Gryphon Minerals - Quarterly Report - 30 June 2016
Gryphon Minerals (ASX:GYR) June Quarterly Report focussed on the proposed merger with ASX/TSX-listed Teranga Gold Corporation. However, there was also a range of good drilling results from Fourkoura including 7m @ 12.8g/t Au, 8m @ 7.5g/t Au and 11m @ 5.3g/t Au. Drilling is continuing at Banfora, aimed at drilling out Fourkoura and Nogbele for a potential CIL operation.
Teranga Gold Corporation to Acquire Gryphon Minerals
· Gryphon Minerals Limited entered into a Scheme Implementation Agreement (SIA) with Teranga Gold Corporation (Teranga) (TSX:TGZ) (ASX:TGZ) pursuant to which Teranga will acquire all of the ordinary shares of Gryphon (Gryphon Shares) by way of a scheme of arrangement under the Corporations Act between Gryphon and its shareholders (the Transaction).
· Under the SIA, each Gryphon Share will be exchanged for 0.169 common shares of Teranga (Teranga Shares) or 0.169 Teranga Shares in the form of ASX-listed CHESS Depositary Interests (CDIs).
· Based on the closing price of Teranga CDIs on Australian Securities Exchange (the ASX) on 17 June 2016 (Date the transaction was announced):
- the Transaction values each Gryphon Share at A$0.206;
- the Transaction implies a total equity value for Gryphon of approximately A$86 million on a fully-diluted basis; and
- the consideration received by Gryphon shareholders represents a 53% premium over the closing price of Gryphon Shares on the ASX on 17 June 2016 and a premium of 45% over the 20-day volume weighted average price (VWAP) ending on the same date.
· Closing of the Transaction is expected to occur during October 2016.
· Teranga owns and operates the Sabodala Gold mine, the only gold mine and mill in Senegal, West Africa. Located approximately 650km southeast of Dakar, the capital of Senegal, Sabodala has been in operation since 2009. As at 31 December 2015 Teranga’s total proven and probable open pit reserves were 2.6 million ounces of gold, including measured and indicated open pit resources of 4.4 million ounces of gold and inferred open pit mineral resources of 0.94 million ounces of gold. The Sabodala Gold mine has a 13.5 year mine life based on current production and proven and probable reserves.
· Refer to TGZ June 2016 quarterly report for more information.
Banfora Gold Project
· RC drilling undertaken focused on Fourkoura and Nogbele deposits for a total of 55 holes (4,297m) (Refer ASX Announcement 13 July 2016)1
· Drilling targeted potential and probable ore extensions along strike and down-dip at the Fourkoura and Nogbele deposits. Results received to date from Fourkoura Deposit include:
- 7m @ 12.8 g/t from 60 metres
- 8m @ 7.5 g/t from 47 metres
- 11m @ 5.3 g/t from 61 metres
- 8m @ 2.4 g/t from 40 metres
· Auger drilling continued and focused on the Nogbele and Fourkoura areas for a total of 663 holes (4,309m), with the most robust auger saprolite anomaly prioritised for RC drilling. Results remain pending.
· A significant exploration program is currently underway with two rigs operating on double shift.
Regional Burkina Faso: Golden Hill and Gourma Gold Projects -Exploration Pipeline Strategy
· Exploration at the Golden Hill Project included auger drilling at Pourey / C-Zone in preparation of a maiden drilling programme in the next field season.
· Ground geophysics including IP and magnetics undertaken in the C-zone / Pourey areas in orde to better define the mineralised trend.
Banfora Gold Project Development
· The Company commenced a review of the operating and capital costs for the 2mtpa heap leach start-up operation in line with recent reductions in costs in the mining industry. This work was put on hold after the Company announced its proposed merger with Teranga (refer ASX Announcement of 20 June 2016).
· The operations team hosted a site visit for key Teranga staff as part of their due diligence review process in advance of entering into the Scheme Implementation Agreement.
· The Company completed the construction and handover of a micro-dam to the community of Nanguelédougou, and a new request has been received from the village of Bavigué-ka for another micro-dam, confirming positive local support for the program. Three micro-dams have been constructed in a co-operative arrangement between Gryphon and the benefiting community.
Environmental & Social Responsibility
· Work continued updating documentation for International Finance Corporation (IFC) compliance at Banfora. Feedback was received from the IFC regarding updated security management documentation and Gryphon’s approach to risk management.
Cash and Working Capital
· At 30 June 2016 Gryphon held approximately $9.3 million in cash, plus approximately $3.8 million in listed investments.
· In July 2016, the Company completed a placement to the value of $4.4 million to Teranga at $0.206 per share to fund the start of a resource conversion drill program and plant optimisation studies required to complete a fully optimised and de-risked feasibility study by the first half of 2017 and to update the tailings storage facility design and resettlement action plan required as a result of the decision to move forward with a carbon-in-leach plant.