Gammon Gold Resolves Suit by Midas Fund, Inc.

HALIFAX, Aug. 27 /PRNewswire/ - Gammon Gold Inc. ("Gammon Gold") (TSX:GAM and
AMEX:GRS) is pleased to announce that it has reached an agreement with Midas
Fund, Inc. ("Midas") to settle a lawsuit filed against Gammon and several of
its officers and directors in U.S. District Court New York. Midas will dismiss
the lawsuit in exchange for a US$200,000.00 cash payment by Gammon. The
settlement does not constitute an admission of liability on the part of Gammon
or any of the other defendants.
Mr. Rene Marion, Chief Executive Officer of Gammon Gold commented, "The
Company's decision to settle with Midas now permanently resolves this matter
and removes the cost and distraction of this litigation going forward. Gammon
Gold believes that the amount of the settlement is in the best interests of
its shareholders in light of the cost and expense required to litigate in the
United States. Gammon has and continues to deny any liability to Midas".

About Gammon Gold

Gammon Gold Inc. is a Nova Scotia based 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 operation in Guanajuato State and has the promising development
Guadalupe y Calvo property in Chihuahua State. The company remains 100%
unhedged.

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 (File # 001-31739), which may be secured
from Gammon Gold, 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.

Certain information regarding the Company contained herein may constitute
forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements are subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those reflected in
the forward-looking statements. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward looking
statements. Specific reference is made to "Risk Factors" in the Company's
Annual Information Form and Form 40-F Report. Forward-looking statements may
include estimates, plans, expectations, opinions, forecasts, projections,
guidance or other statements that are not statements of fact including,
without limitation, statements regarding potential mineralization and
reserves, including without limitation, statements regarding future cash costs
and production at El Cubo and Ocampo and the ability to continue to
successfully implement the Company's turn-around strategy, statements
regarding the resource growth potential of Guadalupe y Calvo, statements
regarding the company's ability to continue its improved cash flow
performance, the impact of any future exploration on reserve estimates;
expectations regarding the timing and extent of production at the Ocampo
project; the implications of the Mexican Single Rate Tax on future income tax
payments; estimates regarding the future costs related to exploration at
Ocampo; the nature and availability of additional funding sources; and future
plans and objectives of Gammon. In some cases, you can identify
forward-looking statements by the use of words such as may, will, should,
could, expect, plan, intend, anticipate, believe, estimate, predict, potential
or continue or the negative or other variations of these words, or other
comparable words or phrases. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
the Company's expectations include, among others, risks related to
international operations, including political turmoil and limited local
infrastructure to support large scale mining operations; the actual results of
current exploration activities; conclusions of economic evaluations and
changes in project parameters as plans continue to be refined; and
fluctuations in future prices of gold and silver. These factors are set out in
the Company's Annual Information Form. The Company's forward-looking
statements are expressly qualified in their entirety by this cautionary
statement.
SOURCE Gammon Gold Inc.

please visit the Gammon Gold website at www.gammongold.com or contact: Rene
Marion, Chief Executive Officer, Gammon Gold Inc., (902) 468-0614; Anne Day,
Director of Investor Relations, Gammon Gold Inc., (902) 468-0614