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Gammon Reports Best Ever Cost Margins and Continued Strengthening of Performance at Ocampo During the Fourth Quarter: Meets Operational Guidance for 2010
Gammon Gold Inc. (TSX:GAM and NYSE:GRS) provide preliminary results from the Ocampo mine for the fourth quarter and 2010. Operations at Ocampo continued to strengthen in the fourth quarter benefiting from the strong performance of the North‐East underground mine.
During the fourth quarter, the Company reported production at Ocampo of 29,384 gold ounces and 1,199,829 silver ounces, or 51,199 gold equivalent1 ounces (realized(2) 53,030 ounces) at total cash costs of $426 (US$) per gold equivalent1 ounce (realized(2) $410). On a by‐product basis, taking Ocampo’s silver production as a credit, total cash costs per ounce of gold sold were negative $390. Ocampo achieved a record margin of $955 per gold equivalent ounce(1) or 69%, and an operating cash flow for the period of approximately $40.0 million.
For the year ended December 31, 2010, the Company reported production at Ocampo of 103,220 gold ounces and 4,417,413 silver ounces, or 183,538 gold equivalent(1) ounces at total cash costs of $422 per gold equivalent(1) ounce, meeting the Company’s guidance for 2010.
“Throughout 2010 we have reported significant quarter over quarter improvements at Ocampo in virtually every key performance indicator. We have met our 2010 production and cash cost guidance and attained a strong and consistent production profile that leverages our record margins,” said René Marion, President and Chief Executive Officer. “Our strong cash flow profile and robust financial position, including a cash balance of $113 million, provides us with the flexibility to invest in our future, and fully fund our growth strategy.”
Recent Highlights - Development of the North‐East and Santa Eduviges underground mines continue to benefit from having access to the additional workforce redeployed from the Company’s El Cubo mine. More than 7,200 metres of development were completed in the fourth quarter
- Commercial production at Santa Eduviges commenced in late December
- On December 9, Gammon announced significant drill results for Reserve expansion and four new discoveries at Ocampo at Balvanera, El Rayo, Stockwork Hill and Polvorin
- On December 16, 2010, the Company announced that it has entered into a binding Letter of Intent with Aurion Resources Ltd. that will provide Gammon with an option to earn up to a 70% joint venture interest in the 12,985 hectare La Bandera Project located in Durango, Mexico
- The Preliminary Economic Assessment of the Guadalupe y Calvo development property is expected to be released later this month
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