Gryphon Gold Corporation
TSX : GGN
OTC Bulletin Board : GYPH

Gryphon Gold Corporation

November 14, 2008 17:30 ET

Gryphon Gold Announces Financial Results for the 2nd Quarter Ended September 30, 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 14, 2008) - Gryphon Gold Corporation (TSX:GGN)(OTCBB:GYPH) (the "Company") reported for the three months ended September 30, 2008 a net loss of $6,916,812 or $0.11 per share compared to a net loss of $2,500,535 or $0.04 per share in the same period in the prior year, on greater shares outstanding. The loss for the current quarter includes a non-cash impairment of the carrying value of Nevada Eagle exploration properties of $5.1 million. Total spending on exploration activities on the Borealis property decreased by $680,275 from the prior years comparable quarter.

Business highlights for the quarter ended September 30, 2008 were:

- Filed a CIM compliant NI 43-101 Preliminary Assessment (PA) on the oxide portion of its 2.5 million ounce Borealis gold resource in Nevada. The PA supports a 46,000 oz per year open-pit oxide heap leach gold mine with an initial life of 5 years.

- Executed an 18-month option agreement to restructure the $5.0 million debt associated with the purchase of Nevada Eagle Resources. This option is expected to improve Gryphon Gold's financing capability and allows for the issuance of 4 million common shares and a cash payment of $500,000 to reduce the face value of the debt by $2.5mm and extend the term to March 30, 2012;

- Executed an 18-month option agreement to reduce and fix the Net Smelter Return royalty from the current uncapped floating rate to a fixed rate of 5% on its Borealis property.

- Appointed Mr. John L. Key, mining engineer, as Chief Executive Officer and Director.

- Leased an exploration property and joint ventured another property, and staked 2 new properties that are available for lease or joint venture.

- Advanced a Scoping Study analyzing the economic potential of the sulphide resource on the Borealis property. Subsequent to September 2008, work has been temporarily halted.

Worldwide equity markets have been in decline over the last several months. This has negatively effected the market valuation of exploration companies. The Company is required to compare the book value of the portfolio of Nevada Eagle exploration properties to the market value of similar, publicly traded exploration companies to determine whether, for accounting purposes, if the value of exploration assets is fairly stated. Due to the decline in value of the comparable companies, the carrying value of the Nevada Eagle properties was reduced by $5.1 million at September 30, 2008. This reduction in value is a non-cash, "mark to market" charge to earnings. The Company is still actively managing all lease and joint venture relationships and ongoing lease payments are expected to far exceed the costs associated with managing the portfolio of assets. The company continues to believe the Nevada Eagle assets provide shareholders with the upside potential of gold exploration, in a politically stable environment, at a low cost.

Because of the reduced valuations of exploration companies and limited opportunities to raise funds, discretionary spending is being substantially reduced. The Company is converting many personnel positions to part time or contract and eliminating others. Discretionary spending is being eliminated and all contractual commitments are being reviewed. These reductions are designed to allow the Company to meet its obligations for the longest period possible, thus allowing the long term preservation of the investment in the Borealis property and the Nevada Eagle exploration properties. Because of its fully permitted oxide heap leach resource on the Borealis property and its large portfolio of exploration properties, leases and joint ventures in the state of Nevada, the Company is in a good position to benefit from what management expects to be a future cyclical upturn in the valuations of exploration companies. The Company is also actively exploring other investment possibilities to secure the development of the Borealis property.

Exploration expenses during the three months ended September 30, 2008 were $594,651 or 9% of total expenses compared to $1,274,926 or 50% of total expenses in the prior year. Two water monitoring wells, necessary for the start of mining operations, were installed during the quarter, while no exploration drilling was completed. During the prior's years comparable quarter the Company drilled a total of 10 holes totaling 12,080 feet.

Management salaries and consulting fees in the quarter ended September 30, 2008 decreased to $659,367 compared to $695,068 incurred in the quarter ended September 30, 2007. The current quarters cost included a charge to earnings of $162,809 for the cost of a transition agreement for the former CEO, and the prior years comparable quarter included the cost of a transition agreement for an employee and director of $322,464. Total non-cash compensation costs included in the quarter ended September 30, 2008 were $288,631 versus $271,462 in the prior year's comparable quarter.

For the six month period ended September 30, 2008, the Company incurred a net loss of $8,355,718 or $0.14 per share compared to a net loss of $4,727,088 or $0.09 per share incurred during the same period in the prior year. The year to date loss included a non-cash $5,100,000 impairment charge reducing the carrying value of the exploration properties held by Nevada Eagle.

Exploration expenses during the six month period ended September 30, 2008 were $1,281,319 or 16% of total expenses compared to $2,753,398 or 57% of total expenses in the prior year. During the six months ended September 30, 2008, a CIM compliant NI 43-101 resource report was completed in April and in September 2008 we released the results of our Preliminary Assessment of the development of a oxide heap leach gold mine on the Borealis property. Much of the current year's expenses covered the completion of these two reports plus permitting efforts for exploration drilling in the pediment areas of the Borealis property. During the six months ended September 30, no exploration drilling was completed compared to 26 holes representing 30,970 feet in the comparable period of the prior year.

Management salaries and consulting fees in the six months ended September 30, 2008 were $987,393 compared to $1,133,431 for the same period in the prior year. The change in costs was due to a decrease in investor relations activities. Total non-cash compensation costs included in the six months ended September 30, 2008 were $391,682 versus $484,494 in the prior year's comparable period.

Gryphon Gold is a Nevada focused, gold exploration company. Its principal gold resource, the 1.4 million (measured and indicated) and 1.1 million (inferred) ounce Borealis deposit, 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 54 highly prospective gold properties located in gold trends in Nevada. Nevada Eagle's principal properties have a cumulative 900,000 of historical ounces of gold (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

Full financial statements and securities filings are available on our website: www.gryphongold.com and www.sec.gov or www.sedar.com.

The new technical report will be filed with Canadian Securities regulatory authorities on SEDAR and made available on the Company's website at www.gryphongold.com by early October.

This press release was reviewed by Dr. R. Steininger of Gryphon Gold, a Qualified Person as defined by National Instrument 43-101 of the Canadian Securities Administrators. This press release contains "forward-looking information" which may include, but is not limited to, statements with respect to anticipated lease payments, valuation of junior resource companies, future overhead costs, resource estimates, and other plans, projections, estimates and expectations. Such forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, the risks and uncertainties outlined in our most recent financial statements and reports and registration statement filed with the SEC (available at www.sec.gov) and with Canadian securities administrators (available at www.sedar.com). 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.

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. 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. We do not undertake to update forward-looking statements.

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