Gryphon Gold Corporation
TSX : GGN
OTC Bulletin Board : GYPH

Gryphon Gold Corporation

June 26, 2009 14:57 ET

Gryphon Gold Reports Annual Financial Results for March 31, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 26, 2009) - Gryphon Gold Corporation (TSX:GGN)(OTCBB:GYPH) (the "Company") today announced that for the year ending March 31, 2009 the Company had a consolidated loss of $9,943,231 or $0.16 per share compared to a consolidated loss of $7,850,766 or $0.13 per share for the year ending March 31, 2008 on fewer shares outstanding. The increase in the loss resulted from a $5,100,000 non-cash impairment of the carrying value of the Nevada Eagle exploration properties that was recorded in the quarter ended September 30, 2008. The loss before the property impairment was $4,843,231 and represented a 39% decrease compared to the prior year's loss. This decrease occurred due to the steps taken during the year to reduce current cash costs and future commitments. The expenditure reductions were made to ensure business presence is maintained while planning continues to put the Borealis property in Nevada's Walker Lane gold belt into production.

Business highlights for the year ended March 31, 2009:

- In April 2008 the Company completed a CIM compliant NI 43-101 resource report that included all drilling results on the Borealis property to date. Total ounces of gold resource on the Borealis property increased by 39 percent from the earlier resource report and now totals 1.4 million measured and indicated ounces of gold and 1.1 million inferred ounces of gold. As announced on June 3, 2009, the Company is moving forward with a pre-feasibility study for mine development on the oxide portion of its Borealis gold resource property in Nevada, which consists of 384,000 measured ounces of gold and 948,000 indicated ounces of gold (M&I), and 1,104,500 Inferred ounces of gold (Infd.). The study is being prepared by Telesto Nevada Inc. of Reno entirely on a deferred fee basis to facilitate moving forward prior to completion of the financing required for mine construction and development;

- A water well, necessary for the construction of an oxide heap leach mine, was installed in June 2008;

- On August 5, 2008, the Company executed a 12-month option agreement (with the ability to extend for an additional 6 months) 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 $2.5m and extend the term to March 30, 2012;

- On August 22, 2008, the Company executed a 12-month option agreement (with the ability to extend for an additional 6 months) 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;

- On September 2, 2008 the Company filed a CIM compliant NI 43-101 Preliminary Assessment (PA)(1) on the oxide portion of its 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;

- On November 10, 2008 the Company amended the convertible promissory note so that cash interest payments shall be $72,388 and $51,713 each January 1 and June 1, respectively, or one half the previous amounts. The unpaid interest will be added to the principal balance of the note, and will compound monthly at 5% and become due and payable at the due date of the note, March 30, 2010;

- During the fiscal year ended March 31, 2009, the Company staked 6 new exploration properties. At year end, 25 properties were subject to lease or joint venture with third parties. During the year the Company collected $373,830 in lease and joint venture payments ($360,700 in cash and $13,130 in shares or warrants) and the Company sold 2 properties for $122,098 ($50,000 in cash and $72,098 in shares) in proceeds.

Exploration expenses during the year ended March 31, 2009 were $1,473,628 or 32% of net expenses (before the effect of the non-cash impairment charge) compared to $3,845,525 or 49% of total net expenses in the prior year. No exploration drilling was completed during the year ended March 31, 2009. During the prior year the Company drilled a total of 31 holes at the Borealis property, representing 36,485 feet. During the year ended March 31, 2009, the Company completed a CIM compliant NI 43-101 report and in September 2008, released the results of the Preliminary Assessment of the development of an oxide heap leach gold mine on the Borealis property. Much of the current year's exploration expense 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 for the year ended March 31, 2009 were $1,375,518 compared to $2,061,885 incurred in the prior year as the number of employees and consultants decreased during the year and non-cash compensation decreased. Total non-cash compensation expense recognized in the year totaled $528,429 compared to non-cash compensation expense of $829,080 recognized in the prior year. General and administrative expenses totaled $657,708, compared to $1,007,053 in the prior year. The decrease is due to reduced spending on investor relations and our efforts to conserve cash. Legal and audit fees for the period decreased from $492,308 to $229,034 for the year ended March 31, 2009. The decrease was the result of fewer registration statements being completed for shares issued under private placements in 2008, an increase in audit fees in 2008 due to the acquisition of Nevada Eagle Resources during the prior year, and legal fees related to potential acquisition activity in the prior year. Travel and accommodation expense for the year ended March 31, 2009 was $133,971, compared to $202,118 for the prior year. The decrease is due to decreased investor relations related travel and fewer property site visits.

Interest income earned on cash deposits was $33,116 for the year ended March 31, 2009, compared to $203,970 in the prior year due to lower cash balances held on average through the current year versus the prior year and a declining interest rate environment in the current fiscal year. Interest expense totaled $529,776, of which $276,863 was non-cash compared to $316,963 of which $159,775 was non-cash, in the prior period. The increase is due to interest being charged for 7 months in the prior period compared to 12 months during the current year ended. The interest expense was related to the note payable for the purchase of Nevada Eagle Resources during fiscal 2008.

For the three months ending March 31, 2009 the Company had a net loss of $768,995 or $0.01 per share compared to a net loss of $1,387,088 or $0.02 per share for the same period in the prior year. Exploration expenses for the three months ending March 31, 2009, were $50,642 or 10% of total expenses during the period, compared to $431,120 or 31% of total expenses for the same period in the prior year due to cash conservation steps taken by the Company.

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 an additional 54 highly prospective gold properties located in desirable 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 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.

This press release contains "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 Preliminary Assessment, the timing of delivery of the pre-feasibility study regarding the Borealis resource, the anticipated conclusions of the pre-feasibility study and scoping study, 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, pediment exploration plans 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 under the section headings "Forward-Looking Statements" and "Risks Factors" in our annual report on Form 10-KSB, as filed with the SEC on June 26, 2008, as amended July 7, 2008, under the section heading "Risk Factors" in our most recent quarterly report on Form 10-Q, as filed with the SEC on February 13, 2009, as amended March 10, 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). In addition, the Preliminary Assessment is the first in a series of development studies for the project assessing the potential viability of an open-pit oxide heap leach mining operation on the Borealis gold property using an estimate of metal prices based on historical and future metal prices. The operating and capital costs in the Preliminary Assessment were developed to be reasonable estimates within industry benchmarks. There is no certainty that the results of the Preliminary Assessment 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, 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. For further information contact: John Key, CEO, by phone: 775-853-8814, or email at jkey@gryphongold.com. The Borealis property is described in the technical report (the "technical reports") dated April 28, 2008 titled Technical Report on the Mineral Resources of the Borealis Gold Project Located in Mineral County, Nevada, U.S.A. and dated September 2, 2008 titled "Preliminary Assessment of the Mineral Resources of the Borealis Gold Project located in Mineral County, Nevada, U.S.A., and prepared in accordance with National Instrument 43-101 of the Canadian Securities Administrators ("NI 43-101"). The technical reports describe 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 Preliminary Assessment (the "PA") was reviewed by J.R. Danio, PE., Telesto Nevada Inc. of Reno, NV, a Qualified Person as defined by NI 43-101 of the Canadian Securities Administrators. Mr. Danio is considered independent of Gryphon Gold for the purposes of NI 43-101. 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 in a consulting geologist retained by Gryphon Gold, is the principal author of the technical report and is considered independent of Gryphon Gold for the purposes of NI 43-101.

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.

(1) The Preliminary Assessment is preliminary in nature and includes inferred mineral resources. The economic viability of mineral resources that are not mineral reserves has not been and can not be demonstrated. Mineral resource estimates used in the Preliminary Assessment include inferred resources. These estimates are considered too geologically speculative to have any economic considerations apply to them that would enable then to be considered as mineral reserves. In addition, there is no assurance that the Preliminary Assessment will be realized and that further work will lead to reserves that can be mined economically. Mineral resources that are not mineral reserves have no demonstrated economic viability. The basis of the Preliminary Assessment and the qualifications and the assumption made by the author are contained in the Preliminary Assessment as filed on www.sedar.com.

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