tonnes per day was completed at the end of October and the operation is currently ramping up production to the enhanced capacity. Throughput on November 3, 2008 has already exceeded 2,350 tonnes without any apparent operational issues or bottlenecks and we fully anticipate reaching and maintaining the new rated capacity in the coming weeks
- In October the decision was made to install a third mill at the Ocampo processing plant. The Marcey mill from El Cubo's Chirimetera plant was moved to Ocampo in early October with the foundations and the electrical room construction already approaching completion. This is the second phase of the three-phase processing plant expansion program, which is presently targeted to be completed in early Q2 2009, and will increase throughput capacity by a further 10% with minimal capital investment. The detailed engineering on the final processing capacity (phase 3), which includes the installation of the Marcey mill and a gravity circuit (phase 2), will be completed by the end of fiscal 2008
- New open pit sequencing plans were developed in early Q3 that allowed for the immediate reduction in waste stripping requirements in August. In conjunction with the reduction in haulage distances associated with the new waste dumps and ore haulage road completed in mid-October these initiatives should improve future open pit mining effectiveness
- In early October, a decision was made to stockpile lower grade ore from the open pit for later stacking onto the heap leach pad. This will improve the ore grades placed on the heap leach during this period of high metal price volatility and defers heap leach capital expansion requirements to 2010. Heap leach gold equivalent grades in October increased by over 40% despite the adverse gold to silver ratio during the month
El Cubo:
- A workforce reduction of approximately 19% (over 230 people) took place in Q3, for a total year-to-date reduction of approximately 31%, which resulted in a more efficient and cost effective workforce
- The third processing mill was placed on care and maintenance during the quarter as 100% of the underground production has now been routed to the lower cost Las Torres processing plant
- The Las Torres processing plant capital projects were largely completed during the quarter, allowing for substantial improvements in metallurgical recoveries
- The 600 metre haulage level to Las Torres is currently operating at over 60% capacity. The remaining locomotives and cars have been ordered, which will allow full capacity to be achieved in the coming quarters
"At the beginning of the year, the new management team at Gammon set an aggressive list of commitments for 2008 and I am very pleased to advise our shareholders that we continue to deliver on those objectives" stated Rene Marion, Chief Executive Office of Gammon Gold Inc. He continued, "I am also pleased to announce that the first phase of the capital expansion program launched at the Ocampo mill facility is complete and that we are currently ramping up production to the increased rated capacity of 2,400 to 2,600 tonnes per day. The second phase of the planned expansion is currently underway that will add additional capacity in Q2 2009."
"I am very pleased that the rainy season strategies that we launched in 2008 had such a positive impact on production at Ocampo in the third quarter" stated Russell Tremayne, Chief Operating Officer of Gammon Gold Inc. He continued, "The newly assembled mine management team at Ocampo has worked diligently and effectively throughout the quarter, which resulted not only in the substantial improvements in production that we achieved, but also the concurrent completion of the expansion of the mill processing facility and the heap leach facility both on time and on budget."
Gammon is also pleased to announce the discovery of a new underground vein, San Amado, at the Ocampo mine. The Company's drilling at its Ocampo Underground mine has recently discovered some very high-grade bonanza mineralization on the San Amado Vein in the northeast portion of the underground operation. This vein appears to be an extension of the San Juan - Balmavera Vein System, which is one of the highest grade veins in the mine complex. Two new drill intercepts that are over 100 meters from any past exploration, show average values of:
- OU-426: 3.5m true thickness at 30.57 g/t Au + 2,126 g/t Ag (Average 2 sets of assays)
- OU-428: 2.5m true thickness at 82.40 g/t Au + 681 g/t Ag (Average 2 sets of assays)
This mineralization was intersected between 1,570 and 1,590 meter elevations, and is open to expansion from these levels to the surface (at 1,800 to 1,900 meter elevations) as well as to the Northeast. The Company plans to continue exploring this potentially rich new vein occurrence by drifting and drilling.
All the Company's exploration core samples are split and sampled on-site by Company personnel, then shipped in sealed bags to ALS Chemex Labs in Hermosillo, Mexico and assayed by conventional Fire Assay methods. The Company maintains a Quality Control program of pulp standards, blanks, and duplicate samples inserted into assay batches. The Qualified Person for this is Ramon Luna, Exploration Manager, Mexico. -- www.cnxmarketlink.com
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