Gammon Gold Reports a New Discovery with Significant Drill Results at the Recently Acquired Los Jarros Project, Located Near the Ocampo Operations

TORONTO, January 27, 2011 - Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): Gammon is pleased to
announce that it has successfully completed the first-stage, 2,000 metre
drilling program at the Los Jarros Project in western Chihuahua. The drilling
was focused on the Gaby target where significant near surface mineralization
was discovered. The Gaby target is approximately 22 kilometres southeast of
Ocampo and 29 kilometres northwest of Fresnillo PLC's Orisyvo gold deposit.

Los Jarros, Gaby Target Drilling Highlights

————————————————————————-

Four of the five holes drilled discovered significant mineralization.
Some highlights of the new program include:

    -   Hole LJ-10-01, 36.0 metres grading 0.68 grams per tonne gold from
        42.0 metres depth
           -  And 60.0 metres grading 0.57 grams per tonne gold from
              94.0 metres depth.
    -   Hole LJ-10-02, 26.6 metres grading 0.69 grams per tonne gold from
        14.0 metres depth.
    -   Hole LJ-10-03, 49.3 meters grading 0.63 grams per tonne gold from
        7.6 metres depth
           -  Including 10.2 metres grading 1.67 grams per tonne gold from
              9.2 metres depth.
    -   Hole LJ-10-04, 5.1 metres grading 15.70 grams per tonne gold and
        42 grams per tonne silver, from 45.2 metres depth.

"We are very encouraged by the mineralization drilled in this initial
campaign, as it documents extensive disseminated gold mineralization as well
as locally high-grade gold. The mineralization occurs in a multi-stage
breccia with alteration typical of high-sulfidation epithermal systems. This
is a large zone still open to expansion of low-grade disseminated gold
mineralization within which are higher grades that warrant follow up
drilling," stated Peter Drobeck, Senior Vice President of Exploration and
Business Development. He continued, "This is an exceptional start to a
reconnaissance drilling program on a property we acquired only five months
ago."

The focus of the initial stage of the 2010 drilling program was on
expanding data from historical drilling programs completed on this project,
as well as localized high grades and did not test past discoveries of
structurally-controlled gold along a dome margin located half a kilometre
further to the north.

The Company is planning preliminary metallurgical tests and more
extensive geology to tie in this drill campaign's breccia discovery to the
dome environment 500 metres to the north before launching future drilling
campaigns.

About Gammon Gold

Gammon Gold Inc. is a mid-tier gold and silver producer with properties
in Mexico. Gammon's flagship Ocampo Property is located in Chihuahua State.
Gammon also owns the suspended El Cubo mine in Guanajuato State and the
Guadalupe y Calvo development property in Chihuahua State. In 2010 Gammon
completed option purchase agreements to acquire the Los Jarros and Venus
Projects located directly north of the Ocampo mine, the Mezquite Project in
Zacatecas State, and has signed a binding Letter of Intent to joint venture
into the La Bandera gold project in Durango State. The Company 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, 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, future exploration results of its
development program, the Company's ability to delineate additional resources
and reserves as a result of such program, and the company's ability to mine
such targets by mid-2011, 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 2010 and 2011, 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.

Table 1: Los Jarros - Gaby Target Drilling Results

        GAMMON 2010 DRILLING
    -------------------------------------------------------------------------
    Hole           From (m)    To (m)    Length (m)  Gold (g/t)  Silver (g/t)
    -------------------------------------------------------------------------
    LJ-10-01          0.0       78.0        78.0        0.48          1
    -------------------------------------------------------------------------
      Including      42.0       78.0        36.0        0.68          2
    -------------------------------------------------------------------------
    LJ-10-01         94.0      154.0        60.0        0.57          4
    -------------------------------------------------------------------------
    LJ-10-01        210.0      254.0        44.0        0.34          2
    -------------------------------------------------------------------------
    LJ-10-01        276.0      294.0        18.0        0.26          2
    -------------------------------------------------------------------------
    LJ-10-02          2.0      136.7       134.7        0.37          4
    -------------------------------------------------------------------------
      Including      14.0       40.6        26.6        0.69          5
    -------------------------------------------------------------------------
    LJ-10-02        155.0      207.8        52.8        0.21          2
    -------------------------------------------------------------------------
    LJ-10-02        249.7      254.6         4.9        0.50          2
    -------------------------------------------------------------------------
    LJ-10-03          7.6       56.9        49.3        0.63          1
    -------------------------------------------------------------------------
      Including       9.2       19.3        10.2        1.67          1
    -------------------------------------------------------------------------
      Including      19.3       54.9        35.6        0.36          1
    -------------------------------------------------------------------------
    LJ-10-03        112.7      193.9        81.2        0.28          3
    -------------------------------------------------------------------------
    LJ-10-04         45.2       50.2         5.1       15.70         42
    -------------------------------------------------------------------------
    LJ-10-05          nsv        Nsv         nsv         nsv        nsv
    -------------------------------------------------------------------------

    VALDEZ 1999 DRILLING
    -------------------------------------------------------------------------
    Hole           From (m)    To (m)    Length (m)  Gold (g/t)  Silver (g/t)
    -------------------------------------------------------------------------
    LJ99-01          29.6       63.7        34.1        0.54          0
    -------------------------------------------------------------------------
    LJ99-01A         30.5       63.6        33.1        0.81          0
    -------------------------------------------------------------------------
      Including      32.0       42.7        10.7        1.96          0
    -------------------------------------------------------------------------
    LJ99-02          47.4       76.5        29.1        1.06          0
    -------------------------------------------------------------------------
      Including      53.2       64.0        10.8        2.51          0
    -------------------------------------------------------------------------
    LJ99-03          15.8       20.0         4.2        2.38          1
    -------------------------------------------------------------------------
    LJ99-04           1.5      107.1       105.6        0.56          4
    -------------------------------------------------------------------------
      Including      81.0      107.1        26.1        0.70          0
    -------------------------------------------------------------------------
    LJ99-04         107.1      201.8        94.7        0.33          3
    -------------------------------------------------------------------------
    LJ99-05         108.6      131.1        22.5        0.52          3
    -------------------------------------------------------------------------

    VALDEZ 2009 DRILLING
    -------------------------------------------------------------------------
    Hole           From (m)    To (m)    Length (m)  Gold (g/t)  Silver (g/t)
    -------------------------------------------------------------------------
    LJ09-01          39.7       45.7         6.0        0.46          1
    -------------------------------------------------------------------------
    LJ09-01          78.7       85.9         7.1        0.66          0
    -------------------------------------------------------------------------
    LJ09-01          94.9      111.9        17.0        0.29          0
    -------------------------------------------------------------------------
    LJ09-03           nsv        Nsv         nsv         nsv        nsv
    -------------------------------------------------------------------------
    LJ09-04           nsv        Nsv         nsv         nsv        nsv
    -------------------------------------------------------------------------
    LJ09-05           nsv        Nsv         nsv         nsv        nsv
    -------------------------------------------------------------------------

Note: The Los Jarros information has been reviewed by Qualified Person,
Mr. Peter Drobeck. All sample analyses for Los Jarros drilling were performed
by Chemex Laboratories, based in Vancouver, British Columbia, using standard
fire assay procedures with AA finish. The Company has an established program
of inserting certified control samples and blanks in compliance with best
practices, and this program was used at Los Jarros per Company policies.
Sample lengths are not necessarily true widths.

Click here to view Figure 1, the Los Jarros Project Drill Plan:
files.newswire.ca/258/Los_Jarros_Jan_2011.JPG

For further information: please visit the Gammon Gold website at
www.gammongold.com or contact: Peter Drobeck, Sr. VP Exploration &
Business Development, Gammon Gold Inc., +1-416-646-3825; Anne Day, Director
of Investor Relations, Gammon Gold Inc., +1-416-646-3825

For further information: please visit the Gammon Gold website at
www.gammongold.com or contact: Peter Drobeck, Sr. VP Exploration &
Business Development, Gammon Gold Inc., +1-416-646-3825; Anne Day, Director
of Investor Relations, Gammon Gold Inc., +1-416-646-3825