Gammon Gold (NYSE:GRS) Price Target Raised by Canaccord Genuity

Canaccord Genuity announced it is raising its price target on Gammon Gold Inc. (NYSE:GRS), citing Ocampo production and valuation. Canaccord maintains a "Hold" on Gammon.

"Gammon recently released Q3/10 operating results from its 100%-owned Ocampo Au/Ag operation in Mexico. We have also increased our peak Au and Ag assumption, which we apply to Ocampo in our valuation, to US$1,500/oz Au from US$1,300/oz Au and to US$25/oz Ag from US$21.5/oz Ag. The net-net result is an increase in our target price," said Canaccord.

Gammon recently announced production at its Ocampo mine increased by 10 percent over its last quarterly production result.

Gammon closed Wednesday at $7.35, gaining $0.31, or 4.40 percent. Canaccord has a price target of C$8.50 on the gold miner, up from C$7.50.

Gammon Gold (AMEX:GRS) a Contender or Pretender?

How long can the narrative of potential be applied to Gammon Gold (NYSE:GRS)? It's not an easy question to answer, but the beating it's been taking lately shows investors aren't believing the story anymore, especially after completely shutting down their El Cubo mine from labor unrest.

Consequently, whether you use Toronto or New York as a measure, the stock has been hit hard and at similar levels at either exchange.

The P/E on Gammon is a huge 93.16 as well.

Interestingly, Scotia Capital upgraded the beleaguered stock from "Underperform" to "Sector Performer" last week, and the share price has risen a little since then.

One potential positive for the company is they can now focus primarily on their Ocampo mine, which had been generating 77 percent of the reserve base of the company, and which resources formally used at El Cuba have now been transferred there.

While this could be a buying opportunity after the stock has plunged, the overall story still must make sense, and Gammon has yet to prove their narrative and the reality are one and the same.

Gammon Gold (NYSE:GRS) Reduces Production Projections Again

Gammon Gold (NYSE:GRS) is taking a big hit on its production estimates for 2010, as closing the El Cubo project will result in approximately 25 percent less production for the company overall.

This is the second time in 2010 Gammon has had to downwardly revise their production estimates.

Before the turmoil, the mining company had estimated it would produce from 150,000 to 160,000 ounces of gold for the year, and about 6.1 million to 6.85 million ounces of silver.

Now they've lowered those estimates to 100,00 to 110,000 ounces of gold and 4.4 million to 4.95 million ounces of silver.

Rene Marion, Gammon CEO, said they'll focus primarily on their gold-silver Ocampo project in the near term, while increasing the pace of their exploration.

"Management focus for the balance of the year will be on expanding productivity at our Ocampo mine as well as bringing new discoveries into production in 2011 and the acceleration of exploration programs at our properties," said Marion.

Gammon Gold Raises 2009 Guidance as Gold Production Up 27 Percent

Annual gold production at Gammon Gold (GRS) increased by 27 percent, spurring the company to say things are now turned around.

For 2008, the company mined 154,428 ounces of gold, while also bringing out another 5,778,428 ounces of silver.

The gold-to-silver ratio of 59:1 helped the company improve its cash costs, as the $539 gold equivalent ounce was 20 percent better than 2007.

According to the company, improved productivity throughout the company, as well as an increase in processing capacity at the Ocampo mine were the keys to their performance.

Giving their guidance, Gammon Gold said they are looking to produce between 185,000 to 205,000 ounces of gold, while silver should come in between 8,170,000 to 8,945,000ounces,

Assuming a 78:1 gold-to-silver ratio, costs should be between $410 to $445.