VANCOUVER, BRITISH COLUMBIA, Nov. 13, 2009 (Marketwire) -- Gryphon Gold Corporation (TSX:GGN)(OTCBB:GYPH) reported for the three months ended September 30, 2009 a net loss of $1,661,000 or $0.02 per share, compared to a net loss of $6,917,000 or $0.11 per share in the same period last year on more shares outstanding. The loss for the prior year's comparable quarter includes a non-cash impairment of the carrying value of Nevada Eagle exploration properties of $5.1 million. Total spending on exploration and engineering activities to advance the Borealis property increased by $85,000 to $680,000 from the prior year's comparable quarter.
Business highlights for the quarter ended September 30, 2009 were:
- The completion of a CIM compliant NI 43-101 Pre-Feasibility Study on the oxide portion of its 1.4 million ounce (measured and indicated) and 1.1 million ounce (inferred) gold resource in Nevada, including 377,356 ounces of gold as Proven and Probable reserves(1). Projected capital costs are US$14.8 million (including a $1 million contingency) and projected average life-of-mine cash operating costs are $476 per ounce of gold;
- Terence J. Cryan was appointed to the board of directors. Mr. Cryan is Co-Founder and Managing Director of Concert Energy Partners, LLC and President & CEO of Medical Acoustics LLC. Formerly, Mr. Cryan served as Senior Managing Director at Bear Sterns & Co. and as Managing Director at Paine Webber/Kidder Peabody;
- Design and construction activities progressed for the potential heap leach mine at the Borealis Property. Activities included negotiations for the final price and construction schedule of the turnkey Adsorption, Desorption and Recovery plant, the issuance of bid packages for the construction of the initial heap-leach pad, pump testing of the No. 1 water well, the beginning of construction of a second water well, and the start of negotiations with NV Energy for a power line to the planned Borealis plant;
- The exercise of 7,161,500 amended warrants which provided $1,161,000 of cash to the treasury;
- The option agreement to fix the NSR royalty rate at 5% on the Borealis property was extended for six months to February 22, 2010 by the issuance of 966,340 common shares to the royalty holders.
Shareholders are being asked to approve an amendment to the articles of incorporation to increase the authorized capital from 150,000,000 shares to 250,000,000 shares on November 20, 2009.
Exploration expenses during the three months ended September 30, 2009 were $679,648 or 41% of total net expenses compared to $594,651 or 32% of total net expenses in the prior year, excluding the effect of the write-down of Nevada Eagle properties. Current quarter costs included property claim payments, work on the Pre-Feasibility study and other engineering design work, and the installation of a water well necessary for production.
Management salaries and consulting fees in the quarter ended September 30, 2009 decreased to $153,448 compared to $659,367 incurred in the quarter ended September 30, 2008. The costs decreased because of a reduction in the number of staff which took place in November of 2008 as part of the plan to conserve cash. Total non-cash compensation costs included in the quarter ended September 30, 2009 were $22,715 versus $288,631 in the prior year's comparable quarter. Generally all other cash overhead costs were reduced year on year due to the reduction in personnel and investor relations activities. Legal and audit costs were higher than the prior year's comparable quarter because of the Special Meeting of Shareholders held October 8, 2009 and legal costs associated with the extension of the option to fix the royalty rate on the Borealis property.
For the six month period ended September 30, 2009, the Company incurred a net loss of $2,057,085 or $0.03 per share compared to a net loss of $8,355,718 or $0.14 per share incurred during the same period in the prior year. The loss for the prior year's comparable period includes a non-cash impairment of the carrying value of Nevada Eagle exploration properties of $5.1 million.
Exploration expenses during the six month period ended September 30, 2009 were $957,101 or 46% of total net expenses compared to $1,281,319 or 39% of total net expenses in the prior year excluding the effect of the write-down of Nevada Eagle properties. During the six months ended September 30, 2009, a CIM compliant NI 43-101 Pre-Feasibility Study was completed and much of the exploration costs incurred related to the completion of that report and related engineering design work. In the first six months of the prior year's fiscal year, a resource report was completed and a Preliminary Assessment of the development of an oxide heap leach gold mine on the Borealis property was released. Much of the prior year's expenses covered the completion of these two reports plus permitting efforts for exploration drilling in the pediment areas of the Borealis property.
Management salaries and consulting fees in the six months ended September 30, 2009 were $249,212 compared to $987,393 for the same period in the prior year. The change in costs was due to a decrease in the number of employees and investor relations activities and the cost of certain transition agreements recognized in the prior year. Generally, costs related to overhead expenditures have been reduced year on year in an effort to reduce the ongoing cash expenditure rate while still progressing on engineering. Total non-cash compensation costs included in the six months ended September 30, 2009 were $72,079 versus $391,682 in the prior year's comparable period.
Gryphon Gold is a Nevada-focused gold exploration and development company. Its principal gold resource, the 1.4 million ounce (377,356 ounces of proven and probable reserves and 1,022,644 ounces of measured and indicated) and 1.1 million ounce (inferred) Borealis deposits, is located in the Walker Lane gold belt of western Nevada. The Borealis gold system is one of the largest known volcanic-hosted high-sulphidation gold bearing mineralized systems in Nevada. Nevada Eagle Resources, a wholly owned subsidiary, has approximately 60 highly prospective gold properties located in desirable gold trends in Nevada. Nevada Eagle's Golden Arrow property (leased to Nevada Sunrise Gold Corp.) contains a NI 43-101 compliant resource of 296,500 ounces of gold (measured and indicated) and 50,400 inferred ounces of gold (as described in a technical report dated May 1, 2009 available on www.Sedar.com under the Nevada Sunrise Gold Corp. profile). Nevada Eagle's other principal properties have a cumulative 1,365,000 of historical ounces of gold(2) (the historical estimates are based on internal reports prepared by prior owners prior to February, 2001, and were not prepared in accordance with CIM NI 43-101 standards, and thus their reliability has not been verified). A number of Nevada Eagle's principal properties are subject to joint venture or farm-in agreements in favor of third parties.
On Behalf Of The Board Of Directors Of Gryphon Gold Corporation
John L. Key, CEO
(1) All mineral resources have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in National Instrument 43-101, commonly referred to as NI 43-101. U.S. reporting requirements for disclosure of mineral properties are governed by the United States Securities and Exchange Commission (SEC) Industry Guide 7. Canadian and Guide 7 standards are substantially different and the information contained in this press release is not comparable to similar information disclosed by U.S. companies. This press release uses the terms "measured", "indicated", and "inferred" resources. We advise investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that enable them to be categorized as mineral reserves. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable.
(2) A qualified person has not done sufficient work to classify the historical resource estimate as current mineral resources or to verify the analytical work as reliable. These do not meet current NI 43-101 standards and are presented here only as an indication of the amount of gold mineralization.
This press release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian and United States securities laws, which may include, but is not limited to, statements with respect to projections and expectations related to the results and projections contained in the pre-feasibility study regarding the Borealis resource including the expected mine life, recovery, capital and other costs and anticipated production of the described open-pit oxide heap leach mine at the Borealis property, anticipated internal rate of return, availability of capital for development and the affect of the pre-feasibility study on the company's ability to raise capital for development, sensitivity to metal prices and ore grade, resource estimates on the Borealis resource, and other plans, projections, estimates and expectations. Such forward-looking statements and forward-looking information reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, the risks and uncertainties outlined under the section headings "Forward-Looking Statements" and "Risks Factors" in our annual report on Form 10-K, as filed with the SEC on June 26, 2009, under the section heading "Risk Factors" in our most recent quarterly report on Form 10-Q, as filed with the SEC on August 14, 2009, and in our most recent financial statements, reports and registration statements filed with the SEC (available at www.sec.gov) and with Canadian securities administrators (available at www.sedar.com). There is no certainty that the results of the pre-feasibility study will ever be realized. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We do not undertake to update forward-looking statements or forward-looking information, except as may be required by law.
Full financial statements and securities filings are available on our website: www.gryphongold.com and www.sec.gov or www.sedar.com. The Borealis property is described in the technical report (the "technical reports") dated September 21, 2009 titled Pre Feasibility Study on the Mineral Resources of the Borealis Gold Project Located in Mineral County, Nevada, U.S.A. prepared in accordance with National Instrument 43-101 of the Canadian Securities Administrators ("NI 43-101"). The technical report describes the exploration history, geology and style of gold mineralization at the Borealis property. Disclosure in this press release of mineral resources is based on the technical report. Details of the quality or grade of each category of mineral resources and key assumptions, parameters and methods used to estimate the mineral resources is included in the technical reports. The reports also include a description of environmental and permitting matters.
The information in this press release as it relates to the mineral resources of the Borealis property was reviewed by Dr. R. Steininger of Reno, NV, a Qualified Person as defined by NI 43-101 of the Canadian Securities Administrators. Dr. Steininger is a consulting geologist retained by Gryphon Gold and is the principal author of the technical report and is considered independent of Gryphon Gold for the purposes of NI 43-101.