Gammon Gold Inc. 2010 Exploration Adds Proven and Probable Reserves and Measured and Indicated Resources
28.02.2011 | CNW
TORONTO, Feb. 28 /CNW/ - Gammon Gold Inc. ("Gammon") (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.All figures reported are in U.S. dollars unless otherwise indicated.
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.\'
(1) Gold equivalent Reserves use a silver to gold ratio of 61.75:1 (2) Gold equivalent Resources use a silver to gold ratio of 55.00:1
Proven and Probable Mineral Reserves
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 Consolidated Measured & Indicated Mineral Resources and Inferred Resources
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.
Reserve and Resource Estimates
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 $22.75 per ounce, for a silver to gold equivalency ratio of 55:1.
2011 Exploration Program
Gammon has committed to an extensive exploration program in 2011 designed to follow up on the success of both the 2010 drilling program and the resulting reserve and resource additions. The following is a breakdown of the currently planned and approved drilling programs across the company:
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Expenditures Drill Development
Project ($ millions) (m) (m)
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Ocampo 27-29 159,000 7,900
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El Cubo 2-3 12,000 -
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Guadalupe y Calvo 4-5 15,000 1,700
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Grassroots 7-8 25,000 -
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Total 40-45 211,000 9,600
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About Gammon Gold
Gammon Gold Inc. is a mid-tier gold and silver producer with properties in Mexico. Gammon\'s flagship Ocampo Property is located in Chihuahua State. Gammon also owns the El Cubo mine in Guanajuato State and the Guadalupe y Calvo development property in Chihuahua State. In 2010 Gammon completed option purchase agreements to acquire the Los Jarros and Venus Projects located directly north and east of the Ocampo mine, the Mezquite Project in Zacatecas State, and has signed a binding Letter of Intent to joint venture into the La Bandera gold project in Durango State. The Company has made strategic investments in Golden Queen Mining Co. Ltd. and Corex Gold Corporation. The Company\'s Executive Office is located in Toronto, Ontario.
Cautionary Statement
Cautionary Note to US Investors - The United States Securities and Exchange Commission permits US mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. This press release uses certain terms, such as \'measured,\' \'indicated,\' and \'inferred\' \'resources,\' that the SEC guidelines strictly prohibit US registered companies from including in their filings with the SEC. US Investors are urged to consider closely the disclosure in Gammon Gold\'s Annual Report on Form 40-F/A, which may be secured from Gammon Gold, or from the SEC\'s website at www.sec.gov/edgar.shtml.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Certain statements included herein, including information as to the future financial or operating performance of the Company, its subsidiaries and its projects, constitute forward-looking statements. 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, future exploration results of its development program, the Company\'s ability to delineate additional resources and reserves as a result of such program, and the company\'s ability to mine such targets by mid-2011, statements regarding its financial exposure to litigation, targets, estimates and assumptions in respect of gold and silver production and prices, 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 completion of the Ocampo expansion program and improvements to the heap leach pad, costs and timing of the development and commencement of production of new deposits, costs and timing of construction, costs and timing of future exploration and reclamation expenses including, anticipated 2010 results, operating performance projections for 2010 and 2011, our ability to fully fund our business model internally, 2010 gold and silver production and the cash and operating costs associated therewith, the ability to achieve productivity and operational efficiencies, the ability to access grid power at Ocampo, further reduction in the open pit stripping ratio and the timing of each thereof. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, olitical
and social uncertainties and contingencies. Many factors could cause the Company\'s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such factors include, among others, known and unknown uncertainties and risks relating to additional funding requirements, reserve and resource estimates, commodity prices, hedging activities, exploration, development and operating risks, illegal miners, political and foreign risk, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write-downs, restrictions in the Company\'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. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.
Ocampo Proven & Probable Reserves(4)(5)(7)(8)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(1)
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Open Pit
Area(9)
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Proven 30,355 0.39 15 0.64 380 14,843 620
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Probable 33,933 0.37 15 0.62 408 16,510 676
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Total Open
Pit Area
Proven &
Probable 64,287 0.38 15 0.63 788 31,353 1,296
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Underground
Area
-------------------------------------------------------------------------
Proven 3,049 3.14 146 5.50 308 14,282 539
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Probable 2,080 2.26 110 4.04 151 7,350 270
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Total
Underground
Area Proven
& Probable 5,130 2.79 131 4.91 459 21,632 810
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Total
Proven 33,404 0.64 27 1.08 688 29,125 1,160
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Total
Probable 36,013 0.48 21 0.82 560 23,860 946
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Total
Ocampo
Proven &
Probable 69,417 0.56 24 0.94 1,248 52,985 2,106
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El Cubo Proven & Probable Reserves(4)(5)(7)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(1)
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El Cubo
-------------------------------------------------------------------------
Proven 1,542 2.62 154 5.11 130 7,618 254
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Probable 1,877 2.69 134 4.86 163 8,075 293
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Total El
Cubo Proven
& Probable
Reserves 3,419 2.66 143 4.97 293 15,694 547
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Las Torres
(Underground)
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Proven 266 1.96 137 4.18 17 1,173 36
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Probable 250 2.34 146 4.70 19 1,172 38
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Total Las
Torres Proven
& Probable
Reserves 516 2.14 141 4.43 36 2,345 74
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Total Proven
- El Cubo
and Las
Torres 1,808 2.53 151 4.98 147 8,791 289
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Total
Probable -
El Cubo and
Las Torres 2,127 2.65 135 4.84 181 9,247 331
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Total Proven
& Probable
Reserves -
El Cubo and
Las Torres 3,936 2.59 143 4.90 328 18,038 620
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Total Summary of Proven & Probable Reserves(4)(5)(7)(8)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(1)
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Total
Proven 35,212 0.74 33 1.28 835 37,916 1,449
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Total
Probable 38,141 0.60 27 1.04 741 33,107 1,277
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Total Proven
& Probable
Reserves 73,353 0.67 30 1.16 1,576 71,023 2,726
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Ocampo Measured, Indicated & Inferred Resources(3)(4)(5)(7)(8)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(2)
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Open Pit
Area(9)
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Measured 13,644 0.15 6 0.26 67 2,627 114
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Indicated 20,037 0.20 8 0.34 126 5,127 219
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Total Open
Pit Area
Measured &
Indicated 33,682 0.18 7 0.31 192 7,754 333
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Inferred 15,523 0.47 23 0.89 237 11,507 446
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Underground
Area
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Measured 649 0.86 46 1.68 18 951 35
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Indicated 628 0.87 45 1.69 18 911 34
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Total
Underground
Measured &
Indicated 1,277 0.86 45 1.69 35 1,862 69
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Inferred 5,092 4.12 256 8.77 674 41,922 1,437
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Summary -
Total
Measured &
Indicated
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Total
Measured 14,294 0.18 8 0.33 84 3,579 150
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Total
Indicated 20,665 0.22 9 0.38 143 6,038 253
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Total Ocampo
Measured &
Indicated 34,959 0.20 9 0.36 228 9,617 403
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Summary -
Total
Inferred
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Total Ocampo
Inferred 20,615 1.37 81 2.84 911 53,428 1,883
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El Cubo Measured, Indicated & Inferred Resources(3)(4)(5)(7)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(2)
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El Cubo
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Measured 149 1.80 121 4.00 9 579 19
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Indicated 477 1.93 157 4.78 30 2,404 73
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Total El
Cubo
Measured &
Indicated 627 1.90 148 4.59 38 2,983 92
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Inferred 3,499 3.29 176 6.49 370 19,788 730
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Las Torres
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Measured 8 1.73 54 2.71 0 13 1
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Indicated 19 1.76 52 2.71 1 32 2
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Total Las
Torres
Measured &
Indicated 27 1.75 53 2.71 2 45 2
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Inferred 546 4.12 169 7.20 72 2,973 126
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Fenix Pit
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Measured - - - - - - -
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Indicated 2,100 2.72 49 3.61 184 3,308 244
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Total Fenix
Pit Measured
& Indicated 2,100 2.72 49 3.61 184 3,308 244
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Inferred - - - - - - -
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Summary -
Measured &
Indicated
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Total
Measured -
El Cubo and
Las Torres 157 1.80 118 3.93 9 592 20
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Total
Indicated -
El Cubo and
Las Torres 2,597 2.57 69 3.82 214 5,744 319
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Total
Measured &
Indicated -
El Cubo and
Las Torres 2,753 2.52 72 3.83 223 6,336 339
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Summary -
Inferred
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Total
Inferred -
El Cubo and
Las Torres 4,045 3.40 175 6.59 443 22,761 857
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Guadalupe y Calvo Estimate of Inferred Resources(3)(4)(5)(7)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Deposit Tonnes Gold Silver alent Ounces Ounces Ounces
Location (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(2)
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Rosario
Bulk
Tonnage
(at 75% of
available
tonnes) 10,700 1.60 96 3.35 566 33,100 1,168
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Rosario
Underground
(at 33% of
available
tonnes) 700 18.50 435 26.41 393 9,200 560
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Rosario
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Total
Rosario
Inferred 11,400 2.64 117 4.77 959 42,300 1,728
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Nankin
Underground
(at 33% of
available
tonnes) 400 9.25 260 13.98 118 3,300 178
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Nankin
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Total Nankin
Inferred 400 9.25 260 13.98 118 3,300 178
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Summary -
Inferred
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Total Rosario
and Nankin
Inferred 11,800 2.84 120 5.02 1,077 45,600 1,906
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Total Summary of Measured, Indicated and Inferred Resources
(3)(4)(5)(7)(8)(10)(11)
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Gold
Gold Equiv-
Equiv- Gold Silver alent
Mineral Tonnes Gold Silver alent Ounces Ounces Ounces
Category (000\'s) (g/t)(6) (g/t)(6) (g/t)(6) (000\'s) (000\'s) (000\'s)(2)
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Summary -
Measured &
Indicated
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Total
Measured 14,450 0.20 9 0.36 94 4,171 169
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Total
Indicated 23,262 0.48 16 0.76 358 11,782 572
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Total
Measured &
Indicated 37,712 0.37 13 0.61 451 15,953 741
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Summary -
Inferred
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Total
Inferred 36,460 2.07 104 3.96 2,431 121,789 4,645
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Notes to Mineral Resources and Reserves Tables:
(1) Gold equivalent calculations use the reserve metal prices of
$1025/oz for gold and $16.60/oz for silver for a gold to silver
ratio of 61.75:1. Individual process recoveries are not factored
into the gold to silver ratio calculation.
(2) Gold equivalent calculations use the resource metal prices of
$1250/oz for gold and $22.75/oz for silver for a gold to silver
ratio of 55.00:1. Individual process recoveries are not factored
into the gold to silver ratio calculation.
(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, 2010.
(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, 2010 are as
follows:
Au Ag
Metallurgical Metallurgical Cut-off Grade
Mine Recovery (%) Recovery (%) g/t
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Ocampo Open-
Pit Mill 95 82 greater than 1.70
Ocampo Open greater than 0.17-
Pit Leach 82 72 1.70
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Ocampo
Underground 95 82 1.80
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El Cubo 90 88 1.86
All ores at Ocampo demonstrate similar metallurgical recoveries
regardless of whether oxides are sulfides.
(8) The Ocampo Open Pit strip ratio is 2.7:1.
(9) The basis for the reserve estimation is the Whittle pit optimization
methodology.
(10) Sums may not add to totals due to rounding.
(11) The following are the qualified persons responsible for mineral
reserve and mineral resource estimates as at December 31, 2010.
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Property Qualified Person
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El Cubo - Excluding Glenn R. Clark, P.Eng, Principal,
Dolores & Capulin Glenn R. Clark & Associates
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Ocampo Ramon Luna, P. Geo, Director, Servicios
y Proyectos Mineros De Mexico S.A. de C.V.
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Guadalupe y Calvo Barton G. Stone, C.P.G., Chief Geologist,
Pincock Allen & Holt,
Mark G. Stevens, C.P.G, former Pincock,
Allen & Holt employee,
Clarence J. Wendt, P. Geo, Consulting
Geologist, former Pincock, Allen & Holt
employee
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For further information:
please visit the Gammon Gold website at
www.gammongold.com or contact:
Rene Marion, President and Chief Executive Officer
Gammon Gold Inc., +1-416-646-3825;
Anne Day, Director of Investor Relations
Gammon Gold Inc., +1-416-646-3825