Gryphon Gold Reports $5.9 Million in Revenue in the First

Gryphon Gold Reports $5.9 Million in Revenue in the First Quarter
Fiscal 2013 
- Achieved revenue of $5.9 million on sales of 3,280 gold equivalent
- Achieved positive income from operations 
CARSON CITY, NEVADA -- (Marketwire) -- 08/14/12 -- Gryphon Gold
Corporation (the "Company" or "Gryphon Gold") (TSX:GGN)(OTCBB:GYPH),
a gold exploration, development and production company focused on its
Borealis Oxide Heap Leach Project in Nevada (the "Borealis
Property"), announced financial results for its first quarter of
fiscal 2013, which ended June 30, 2012.  
The Company achieved revenue of $5.9 million in the first quarter of
fiscal 2013 on sales of 3,280 gold equivalent ounces. There was no
revenue in the first quarter of fiscal 2012. Revenue in the fourth
quarter of fiscal 2012 was $1.8 million on sales of 1,076 gold
equivalent ounces.  
Approximately 223,500 tons of ore was placed on the heap leach pad in
the fiscal 2013 first quarter. The Company produced 3,280 gold
equivalent ounces in the quarter at a recovery rate of approximately
40%. For the fiscal 2013 first quarter, the average cash cost per
ounce was approximately $948.This is a non-GAAP measurement, see page
4 for reconciliation. At June 30, 2012, the Company had $5.9 million
of inventory.  
James T. O'Neil Jr., CEO and Interim CFO of Gryphon Gold, commented,
"We completed the 1A phase of the heap leach pad as well as the
Adsorption Desorption and Refining ("ADR") facility in the first
quarter. We have since received the permit for the 1B phase of
expansion of the heap leach pad to build it out from a 4 million ton
capacity to 12 million tons. We also established the reclamation bond
for the expansion while concurrently restructuring the previous bond
for the existing disturbance, which is the Phase 1A portion of the
heap leach pad, with a lower cash collateral requirement. Once we
have the conveyor system, we will be able to mobilize the larger
crusher and load the pad more rapidly as it and two downstream cone
crushers are in place for operation. Our goal is to increase the tons
of ore delivered to the pad to an average of 12,000 tons per day.
However, an increase in our production rate still requires approval
of our permits for the second carbon column structure and higher
pumping capacity. The permits are currently under review with the
Nevada Department of Environmental Protection and the U.S. Forest
The Phase 1B of the heap leach pad expansion is underway.  
For the first quarter of fiscal 2013, the Company had a net loss from
continuing operations of $379,151, compared with a net loss of
$583,461 in same period of the prior year. On a per diluted share
basis, both quarters were negligible.  
Other operating expenses increased $179,506 mostly as the result of a
$138,029 increase in legal and audit fees associated with refinancing
efforts and litigation activity and higher noncash stock option
expense of $72,075. Income from operations was $71,576. 
Interest expense, net of capitalized interest, was $889,401 for the
quarter up from $19,811 in the prior year period for interest
payments made on promissory and convertible notes issued May 20,
2011, to reduce potential future royalty obligations and debt
incurred since April 2011. Also, the Company recognized a gain of
$417,776 in this year's first quarter for the change in liability
warrants issued in Canadian dollars. 
At June 30, 2012, the Company had cash on hand of $4.5 million,
compared with $0.6 million at March 30, 2012. The increase reflected
cash generated from gold sales and borrowings on its senior credit
facility. On April 18, 2012, the Company secured a $15 million senior
secured non-revolving gold stream credit agreement for debt repayment
and working capital requirements. The Company drew the full $15
million facility and used approximately $9.0 million for debt
repayment. At August 10, 2012, the Company had $284,000 in cash,
$360,000 in receivables and $2.6 million being returned to the
Company for the initial surety bond on Phase 1A of the heap leach
Gryphon Gold's objective is to reach a production rate of 2,000 to
2,500 ounces per month by the end of calendar year 2012 with
measurably reduced production costs from leverage on higher
production volume and improved recovery rates achieved by adding
newly mined ore when available to the existing dump and heap
resources currently being processed. The Company's strategy is to
increase production and sales in order to generate sufficient cash to
invest in further exploration and development of the historic
resource base of Borealis for an extended mine life.  
The Company is currently reviewing a three-year mine plan with an
additional three-year potential if drilling confirms current oxide
resource predictions. Gryphon Gold's objective is to further explore
and develop the Borealis Property in order to aid in the discovery of
additional mineralization and to expand the mine life past its
initial six-year estimate. 
Mr. O'Neil noted, "Our focus remains on our planned operational
upgrades to achieve our production target with current mineralization
and the discovery of assets through definition drilling. We have a
lot to accomplish in the next several months to achieve our
production goals, but believe we are executing on plan to make this
happen. We are dependent upon certain items out of our control, such
as permitting, but can move quickly once approvals are received. We
expect these activities to further increase our cash flow and enable
the necessary development drilling to extend the mine life of our
Borealis property."  
The Company will host a conference call and webcast to discuss its
results and progress in advancing the Borealis project on Wednesday,
August 15, 2012 at 11:30 a.m. ET. 
The teleconference call can be accessed by dialling (201) 689-8560.
The webcast can be found on the Company's website at  
A telephonic replay will be available from 2:30 p.m. Eastern Time the
day of the teleconference until Friday, August 22, 2012. To listen to
a replay of the call, dial (858) 384-5517 and enter replay pin number
396771. An archive of the call can be found on the website and a
transcript of the call will be posted once available.  
Gryphon Gold is an exploration, development and production company
focused on precious metals and is currently producing at its Borealis
property, located in Nevada's Walker Lane Gold Belt. . The plan for
the Borealis Property is to advance the development of the oxide heap
leachable gold and silver to the production stage and to further
expand and develop the significant sulphide resource through
exploration, metallurgical design and sulphide project permitting and
development. The Borealis Property is unpatented mining claims
(including claims leased to the Company's wholly owned subsidiary) of
approximately 20 acres each, totaling about 15,020 acres, which has
successful past production.  
Gryphon Gold routinely posts news and other important information on
its website.  
Safe Harbor Statement 
This press release contains "forward-looking statements" and
"forward-looking information" within the meaning of United States and
Canadian securities laws, which may include, but are not limited to,
goals for gold production, goals for ore processing, statements
relating to composition of the shipped dore; estimates related to
cash flow, fixed costs revenue from dore shipments; plans and timing
of the drill program and expected results; estimates related to the
production rate for fiscal 2013; expected investments to increase
production capacity and for capital investments in fiscal 2013;
ability to increase cost efficiencies and achieve positive cash flow
from operations; investment in increasing production capacity and
future production potential and the plans to advance the development
of the Borealis Property. 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 risk that additional financing may be
required and, if so, may not be available on terms satisfactory to
the Company if at all, risks associated with mining operations, risks
associated with the oxide heap, risks associated with exploration,
metallurgical design and project permitting and development and the
risks and uncertainties outlined under the section headings
"Forward-Looking Statements" and "Risks Factors and Uncertainties" in
the Company's annual report on Form 10-K for the year ended March 31,
2012, and interim report on Form 10Q for the period ended June 30,
2012, as filed with the SEC and Canadian securities administrators
and in the Company's other reports, documents, and registration
statements filed with the SEC (available at and with
Canadian securities administrators (available at
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. The Company does 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 the Company's website: and or Financial data included in the
financial tables should be read in conjunction with the Company's
audited financial statements and the notes attached thereto. 
Non-GAAP Measures 
Cash costs per ounce of gold represent non-U.S. Generally Accepted
Accounting Principles ("GAAP") measurements that the Company believes
provide management and investors an indication of net cash flow.
Management also uses this measurement for the comparative monitoring
of performance of mining operations period-to-period from a cash flow
perspective. Cash cost per ounce is a measure developed by gold
companies in an effort to provide a comparable standard; however,
there can be no assurance that our reporting of this non-GAAP measure
is similar to that reported by other mining companies. Cost of sales
and other direct production costs and depreciation, depletion and
amortization was the most comparable financial measures calculated in
accordance with GAAP to total cash costs.  

                          Gryphon Gold Corporation                          
                     Cash Cost Per Ounce Reconciliation                     
                          (Stated in U.S. dollars)                          
Cost of sales                                                  $   5,045,815
  Impairment on inventory                                             60,531
  Royalties                                                          280,295
  Inventory change                                                 1,271,965
  Depreciation, depletion, amortization                              325,010
Production cash costs                                              3,108,014
Gold equivalent ounces sold                                            3,280
Cash cost per ounce                                            $      947.57
                          Gryphon Gold Corporation                          
                         Consolidated Balance Sheets                        
                          (Stated in U.S. dollars)                          
                                                    As at                   
                                            June 30, 2012             As at 
                                              (unaudited)    March 31, 2012 
Current Assets                                                              
  Cash                                   $      4,533,261  $        602,343 
  Accounts receivable                              27,179           358,005 
  Prepaid expenses                                275,103           171,515 
  Inventories                                   6,024,646         6,363,016 
  Deferred debt issue costs                       491,802           312,549 
    Total Current Assets                       11,351,991         7,807,428 
  Property, plant & equipment, net             20,003,682        19,565,395 
  Reclamation bonds                             2,898,359         2,839,559 
    Total Assets                         $     34,254,032  $     30,212,382 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current Liabilities                                                         
  Accounts payable and accrued                                              
   liabilities                           $      3,863,407  $      5,004,298 
  Current portion of the long term debt         3,136,500           583,458 
  Note payable                                  1,084,258         1,376,479 
    Total Current Liabilities                   8,084,165         6,964,235 
  Asset retirement obligation                   1,703,504         1,675,877 
  Warrant derivative liabilities                  759,081           137,291 
  Long-term debt, net if discount              12,759,482        10,198,611 
    Total Liabilities                          23,306,232        18,976,014 
Commitments & contingencies (Note 10, 11                                    
 and 13)                                                                    
Stockholders' Equity                                                        
  Common stock                                    194,103           194,103 
  Additional paid-in capital                   54,205,021        54,114,438 
  Accumulated deficit                         (43,451,324)      (43,072,173)
    Total Stockholders' Equity                 10,947,800        11,236,368 
    Total Liabilities and Stockholders'                                     
     Equity                              $     34,254,032  $     30,212,382 
                          Gryphon Gold Corporation                          
                    Consolidated Statement of Operations                    
                          (Stated in U.S. dollars)                          
                                             Three months      Three months 
                                                    ended             ended 
                                            June 30, 2012     June 30, 2011 
Sales of product                         $      5,889,363  $              - 
Cost of sales and other direct                                              
 production costs                               5,045,815                 - 
Gross profit                                      843,548                 - 
Other operating expenses:                                                   
  Exploration                                      25,218            90,896 
  Salaries & consulting fees                      320,935           233,407 
  General and administrative                      153,424           143,079 
  Legal and audit                                 212,176            74,147 
  Travel and accommodation                         26,390            50,473 
  Depreciation                                      6,632             3,509 
  Loss (gain) on disposal of equipment               (430)                - 
  Asset retirement obligation accretion            27,627            (3,046)
    Total other operating expenses                771,972           592,465 
Income (loss) from operations                      71,576          (592,465)
Other (income) expense:                                                     
  Foreign exchange (gain) loss                    (19,400)          (28,749)
  (Gain) loss on warrant derivative                                         
   liability                                     (417,776)                - 
  Interest income                                  (1,498)              (66)
  Interest expense, net of capitalized                                      
   interest                                       889,401            19,811 
    Total other (income) expense                  450,727            (9,004)
Net loss                                 $       (379,151) $       (583,461)
Basic and diluted loss per share:                                           
Net loss                                              Nil               Nil 
Basic and diluted weighted average                                          
 number of common shares outstanding          194,103,382       141,980,549 
Gryphon Gold Corporation                                                    
Consolidated Statements of Cash Flows                                       
(Stated in U.S. dollars)                                                    
                                             Three months      Three months 
                                                    ended             ended 
                                            June 30, 2012     June 30, 2011 
OPERATING ACTIVITIES                                                        
Net loss for the period                  $       (379,151) $       (583,461)
Items not involving cash:                                                   
  Interest expense paid with debt                 149,229                   
  Depreciation                                    394,666             3,509 
    Asset retirement obligation                                             
     accretion                                     27,627            (3,046)
    Gain on disposal of equipment                    (430)                - 
  Share based compensation                         90,583            18,508 
  Amortization of debt offering costs             380,822                   
  Amortization of notes payable discount          242,672                   
  Unrealized gain on foreign exchange               5,572           (33,513)
    Impairment of inventory                        60,531                 - 
    Change in liability of options and                                      
     warrants                                    (417,776)                - 
    Loss on modification of debt                        -                 - 
Changes in non-cash working capital                                         
 items:                                                                   - 
  Accounts receivable                               7,256            (2,608)
  Accounts payable and accrued                                              
   liabilities                                 (3,131,858)          150,863 
  Inventories                                   1,881,582                 - 
  Prepaid expenses                               (103,588)              564 
Cash used in operating activities                (792,263)         (449,184)
INVESTING ACTIVITIES                                                        
Reclamation bonds purchased                       (58,800)       (2,000,000)
Purchase of property, plant & equipment          (166,049)         (896,535)
Interest capitalized on self-constructed                                    
 assets                                           (35,799)                - 
Proceeds from sale of equipment                     1,000                 - 
Option payment to amend and reduce                                          
 royalty                                                -          (175,000)
Proceeds from note receivable                           -             2,975 
Cash used in investing activities                (259,648)       (3,068,560)
FINANCING ACTIVITIES                                                        
Payments on notes payable                        (321,619)                  
Proceeds from senior credit facility            5,395,095                   
Shares and warrants issued for cash                     -        11,068,362 
Share issue costs                                       -           (13,177)
Public offering costs                                   -        (1,185,444)
Debt and share issue costs                        (85,075)                  
Cash provided by financing activities           4,988,401         9,869,741 
Effect of foreign exchange on cash                 (5,572)           33,513 
Increase (decrease) in cash during the                                      
 period                                         3,930,918         6,385,510 
Cash, beginning of year                           602,343  $        837,457 
Cash, end of period                      $      4,533,261  $      7,222,967 

Gryphon Gold Corporation
James T. O'Neil Jr.
CEO and Interim CFO
Kei Advisors LLC
Deborah K. Pawlowski
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