El Cubo Labour Strike Declared Illegal

TORONTO, October 4, 2010 - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): announced today that
the labour strike at the El Cubo mine has been declared illegal by the
Federal Labor Board.

On June 3, 2010 the Company announced operations at the El Cubo mine were
suspended due to an illegal labour disruption launched by the union
workforce. As a result, 397 union workers were terminated as of June 16, 2010
and criminal charges for dispossession and damages were filed against seven
union executives. Regardless of their termination, the union subsequently
declared a strike on June 30, 2010. Since that time, the legality of the
union's strike action has been under consideration by the Federal Labor
Board. On October 2, 2010, the Labor Court released its ruling that has
declared the strike action illegal. In accordance with this ruling, the union
should release the assets to the Company and the Company is now working
through all legal channels to recover access to the facilities to assess the
potential resumption of mining opportunities.

"It has always been the Company's position that this work stoppage
violated both the Collective Agreement as well as Mexican Federal Labor Law.
The Company is pleased that the Mexican Federal Labor Board's ruling confirms
that Gammon Gold has been acting in good faith, in accordance with the
collective agreement and in the best interests of the union employees."
stated Rene Marion, President and Chief Executive Officer. "This ruling is an
important first step in resuming operations at our El Cubo mine. We remain
open to discussions directly with local union workers who are willing to
consider a mutually agreeable solution that will result in operations at El
Cubo being resumed as soon as possible."

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 Gold also owns the suspended El
Cubo mine in Guanajuato State and has the promising Guadalupe y Calvo
development property in Chihuahua State. Gammon recently completed option
purchase agreements to acquire the Mezquite Project in Zacatecas State,
Mexico and the Venus Project located north of the Ocampo mine. Gammon also
recently signed a Letter of Intent to acquire 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.

Cautionary Statement

Cautionary Note to US Investors - The United States Securities and
Exchange Commission permits US mining companies, in their filings with the
SEC, to disclose only those mineral deposits that a company can economically
and legally extract or produce. This press release uses certain terms, such
as "measured," "indicated," and "inferred" "resources," that the SEC
guidelines strictly prohibit US registered companies from including in their
filings with the SEC. US Investors are urged to consider closely the
disclosure in Gammon Gold's Annual Report on Form 40-F/A, which may be
secured from Gammon Gold, or from the SEC's website at
www.sec.gov/edgar.shtml.

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

Certain statements included herein, including information as to the
future financial or operating performance of the Company, its subsidiaries
and its projects, constitute forward-looking statements. The words "believe",
"expect", "anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "forecast", "may", "will", "schedule" and
similar expressions identify forward-looking statements. Forward-looking
statements include, among other things, statements regarding targets,
estimates and assumptions in respect of gold and silver production and
prices, operating costs, results and capital expenditures, mineral reserves
and mineral resources and anticipated grades, recovery rates, future
financial or operating performance, margins, operating and exploration
expenditures, costs and timing of the development of new deposits, costs and
timing of construction, costs and timing of future exploration and
reclamation expenses including, anticipated 2010 and 2011 results, operating
performance projections for 2010 and 2011, our ability to fully fund our
business model internally, 2010 and 2011 gold and silver production and the
cash and operating costs associated therewith, the ability to achieve
productivity and operational efficiencies, further improvements to silver
recoveries resulting from improvements to the Ocampo mill and the timing of
each thereof. Forward-looking statements are necessarily based upon a number
of estimates and assumptions that, while considered reasonable by the
Company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies. Many
factors could cause the Company's actual results to differ materially from
those expressed or implied in any forward-looking statements made by, or on
behalf of, the Company. Such factors include, among others, known and unknown
uncertainties and risks relating to additional funding requirements, reserve
and resource estimates, commodity prices, hedging activities, exploration,
development and operating risks, illegal miners, political and foreign risk,
uninsurable risks, competition, limited mining operations, production risks,
environmental regulation and liability, government regulation, currency
fluctuations, recent losses and write-downs, restrictions in the Company's
loan facility, dependence on key employees, possible variations of ore grade
or recovery rates, failure of plant, equipment or process to operate as
anticipated, accidents and labour disputes. Investors are cautioned that
forward-looking statements are not guarantees of future performance and,
accordingly, investors are cautioned not to put undue reliance on
forward-looking statements due to the inherent uncertainty therein.

TSX: GAM / NYSE: GRS / BSX: GL7

www.gammongold.com

For further information: For further information: please visit the Gammon
gold website at www.gammongold.com or contact: Rene Marion, President
& Chief Operating Officer, Gammon Gold Inc., +1-416-646-3825; Anne Day,
Director of Investor Relations, Gammon Gold Inc., +1-902-468-0614

For further information: For further information: please visit the Gammon gold website at www.gammongold.com or contact: Rene Marion, President & Chief Operating Officer, Gammon Gold Inc., +1-416-646-3825; Anne Day, Director of Investor Relations, Gammon Gold Inc., +1-902-468-0614