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Gryphon Signs Option
to Cap Borealis Royalty
Gryphon Gold
Corporation (GGN: TSX; GYPH: OTC.BB) has entered into an agreement providing Gryphon Gold with an
18-month option to reduce and fix the Net Smelter Return (NSR) royalty on
its Borealis property, which currently has two gold deposits under
examination for economic viability.
Under the terms of the option, which can be exercised by Gryphon Gold any
time during the next eighteen months, the royalty will be fixed at 5%,
versus the current variable rate royalty, which is calculated as the price
of gold divided by one hundred expressed as a percentage; i.e. at a gold
price of $800/ounce the NSR royalty rate would be 8.0%.
The option provides that, on exercise, Gryphon Gold will pay the royalty
holders US$1,750,000 cash, 7,726,250 common shares of Gryphon Gold, and a
three year (from date of exercise of the option) US$1,909,500 5% debenture,
convertible into common shares at $0.70/share for the first year of the
three year term and escalating by $0.10/share per year until maturity. The
option payment is $250,000 for the first 12 months and an additional
$125,000 to extend it to eighteen months. The issuance of the shares and
convertible debenture is subject to TSX approval.
"We appreciate the Royalty Holders' vote of confidence in Gryphon
Gold. The restructuring of the royalty eliminates the uncertainty of a
variable rate royalty, which could have become a heavy burden as the price
of gold rises further. A fixed royalty should greatly improve the ability
to finance a potential production decision on either of our two gold
deposits at the Borealis," said John Key, CEO of Gryphon Gold.
"With an approximate fair market value of US$6.4 million for the
transaction, we estimate that, at $800/ounce of gold and an initial
production rate of 50,000 ounce of gold per year (from the oxide mine
only), Gryphon Gold would recover the cost of reducing the royalty in just
over 5 years".
The independent NI 43-101 compliant Preliminary Assessment Study
establishing the economic potential for a heap leach mine from Gryphon's
700,000 oz oxide gold resources, as well as the NI 43-101 compliant
independent Scoping Study affirming the longer term opportunity for mining
from Gryphon's 1.8 million oz sulphide gold resources, are scheduled for
released in early September.
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. For further
information contact: John Key, CEO, by phone: 604-261-2229, or email at
jkey@gryphongold.com
The Borealis property is described in the technical report 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 prepared in
accordance with National Instrument 43-101 of the Canadian Securities
Administrators. The technical report describes the exploration history,
geology and style of gold mineralization at the Borealis property. 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 a possible production decision at the Borealis, the anticipated
result and economic payback of reducing the variable royalty, the ability
to exercise the option, the ability to successfully develop the Borealis,
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. We do not undertake to update forward-looking
statements.
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