Gryphon Gold, American Bonanza merger

Gryphon Gold Corporation and American Bonanza Gold Corp. have signed a Letter of Intent to merge American Bonanza into a wholly owned subsidiary of Gryphon Gold through a Plan of Arrangement. Shareholders of American Bonanza will receive 0.50 shares of Gryphon Gold for every share of American Bonanza and options and warrants will be exchanged on the same ratio.

The merger is part of an overall business strategy to increase gold resources through acquisition, exploration and joint ventures in politically stable jurisdictions with long histories of gold mining.

Gryphon Gold brings positive exposure to the benefits of gold exploration and resource expansion with nominal cash expenditures through exploration at over 50 properties — primarily through joint venture and leasing agreements. This property portfolio and strategy is expected to allow the combined company to focus on the development of the Borealis and Copperstone properties.

American Bonanza’s Joint Venture with Agnico-Eagle on the Northway and Vezza deposits offers potential for a third gold mining project. Other American Bonanza projects in Ontario and Quebec offer significant potential to develop additional resources. The Fenelon property lies in Quebec’s Casa Berardi gold district and drilling has identified two large nickel rich zones. American Bonanza continues to advance other exploration projects, including the La Martinière gold project in Quebec.

American Bonanza has sold the Taurus property in northern British Columbia to Hawthorne Gold Corporation. Under that agreement, American Bonanza is expected to receive further payments of Cdn$5 million by December 22, 2009. An additional Cdn$3 million is due to American Bonanza upon the completion of a feasibility study or the commencement of production.

The current cash reserves of the combined company amounts to approximately Cdn$9 million. Future cash receipts from the sale of the Taurus property is expected to total Cdn$5 to Cdn$8 million. Outstanding Quebec mining tax credits due to American Bonanza total up to Cdn$2 million and will be to the credit of the merged entity. Therefore, current cash on hand plus expected receipts totals Cdn$16 to Cdn$19 million. The combined financial strength of the Companies is expected to allow significant development at the Borealis and Copperstone projects.

The board and management structure of the combined Company is expected to be as follows: Tony Ker, Richard Hughes, Rohan Hazelton, Don Gentry (of Gryphon Gold), and Brian Kirwin and Giulio Bonifacio (of American Bonanza) will serve as directors of the merged company. Tony Ker will serve as Chief Executive Officer and Michael Longinotti will serve as Chief Financial Officer of the combined company.

Tony Ker, CEO of Gryphon Gold, believe that this merger will strengthen the Company’s resource, management and financial base. The merger is expected to enable the Company to further its business strategy of developing and acquiring more gold resources in politically stable jurisdictions that have either great exploration potential or near-term production potential. I look forward to working with Brian and Giulio in growing the company.