Gammon Gold Signs Definitive Agreement on the Los Jarros Properties, Chihuahua Mexico

TORONTO, August 31, 2010 - TSX: GAM / NYSE: GRS / BSX: GL7

Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): Gammon is pleased to
announce that it has signed the definitive purchase option agreements on the
Los Jarros Properties, in Chihuahua State, Mexico.

"I am very pleased that we have completed the definitive option
agreements on the Los Jarros concessions with Valdez Gold Inc. ("Valdez").
The addition of this project to Gammon's existing land package gives the
Company a commanding position in the greater Ocampo / Pinos Altos / Concheno
district. These holdings allow Gammon to extend exploration from the Ocampo
and Venus projects to prospective ground between these two properties and our
existing land package, as well as new ground in this large district." stated
Peter Drobeck, Senior Vice President of Exploration & Business Development.
He continued "Valdez completed substantial exploration on these properties in
the 1990's, resulting in the definition of a disseminated epithermal gold
occurrence in the southern part of the property. This target area, the actual
'Los Jarros' occurrence, consists of a central rhyolite dome with surrounding
silicified breccias."

Historical drilling by Valdez in 1999 cut strongly anomalous gold not
only along the flanks of the dome, but also in a breccia complex on the south
side of the dome system. The best drill hole from the breccia cut a long
intercept of highly anomalous gold: 105.6 metres grading 0.56 grams per tonne
gold from 1.5 metres depth, including 26.1 metres grading 0.70 grams per
tonne gold from 81.0 meters depth. The gold mineralization in the breccias
complex is disseminated in character, with all samples in the first 109
metres of the drill hole falling between 0.20 and 2.12 grams per tonne gold.
Other intercepts in the dome margin also discovered substantially anomalous
gold in what appears to be a structurally-controlled setting. Selected
results of Valdez' past drilling are summarized in Table 1.

Apart from the disseminated epithermal target in the southern block of
claims, the Los Jarros properties control the potential northwest strike
extent of the Concheno vein system (being developed by Frisco Mining).
Valdez' historical work had identified three unexplained stream-sediment gold
anomalies within the land package. Gammon intends to explore the entire Los
Jarros Project aggressively in the coming dry season.

The Company plans to conduct a detailed geologic mapping program on the
southern Los Jarros prospect, followed up by drilling extensions to the
anomalous mineralization discovered to date, and to mount a regional
reconnaissance program on the remainder of the property to determine if
viable exploration targets emerge.

TABLE 1: Valdez Gold Inc. Selected Drill Intercepts from Los Jarros
Project, Chihuahua

    -------------------------------------------------------------------------
    Drill Hole                    From(m)       To(m)  Length(m)     Au (g/t)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    1999 Drilling
    -------------------------------------------------------------------------
    LJ99-01                         29.6        63.7        34.1        0.54
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    LJ99-01A                        30.5        63.6        33.1        0.81
    -------------------------------------------------------------------------
             Including              32.0        42.7        10.7        1.96
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    LJ99-02                         47.4        76.5        29.1        1.06
    -------------------------------------------------------------------------
             Including              53.2        64.0        10.8        2.51
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    LJ99-03                         15.8        20.0         4.2        2.38
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    LJ99-04                          1.5       107.1       105.6        0.56
    -------------------------------------------------------------------------
             Including              81.0       107.1        26.1        0.70
    -------------------------------------------------------------------------
    LJ99-04                        107.1       201.8        94.7        0.33
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    LJ99-05                        108.6       131.1        22.5        0.52
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    2009 Drilling
    -------------------------------------------------------------------------
    LJ09-01                         39.7        45.7         6.0        0.46
    -------------------------------------------------------------------------
    LJ09-01                         78.7        85.9         7.1        0.66
    -------------------------------------------------------------------------
    LJ09-01                         94.9       111.9        17.0        0.29
    -------------------------------------------------------------------------

Note: The reported assays from the Los Jarros option 1999 work were not
done under the supervision of a Qualified Person, as the work was completed
before NI 43-101 was promulgated. The 1999 assays were done byBondar Clegg
Interteck Testing Services (subsequently merged with ALS-Chemex) and the 2009
assays were done by ALS-Chemex Laboratories, based in Vancouver, British
Columbia, using standard fire assay procedures. For both the 1999 and 2009
drilling Valdez had a program of control pulps and blanks being inserted into
the assay jobs, and no irregularities were reported. Qualified Person Peter
Drobeck has reviewed the available data from this historic work and believes
the data to be valid.

This press release sets out the gold and silver grades from prospects
that have not been categorized as a mineral resource deposit under applicable
Canadian mineral resource reporting standards, and it is uncertain if further
exploration will result in these targets being delineated as mineral
resources. The grades encountered so far should not be taken as
representative of the ore bodies in question as there has been insufficient
exploration to define a mineral resource, and such grades may not prove
representative of the deposits if and when the same are delineated as mineral
resources.

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, 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 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.

Diagram 1:

Map showing the San Francisco Option, the Venus Project & Los Jarros
Properties in Relation to the Ocampo Mine Properties Need to show the
location of the drill holes mentioned in Table 1

files.newswire.ca/258/Diagram_1_Los_Jarros.doc

files.newswire.ca/258/Diagram_2_CrossSec.doc

For further information: For further information: please visit the Gammon
gold website at www.gammongold.com or contact: Peter Drobeck, Senior
VP Exploration & Business Development, 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 contact: Peter Drobeck, Senior
VP Exploration & Business Development, Gammon Gold Inc., +1-416-646-3825;
Anne Day, Director of Investor Relations, Gammon Gold Inc., +1-902-468-0614