JUNIOR MINING

After El Cubo suspension, Gammon Gold to focus on Ocampo gold-silver operation

For a second time this year, Gammon Gold has reduced its production forecasts. Now the company is placing its bets on an expanded Ocampo operation.

RENO, NV - 

Gammon Gold said Monday it has transferred 154 contract miners as well as 30 pieces of key underground mining equipment from the now shuttered El Cubo Mine to the Ocampo Mine.

The Halifax, Nova Scotia-based company had originally projected it would produce 150,000 to 160,000 ounces of gold and 6.1 million to 6.85 million ounces of silver this year. That production outlook has now been revised to 100,000 to 110,000 ounces of gold and 4.4 million to 4.95 million ounces of silver.

In April, Gammon said it had encountered larger than anticipated voids from historical mining activities in the Ocampo Pichaco open pit in the Chihuahua State. The voids reportedly reduced ore tonnages and grades being directed to the mill and heap leach facilities.

However the Phase III Ocampo mill expansion was operating at its targeted rate of between 3,300 and 3,400 tpd this month.

In a news release, Rene Marion, Gammon CEO, said, "Operations at Ocampo continue to stabilize at targeted levels and the redeployment of our top contract workers and equipment from El Cubo will provide immediate and supplemental operational support to Ocampo. This expanded operating team will allow us to accelerate development of our new discoveries at Santa Eduviges, Belen and our many other promising targets."

"Management focus for the balance of the year will be on expanding productivity at our Ocampo mine as well as bringing new discoveries into production in 2011 and the acceleration of exploration programs at our properties," he added.

Development activities at the Santa Eduviges underground mine at Ocampo are currently accessing development ore. "Production of approximately 250 tonnes per day is anticipated later in the second half of 2010 that should provide additional high grade underground ore feed to the mill facility," the company said.

Gammon Gold suspended operations at the El Cubo underground mine this month and terminated 397 union workers at the gold and silver mine. A work stoppage began on June 3.

Roughly 25% of Gammon Gold's production had come from El Cubo.