Gammon Gold Announces Shutdown of the El Cubo Operations

HALIFAX, Canada, June 17, 2010 - Gammon Gold Inc. ("Gammon") (TSX:GAM and
NYSE:GRS): Gammon Gold announced today that due to continued illegal labour
disruptions at its El Cubo operation as well as the untenable financial
demands made by the union workforce, as reported on June 3, 2010, it has
terminated 397 union workers as of June 16, 2010 and is in the process of
filing criminal charges against seven union executives. Operations at the El
Cubo mine have been suspended indefinitely.

Since acquiring the mine Management has believed that El Cubo is a
modest sized operation with the potential to be reasonably economic, however
its economic viability has been wholly undermined by a legacy of unacceptably
low union productivity. This low productivity arises from an outdated
collective agreement and an interfering union executive office that appears
to have put its own interest ahead of the livelihood of its workers, their
families and local communities. The El Cubo mine will be placed on care and
maintenance until management determines its next course of action.

Since 2008, the Company has invested in new equipment, introduced more
efficient mining techniques, launched a more effective work schedule,
significantly improved the mine's safety performance, introduced a production
bonus program and launched an aggressive and strategic exploration program.
Nonetheless, this investment has not delivered the anticipated productivity
improvements due to the continued resistance of union workers to fully
leverage these strategic initiatives. Management, supported by the Company's
Board of Directors, have concluded that there is a need for the Company to
take a firm and decisive stance with the union and is confident that this
decision is in the best interests of the Company's shareholders.

"Although the Company continues to believe in the potential of this
property, given its location in one of the most prolific mining districts in
Mexico, the Board and Management have a fiduciary responsibility to invest in
operations that provide a positive rate of return for its shareholders. The
ongoing challenges caused by the relentless distractions of union labour
disruptions and sub-optimal performance have rendered the El Cubo mine
uneconomic and any further investments, including management's time and
effort, are not justified." stated Rene Marion, President and Chief Executive
Officer of Gammon Gold. "Management and the Board are frustrated that the
decision to close this mine was required and regrets the unwillingness of the
union to work collaboratively with management."

About Gammon Gold

Gammon Gold Inc. is a mid-tier gold and silver producer with properties
in Mexico. The Company's flagship Ocampo Project in Chihuahua State achieved
commercial production in January 2007. Gammon Gold also operates its El Cubo
mine in Guanajuato State and has the promising Guadalupe y Calvo development
property in Chihuahua State. The Company recently completed option purchase
agreements to acquire the Mezquite Project in Zacatecas State, Mexico and the
Venus Project located north of the Ocampo mine in Chihuahua State, Mexico.
The Company is based in Halifax, Nova Scotia with an Executive Office 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, 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 its financial
exposure to litigation, 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 completion of the Ocampo
expansion program and improvements to the heap leach pad, costs and timing of
the development and commencement of production of new deposits, costs and
timing of construction, costs and timing of future exploration and
reclamation expenses including, anticipated 2010 results, operating
performance projections for 2009 and 2010, our ability to fully fund our
business model internally, 2010 gold and silver production and the cash and
operating costs associated therewith, the ability to achieve productivity and
operational efficiencies, the ability to access grid power at Ocampo, further
reduction in the open pit stripping ratio 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.

For further information: please visit the Gammon Gold website at
www.gammongold.com or contact: Anne Day, Director of Investor
Relations, Gammon Gold Inc., +1(902)468-0614

For further information: please visit the Gammon Gold website at www.gammongold.com or contact: Anne Day, Director of Investor Relations, Gammon Gold Inc., +1(902)468-0614