Gammon Reports Lower Profit On Unfavorable Rates

HALIFAX, Nova Scotia (AP) — Gammon Gold Inc. said Tuesday that its profit fell 57 percent in the fourth quarter as the dollar fell and its taxes rose.

For the three months that ended Dec. 31, the company earned $13.5 million, or 10 cents per share. That compared with $31.6 million, or 26 cents per share, a year earlier.

Gammon's benefited in 2008's fourth quarter from a foreign exchange gain of 14 cents per share and future tax recovery of 8 cents per share. In the latest quarter, foreign exchange rates cost it a penny per share and future taxes 3 cents per share.

Excluding those adjustments, Gammon earned 14 cents per share. Analysts surveyed by Thomson Reuters, who typically exclude one-time items, expected earnings of 11 cents per share on revenue of $68.7 million.

Gammon said its quarterly revenue from mining operations was $68.2 million, compared with $48.3 million a year earlier. It realized an average gold price of $1,093 per ounce and silver price of $17.54 per ounce, compared with $796 and $10.05 a year earlier. But it sold 38,249 ounces of gold in the quarter, compared with 41,004 ounces a year earlier.

For the year, the company earned a penny per share, compared with 33 cents per share in 2008. Gammon's 2009 revenue was $206.8 million, compared with $212.5 million in 2008.

The company raised $108 million from a public offering that ended Oct. 22. It plans to use the proceeds to expand exploration, repay debt and cover general corporate purposes.

Shares of Gammon Gold fell 59 cents, or 7 percent, to $7.63 in afternoon trading.

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