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Gammon Lake Resources Announces Start of Development of Third Mine at Ocampo

Posted on: Monday, 14 May 2007, 09:00 CDT

HALIFAX, May 14 /PRNewswire-FirstCall/ -- Gammon Lake Resources Inc. ("Gammon Lake") (TSX:GAM and AMEX:GRS) is pleased to announce that the Company has commenced driving a major development ramp to explore and develop high grade veins below the limits of the Ocampo open pit bottoms. This project is targeting the major development of a potential third mine on the Ocampo property.

The Ocampo open pit deposit has been extensively drilled and well modeled. The modeling process in the pit has identified a number of defined high grade ore shoots, some of which have been subjected to mining activity up until 1941. Family recollections from Alejandro Caraveo (a director of Gammon Lake) describe that a company owned by his grandfather mined 3.8 tonnes of gold and 58 tonnes of silver in a period of two years within the now open pit mine zone.

"The commencement of this ramp development marks a significant milestone for Gammon Lake to explore and develop a third mine at Ocampo," commented Russell Barwick, newly appointed CEO of Gammon Lake. "Now that I have assumed the role of CEO, I will be working very closely with the Company's operations team, focusing attention on optimization of our operations particularly through initiatives such as this development. Brad Langille (consultant for Gammon Lake and former CEO), along with the Company's exploration team, will be focused on the development of this new mine and continued expansion of resources and reserves at Ocampo."

Based on geological modeling and limited drilling completed below the open pits, the high grade ore shoots modeled within the Ocampo open pits are known to extend to depth, below the limits of the pit bottoms. Figure 1, demonstrates the projected extension of the Plaza de Gallos ore zone below the Plaza de Gallos pit bottom.

Click on the following link to view Figure 1: The Plaza de Gallos Ore Shoot http://www.gammonlake.com/images/press_images/pic1.html Ramp Development to Access the Extension of the Plaza de Gallos and Refugio Zones beneath the Open Pits

The full production sized ramp measuring 4.5 by 4.5 metres is being developed to access the extensions of the Plaza de Gallos and Refugio zones below the Ocampo open pits. Ramp development is progressing at 8 to 10 metres per day, and the Company expects to reach the main ore shoots within 500 metres. The full phase one program planned is for a total of 2700 metres of ramp, sill drifting and drill cross cuts. The Alvarez structure within the Plaza de Gallos zone is one of four known mineralized structures that make up the historic Santa Eduviges mine. The Company has recently rehabilitated old workings from the Santa Eduviges mine and accessed the previous bottoms of mine stopes developed within the Plaza de Gallos zone. Samples were taken from these old workings, the results of which are included in Table 1, below:

Table 1: ------------------------------------------------------------------------- Samples taken within Historic Santa Eduviges Mine Workings ------------------------------------------------------------------------- Sample Gold Silver Gold Eq. Sample Length Grade Grade Grade (m) (g/t) (g/t) (g/t) ------------------------------------------------------------------------- CH081A 4.97 3.82 291 9.64 ------------------------------------------------------------------------- CH081B 6.20 4.26 336 10.99 ------------------------------------------------------------------------- CH040 3.36 2.74 207 6.88 ------------------------------------------------------------------------- CH082 2.70 2.52 162 5.76 ------------------------------------------------------------------------- CH013 1.73 7.51 405 15.61 ------------------------------------------------------------------------- CH016 1.51 2.89 132 5.53 ------------------------------------------------------------------------- CH039 1.80 3.68 242 8.52 ------------------------------------------------------------------------- Gold equivalent values are calculated based on 50 grams of silver = 1 gram of gold, using a gold price of US $600/oz and a silver price of US $12.00/oz. CH081A and CH081B are cross cut samples taken continuously along a 52 metre drive. CH040 and CH039 are cross cut samples taken every 17 metres over a total of 112 metres. CH082 is taken along the back of a 6 metre cross cut. CH013 and CH016 are extracts of samples taken every 4 metres along a 60 metre sill drive.

The new development ramp will access the Plaza de Gallos zone below the bottom of these old workings to facilitate underground drilling, exploration sill drifting and sampling on these highly prospective structures. Table 2 summarizes the drill holes drilled below the limits of the Ocampo open pits, within the extensions of the Plaza de Gallos and Refugio ore zones.

Table 2: ------------------------------------------------------------------------- Holes Drilled Beneath the Limits of the Open Pits ------------------------------------------------------------------------- Interval Gold Silver Gold Eq. Drill Hole Width Grade Grade Grade (m) (g/t) (g/t) (g/t) ------------------------------------------------------------------------- OG-265 2.0 14.04 47 14.98 ------------------------------------------------------------------------- OG-267 3.0 11.62 20 12.02 ------------------------------------------------------------------------- OG-124 3.0 15.3 227 19.84 ------------------------------------------------------------------------- OG-119 10.7 3.45 253 8.70 ------------------------------------------------------------------------- OG-140 2.0 2.42 220 6.82 ------------------------------------------------------------------------- ODH-229 3.1 3.84 175 7.34 ------------------------------------------------------------------------- OG-132 1.5 5.82 208 9.48 ------------------------------------------------------------------------- ODH-194 4.6 8.12 445 17.03 ------------------------------------------------------------------------- Gold equivalent values are calculated based on 50 grams of silver = 1 gram of gold, using a gold price of US $600/oz and a silver price of US $12.00/oz. The widths above are interval widths and not necessarily true widths(x). (X) Drill results were previously released in press releases dated Nov. 30, 2000, Feb. 7, 2001, Jun. 10, 2004 and Mar. 2, 2005. The following photograph was taken of members of the Gammon Lake team in front of the opening of the new ramp portal: Click on the following link to view Figure 2: The New Ramp http://www.gammonlake.com/images/press_images/pic2.html Exploration of Extension of High Grade Structures within the Ocampo Open Pit

There are four high grade areas presently recognized within the Ocampo open pits. These ore shoots are known to extend below the limits of the open pits. They are the Plaza de Gallos ore shoot, the Refugio ore shoot, the Santa Teresa ore shoot and the Madona ore shoot, as demonstrated in the following long section (Figure 3).

Click on the following link to view Figure 3: Long Section of the Ocampo Open Pit Area Showing Extension of High Grade Ore Shoots http://www.gammonlake.com/images/press_images/pic3.html

High grade drill intercepts have been encountered in the ore shoot structures that will be mined within the pits and have been projected to depth below the pit bottoms. Table 3 highlights some of the intercepts that have been encountered in the Refugio and Plaza de Gallos open pit zones and helps demonstrate the high grades and significant widths encountered in these zones. The Company will now focus on continuing to explore and to delineate the extension of these high grade ore shoots below the limits of the Ocampo open pits.

Table 3: ------------------------------------------------------------------------- Highlights of High Grade Intercepts over Significant Widths from the Refugio and Plaza de Gallos Zones ------------------------------------------------------------------------- Interval Gold Silver Gold Eq. Drill Hole Width Grade Grade Grade (m) (g/t) (g/t) (g/t) ------------------------------------------------------------------------- ODH-007 6.10 7.18 372.3 14.62 ------------------------------------------------------------------------- ODH-014 9.10 4.21 281.5 9.84 ------------------------------------------------------------------------- ODH-030 4.57 10.71 257.3 15.86 ------------------------------------------------------------------------- ODH-044 4.60 2.63 251.0 7.65 ------------------------------------------------------------------------- ODH-045 9.14 7.83 348.0 14.79 ------------------------------------------------------------------------- ODH-056 15.24 12.50 448.1 21.46 ------------------------------------------------------------------------- ODH-058 6.10 7.95 454.0 17.03 ------------------------------------------------------------------------- ODH-080 12.50 6.23 368.0 13.59 ------------------------------------------------------------------------- ODH-087 4.57 34.80 1158.0 57.96 ------------------------------------------------------------------------- ODH-090 12.19 12.06 792.0 27.90 ------------------------------------------------------------------------- ODH-097 16.80 3.75 287.4 9.50 ------------------------------------------------------------------------- ODH-110 12.20 4.42 241.3 9.25 ------------------------------------------------------------------------- ODH-116 12.20 4.92 145.1 7.82 ------------------------------------------------------------------------- ODH-136 16.76 7.43 397.7 15.38 ------------------------------------------------------------------------- ODH-261 21.30 8.07 70.7 9.48 ------------------------------------------------------------------------- ODH-262 19.81 6.02 53.0 7.08 ------------------------------------------------------------------------- ODH-283 10.66 4.60 200.2 8.60 ------------------------------------------------------------------------- ODH-298 21.33 3.92 208.8 8.10 ------------------------------------------------------------------------- ODH-301 19.81 4.75 192.5 8.60 ------------------------------------------------------------------------- ODH-301 7.62 4.33 203.2 8.39 ------------------------------------------------------------------------- ODH-303 13.72 4.80 165.8 8.12 ------------------------------------------------------------------------- ODH-307 12.20 3.74 219.6 8.13 ------------------------------------------------------------------------- ODH-313 9.15 3.41 121.0 5.83 ------------------------------------------------------------------------- ODH-314 16.80 4.66 230.0 9.26 ------------------------------------------------------------------------- ODH-317 15.24 4.96 265.0 10.26 ------------------------------------------------------------------------- ODH-329 10.67 6.32 248.0 11.28 ------------------------------------------------------------------------- ODH-335 3.04 9.44 497.0 19.37 ------------------------------------------------------------------------- OG-116 3.00 5.08 320.0 11.48 ------------------------------------------------------------------------- OG-119 10.70 3.45 253.0 8.51 ------------------------------------------------------------------------- OG-124 4.50 2.28 319.0 8.70 ------------------------------------------------------------------------- OG-124 3.00 15.30 227.0 19.84 ------------------------------------------------------------------------- OG-265 2.00 14.04 47.0 14.98 ------------------------------------------------------------------------- Gold equivalent values are calculated based on 50 grams of silver = 1 gram of gold, using a gold price of US $600/oz and a silver price of US $12.00/oz. The widths above are interval widths and not necessarily true widths(x). (x) Drill results were previously released in press releases dated Apr. 6, 2000, May 30, 2000, Jun. 14, 2000, Jun. 21, 2000, Jul. 13, 2000, Aug. 1, 2000, Sep. 18, 2000, Aug. 6, 2002, Oct. 15, 2002, Jan. 13, 2003, Jun. 10, 2004 and Mar. 2, 2005.

Company personnel have also reviewed all of the mineralized intercepts above a 3.0 gram per tonne cut off that were encountered within the Refugio and Plaza de Gallos pits. This is the cut off grade that was utilized in the feasibility study for the Ocampo Northeast underground mine. This review resulted in 1,436 metres of mineralized intervals with an overall average gold equivalent grade of 8.3 grams per tonne, over an average width of 5.2 metres, as in table 4:

Table 4: ------------------------------------------------------------------------- Summary of High Grade Intervals Encountered within the Refugio and Plaza de Gallos Pits ------------------------------------------------------------------------- Combined Average Zone Length of Gold Silver Gold Eq. Interval Intervals Grade Grade Grade Width (m) (g/t) (g/t) (g/t) (m) ------------------------------------------------------------------------- Refugio 782 3.75 169.2 7.13 5.18 ------------------------------------------------------------------------- Plaza de Gallos 654 5.74 198.1 9.70 5.19 ------------------------------------------------------------------------- Total 1,436 4.66 182.4 8.3 5.18 ------------------------------------------------------------------------- Gold equivalent values are calculated based on 50 grams of silver = 1 gram of gold, using a gold price of US $600/oz and a silver price of US $12.00/oz. The widths above are interval widths and not necessarily true widths.

From the detailed geological modeling of these high grade zones it is clear that they exist within the Ocampo open pits and extend below the limits of those pits.

The program of ramp and sill drift development will sample the extension of these structures and new underground drill stations will further allow diamond drilling to delineate this significant underground potential. It is expected that in the third quarter 2007 the Company will access these high grade zones for detailed sampling.

The qualified person responsible for all technical data reported in this news release is John C. Thornton, Chief Operating Officer. Third party analytical work was performed by ALS Chemex of Vancouver and Florin Labs of Reno, Nevada, employing conventional fire assay analysis techniques. A summary description of the geology, mineral occurrences, nature of mineralization found, rock types, geological controls and dimensions of mineralized zones for the Refugio and Plaza de Gallos pits is provided in the report titled, "Gammon Lake Resources Inc. Ocampo Deposit Mineral Resources and Reserves Technical Report," dated January 6, 2006, prepared by Mintec, Inc., a copy of which is available at http://www.sedar.com/.

About Gammon Lake

Gammon Lake Resources Inc. is a Nova Scotia based gold and silver producer with properties in Mexico. The Company's flagship Ocampo Project achieved commercial production in January 2007. Gammon Lake remains 100% unhedged and the Company is now focused on increasing its production profile to 280,000 gold ounces and 15 million silver ounces in 2009 and beyond.

Cautionary Statement

Cautionary Note to U.S. Investors - Under a Multi Jurisdictional Disclosure System (the "MJDS") adopted by the United States, Gammon Lake is permitted to prepare its mining disclosure in accordance with applicable Canadian securities laws. Consequently, this press release referred to herein, may contain disclosure that is different than, or in some cases not permitted by U.S. securities laws. For example, the United States Securities and Exchange Commission (the "SEC") permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Under Canadian securities laws, Gammon Lake is permitted to use certain terms, such as "measured,""indicated," and "inferred""resources," that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in Gammon Lake's Annual Report on Form 40-F (File # 001-31739), which may be obtained from Gammon Lake, or from the SEC's website at http://www.sec.gov/edgar.shtml.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

This News Release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the annualized production run rate at the Ocampo and El Cubo Mines, potential mineralization and reserves, exploration results, and future plans and objectives of Gammon Lake Resources, are forward-looking statements (or forward-looking information) that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Gammon Lake'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 as well as future prices of gold and silver, as well as those factors discussed in the section entitled "Risk Factors" in Gammon Lake's Form 40-F and Annual Information Form as filed with the United States Securities and Exchange Commission. Although Gammon Lake 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. Accordingly, readers should not place undue reliance on forward-looking statements. Gammon Lake does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

GAMMON LAKE RESOURCES INC.

CONTACT: Russell Barwick, Chief Executive Officer, Gammon Lake ResourcesInc., (902) 468-0614; Jodi Eye, Investor Relations, Gammon Lake ResourcesInc., (902) 468-0614; http://www.gammonlake.com/

Source: PRNewswire-FirstCall

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