CARSON CITY, NEVADA -- (Marketwire) -- 03/01/13 -- Gryphon Gold Corporation (the "Company" or "Gryphon Gold") (TSX: GGN)(OTCQB: GYPH), a company focused on its joint venture interest in the gold Borealis Oxide Heap Leach Project in Nevada (the "Borealis Property"), provided an operational update as of February 28, 2013.
Permit to increase solution flow still progressing
The Company has submitted several permit applications that would allow the solution flow at the Borealis Property to increase almost 50%, up to 2,600 gallons per minute. The current solution flow permit allows throughput of approximately 1,750 gallons per minute, which is nearly double the approximately 950 gallons per minute that has been realized to date. While the Water Pollution Control Permit was issued by the State of Nevada in the fourth quarter of 2012, the main overriding permit, the Modified Plan of Operations, continues to be under review by the U.S. Forest Service and the Nevada Department of Environmental Protection. Borealis Mining Company LLC ("Borealis"), the entity that was created as a result of the joint venture with Waterton Global Value L.P. ("Waterton"), continues to work with both agencies to complete the permitting.
Additional initiatives to advance production
-- Borealis is finalizing the assembly and electrical work on the additional crushers, which are expected to be fully operational next week. Once online, the system is expected to be able to process 12,000 tons of ore per day.-- The pumping system required for the additional set of carbon columns is on site. The carbon columns are anticipated to be delivered to the property by the end of March and, along with the expanded pumping system, will be installed and should be operational upon receipt of the solution flow permits.-- Heavy earth moving equipment, including a loader and a haul truck, has been ordered and is scheduled to be on site by the end of March. With this additional equipment, Borealis will be able to mine and add fresh ore to the heap leach pad with the expectation of increasing recovery rates and decreasing the cash cost per ounce.
James T. O'Neil Jr., CEO and Interim CFO of Gryphon Gold, commented, "The restart in production and the addition of our joint venture partner has allowed investments to continue in an effort to expand production capacity at the Borealis Property. The additional crushing capacity and heavy earth moving equipment will allow us to not only stack ore on the pad more quickly, but also add fresh ore to be processed."
Senior Credit Facility and Capital Contributions
Under the terms of the joint venture with Waterton, $17 million, or about two-thirds, outstanding under the Company's senior credit facility was converted for a 60% ownership interest in Borealis. Gryphon Gold owns a 40% interest in Borealis and the amount due under the senior credit facility has been reduced to $8 million, which is to be repaid in twenty-three monthly installments, with the first payment paid on January 31, 2013. The amounts due under the senior credit facility consist of principal of $6,650,000 and an additional aggregate amount of $1,662,500, together with interest calculated at an annual rate of 5%. In the event payments are not made on the facility during the six months ending July 31, 2013, Gryphon Gold will face dilution of its ownership percentage in the joint venture by up to 5.2%, bringing its ownership interest down to 34.8%.