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| **KPMG LLP **Chartered Accountants 
Suite 1500 Purdy's Wharf Tower ITelephone (902) 492-6000
1959 Upper Water StreetTelefax (902) 429-1307
Halifax NS B3J 3N2www.kpmg.ca
Canada **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
The Board of Directors and Shareholders Gammon Lake Resources Inc.: 

We have audited management's assessment, included inManagement's Report on Internal Control Over Financial Reporting included in theaccompanying Management Discussion and Analysis, that Gammon Lake Resources Inc.(the "Company") maintained effective internal control over financial reportingas of December 31, 2006, based on the criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO). The Company's management is responsible formaintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting.Our responsibility is to express an opinion on management's assessment and anopinion on the effectiveness of the Company's internal control over financialreporting based on our audit. 

We conducted our audit in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether effective internal control over financial reporting was maintained inall material respects. Our audit included obtaining an understanding of internalcontrol over financial reporting, evaluating management's assessment, testingand evaluating the design and operating effectiveness of internal control, andperforming such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for ouropinion. A company's internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. 

A company's internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors ofthe company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorizedacquisition, use, or disposition of the company's assets that could have amaterial effect on the financial statements. 

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Because of its inherent limitations, internal control overfinancial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the riskthat controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate. 

A material weakness is a control deficiency, or combinationof control deficiencies, that results in more than a remote likelihood that amaterial misstatement of the annual or interim financial statements will not beprevented or detected. We have identified the following material weakness thathas been identified as a material weakness in management's assessment. TheCompany had insufficient accounting personnel to appropriately review andapprove non-routine and complex transactions. Specifically, this involvedaccounting for stock option expense and inventory valuation. We also haveaudited, in accordance with the standards of Public Company Accounting OversightBoard (United States), the consolidated balance sheet, and the relatedstatements of operations and deficit and cash flows of Gammon Lake ResourcesInc.. This material weakness was considered in determining the nature, timing,and extent of audit tests applied in our audit of the 2006 consolidatedfinancial statements, and this report does not affect our report dated April 2,2007, which expressed an unqualified opinion on those consolidated financialstatements. 

In our opinion, management's assessment that Gammon LakeResources Inc. did not maintain effective internal control over financialreporting as of December 31, 2006, is fairly stated, in all material respects,based on criteria established in Internal Control—Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO).Also, in our opinion, because of the effect of the material weakness describedabove on the achievement of the objectives of the control criteria, Gammon LakeResources Inc. has not maintained effective internal control over financialreporting as of December 31, 2006, based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizationsof the TreadwayCommission (COSO). 

The Company acquired Mexgold Resources Inc. during 2006 andmanagement excluded from its assessment of the effectiveness of the Company'sinternal control over financial reporting as of December 31, 2006, MexgoldResources Inc.'s internal control over financial reporting associated with totalassets of $453,262,506 and total revenues of $19,297,723 included in theconsolidated financial statements of the Company as of and for the year endedDecember 31, 2006. Our audit of internal control over financial reporting of theCompany also excluded an evaluation of the internal control over financialreporting of Mexgold Resources Inc. 

We also have conducted our audits on the consolidatedfinancial statements in accordance with Canadian generally accepted auditingstandards. With respect to the year ended December 31, 2006, we also haveconducted our audit in accordance with the standards of the Public Company 

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We also have conducted our auditson the consolidated financial statements in accordance with Canadian generallyaccepted auditing standards. With respect to the year ended December 31, 2006,we also have conducted our audit in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Our report datedApril 2, 2007, expressed an unqualified opinion on those consolidated financialstatements. 

/s/ KPMG LLP Chartered Accountants 

Halifax, Canada April 2, 2007 

 

 

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