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 8, 2010 for investors and (ii) materials posted on the website of Gammon Gold Inc. on November 8, 2010 regarding the general business and operations of Gammon Gold Inc. 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 outcome of pending litigation related to the proposed acquisition of Capital Gold Corporation. 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. Gammon Gold Inc. and Capital Gold Corporation have filed with the SEC a Registration Statement on Form F-4 containing a preliminary proxy statement/prospectus and each of the companies plans to file with the SEC other documents regarding the proposed transaction. Stockholders are encouraged to read the preliminary proxy statement/prospectus regarding the proposed transaction and the definitive proxy statement/prospectus when it becomes available, as well as other documents filed with the SEC because they contain important information. Stockholders may obtain a free copy of the preliminary proxy statement/prospectus, and will be able to obtain a free copy of the definitive proxy statement/prospectus when it becomes available, 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 definitive proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the definitive 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 SEC on March 30, 2010, as amended by Amendment No. 1 to Annual Report on Form 40-F/A, which was filed with the SEC on May 13, 2010, in its notice of annual meeting and proxy circular for its most recent annual meeting, which was filed with the SEC on April 15, 2010, and the above-referenced Registration Statement on Form F-4, which was filed with the SEC on November 4, 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 SEC 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, is contained in the above-referenced Registration Statement on Form F-4, which was filed with the SEC on November 4, 2010, 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 8, 2010 FOR INVESTORS
Building a Leading Gold Company in Mexico
November, 2010
Operations
Development & Exploration Properties
Capital Gold Operations
Capital Gold Development & Exploration Properties
Gammon Gold Inc.
Forward Looking Statements
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 proposed 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 and the outcome of any pending litigation related to the Acquisition. 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
Capital Markets Profile
Gammon Gold Inc.
Capitalization
US$
Cash on Hand (M)
Long Term Debt (M)
Share Price (Oct. 19/2010)
Shares Outstanding (M)
Market Capitalization
Cash as a % of Market Cap
(As of Sept. 30, 2010)
Gammon
$107
$33
$6.95
138.4
$968M
11%
12 consecutive quarters of positive operating cash flow
Current debt-to-equity ratio of 3.7%, well below industry standards
Undrawn credit capacity of $74M
OCF of $31.2M in Q3 2010
Liquid shares with average daily trading value of $13mm or 1.4% of its market capitalization
Analyst Coverage
Company
BMO Nesbitt Burns
Canaccord Genuity
CIBC
Credit Suisse
Dahlman Rose
Desjardins Security
Dundee Securities
Mackie Research
Macquarie Securities
Merrill Lynch
Scotia Capital
Sidoti & Company
TD Newcrest
UBS
Analyst
David Haughton
Wendell Zerb
Brian Quast
Anita Soni
Adam P. Graf
Brian Christie
Ron Stewart
Barry Allan
Tony Lesiak
Mike Jalonen
Trevor Turnbull
Adam Brooks
Steven Green
Dan Rollins
3
Investment Highlights
Gammon Gold Inc.
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)
Four 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 Corex Gold 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
* Using the Company’s long term gold equivalency ratio (55:1)
4
Leading Mexican Precious Metal Producer
Gammon Gold Inc.
Ocampo
Increased land position through Venus and Los Jarros property 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 Chanate Mine would immediately expand production profile and increase
Reserves by 1.5M gold ounces
Orion Project - Total resources 359k gold eq. oz*, **
Ocampo Mine (14,641 Ha - 100%)
2009 Production: 180.9k Aue* oz
El Chanate Mine (3,665 Ha - Capital Gold)
2009 production: 54.3k Aue* oz
Saric Property
(2,300 Ha - Capital Gold)
Dolores (Minefinders)
2009 production: 101.2k Aue* oz
Guadalupe y Calvo
(54,853Ha - 100%)
Mulatos (Alamos)
2009 production: 178.5koz
Venus (4,574 Ha - 100%)
Los Jarros (43,229 Ha - 100%)
Orion Property
(110,000 Ha - Capital Gold)
Mexico
Mezquite (460 Ha - 100%)
El Cubo Mine (14,087 Ha - 100%)
2009 prodcution: 49.4k Aue* oz
Exploration Property
Gammon Operation
Peer Assets
Capital Gold Assets
* Using the Company’s long term gold equivalency ratio (55:1)
** Refer to appendices for breakdown of reserve/resource categories
5
Ocampo Overview
Gammon Gold Inc.
One of the largest gold-silver mines in Mexico
2010e production of 180-200k 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 significant exploration potential - new discoveries identified
Ocampo Production and Cash Costs
Open Pit Mining
Average tonnes mined per day
Head grade gold eq. (g/t)(1)
Underground Mining
Average tonnes mined per day
Head grade gold eq. (g/t)(1)
Total underground development
Mill Facility
Average tonnes per day
Mill grade gold eq. (g/t)(1)
Heap Leach Facility
Average tonnes per day
Head grade gold eq. (g/t)(1)
Production
Gold oz produced
Silver oz produced
Gold eq. oz produced(1)
Total Cash Costs
Cash Costs per gold eq. oz(1)
Cash Costs per gold oz
Q1 2010
93,730
0.97
Q1 2010
1,377
5.24
3,904
Q1 2010
2,920
3.54
Q1 2010
7,328
0.72
Q1 2010
21,855
960,817
39,324
Q1 2010
$423
$8
Q2 2010
103,117
1.01
Q2 2010
1,500
4.73
4,745
Q2 2010
3,182
Q2 2010
10,017
0.81
Q2 2010
24,963
1,066,998
44,363
Q2 2010
$430
($33)
Q3 2010
97,992
1.45
Q3 2010
1,596
4.52
6,546
Q3 2010
3,113
3.86
Q3 2010
6,830
0.93
Q3 2010
27,018
1,180,769
48,650
Q3 2010
$411
($121)
(1) Comparative performance metrics using the Company’s long term gold equivalency guidance ratio (55:1)
6
Ocampo Exploration
Gammon Gold Inc.
Underground Targets
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)
Santa Eduviges is a second underground mine located 2 km from the NE underground
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
NE Underground
JESUS MARIA
DRILL #5 ARRIVED OCT 6/10
ST EDUVIGES/VETA LIBRE
DRILL #4
Santa Eduviges
2nd underground mine
DRILL #2
SAN AMADO
ROSARIO
DRILL #1
AVENTURERO SE
STA JULIANA
DRILL #1
BELEN
DRILL #3
7
Ocampo Exploration
Gammon Gold Inc.
Open Pit Targets
22,716m drilled to Sept. 30/10
Added 35,000m in H2/10
Los Molinos - new Reserves of 32,260 gold eq. ounces(1)(2)(3)
Increased drills from 4 to 7
ESTRELLA
CONICO
REFUGIO
PLAZA GALLOS
Pista de Aterriza Je
PICACHO
(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
8
Venus & Los Jarros
Gammon Gold Inc.
Venus Property
Option to purchase a 100% interest in the 4,491 hectare Venus property
Could host extensions of the Pinos Altos trend
A drilling program is targeted for Q4
La Boleta Target
400 x 120m 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 at 8.0 g/t gold
Roncesvalle Target
29 rock chip samples >0.20 g/t gold eq.(1). These average 1.58 g/t gold equivalent(1) if capped at 8.0 g/t gold
Santo Nino Target
29 rock chip samples >0.20 g/t gold eq.(1). These average 1.58 g/t gold equivalent(1) if capped at 8.0 g/t gold
Los Jarros 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)
74500 750000 755000 760000 765000 770000 775000 780000
N
E
S
W
Los Jarros
La Boleta
Roncesvalle
Santo Nino
Venus
Ocampo
Agnico
6.7 Moz Aueq
FRISCO
2.0 Moz AuEq
4.2 Moz
Aueq
Jarros StSed Au Geochem
<2.00
2.00 - 10.00
10.00 - 30.00
30.00 - 100.00
>100.00
0 2,500 5,000 10,000
Meters
3140000 3135000 3130000 3125000 3120000 3115000 3110000 3105000 3100000 30950000
9
Guadalupe y Calvo
Gammon Gold Inc
Project Overview
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
New claims staked to the northwest
Identified 200m wide anomalous mineralization in NW portion of San Luis claim
Rosario Vein Long Section
Seccion longitudinal NW 64 viendo al NE
Vetc Rosario
2500 2450 2400 2350 2300 2250 2200 2150 2100 2050 2000 1950 1900 1850 180 1750
Post Mineral Tuffs
OG-182 1.0m @ 2.06 AuEq
OG-183 1.0m @ 11.83 AuEq
OG-185 1.1m @ 63.39 AuEq
OG-186 2.0m @ 3.30 AuEq
OG-188 1.4m @ 30.51 AuEq
2010 Target
seccion 64-31 al NE seccion 64-23 seccion 64-19 seccion 64-15
PROGRAMA DE BARRENACION 2010 AREA 64
seccion 64-13 seccion 64-12 seccion 64-11 seccion 64-10 seccion 64-09 seccion 64-08 seccion 64-07 seccion 64-06 seccion 64-05 seccion 64-04 seccion 64-03 seccion 64-02 seccion 64-01
PROGRAMA DE BARRENACION 2008 AREA 64
PROGRAMA DE BARRENACION 2008 AREA 75
2008 Drilled Resource Volume
2500 2450 2400 2350 2300 2250 2200 2150 2100 2050 2000 1950 1900 1850 1800 1750
Drill Spacing 25 x 40m
10
Capital Gold Acquisition
Gammon Gold Inc
Gold Reserves (M oz)
Probable
Proven
100% increase in reserves
1.5
0.7
0.8
Gammon
3.0
1.7
1.3
Pro Forma Gammon
Gold Resources (2) (M oz)
Inferred
M & I
Proven and Probable
42% increase in resources
4.5
2.6
0.3
1.5
Gammon
6.3
2.8
0.5
3.0
Pro Forma Gammon
2010 Gold Production (1) (koz)
48% increase in production
116
Gammon
172
Pro Forma Gammon
2010 Gold Revenue Contribution (3)
15% increase
59%
Gammon
68%
Pro Forma Gammon
(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$18.08/oz.
11
Capital Gold - Pro Forma Position
Gammon Gold Inc
Market Capitalization (US$ M) (1)
$312 $678 $1,183 $1,267 $1,367 $2,163 $2,414
Timmins Minefinders Aurizon Pro Forma Gammon Lake Shore Alamos Allied Nevada
2011-2012 Average Gold Production (koz)
102 157 169 175 189 209 223
Timmins Minefinders (2) Aurizon Lake Shore Allied Nevada Alamos Pro Forma Gammon
Gold Reserves (M oz)
0.6 0.8 2.0 2.4 2.4 2.8 3.0
Timmins Lake Shore Aurizon Alamos Allied Nevada Minefinders Pro Forma Gammon
2011-2012 Average Gold Cash Cost (US$/oz)(3)
Street Consensus Average Cash Cost
Cash Cost Based on Spot Ag Price (4)
$89 $163 $341 $424 $433 $444 $452 $524
Pro Forma Gammon Alamos Allied Nevada Lake Shore Aurizon Timmins Minefinders (2)
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.
12
Near Term Goals / Catalysts
Gammon Gold Inc
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 Eduviges production in H2 2010
Guadalupe y Calvo Scoping Study (PEA)
Closing Capital Gold Transaction
Ongoing Business Development Opportunities
Growing Gold Production
300,000 250,000 200,000 150,000 100,000 50,000 0
Strong Growth Profile
2010E 2011F 2012F 2013F
Expanding Margins
$1,400 $1,200 $1,000 $800 $600 $400 $200 $0 -$200
Margin ($/oz)
Cash Cost ($/oz Au)
$87 $574 $817 $1,291
Strong Margin Growth
FY 2007 FY 2008 FY 2009 2010F* (Assumes Ocampo Production only)
13
Gammon Gold Inc.
APPENDICES
Ocampo Production Outlook Gammon Gold Inc
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
15
2010 New Discovery Reserve Additions Gammon Gold Inc
Ocampo Proven & Probable Reserve Additions(2)(3)(5)(6)(8)
Mineral Category
Los Molinas Open Pit(7)
Proven Probable
Total Los Molinas Proven & Probable Santa Eduviges Underground
Proven Probable
Total Sta. Eduviges Proven & Probable Santa Juliana/Belen Underground
Proven Probable
Total Sta. Juliana/Belen Proven & Probable
Total Proven Additions Total Probable Additions
Total Additions Proven & Probable
Gold
(g/t)(4)
0.72 0.52
0.68
4.18 2.42
3.61
2.39 1.91
2.05
1.49 1.41
1.46
Silver
(g/t)(4)
21 18
20
85 52
75
254 219
229
51 102
67
Gold Equivalent (g/t)(4)
1.06
0.80
1.00
5.56
3.26
4.82
6.47
5.43
5.74
2.30
3.05
2.54
Tonnes
(000’s)
785 214
999
197 94
290
81 192
274
1,064 500
1,563
Gold Ounces (000’s)
18 4
22
26 7
34
6 12
18
51 23
74
Silver Ounces (000’s)
531 122
653
540 158
698
665 1,354
2,019
1,736 1,634
3,370
Gold Equivalent Ounces (000’s)(1)
27 6
32
35 10
45
17 34
51
79 49
128
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:
Au Metallurgical Ag Metallurgical Cut-off Grade Mine Recovery (%) Recovery (%) g/t
Los Molinas Mill 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
All ores at Ocampo demonstrate similar metallurgical recoveries regardless of whether oxides are sulfides.
6. The Los Molinas Open Pit strip ratio is 5.5:1.
7. The basis for the reserve estimation is the Learchs-Grossman pit optimization methodology.
8. Sums may not add to totals due to rounding.
16
Consolidated 2009 R&R Summary Gammon Gold Inc
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
17
Ocampo 2009 R&R Summary Gammon Gold Inc
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
18
El Cubo 2009 R&R Summary Gammon Gold Inc
El Cubo 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) Proven & Probable 3,575 2.64 150 5.19 304 17,232 596
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) 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
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 Cut-off Grade Metallurgical 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 All ores at Ocampo demonstrate similar metallurgical recoveries regardless of whether oxides are sulfides.
8) The Ocampo Open Pit strip ratio is 2.3:1.
9) The basis for the reserve estimation is the Learchs-Grossman pit optimization methodology.
10) Sums may not add to totals due to rounding.
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