Project Located in Durango Mexico

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TSX: GAM / NYSE: GRS / BSX: GL7





TORONTO, Dec. 16 /CNW/ - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): Gammon is pleased to announce that the Company has entered into binding Letter of Intent ("LOI") with Aurion Resources Ltd. wherein both parties agree to negotiate a definitive agreement that will provide Gammon with an option to earn up to a 70% joint venture interest in the 12,985 hectare La Bandera Project located in Durango, Mexico. Under the terms defined in the Letter of Intent, Gammon will have the option to earn its interest through a $250,000 private placement in Aurion and a series of escalating work commitments.


The La Bandera project is a low-sulphidation, epithermal gold-silver system located approximately 120 kilometres north-northwest of Durango City, in Durango State. Exploration targets are primarily high grade gold-silver veins, stockwork and breccias associated with favourable structural sites along the regionally extensive La Bandera fault system. La Bandera is host to a more than 20 kilometre long, 40 to 150 metre-wide, epithermal gold vein system that is believed to cover the uppermost portions of the system. Despite this high-level expression, of 2,245 rock samples collected by Aurion and predecessors, 19% of the samples have more than 0.10 grams per tonne gold and 3% contain more than 1.0 grams per tonne gold.


"We are pleased to enter into this agreement with Aurion as the La Bandera Project is a highly prospective epithermal project where we can leverage our team's expertise in epithermal veins and potentially our experience in mining underground vein systems in Mexico." stated Peter Drobeck, Senior Vice President of Exploration and Business Development. He continued, "This option agreement is another step in expanding our land package in Mexico and we look forward to launching a strategic exploration program at La Bandera in the coming months."





About Gammon Gold





Gammon Gold Inc. is a mid-tier gold and silver producer with properties in Mexico. Gammon's flagship Ocampo Property in Chihuahua State achieved commercial production in January 2007. Gammon also owns the suspended El Cubo mine in Guanajuato State and has the promising Guadalupe y Calvo development property in Chihuahua State. In 2010 Gammon completed option purchase agreements to acquire the Mezquite Project in Zacatecas State, Mexico, the Venus project located north of the Ocampo mine, and the Los Jarros Project in Chihuahua State. Since 2008, the Company has increased its Mexican land position by over 59% and has made strategic investments in Golden Queen Mining Co. Ltd. and Corex Gold Corporation. The Company's Executive Office is located in Toronto, Ontario.