Filed by Gammon Gold Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Capital Gold Corporation
Commission File No.: 001-34618
This filing, which includes (i) materials used in a presentation held on November 3, 2010 for investors and (ii) materials posted on the website of Gammon Gold Inc. on November 3, 2010 regarding the general business and operations of Gammon Gold and its proposed acquisition of Capital Gold Corporation, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and comparable “safe harbour” provisions of applicable Canadian legislation, including, but not limited to, statements relating to anticipated financial and operating results, the companies’ plans, objectives, expectations and intentions, cost savings and other statements, including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” and other similar expressions. Such statements are based upon the current beliefs and expectations of our management and involve a number of significant risks and uncertainties. Actual results may differ materially from the results anticipated in these forward-looking statements. The following factors, among others, could cause or contribute to such material differences: the ability to obtain the approval of the transaction by Capital Gold Corporation stockholders; the ability to realize the expected synergies resulting from the transaction in the amounts or in the timeframe anticipated; the ability to integrate Capital Gold Corporation’s businesses into those of Gammon Gold Inc. in a timely and cost-efficient manner; the ability to obtain governmental approvals of the transaction or to satisfy other conditions to the transaction on the proposed terms and timeframe; and the pending litigation. Additional factors that could cause Gammon Gold Inc. and Capital Gold Corporation’s results to differ materially from those described in the forward-looking statements can be found in the 2009 Annual Report on Form 40-F, as amended by Amendment No. 1 to Annual Report on Form 40-F/A, for Gammon Gold Inc. and the Annual Report on Form 10-K of Capital Gold Corporation for the fiscal year ended July 31, 2010 filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s Internet site (http://www.sec.gov).
The proposed merger transaction involving Gammon Gold Inc. and Capital Gold Corporation will be submitted to Capital Gold Corporation’s stockholders for their consideration. Stockholders are encouraged to read the proxy statement/prospectus regarding the proposed transaction when it becomes available because it will contain important information. Stockholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about Gammon Gold Inc. and Capital Gold Corporation, without charge, at the SEC’s Internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, when available, without charge, by directing a request to Gammon Gold, Inc., Investor Relations, 1701 Hollis Street, Suite 400, Founders Square, P.O. Box 2067, Halifax, Nova Scotia, B3J 2Z1, Canada, or to Capital Gold Corporation, Investor Relations, 76 Beaver Street, 14th floor, New York, New York 10005.
Gammon Gold Inc., Capital Gold Corporation, their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Gammon Gold Inc.’s directors and executive officers is available in its Annual Report on Form 40-F for the year ended December 31, 2009, which was filed with the Securities and Exchange Commission on March 30, 2010, as amended by Amendment No. 1 to Annual Report on Form 40-F/A, which was filed with the Securities and Exchange Commission on May 13, 2010, and in its notice of annual meeting and proxy circular for its most recent annual meeting, which was filed with the Securities and Exchange Commission on April 15, 2010. Information regarding Capital Gold Corporation’s directors and executive officers is available in Capital Gold Corporation’s proxy statement for its most recent annual meeting, which was filed with the Securities and Exchange Commission on December 14, 2009. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
THE FOLLOWING ARE MATERIALS USED IN A PRESENTATION HELD ON NOVEMBER 3, 2010 FOR INVESTORS
GAMMON GdOLD INC.
Building a Leading Gold Company in Mexico
Development & Exploration Properties
Operations
Credit Suisse Conference
November, 2010
Capital Gold Development & Exploration Properties
Capital Gold Operations
GAMMON GOLD INC.
Forward Looking Statements
This presentation includes certain “forward? looking statements” or “forward? looking information”. All statements, other than statements of historical fact, included in this presentation are forward? looking statements that involve risks and uncertainties. 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 and gold equivalent production and prices, cash and 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, anticipated 2010 year? end and 2011 results, our ability to fully fund our business model, including our capital and exploration program, internally, anticipated 2010 year? end and 2011 interim and annual gold and silver production and the cash and operating costs associated with the same, the ability to achieve productivity and operational efficiencies, the ability to achieve cash flow margin improvements, the ability to complete further reduction in the open pit stripping ratio, the ability to develop and put into production our exploration targets and the timing of each thereof, the acquisition of Capital Gold (the “Acquisition”) including whether the completion of the Acquisition will ultimately occur, whether the anticipated synergies of the acquisition will occur, incorrect assessment of the value of the properties of Capital Gold and failure to obtain the required security holder, regulatory, third party and other approvals. Forward? looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Gammon Gold, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Important factors that could cause actual results to differ materially from Gammon Gold’s expectations include, among others, risks related to international operations, the actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined, future prices of gold and silver, known and unknown uncertainties and risks relating to additional funding requirements, reserve and resource estimates, hedging activities, development and operating risks, illegal miners, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write? downs, restrictions in Gammon Gold’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 as well as those factors discussed in the section entitled “Risk Factors” in Gammon Gold’s Form 40? F/A as filed with the United States Securities and Exchange Commission. Although Gammon Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Forward?
looking statements are not guarantees of future performance. Accordingly, readers should not place undue reliance on forward? looking statements.
Cautionary Note to US Investors Concerning Estimates of Measured, Indicated and Inferred Resources
This presentation uses the terms “Measured”, “Indicated” and “Inferred” Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. “Inferred Resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred mineral Resource exists, or is economically or legally mineable.
2
GAMMON GOLD INC.
Capitalization (As of Sept. 30, 2010)
US$ Gammon
Cash on Hand (M) $107
Long Term Debt (M) $34
Share Price (Oct. 19/2010) $6.95
Shares Outstanding (M) 138.9
Market Capitalization $965M
Cash as a % of Market Cap 11%
3
12 consecutive quarters of positive operating cash flow
Current debt-to-equity ratio of 5.3%, well below industry standards
Undrawn credit capacity of $24M
Strong liquidity with average daily trading value of $13mm or 1.4% of its market capitalization
Analyst Coverage
Company Analyst
BMO Nesbitt Burns David Haughton
Canaccord Genuity Wendell Zerb
CIBC Brian Quast
Credit Suisse Anita Soni
Dahlman Rose Adam P. Graf
Desjardins Security Brian Christie
Dundee Securities Ron Stewart
Mackie Research Barry Allan
Macquarie Securities Tony Lesiak
Merrill Lynch Mike Jalonen
Scotia Capital Trevor Turnbull
Sidoti & Company Adam Brooks
TD Newcrest Steven Green
UBS Dan Rollins
Capital Markets Profile
GAMMON GOLD INC.
4
One of the largest gold producers focused on Mexico
Continued operational performance improvements being achieved
Significant growth
Since 2006 production has grown 22% per annum
Continued production growth through existing operations
Signed Definitive Merger Agreement to acquire Capital Gold Corporation (October 1, 2010)
Three new discoveries added 128k gold eq.* ounces to reserves at Ocampo (June 30, 2010)
Significant upside from exploration throughout extensive land position in Mexico
Strategic equity investments in Golden Queen Mining (7.5% FD) and CorexGold Corp. (14% FD)
Strong balance sheet - $107 million in cash as of Sept 30/10
Strong leverage to gold and silver in a desired jurisdiction
NYSE & TSX listings provide liquid shares
Strong management team supported by an experienced independent Board of Directors
Undervalued relative to peers
Investment Highlights
* Using the Company’s long term gold equivalency ratio (55:1)
GAMMON GOLD INC.
Mexico
Ocampo Mine (14,641 Ha –100%)
•2009 production: 180.9k Aue* oz
Guadalupe y Calvo
(54,853 Ha –100%)
El Cubo Mine(14,087 Ha –100%)
•2009 production: 49.4k Aue* oz
Exploration Property
Gammon Operation
Mezquite (460 Ha –100%)
Venus (4,574 Ha –100%)
Los Jarros (43,229 Ha –100%)
5
Ocampo Increased land position through Venus and Los Jarrosproperty acquisitions
Total resources –4.3M gold eq. oz*,**
128k gold eq. ounces in new reserve additions (June 2010)
El Cubo Total resources –1.6M gold eq. oz*,**
Temporarily suspended
Guadalupe y Calvo Advanced exploration property
Total resources –1.8M gold eq. oz*,**
Mezquite Project Located in Peñesquito District
Regional resource of 53.3M gold eq. oz*
Capital Gold Acquisition Signed Definitive Agreement–Oct. 1, 2010
El ChanateMine would immediately expand production profile and increase Reserves by 1.5M gold ounces
Orion Project –Total resources ?359k gold eq. oz*
Mulatos (Alamos)
•2009 production: 178.5koz
Dolores (Minefinders)
•2009 production: 101.2k Aue*oz
Leading Mexican Precious Metal Producer
Peer Assets
* Using the Company’s long term gold equivalency ratio (55:1)
** Refer to appendices for breakdown of reserve/resource categories
Capital Gold Assets
El ChanateMine (3,665 Ha –Capital Gold)
2009 production: 54.3k Aue* oz
Orion Property
(110,000 Ha ?Capital Gold)
SaricProperty
(2,300 Ha Capital Gold)
GAMMON GOLD INC.
| 6 |
One of the largest goldsilver mines in Mexico 2010e production of 180200k gold eq. ounces at cash costs between $410$435/gold eq. oz (1)
Open pit and underground operation with both a mill and heap leach circuit
A number of capital projects completed lowering cash costs and increasing throughput
Addition of El Cubo work force increasing underground development capacity by 44%
Recent land acquisitions add to excellent exploration potential –new discoveries identified
Ocampo Overview
Open Pit Mining Q1 2010 Q2 2010 Q3 2010
Average tonnes mined per day 93,730 103,117 97,992
Head grade gold eq. (g/t)(1) 0.97 1.01 1.46
Underground Mining Q1 2010 Q2 2010 Q3 2010
Average tonnes mined per day 1,377 1,500 1,596
Head grade gold eq. (g/t)(1) 5.23 4.73 4.45
Total underground development 3,903 4,744 6,546
Mill Facility Q1 2010 Q2 2010 Q3 2010
Average tonnes per day 2,920 3,182 3,113
Mill grade gold eq. (g/t)(1) 3.53 3.50 3.87
Heap Leach Facility Q1 2010 Q2 2010 Q3 2010
Average tonnes per day 7,328 10,017 6,830
Head grade gold eq. (g/t)(1) 0.72 0.81 0.94
Production Q1 2010 Q2 2010 Q3 2010
Gold oz produced 21,855 24,963 27,018
Silver oz produced 960,817 1,066,998 1,180,769
Gold eq. oz produced(1) 39,325 44,363 48,650
Total Cash Costs Q1 2010 Q2 2010 Q3 2010
Cash Costs per gold eq. oz(1) $423 $430 $411
Cash Costs per gold oz $8($33)($121)
| (1) |
Comparative performance metrics using the Company’s long term gold equivalency guidance ratio (55:1)
Ocampo Production and Cash Cost
GAMMON GOLD INC.
ST EDUVIGES/VETA LIBRE
BELEN
STA JULIANA
AVENTURERO SE SAN AMADO ROSARIO
??64,832m drilled to Sept. 30/10
??Added 40,000m in H2/10
Santa Eduviges – new Reserves of 44,961 gold eq.
ounces (1)(2)(3)
Belen/Santa Juliana – new reserves of 50,529 gold
eq.(1)(2)(3)
??Increased drills from 4 to 6
(1) Using the Company’s long term gold equivalency guidance ratio (55:1) (2) NI43 101 compliant reserve tables are provided in the Appendix section of this presentation (3) Reserves as of June 30, 2010
7
DRILL #1
DRILL #2
DRILL #3
DRILL #1
DRILL #5 ARRIVED OCT 6/10
BELEN
DRILL #4
GAMMON GOLD INC.
Ocampo Exploration
8
PLAZA GALLOS
REFUGIO
PICACHO
CONICO
ESTRELLA
22,716m drilled to Sept. 30/10
Added 35,000m in H2/10
Los Molinosnew Reserves of 32,260 gold eq. ounces(1)(2)(3)
Increased drills from 4 to 7
Open Pit Targets
(1) Using the Company’s long term gold equivalency guidance ratio (55:1)
(2) NI43 101 compliant reserve tables are provided in the Appendix section of this presentation (3) Reserves as of June 30, 2010
GAMMON GOLD INC.
9
Venus Property
?Option to purchase a100% interest in the 4,574 hectare Venus property ?Could host extensions of the PinosAltos trend ?A drilling programis targeted for Q4
LaBoleta Target
?400 x120m core target zone in 2.1 km long multiple vein system ? adjacent to Pinos Altos ?171 rock chip samples >0.20 g/t gold eq.(1).
These average 1.90 g/t gold eq.(1) if capped at8.0 g/t gold
LosJarros Property
?Option agreement for 100% interest in the 43,229? hectare “Los Jarros” Property ?Possible extentions of Pinos Altos and Frisco
| (1) |
Using the Company’s long term gold equivalency guidance ratio (55:1) |
La Boleta
Roncesvalle
Santo Nino
AGNICO 6.7 MOZ AUEQ
FRISCO – 2.0 MOZ AUEQ
JARROS STSED AU GEOCHEM
GAMMON GOLD INC.
10
?100% ownership
?54,853 ha gold/silver property
?Inferred resource of 1.8M oz gold eq.
?Scoping Study (PEA) anticipated for Q4/10
?Expanded drilling program of 25,000m
?Potential for open pit & underground operations
?Potential to be significant production contributor
Project Overview
Rosario Vein Long Section
Guadalupe y Calvo
?New claims staked to the northwest
?Identified 200m wide anomalous mineralization in NW portion of San Luis claim
POST MINERAL TUFFS
2008 DRILLED RESOURCE VOLUME DRILL SPACING 25 X 40M
PROGRAMA DE BARRENACION 2010 AREA 64
PROGRAMA DE BARRENACION 2008 AREA 64
PROGRAMA DE BARRENACION 2008 AREA 75
GAMMON GOLD INC.
11
Capital Gold Acquisition
(1)Pro forma production based on management estimates and F2010 CGC gold production.
(2)Measured, Indicated and Inferred Resources (inclusive of Reserves).
(3)Pro forma contribution based on management estimates and average YTD gold price of US$1,178/oz and silver price of US$18.08/oz.
Gold Reserves (M oz)
Gold Resources (2)(M oz)
2010 Gold Production (1)(koz)
2010 Gold Revenue Contribution (3)
100% INCREASE IN RESERVES
48% INCREASE IN PRODUCTION
42% INCREASE IN RESOURCES
15% INCREASE
INFERRED M&I
1.5 0.7 0.3 3.0 1.7 1.3 116 172 4.5 2.6 0.3 15 63 2.8 0.5 3.0 59% 68%
PROBABLE PROVEN GAMMON PRO FORMA GAMMON
GAMMON GOLD INC.
12
Capital Gold ?Pro Forma Position
Source: Company disclosure and analyst consensus.
(1)Market capitalization as at September 29, 2010.
(2)Minefinders production and cash costs in gold Eq.
(3)Net of silver by?products.
(4)Average cash cost based on spot silver price of US$21.89/oz.
Market Capitalization (US$ M) (1)
2011?2012 Average Gold Production (koz)
Gold Reserves (M oz)
2011?2012 Average Gold Cash Cost (US$/oz)(3)
Street Consensus Average Cash Cost
| (2) |
Cash Cost Based on Spot Ag Price
| (4) |
| (2) |
TIMMINS MINEFINDERS(2) AURIZON PRO FORMA GAMMON LAKE SHORE ALAMOS ALLIED NEVADA
$312 $678 $1,183 $1,267 $1,367 $2,163 $2,414 102 157 169 175 189 209 223 0.6 0.5 2.0 2.4 2.4 2.8 3.0 102 157 169 175 189 209 223 $163 $341 $424 $433 $444 $452 $524
GAMMON GOLD INC.
13
?Independent and strengthened Board of Directors
?Accretive Business Development Opportunities
?Expanded Company?Wide Exploration Program to over $30M
?Sustain 1,500 tpd at Ocampo Underground
?Start Growing the Reserve Base
?Santa Eduvigesproduction in H2 2010
?Guadalupe y Calvo Scoping Study (PEA)
?Closing Capital Gold Transaction
?Ongoing Business Development Opportunities
Near Term Goals / Catalysts
Growing Gold Production
Expanding Margins 050,000100,000150,000200,000250,000 300,0002010E2011F2012F2013F$ 649 $551 $156 ($83)$50$313$822$1,291?$200$0$200$400$600$800$1,000$1,200$1,400FY 2007FY 2008FY 20092010F*Margin ($/oz)Cash Cost ($/oz Au) (Assumes Ocampo Production only)
STRONG GROWTH PROFILE
STRONG MARGIN GROWTH
APPENDICES
14
GAMMON GOLD INC.
15
Ocampo Mine –2010 Production Outlook
Production: 2010
Gold Ounces 100,000 to 110,000
Silver Ounces 4,400,000 to 4,950,000
Gold Equivalent(1) 180,000 to 200,000
Cash Cost per Gold Equivalent Ounce(1)(2) $410 to $435
1.Assumes a 55:1 gold?to?silver ratio
2.Assumes a foreign exchange rate of 12.5 Mexican pesos to one U.S. dollar
Ocampo Production Outlook
GAMMON GOLD INC.
GAMMON GOLD INC.
2010 New Discovery Reserve Additions
16
Notes to Mineral Resources and Reserves Tables:
1. Gold equivalent calculations use the reserve metal prices of $945/oz for gold and $15.20/oz for silver for a gold to silver ratio of 62.17:1.
2. Reserves additions have been calculated in accordance with NI 43? 101, as required by Canadian securities regulatory authorities. In addition, while the terms “Measured”, “Indicated and “Inferred” Mineral Resources are required pursuant to NI 43? 101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and Mineral Resources disclosed in accordance with the requirements of the SEC. Investors should understand that “Inferred” Mineral Resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, investors are cautioned not to assume that any part or all of Gammon’s Mineral Resources constitute or will be converted into Reserves.
3. Mineral Reserves additions have been calculated as at June 30, 2010.
4. Grade represents an average, weighted by reference to tons of ore type where several recovery processes apply.
5. The metallurgical recovery applicable for each deposit and the cut? off grades used to determine Reserves additions as at June 30, 2010 are as follows:
Mine Au Metallurgical
Recovery (%) Ag Metallurgical
Recovery (%) Cut?off Grade
g/t
Los MolinasMill 96 82 >2.0
Los Molinas Pit Fine Crush 82 72 >0.7?2.0
Los Molinas Coarse Crush 60 35 >0.18?0.70
Sta. Eduviges, Sta. Juliana, Belen 96 82 2.0
Ocampo Proven & Probable Reserve Additions(2)(3)(5)(6)(8)
Gold Gold Silver Gold
Mineral Category Gold Silver Equivalent Tonnes Ounces Ounces Equivalent Ounces
(g/t)(4)(g/t)(4)(g/t)(4)(000’s)(000’s)(000’s)(000’s)(1)
Los Molinas Open Pit(7)
Proven 0.72 21 1.06 785 18 531 27
Probable 0.52 18 0.80 214 4 122 6
Total Los Molinas Proven & Probable 0.68 20 1.00 999 22 653 32
Santa Eduviges Underground
Proven 4.18 85 5.56 197 26 540 35
Probable 2.42 52 3.26 94 7 158 10
Total Sta. Eduviges Proven & Probable 3.61 75 4.82 290 34 698 45
Santa Juliana/Belen Underground
Proven 2.39 254 6.47 81 6 665 17
Probable 1.91 219 5.43 192 12 1,354 34
Total Sta. Juliana/Belen Proven & Probable 2.05 229 5.74 274 18 2,019 51
Total Proven Additions 1.49 51 2.30 1,064 51 1,736 79
Total Probable Additions 1.41 102 3.05 500 23 1,634 49
Total Additions
Proven & Probable 1.46 67 2.54 1,563 74 3,370 128
GAMMON GOLD INC.
GAMMON GOLD INC.
17
2009 Consolidated Reserve and Resource Summary
Proven and Probable Reserves
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Ocampo 64,201 0.54 24 0.94 1,120 48,841 1,949
El Cubo 3,575 2.64 150 5.19 304 17,232 596
Total 67,776 0.65 30 1.17 1,424 66,073 2,546
Measured and Indicated Resources
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Ocampo 15,117 0.26 11 0.43 125 5,159 211
El Cubo 2,448 2.62 55 3.55 206 4,333 280
Total 17,565 0.59 17 0.87 331 9,492 490
Inferred Resources
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Ocampo 14,218 2.57 122 4.61 1,176 55,815 2,107
El Cubo 2,903 4.14 198 7.44 387 18,469 694
Guadalupe y Calvo 11,800 2.84 120 4.84 1,077 45,525 1,836
Total 28,921 2.84 129 4.99 2,640 119,810 4,637
Total Inventory 114,262 1.20 53 2.09 4,395 195,375 7,673
Consolidated 2009 R&R Summary
GAMMON GOLD INC.
GAMMON GOLD INC.
18
Ocampo 2009 Reserve and Resource Summary
Proven and Probable Reserves
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Open Pit 61,248 0.40 16 0.67 781 31,994 1,324
Underground 2,953 3.58 177 6.59 339 16,847 626
Total 64,201 0.54 24 0.94 1,120 48,841 1,949
Measured and Indicated Resources
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Open Pit 14,612 0.17 6 0.27 81 2,833 129
Underground 505 2.69 143 5.08 44 2,326 82
Total 15,117 0.26 11 0.43 125 5,159 211
Inferred Resources
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Open Pit 8,888 1.42 38 2.06 405 10,957 588
Underground 5,330 4.50 262 8.86 771 44,858 1,519
Total 14,218 2.57 122 4.61 1,176 55,815 2,107
Ocampo 2009 R&R Summary
GAMMON GOLD INC.
19
El Cubo 2009 Reserve and Resource Summary
Proven and Probable Reserves
Tonnes
(000’s) Au
g/t Ag
g/t Aueq
g/t Au Ounces
(000’s) Ag Ounces
(000’s) Aueq Ounces
(000’s)
Proven & Probable 3,575 2.64 150 5.19 304 17,232 596
Measured and Indicated Resources
Tonnes
(000’s) Au
g/t Ag
g/t Aueq
g/t Au Ounces
(000’s) Ag Ounces
(000’s) Aueq Ounces
(000’s)
Measured & Indicated 2,448 2.62 55 3.53 206 4,333 278
Inferred Resources
Tonnes Au Ag Aueq Au Ounces Ag Ounces Aueq Ounces
(000’s) g/t g/t g/t(000’s)(000’s)(000’s)
Inferred 2,903 4.14 198 7.44 387 18,469 694
El Cubo 2009 R&R Summary
Notes to Mineral Resources and Reserves Tables:
1) Gold equivalent calculations use the reserve metal prices of $845/oz for gold and $14.35/oz for silver for a gold to silver ratio of 58.89:1
2) Gold equivalent calculations use the resource metal prices of $975/oz for gold and $16.25/oz for silver for a gold to silver ratio of 60.00:1
3) These Mineral Resources are in addition to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability when calculated using Mineral Reserve assumptions.
4) Reserves have been calculated in accordance with NI 43? 101, as required by Canadian securities regulatory authorities. In addition, while the terms “Measured”, “Indicated and “Inferred” Mineral Resources are required pursuant to NI 43? 101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and Mineral Resources disclosed in accordance with the requirements of the SEC. Investors should understand that “Inferred” Mineral Resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, investors are cautioned not to assume that any part or all of Gammon’s Mineral Resources constitute or will be converted into Reserves.
5) Mineral Reserves and Resources have been calculated as at December 31, 2009.
6) Grade represents an average, weighted by reference to tons of ore type where several recovery processes apply.
7) The metallurgical recovery applicable at each property and the cut? off grades used to determine Reserves as at December 31, 2009 are as follows:
Au
Metallurgical Metallurgical Cut?off Grade
Mine Recovery (%) Recovery (%) g/t
Ocampo Open Pit Fine Crush 82 72 >0.7?2.5
Ocampo Open Pit Coarse Crush 60 35 >0.18?0.70
Ocampo Underground 96 82 2.0
El Cubo 89 89 2.19