Gammon Gold Announces Successful End to the El Cubo Strike

Gammon Gold Inc. announce the successful conclusion of the strike action at its El Cubo mine in Guanajuato State, Mexico. The union representatives agreed to recommend to its members the adoption of a seven-day continuous work schedule that Management had tabled as part of the negotiations of the union’s collective agreement. The changes to the agreement were ratified at a vote by the union membership on June 13, 2009. The new agreement will be registered with the Secretariat and the workers will be returning to work today, June 15, 2009.

During the negotiations with the Union, Management remained steadfast that the Union adopt a seven-day continuous work schedule as is the normal practice in mining operations throughout Mexico. The Company is confident that this new work schedule could further improve El Cubo’s productivity and therefore operating margins over time. The two parties have also agreed to an 8% increase in basic wages and a 3% increase in benefits, representing approximately a 3.5% increase in total payroll costs.

“We are pleased we have been able to resolve the strike action at our El Cubo mine.” stated Rene Marion, Chief Executive Officer of Gammon Gold. He continued, “I applaud the Management negotiating team as well as the Union representatives and its members for their willingness to adopt a seven-day continuous work schedule. I am confident that this new work schedule will prove beneficial for both parties and that operations at El Cubo will quickly return to normal levels.”

Fred George, President and Chairman stated “I would like to thank the Government of Mexico for their support in the successful negotiation of this landmark union agreement at El Cubo and for the Ocampo Presidential Decree formally granting all property rights and titles of the Ocampo land package to Gammon.”