Bolero Likely To Bid For Gryphon Gold

Bolero Resources (BRU-V), a Canadian molybdenum development and exploration company, says it intends to make an all-share takeover offer for indebted Gryphon Gold (GGN-T), which holds gold assets in Nevada’s Borealis district.

“We felt that being a one-trick pony is just not the way to be anymore, you have to try to find value properties and work them,” Bruce Duncan, Bolero’s president and chief executive explained in a telephone interview.

Bolero says it will try to buy all of Gryphon’s shares at an implied offer price of about 25¢ per share.

If the offer goes ahead, it would value Gryphon at $18 million and represent about a 25% premium to its closing share price of 20¢ on Jan. 19, and a premium of 25.8% to its 21-day, volume-weighted average price.

Gryphon Gold shareholders would receive one Bolero share for every two Gryphon shares they hold. Bolero would have to issue about 35.09 million shares (equivalent to 64% of Bolero’s enlarged share capital) to Gryphon’s shareholders.

Bolero describes the offer price as fair, given Gryphon’s debt load of roughly $7 million.

Gryphon Gold’s Borealis deposits are located in the Walker Lane gold belt of western Nevada. The Borealis gold system is one of the largest known volcanic-hosted, high-sulphidation gold-bearing mineralized systems in Nevada, according to the company’s website.

“We thoroughly know their assets because the geologist who did their National Instrument 43-101 is on our board,” Duncan said. “We like the Borealis asset; we’ve disclosed our intent, and we’ll see if we can cobble together some sort of a deal.”

Duncan noted that Gryphon’s management team was “doing a fine job” with the asset but said he believes Bolero can take it further.

“It’s an asset where you could get into production in nine months,” he explained. “If you were set to go with financing you could be up and running in nine months, at a pretty decent rate of return. Payback would be in two years and we’re all anticipating gold is going to go higher. We think it’s a pretty solid investment. And we have people who could step in and operate it.”

Duncan added that the asset shows about 2.5 million oz. gold in the measured, indicated and inferred categories and says he thinks Bolero could build that up to about 5 million oz.

“They have a pre-feasibility study; it’s not grassroots, it’s an advanced property,” he said.

Bolero will likely proceed with an official takeover offer following more due diligence work on Gryphon Gold’s assets but Duncan points out that all of the company’s initial overtures to Gryphon have been friendly.

Duncan first approached John Key, Gryphon’s president and chief executive, on Jan. 11. The two companies subsequently signed a non-disclosure agreement on Jan. 14.

Bolero then followed up with a letter agreement outlining a potential business combination and short-term debt financing assistance to allow Gryphon Gold to meet a property option agreement payment before Feb. 22.

But according to Duncan, Gryphon Gold did not respond to the letter and the company is now considering making an offer directly to Gryphon Gold’s shareholders.

Bolero owns 100% interests in two molybdenum properties in Montana: Bald Butte and Cannivan Gulch.

At presstime, Bolero was trading at 52¢ per share and, over the last year, has traded in a range of 18.5¢-$3.00 per share. The junior has 8.5 million shares outstanding.

Gryphon Gold was trading at 21.5¢ and has traded in a 52-week range of 10-32.5¢ per share.