Mar 1 2011
Gammon Gold Inc. (TSX: GAM) and (NYSE: GRS) today reported its updated Reserves and Resources, as at December 31st, 2010 which include the addition of 0.5 million gold equivalent ounces (1) to Proven and Probable Reserves and an increase of 0.2 million gold equivalent ounces (2) to Measured and Indicated Resources.
Highlights:
- Addition to company-wide Proven and Probable Reserves of 459 thousand gold equivalent ounces(1), an increase of 18% before mining depletion; - Addition to company-wide Measured and Indicated Resources of 238 thousand gold equivalent ounces(2), an increase of 47% (calculated at metal prices below current spot prices); - Addition to Proven and Probable Reserves at Ocampo of 398 thousand gold equivalent ounces(1), an increase of 20% before mining depletion, including: - 280 thousand gold equivalent ounces(1) at the Ocampo underground, an increase of 45% - 118 thousand gold equivalent ounces(1) at Ocampo open pit operations, an increase of 9% - Addition to Proven and Probable Reserves at El Cubo of 61 thousand gold equivalent ounces(1), an increase of 10% before mining depletion; - Proven and Probable Reserves of 2.7 million gold equivalent ounces(1) company-wide including: - 1.6 million gold ounces, an increase of 11% - 71.0 million silver ounces, an increase of 7% - Measured & Indicated Resources of 741 thousand gold equivalent ounces(2) company-wide including: - 0.5 million gold ounces, an increase of 36% - 16.0 million silver ounces, an increase of 68%.
Rene Marion, President and CEO, commented: "In this, the first year in which meaningful exploration has been conducted on Gammon's properties, we have been able to significantly extend the life of the underground and open pit ore bodies at Ocampo and add ounces at El Cubo, despite the limited exploration work conducted there in 2010. Our reserve ounces were added at a favourable finding cost of only $49 per gold equivalent ounce(1) and represent highly profitable ounces given their immediate proximity to existing mine development and infrastructure." Rene Marion continued, "We are also very pleased that measured and indicated resources have increased to 741 thousand gold equivalent ounces(2) and it's worth noting that at today's metal prices, many of these ounces could be classified as reserves. The 2010 exploration program has not only extended the North East underground operation by two kilometers to the south, connecting to the Picacho open pit, but has also identified ten (10) new underground veins and one new open pit. The 2011 success driven exploration program at Ocampo has been expanded from 2010 and will not only focus on continued resource conversion, but also on 13 new underground veins located in four distinct regions and on six (6) new open pit targets."
Gammon Consolidated
Using a silver to gold equivalency ratio of 61.75:1 Gammon's total Proven and Probable mineral reserves at year-end 2010 increased by 459 thousand gold equivalent ounces, or 18% prior to depletion. After accounting for mining depletion of 226 thousand gold equivalent ounces, Proven and Probable reserves stand at 2.7 million gold equivalent ounces, versus 2.5 million gold equivalent ounces at year end 2009, or an increase of 9%.
Ocampo Underground
Using a silver to gold equivalency ratio of 61.75:1, 2010 year-end Proven and Probable reserves at the Ocampo underground increased by 280 thousand gold equivalent ounces, or 45% prior to mining depletion. After accounting for depletion of 82 thousand gold equivalent ounces, Proven and Probable reserves stand at 810 thousand gold equivalent ounces representing an increase of 32%. During the year, Ocampo added six new veins to reserves at the northeast underground, and increased reserves in 14 of the 20 existing veins there. In addition, the six veins that comprise the Santa Eduviges complex were added to reserves and Santa Eduviges was brought into production at year-end.
Ocampo Open Pits
Using a silver to gold equivalency ratio of 61.75:1, 2010 year-end Proven and Probable reserves at the Ocampo open pits increased by 118 thousand gold equivalent ounces, or 9% prior to mining depletion. After accounting for mining depletion of 121 thousand gold equivalent ounces, Proven and Probable reserves stand at 1.3 million gold equivalent ounces. Additional surface drilling in 2010 has seen the extension of the pits to the east at Picacho and to the south in Refugio/PDG, and as well the inclusion in reserves for the first time of a new satellite pit, Los Molinas, that is located 300 metres from the Ocampo mill facility.
El Cubo Underground
During the curtailment of production in the second half of 2010 the El Cubo geology staff was able to focus on the re-interpretation of past sampling programs and on the incorporation of the successful five month drilling program up until the labour disruption action. Using a silver to gold equivalency ratio of 61.75:1, 2010 year-end Proven and Probable reserves at the El Cubo mine increased by 61 thousand gold equivalent ounces, or 10% prior to mining depletion. After accounting for limited mining depletion, Proven and Probable reserves stand at 620 thousand gold equivalent ounces representing a 6% increase. Included in the resource additions at El Cubo are the delineation of two entirely new veins discovered during the 2009/2010 drilling programs, for which a plan and budget is in place for immediate development upon the mine's restart.
Gammon's total Measured and Indicated mineral resources at year-end 2010 increased by 238 thousand gold equivalent ounces to 741 thousand gold equivalent ounces, or 47%, versus 503 thousand gold equivalent ounces at a silver to gold equivalency ratio of 55:1.
Gammon's total Inferred mineral resources at year-end 2010 decreased by 174 thousand ounces to 4.6 million gold equivalent ounces, or 4% versus 4.8 million gold equivalent ounces at a silver to gold equivalency ratio of 55:1.
Mineral Reserves and Mineral Resources are stated as of December 31, 2010. Mineral Reserves have been calculated assuming the three year trailing average metal prices and used a gold price of $1,025 per ounce, and a silver price of $16.60 per ounce for a silver to gold equivalency ratio of 61.75:1. Mineral Resources have been calculated using a gold price of $1,250 per ounce, and a silver price of $22.75 per ounce, for a silver to gold equivalency ratio of 55:1.
Gammon has committed to an extensive exploration program in 2011 designed to follow up on the success of both the 2010 drilling program and the resulting reserve and resource additions.