Gammon Gold Makes Firm and Final Offer to Capital Gold

Proposes Increased Offer of 0.5209 Gammon Shares and US$1.09 in Cash

TORONTO, March 15 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM) and (NYSE:GRS): Gammon today proposed to amend its merger agreement with Capital Gold to increase the cash component of the merger consideration to be paid to Capital Gold's stockholders by US
.30 per share to US$1.09. If Capital Gold accepts Gammon's proposed amendment and Capital Gold's stockholders approve the merger involving Gammon Gold, Capital Gold's stockholders will receive 0.5209 Gammon shares and US$1.09 in cash for each share of Capital Gold common stock that they hold.

The original Gammon deal is unanimously supported by Capital Gold's Board of Directors and has separately been endorsed by the two leading independent proxy advisory firms, ISS and Glass Lewis.

Commenting on the proposed amendment, Rene Marion, President and CEO of Gammon, stated: "Our proposed increase in the merger consideration is firm and final. The merger with Gammon is the only effective transaction in front of Capital Gold stockholders to be voted on. Timmins' recent proposed offer does nothing in our view to increase the attractiveness of their company or to reduce the considerable risk and timing delay of their proposed hostile transaction. Ultimately, the decision rests with Capital Gold stockholders, combine with Gammon or forego the premium and remain an independent company."

TMM