Gammon Lake marching towards becoming a mid-tier

The finalizing of an acquisition and the commissioning of an underground mine pushed Gammon Lake Resources (GAM-T, GRS-X) shares up marginally.

The company announced that it has acquired all of fellow Dartmouth, Nova Scotia-based Mexgold Resources‘ (MGR-V)’s shares for 0.47 Gammon Lake common shares for each Mexgold common share, making Mexgold a wholly-owned subsidiary of Gammon Lake.

Separately, the company announced it has begun processing ore from its underground mine at Ocampo in Chihuahua, Mexico.

In Toronto on Aug. 9, Gammon Lake shares were up 3 to $16.19 on just over 100,000 shares traded.

As a result of the Mexgold acquisition, Gammon Lake acquires the El Cubo Mine in Guanajuato, Mexico.

For July El Cubo produced 4,458 oz. of gold and 142,767 oz. of silver. Gammon Lake says those figures represent a 14.5% increase over mine production in the month of June and is a result of development of new areas within the mine that have been identified through exploration drilling.

As for its wholly owned Ocampo project, the company says material is being fed through the crushers and ball mills for testing purposes and it expects to start gold and silver production from the underground mine sometime in August.

The company is already producing gold and silver at Ocampo from its open pit mine. The pit produced 5,902 oz. of gold and 120,565 oz. of silver for July.

Despite minor setbacks in the month Gammon Lake chairman and president, Fred George, is bullish on the months ahead.

“Given the exceptional weather conditions the company was faced with in July we are very pleased with the progress that has continued to be made on site,” George says in a release. “We are confident of attaining higher production levels in August.”

Once at full production, Ocampo and El Cubo are expected to measure more than 400,000 gold equivalent oz. — 235,600 oz. of gold and 10,500,000 oz. of silver.

The company says it’s on schedule to achieve such production by the end of the year.

The company will announce its second quarter financial results after markets close on August 10.