Merger plans for Gryphon Gold, American Bonanza

Gryphon Gold (GGN-T, GYPH-O) and American Bonanza Gold (BZA-T, ABGFF-O) have tabled plans to merge. A letter of intent inked by the pair would see Gryphon issue a half-share for each of American Bonanza’s roughly 116 million shares outstanding along with a similar exchange ratio for its option and warrants.

The plan comes just several months after Gryphon purchased private company Nevada Eagle Resources — building a significant property portfolio through the acquisition of some 54 separate gold projects primarily in Nevada.

This latest deal would incorporate American Bonanza’s flagship Copperstone gold project in Arizona into the combined portfolio. The property holds a measured and indicated resource of 970,000 tonnes grading 10.7 grams gold per tonne for about 335,000 contained oz. gold. An additional 190,000 tonnes of 10.9 grams gold has also been reviewed — kicking in a further 66,000 contained oz.

Additionally, American Bonanza holds the advanced-stage Fenelon gold project in northwestern Quebec that has undergone a past pre-feasibility study as well as some underground development. About 48,000 measured and inferred tonnes grading 19.6 grams gold has been tabled in the high-grade deposit. Recent exploration has also identified a couple of significant nickel mineralized zones on the project.

The company also recently entered into an agreement with Agnico-Eagle (AEM-T, AEM-N) to jointly explore and develop a pair of adjoining properties in Quebec Bonanza’s Noyon-Northway project and Agnico-Eagle’s Vezza property.

In late-2007 American Bonanza closed a deal assigning its option on the Taurus gold property in northern B.C. to Hawthorne Gold (HGC-V, HWTHF-O), which itself is in merger process with Cusac Gold (CGC-T, CUSIF-O). Hawthorne is paying $6 million over two years plus a further $3 million upon completion of positive feasibility study or a production decision.

Gryphon is continuing to advance its flagship Borealis gold deposit in west-central Nevada where is has tabled a measured and indicated resource of 37.4 million tonnes grading 1 gram gold per tonne (about 1.2 million contained oz.) plus an additional 28 million inferred tonnes of 0.7 gram gold (roughly 609,000 contained oz.). A revised resource estimate is in the works and expected before Q2 of this year.

Borealis operated from 1981 to 1990 producing roughly 600,000 oz. gold from several open pits feeding heap leach operations.

Shares of Gryphon Gold dropped 10% on news of the proposed merger — closing off 6 to a new low of 55 apiece in February 12th trading — while American Bonanza gained 15% to close up 3 at 23.5 per share.