Gammon Gold Inc. reported production of 28,341 ounces of gold and 1,284,071 ounces of silver in the first quarter of 2010. Gold equivalent production company wide was 48,061 ounces using a ratio of 55 to 1 to convert the silver production.

Production was down on a year over year basis. In the first quarter of 2009, the company’s mines produced 36,820 ounces of gold, and 1,351,300 ounces of silver, for gold equivalent production of 55,480.

Gammon Gold Inc. also said that its cash cost per gold equivalent ounce is expected to be in a range from $488-498, up from $411 in the same quarter of 2009.

The company blamed the fall in production and increase in costs on larger than expected voids at the Ocampo Picacho mine, and a delay in installing mining equipment at the same mine.

Rene Marion, the CEO of Gammon Gold Inc., said, “As we previously disclosed, we encountered some operational challenges specific to the first quarter that our operating team has largely addressed. This positions our operations for consistent production growth in the coming quarters. The Company begins the year in a strong financial position and we continue to realize strong cash flow margins that together with our expanded $26 to $30 million exploration program, will best position the Company’s assets to deliver on their long- term potential.”

Gammon Gold Inc. owns a 100% interest in the Ocampo Picacho mine located in Chihuahua, Mexico, and the El Cubo Mine in Guanajuato, Mexico.

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