Edgar Filing: GRYPHON GOLD CORP

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON .

REGISTRATION STATEMENT NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GRYPHON GOLD CORPORATION
(Name of Small Business Issuer in its charter)

NEVADA 1041 92-0185596
(State or jurisdiction (Primary Standard I.R.S. Employee
of incorporation Industrial Classification Identification No.)
or organization) Code Number)

390 UNION BLVD., SUITE 360
LAKEWOOD, CO, 80228 303-679-9819
(Address of principal executive offices) (Registrant's telephone number, including area code)

PARACORP INCORPORATED
318 N CARSON STREET #208
CARSON CITY, NEVADA 89701
PHONE: (775) 883-0104
(Name, address and telephone number of agent for service)
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COPIES TO:

KENNETH SAM, ESQ. PHILIPPE TARDIF, ESQ. ANDREW FOLEY, ESQ. DAVID REDFORD, ESQ.
CHRIS DOERKSEN, ESQ. LANG MICHENER LLP PAUL WEISS RIFKIND GOODMANS LLP
DORSEY & WHITNEY LLP SUITE 2500, 181 BAY STREET WHARTON GARRISON LLP 355 BURRARD STREET, SUITE 1900
1420 FIFTH AVENUE, SUITE 3400 TORONTO, ONTARIO 1285 AVENUE OF THE AMERICAS VANCOUVER, BRITISH COLUMBIA
SEATTLE, WA 98101 CANADA, M5J 2T7 NEW YORK, NY 10019-6064 CANADA V6C 2G8
(206) 903-8800 (416) 307-4085 (212) 373-3078 (604) 608-4560

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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after
the effective date of this registration statement.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1) REGISTRATION FEE
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Units, each consisting of one share of Common Stock, $0.001
par value, and one-half Class A Warrant(2)................ $17,250,000 $2,030.33
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Shares of Common Stock included as part of the Units(2).....
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Class A Warrants included as part of the Units(2)(3)........
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Shares of Common Stock underlying the Class A Warrants
included in the Units(2)(3)............................... $10,781,250 $1,268.96
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Agent Compensation Options(3)............................... $1,725,000 $203.04
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Shares of Common Stock underlying Agent Compensation
Options(3)................................................
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TOTAL..................................................... $29,756,250 $3,502.33
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(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2) Public offering of Units, each Unit consisting of one share of Common Stock,
$0.001 par value, and one-half Class A Warrant.

(3) Pursuant to Rule 416, there are also being registered such indeterminable
additional securities as may be issued as a result of the anti-dilution
provisions contained in the warrants or options.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.

(SUBJECT TO COMPLETION) DATED AUGUST 17, 2005

PRELIMINARY PROSPECTUS

GRYPHON GOLD CORPORATION

$15,000,000

UNITS

This is the initial public offering of our securities. We are offering up
to units at a price of $ per unit. Each unit will consist of one (1)
share of our common stock and one-half of one (1/2) non-transferable Class A
Warrant, each whole Class A Warrant is exercisable to acquire one share of
common stock at a price of $ until 5:00 p.m. (New York time) on . We
are offering our units for sale concurrently in the United States under the
terms of this prospectus and in each province of Canada under the terms of a
prospectus filed with Canadian securities regulatory authorities. Desjardins
Securities Inc. has agreed to act as our agent in connection with our offering
on a commercially reasonable "best efforts" basis in Canada, and Desjardins
Securities International Inc., the U.S. affiliate of Desjardins Securities Inc.,
will act as agent in the United States. This means that the agent has not
committed to buy any of our units, but shall use commercially reasonable efforts
to sell our units for us.

The offering price of the units and the terms of the Class A Warrants will
be determined by negotiation between Gryphon Gold and the agent in the context
of the market. These prices may not reflect the market price of our common stock
after our offering.

Our Class A Warrants are non-transferable. We will use commercially
reasonable efforts to maintain an effective registration statement at the time
you seek to exercise your warrants; however, we cannot assure you that we will
be able to do so.

No public trading market currently exists for our units, common stock or
warrants. We cannot assure you that our common stock will be listed on any
exchange.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS AND
UNCERTAINTIES" BEGINNING ON PAGE 7.

AGENCY NET PROCEEDS
PRICE TO PUBLIC COMMISSIONS(1) TO COMPANY(2)(3)
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Per Unit............................................. $ $ $
Total Offering(2)(4)................................. $15,000,000 $1,200,000 $13,800,000

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(1) We have agreed to pay selling commissions to the agent equal to 8% for sales
of our units, plus expenses. In addition, we agreed to issue Desjardins
Securities Inc. agent compensation options exercisable to acquire a number
of shares of common stock equal to 10% of the number of units sold. The
agent compensation options are exercisable to acquire shares of common stock
at $ per share until .
(2) We have granted the agent an over-allotment option, exercisable until the
date which is 30 days following the closing of this offering, to purchase on
the same terms a number of additional units equal to up to 15% of the number
of units sold in the offering. If the agent exercises the over-allotment
option in full, the total offering will be $17,250,000 and net proceeds to
us (including deduction of expenses of the offering), will be approximately
$15,070,000.
(3) After deducting the agent's commission but before deducting the expenses of
the offering which are estimated at $800,000. The expenses of the offering
and the agent's commission will be paid by us.
(4) The offering will not be completed unless Units having an aggregate purchase
price of a minimum of $ are sold. If subscriptions for such minimum
number of Units have not been received by the termination date, being the
date which is 90 days following the date of the (final) prospectus, the
offering may not continue without the consent of those who have subscribed
for Units on or before such date.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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DESJARDINS SECURITIES INTERNATIONAL INC.

TABLE OF CONTENTS

PAGE
----

SUMMARY..................................................... 1
RISK FACTORS AND UNCERTAINTIES.............................. 7
FORWARD-LOOKING STATEMENTS.................................. 16
GRYPHON GOLD CORPORATION.................................... 17
DESCRIPTION AND DEVELOPMENT OF THE BUSINESS................. 17
GOLD INDUSTRY AND THE GOLD MARKET........................... 20
BOREALIS PROPERTY........................................... 22
USE OF PROCEEDS............................................. 57
DIVIDEND POLICY............................................. 58
CONSOLIDATED CAPITALIZATION................................. 58
DILUTION.................................................... 59
PRIOR SALES OF SECURITIES................................... 60
LEGAL PROCEEDINGS........................................... 61
DIRECTORS AND OFFICERS...................................... 61
EXECUTIVE COMPENSATION...................................... 67
PRINCIPAL STOCKHOLDERS...................................... 70
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 72
DESCRIPTION OF SECURITIES................................... 73
THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES............................................... 77
MANAGEMENT'S DISCUSSION AND ANALYSIS........................ 78
DESCRIPTION OF PROPERTY..................................... 82
TRANSFER AGENT AND REGISTRAR................................ 82
LEGAL....................................................... 82
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED
STATES HOLDERS............................................ 83
SHARES ELIGIBLE FOR FUTURE SALE............................. 87
PLAN OF DISTRIBUTION........................................ 89
EXPERTS..................................................... 91
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL MATTERS..................................... 91
WHERE YOU CAN FIND MORE INFORMATION......................... 92
GLOSSARY OF TECHNICAL TERMS................................. 93
INDEX TO FINANCIAL STATEMENTS............................... F-1

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from the
information contained in this prospectus. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
when this prospectus is delivered or when any sale of our common stock occurs.

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FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES

In this prospectus all references to "$" or "dollars" mean the U.S. dollar,
and unless otherwise indicated all currency amounts in this prospectus are
stated in U.S. dollars. All references to "Cdn.$" refer to the Canadian dollar.
All financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and are reported in U.S.
dollars.

EXCHANGE RATE INFORMATION

The following table sets forth, for each of the years indicated, the year
end exchange rate, the average closing rate and the high and low closing
exchange rates of one Canadian dollar in exchange for U.S. currency as quoted by
the Bank of Canada. On August 15, 2005, the closing rate was Cdn.$1.00 equals
United States $0.8338.

CALENDAR YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31 MARCH 31
-------------------- -----------------
2004 2003 2005 2004
-------- -------- ------- -------

High.............................................. 0.8504 0.7726 0.8504 0.7866
Low............................................... 0.7165 0.6381 0.7164 0.6763
Average........................................... 0.7685 0.7138 0.7822 0.7392
Year End.......................................... 0.8319 0.7713 0.8267 0.7626

METRIC CONVERSION TABLE

For ease of reference, the following conversion factors are provided:

METRIC UNIT U.S. MEASURE U.S. MEASURE METRIC UNIT
----------- ------------ ------------ -----------

1 hectare................... 2.471 acres 1 acre 0.4047 hectares
1 metre..................... 3.2881 feet 1 foot 0.3048 metres
1 kilometre................. 0.621 miles 1 mile 1.609 kilometres
1 gram...................... 0.032 troy oz. 1 troy ounce 31.1 grams
1 kilogram.................. 2.205 pounds 1 pound 0.4541 kilograms
1 tonne..................... 1.102 short tons 1 short ton 0.907 tonnes
1 gram/tonne................ 0.029 troy ozs./ton 1 troy ounce/ton 34.28 grams/tonne

SUMMARY

This summary does not contain all of the information you should consider
before buying shares of our common stock. You should read the entire prospectus
carefully, especially the "Risk Factors and Uncertainties" section and our
consolidated financial statements and the related notes appearing at the end of
this prospectus, before deciding to invest in shares of our common stock.

SUMMARY OF OUR BUSINESS

We are a gold company focused on acquiring, exploring and developing gold
properties in the United States. Our objective is to establish a producing gold
company through the development and extraction of gold deposits, beginning with
our Borealis Property.

Our principal asset is the Borealis Property located in the Walker Lane
Gold Belt in the Borealis District of Western Nevada. Nevada has a well
established history of gold production and an existing infrastructure to
accommodate mining operations. Several gold deposits have been previously
defined through extensive drilling on the Borealis Property. Prior owners
drilled over 2,200 holes with a total drilled length of over 600,000 ft. We have
compiled an electronic database of these drill results and other technical
information to better understand the resource potential at the Borealis
Property. In the 1980's, previous operators of the Borealis Property mined
approximately 600,000 ounces of gold from near-surface oxide deposits. Of the 14
known deposits on the Borealis Property, 8 have been the source of historical
production. Operations at the mine were shut down in 1991 and a full site
reclamation was completed in 1994.

In May 2005, Ore Reserves Engineering delivered to us a technical report
prepared in accordance with National Instrument 43-101 of the Canadian
Securities Administrators. The technical report identified 44,694,000 tons of
ore containing measured and indicated resources with an average gold grade of
0.024 opt for an aggregate of 1,249,000 contained ounces of gold, and 34,384,000
tons of ore containing inferred resources with an average of 0.021 opt for an
aggregate of 729,000 contained ounces of gold.

We acquired our interest in the Borealis Property from Golden Phoenix
Minerals, Inc. in a series of transactions, which began in July 2003. During
2004, we completed drilling, technical and engineering work necessary to prepare
a Plan of Operation to allow the construction and operation of an open pit heap
leach mine on the Borealis Property. We submitted the Plan of Operation to the
United States Forest Service in August 2004, and we are continuing our work to
satisfy the requirements of the various agencies, including the approval of the
Nevada Division of Environmental Protection. We anticipate that the principal
mine operating permits will be granted in early 2006.

We are preparing a feasibility study on the previously mined area of the
Borealis Property to further delineate the gold resources available for the
operation of a mine, to upgrade some or all of the mineralized material to
proven and probable reserves, design the open pit mine, heap leach pads and gold
recovery plant and to estimate the capital and operating costs of the proposed
mining scenario. Metallurgical test work completed to date indicates the
material is amenable to conventional heap-leach recovery methods. Once we have
completed a feasibility study and, if warranted have made a decision to begin
development, we intend to develop our Borealis Property and place it into
production. We estimate that we may be able to commence mine operations during
the second half of 2006.

CORPORATE STRENGTHS

We believe that we have the following business strengths that will enable
us to achieve our objectives:

- Our management team has significant mining industry experience ranging
from exploration to mine development and operation.

and is rapidly moving through state and federal permit requirements. We
have received approvals for surface exploration and water wells and have
successfully progressed through the required agency and public review
process for those permits.

- Our land position is extensive, covering approximately 14,900 acres. Many
surface showings of gold mineralization on the property have already been
identified and may provide opportunities for discovery of additional gold
deposits. Our property has multiple types of gold deposits including
oxidized material, partial oxidized material, and predominantly sulfide
material; all of which may allow us flexibility in our future plans for
mine development and expansion.

NON-RESERVES BOREALIS PROPERTY

The below noted mineralized material is contained in several deposits
within the limits of a specific study area defined as the central core group of
mining claims for historical mining operations that took place in the 1980's,
and was estimated using guidelines established in, and is compliant with,
Canadian NI 43-101 standards. These gold deposits within the specific study area
include: the West Alluvial Deposit, Borealis, Crocodile Ridge, Deep Ore Flats
(also known as Polaris), East Ridge, Freedom Flats, Gold View, Graben, Middle
Ridge and Northeast Ridge. The estimate also includes material containing gold
in the heaps and dumps which are located within the boundaries of the study
area.

Known gold deposits outside the boundaries of the study area with
historical estimates include Cerro Duro, Jaimes Ridge, Purdy Peak and Boundary
Ridge Zone. These four deposits are all located on mining claims that we
control. The historical estimates have not been verified by our current study
and should not be relied upon.

We report mineralized material under two separate standards to meet the
requirements for reporting in both the U.S. and Canada. U.S. reporting
requirements for disclosure of mineral properties are governed by the United
States Securities and Exchange Commission (SEC) Industry Guide 7. Canadian
reporting requirements for disclosure of mineral properties are governed by
National Instrument 43-101, commonly referred to as NI 43-101. Canadian and
United States standards are substantially different, and none of our property
has any probable or proven reserves under either Canadian or United States
standards.

US SEC INDUSTRY GUIDE 7 NON-RESERVES -- MINERALIZED MATERIAL

The following table summarizes our estimated US SEC Industry Guide 7
non-reserves (mineralized material) as of May 23, 2005:

BOREALIS PROPERTY
-----------------------
AVERAGE
NON-RESERVES GOLD GRADE TONS
------------ ---------- ----------
(OZ AU/TON)

Mineralized Material(1)..................................... 0.025 79,078,000

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(1) See Glossary of Technical Terms -- SEC Industry Guide 7 Definition for
definitions of non-reserves -- mineralized material.

The following tables summarize our estimated Canadian NI 43-101
non-reserves (measured, indicated and inferred mineral resources) as of May 23,
2005:

CAUTIONARY NOTE TO INVESTORS CONCERNING ESTIMATES OF MEASURED AND
INDICATED MINERAL RESOURCES: The table below uses the terms "measured
mineral resources" and "indicated mineral resources." We advise investors
that while those terms are recognized and required by Canadian regulations,
the SEC does not recognize them. Investors are cautioned not to assume that
any part or all of the mineral deposits in these categories will ever be
converted into mineral reserves.

CANADIAN NI 43-101 NON-RESERVES -- MEASURED AND INDICATED MINERAL RESOURCES(1)

BOREALIS PROPERTY
------------------------------------
AVERAGE CONTAINED
NON-RESERVES(3) GOLD GRADE TONS OUNCES(2)
--------------- ----------- ---------- ---------
(OZ AU/TON) (000'S)

Measured mineral resources......................... 0.024 25,279,000 615.8
Indicated mineral resources........................ 0.033 19,415,000 633.4
Measured and indicated mineral resources........... 0.028 44,694,000 1,249.2

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(1) See Glossary of Terms for definitions of non-reserves -- mineral resources,
measured mineral resources and indicated mineral resources.

(2) The contained gold represents estimated contained metal in the ground and
metallurgical recoveries have not been applied. The estimated metallurgical
recoveries to be applied for gold will be determined upon the completion of
definitive metallurgical testing and in conjunction with the historical
results.

(3) The total measured and indicated mineral resources for our properties have
been estimated at a cut-off grade ranging from 0.005 to 0.01 opt based on
economic constraints that we believe are realistic.

CAUTIONARY NOTE TO INVESTORS CONCERNING ESTIMATES OF INFERRED MINERAL
RESOURCES: The section uses the term "inferred mineral resources." We
advise investors that while this term is recognized and required by
Canadian regulations, the SEC does not recognize it. "Inferred mineral
resources" have a great amount of uncertainty as to their existence, and
great uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an inferred mineral resource will ever be
upgraded to a higher category. In accordance with Canadian rules, estimates
of inferred mineral resources cannot form the basis of feasibility or other
economic studies. Investors are cautioned not to assume that any part or
all of the inferred mineral resource exists or is economically or legally
mineable.

CANADIAN NI 43-101 NON-RESERVES -- INFERRED MINERAL RESOURCES(1)

BOREALIS PROPERTY
------------------------------------
AVERAGE CONTAINED
NON-RESERVES GOLD GRADE TONS OUNCES(2)
------------ ----------- ---------- ---------
(OZ AU/TON) (000'S)

Inferred mineral resources(3)...................... 0.021 34,384,000 729.1

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(1) See Glossary of Terms for definitions of non-reserves -- inferred mineral
resources.

(3) The total inferred mineral resources for our properties have been estimated
at a cut-off grade ranging from 0.005 to 0.01 opt based on economic
constraints that we believe are realistic.

SUMMARY FINANCIAL DATA

The following table summarizes our financial data. You should read the
following selected financial data together with our consolidated financial
statements and the related notes appearing at the end of this

prospectus and the "Management's Discussion and Analysis" section and other
financial data included in this prospectus.

PERIOD FROM THREE
APRIL 24, 2003 MONTHS FROM APRIL 24, 2003
FISCAL YEAR ENDED (INCEPTION) TO ENDED (INCEPTION) TO
MARCH 31, MARCH 31, JUNE 30, JUNE 30,
2005 2004 2005 2005
----------------- -------------- ------------ -------------------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS
DATA:
Revenue................... $ 0 $ 0 $ 0 $ 0
Net loss.................. (2,341,120) (1,039,925) (817,918) (4,198,963)
Basic and diluted loss per
common share............ (0.15) (0.13) (0.03)
Weighted average shares
outstanding(1).......... 15,287,736 7,879,432 26,150,210

AT MARCH 31, AT JUNE 30,
----------------------- -----------
2005 2004 2005
---------- ---------- -----------
(UNAUDITED)

BALANCE SHEET DATA:
Cash............................................. $3,065,436 $ 975,551 $5,859,298
Working capital.................................. 1,702,953 1,065,082 4,743,631
Total assets..................................... 4,985,808 1,588,107 7,721,545
Non-current liabilities.......................... 0 0 0
Stockholders' equity............................. 3,532,615 1,379,275 6,574,174

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(1) As of June 30, 2005, we had 27,722,370 shares issued and outstanding.

THE OFFERING

This prospectus covers Units with the aggregate value of $15,000,000, each
Unit consisting of one share of common stock and one-half of one
non-transferable Class A Warrant, offered in our initial public offering, plus
an over allotment option equal to 15% of the total number of Units sold in the
offering. The offering will not be completed unless Units having an aggregate
minimum purchase price of $ are sold. If subscriptions for such minimum
number of Units have not been received by the termination date, being the date
which is 90 days following the date of this prospectus, the offering may not
continue without the consent of those who have subscribed for Units on or before
such date.

SECURITIES OFFERED Units consisting of:

- one share of common stock, and

- one-half of one non-transferable Class A
Warrant.

Each whole Class A Warrant is exercisable to
acquire one share of common stock at $ per
share and will expire on .

OFFERING PRICE $ per Unit

COMMON STOCK OUTSTANDING AS OF
AUGUST 17, 2005 27,722,370 shares

MAXIMUM OFFERING(1)

NUMBER OF UNITS OFFERED

NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING AFTER
OFFERING

NUMBER OF CLASS A WARRANTS
OUTSTANDING AFTER OFFERING

NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING ASSUMING
EXERCISE OF ALL OF THE CLASS A
WARRANTS
---------------

(1) At an offering price of $ per Unit. Also, assumes no exercise by the
agent of its option to purchase up to 15% of the number of units sold in the
offering to cover over-allotments, if any. The offering will not be
completed unless Units having an aggregate purchase price of a minimum of
$ are sold.

USE OF PROCEEDS We expect to use the net proceeds from this
offering to finance exploration and development
of our Borealis Property. In addition, we will
use the proceeds from this offering for general
corporate purposes, including working capital
needs. See "Use of Proceeds."

DIVIDEND POLICY We currently intend to retain any future
earnings to fund the development and growth of
our business. Therefore, we do not currently
anticipate paying cash dividends.

OFFERING RESTRICTIONS The Units are being offered to the public in
Canada under a Canadian prospectus. The Units
are being offered in the United States in the
states of New York, Massachusetts, California,
Texas, Colorado, Illinois, Utah, Arizona and
Florida only to "qualified institutional
buyers" as that term is defined in Rule 144A of
the Securities Act of 1933, as amended.

The number of shares of our common stock that will be outstanding
immediately after this offering includes 27,722,370 shares of common stock
outstanding as of August 17, 2005. This calculation excludes:

- 2,300,000 shares of common stock issuable upon vested exercise of options
outstanding as of August 17, 2005 at a weighted average exercise price of
$0.75 per share;

- 6,694,193 shares of common stock issuable upon exercise of warrants
outstanding as of August 17, 2005 at a weighted average exercise price of
$0.89 per share;

- 700,000 shares of common stock available for future grant under our Stock
Option Plan as of August 17, 2005;

- an exercise by the agent of its over-allotment option to purchase up to
additional units from us to cover over-allotments, if any, assuming
an offering price of $ per unit; and

- shares of common stock issuable to the agent pursuant to the compensation
option granted to the agent hereunder at a price of $ per share.

Unless otherwise indicated, all information in this prospectus assumes no
exercise of the Class A Warrants, the over-allotment option or the agent
compensation options.

RISKS RELATED TO INVESTMENT

INVESTMENT IN OUR SECURITIES SHOULD BE CONSIDERED HIGHLY SPECULATIVE.
Investing in our common stock involves risks, including but not limited to:

- we have no proven or probable reserves;

- the feasibility of mining at the Borealis Property has not been
established;

- the Borealis Property is currently not in production;

- our exploration activities may not be commercially successful;

- we may need to raise further funds to meet our business objectives,
including the capital cost required for Borealis, and we have no
assurance that we will be able to raise such funds;

- exploration, development and mining involve a high degree of risk;

- the price of gold is volatile and we may be adversely affected by
fluctuations in those prices;

- title to our properties may be subject to other claims;

- we currently depend on a single property -- the Borealis Property;

- we have not obtained all of the required permits and governmental
approvals for our planned operations at our Borealis Property;

- there is no active market for our securities;

- if we do not maintain an effective registration statement covering the
warrants offered in our Units, or comply with applicable state securities
laws, you may not be able to exercise the warrants or you may be
restricted from selling the underlying common stock; and

- other risks more specifically described under "Risk Factors and
Uncertainties" beginning on page 7.

Our principal business offices are located at 390 Union Blvd., Suite 360,
Lakewood, CO 80228, and our telephone number is 303-679-9819. We also have an
administrative and financing office in Canada at Suite 810, 1130 West Pender
Street, Vancouver, BC V6E 4A4.

RISK FACTORS AND UNCERTAINTIES

Readers should carefully consider the risks and uncertainties described
below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks and uncertainties described
below would have a material adverse effect on our business, financial condition
and/or results of operations, and the trading price of our common stock may
decline and investors may lose all or part of their investment. We cannot assure
you that we will successfully address these risks or other unknown risks that
may affect our business.

Estimates of mineralized material are forward-looking statements inherently
subject to error. Although resource estimates require a high degree of assurance
in the underlying data when the estimates are made, unforeseen events and
uncontrollable factors can have significant adverse or positive impacts on the
estimates. Actual results will inherently differ from estimates. The unforeseen
events and uncontrollable factors include: geologic uncertainties including
inherent sample variability, metal price fluctuations, variations in mining and
processing parameters, and adverse changes in environmental or mining laws and
regulations. The timing and effects of variances from estimated values cannot be
accurately predicted.

THE FEASIBILITY OF MINING HAS NOT BEEN ESTABLISHED.

We have no probable or proven reserves on our property. The mineral
resources identified to date on the Borealis Property do not have demonstrated
economic viability, and we cannot provide any assurance that mineral reserves
will be identified on the property. The feasibility of mining has not been, and
may never, be established. Whether a mineral deposit will be commercially viable
depends on a number of factors, some of which are: the particular attributes of
the deposit, such as size, grade and proximity to infrastructure; metal prices,
which are highly cyclical; and government regulations, including regulations
relating to prices, taxes, royalties, land tenure, land use, importing and
exporting of minerals and environmental protection. If we are unable to upgrade
some or all of our mineralized material to proven and probable reserves in
sufficient quantities to justify commercial operations, we may not be able to
develop a mine at the Borealis Property, which would have a material adverse
effect on our financial condition and results of operations.

THE BOREALIS PROPERTY IS CURRENTLY NOT IN PRODUCTION.

The Borealis Mine actively produced gold in the 1980's, but we currently
have no commercial production at the Borealis Property and have never recorded
any revenues. We expect to continue to incur losses unless and until such time
as our properties enter into commercial production and generate sufficient
revenues to fund our continuing operations. The development of new mining
operations at the Borealis Property will require the commitment of substantial
resources for operating expenses and capital expenditures, which may increase in
subsequent years as needed consultants, personnel and equipment associated with
advancing exploration, development and commercial production of our properties
are added. The amounts and timing of expenditures will depend on the progress of
ongoing exploration and development, the results of consultants' analysis and
recommendations, the rate at which operating losses are incurred, the execution
of any joint venture agreements with strategic partners, our acquisition of
additional properties, and other factors, many of which are beyond our control.
We may not be able to generate any revenues or achieve profitability.

OUR OPERATIONS MAY REQUIRE FURTHER CAPITAL BEYOND WHAT WE RAISE IN THIS
OFFERING, IF ANY.

We are an early stage company and currently do not have sufficient capital
to fully fund the Plan of Operation at the Borealis Property. Although the
minimum proceeds of this offering are expected to provide us with sufficient
capital to fund the mining, processing, development and exploration of the
Borealis Property, we may require substantial additional financing. Failure to
obtain sufficient financing may result in the delay or indefinite postponement
of exploration, development or production on any or all of the Borealis Property
and any properties we may acquire in the future or even a loss of property
interest. This includes the Borealis Property, as our lease over claims covering
the principal deposits will expire in 2009 unless we are engaged in active
mining operations at that time. We have not obtained firm bids or third party
verification for completing work on the Borealis Property, and we cannot be
certain that the amounts we allocate in our use of proceeds

will be sufficient to fund this work. We cannot be certain that additional
capital or other types of financing will be available if needed or that, if
available, the terms of such financing will be favorable or acceptable to us.

OUR EXPLORATION ACTIVITIES MAY NOT BE COMMERCIALLY SUCCESSFUL.

Our long-term success depends on our ability to identify additional mineral
deposits that we can then develop into commercially viable mining operations.
Mineral exploration is highly speculative in nature, involves many risks and is
frequently nonproductive. These risks include unusual or unexpected geologic
formations, and the inability to obtain suitable or adequate machinery,
equipment or labor. The success of gold exploration is determined in part by the
following factors:

- the identification of potential gold mineralization based on superficial
analysis;

- availability of government-granted exploration permits;

- the quality of our management and our geological and technical expertise;
and

- the capital available for exploration.

Substantial expenditures are required to establish proven and probable
reserves through drilling and analysis, to develop metallurgical processes to
extract metal, and to develop the mining and processing facilities and
infrastructure at any site chosen for mining. Whether a mineral deposit will be
commercially viable depends on a number of factors, which include, without
limitation, the particular attributes of the deposit, such as size, grade and
proximity to infrastructure; metal prices, which fluctuate widely; and
government regulations, including, without limitation, regulations relating to
prices, taxes, royalties, land tenure, land use, importing and exporting of
minerals and environmental protection. We cannot assure you that we will
discover or acquire any mineralized material in sufficient quantities to justify
commercial operations.

EXPLORATION, DEVELOPMENT AND MINING INVOLVE A HIGH DEGREE OF RISK.

Our operations will be subject to all the hazards and risks normally
encountered in the exploration, development and production of gold and other
base or precious metals, including, without limitation, unusual and unexpected
geologic formations, seismic activity, rock bursts, pit-wall failures, cave-ins,
flooding and other conditions involved in the drilling and removal of material,
any of which could result in damage to, or destruction of, mines and other
producing facilities, damage to life or property, environmental damage and legal
liability. Milling operations, if any, are subject to various hazards,
including, without limitation, equipment failure and failure of retaining dams
around tailings disposal areas, which may result in environmental pollution and
legal liability.

The parameters used in estimating mining and processing efficiency are
based on testing and experience with previous operations. While the parameters
used have a reasonable basis, various unforeseen conditions can occur that may
materially affect the estimates. In particular, past operations indicate that
care must be taken to ensure that proper ore grade control is employed and that
proper steps are taken to ensure that the leaching operations are executed as
planned.

If we make a decision to develop the Borealis Property, we plan to process
the sulfide gold mineralization using technology that has been demonstrated to
be commercially effective at other gold deposits in Nevada. These techniques may
not as efficient or economical as we project, and we may never achieve
profitability.

WE MAY BE ADVERSELY AFFECTED BY FLUCTUATIONS IN GOLD PRICES.

The value and price of our units, common shares and warrants, our financial
results, and our exploration, development and mining activities may be
significantly adversely affected by declines in the price of gold and other
precious metals. Gold prices fluctuate widely and are affected by numerous
factors beyond our control such as interest rates, exchange rates, inflation or
deflation, fluctuation in the value of the United States dollar and foreign
currencies, global and regional supply and demand, and the political and
economic conditions of gold producing countries throughout the world. The price
for gold fluctuates in response to many factors

beyond anyone's ability to predict. The prices used in making the resource
estimates are disclosed and differ from daily prices quoted in the news media.
The percentage change in the price of a metal cannot be directly related to the
estimated resource quantities, which are affected by a number of additional
factors. For example, a 10 percent change in price may have little impact on the
estimated resource quantities and affect only the resultant positive cash flow,
or it may result in a significant change in the amount of resources. Because
mining occurs over a number of years, it may be prudent to continue mining for
some periods during which cash flows are temporarily negative for a variety of
reasons including a belief that the low price is temporary and/or the greater
expense incurred in closing a property permanently.

Mineralized material calculations and life-of-mine plans using
significantly lower gold and precious metal prices could result in material
write-downs of our investments in mining properties and increased amortization,
reclamation and closure charges.

In addition to adversely affecting our mineralized material estimates and
its financial condition, declining metal prices can impact operations by
requiring a reassessment of the commercial feasibility of a particular project.
Such a reassessment may be the result of a management decision related to a
particular project. Even if the project is ultimately determined to be
economically viable, the need to conduct such a reassessment may cause
substantial delays in development or may interrupt operations, if any, until the
reassessment can be completed.

TITLE TO THE BOREALIS PROPERTY MAY BE SUBJECT TO OTHER CLAIMS.

Although we believe we have exercised commercially reasonable due diligence
with respect to determining title to properties we own or control and the claims
that are subject to the Borealis mining lease, there is no guarantee that title
to such properties will not be challenged or impugned. The Borealis Property may
be subject to prior unrecorded agreements or transfers or native land claims and
title may be affected by undetected defects. There may be valid challenges to
the title of the Borealis Property which, if successful, could impair
development and/or operations. This is particularly the case in respect of those
portions of the Borealis Property in which we hold our interest solely through a
lease with the claim holders, as such interest is substantially based on
contract and has been subject to a number of assignments (as opposed to a direct
interest in the property).

All of the mineral rights to the Borealis Property consist of "unpatented"
mining claims created and maintained in accordance with the U.S. General Mining
Law. Unpatented mining claims are unique property interests, and are generally
considered to be subject to greater title risk than other real property
interests because the validity of unpatented mining claims is often uncertain.
This uncertainty arises, in part, out of the complex federal and state laws and
regulations under the U.S. General Mining Law, including the requirement of a
proper physical discovery of valuable minerals within the boundaries of each
claim and proper compliance with physical staking requirements. Also, unpatented
mining claims are always subject to possible challenges by third parties or
validity contests by the federal government. The validity of an unpatented
mining or millsite claim, in terms of both its location and its maintenance, is
dependent on strict compliance with a complex body of U.S. federal and state
statutory and decisional law. In addition, there are few public records that
definitively determine the issues of validity and ownership of unpatented mining
claims.

ESTIMATES OF MINERALIZED MATERIALS ARE SUBJECT TO GEOLOGIC UNCERTAINTY AND
INHERENT SAMPLE VARIABILITY.

Although the estimated resources at the Borealis Property have been
delineated with appropriately spaced drilling, there is inherent variability
between duplicate samples taken adjacent to each other and between sampling
points that cannot be reasonably eliminated. There also may be unknown geologic
details that have not been identified or correctly appreciated at the current
level of delineation. This results in uncertainties that cannot be reasonably
eliminated from the estimation process. Some of the resulting variances can have
a positive effect and others can have a negative effect on mining and processing
operations. Acceptance of these uncertainties is part of any mining operation.

MINERAL RESOURCES ARE ONLY ESTIMATES WHICH MAY BE UNRELIABLE.

Although the mineralized material figures included in this prospectus have
been carefully prepared by Ore Reserves Engineering, these amounts are estimates
only, and we cannot be certain that any specified level of recovery of gold or
other mineral from mineralized material will in fact be realized or that the
Borealis Property or any other identified mineral deposit will ever qualify as a
commercially mineable (or viable) ore body that can be economically exploited.
Mineralized material, which is not mineral reserves, does not have demonstrated
economic viability. Any material change in the quantity of mineralization, grade
or stripping ratio, or the gold price may affect the economic viability of our
properties. In addition, we cannot be certain that gold recoveries or other
metal recoveries in small-scale laboratory tests will be duplicated in larger
scale tests under on-site conditions or during production.

Even though gold has been mined and successfully recovered for several
years at the Borealis Property, until an unmined deposit is actually mined and
processed the quantity of mineral resources and reserves and grades must be
considered as estimates only. In addition, the quantity of mineral reserves and
mineral resources may vary depending on, among other things, metal prices. Any
material change in quantity of mineral reserves, mineral resources, grade or
stripping ratio may affect the economic viability of the Borealis Property. In
addition, we cannot be certain that gold recoveries or other metal recoveries in
small scale laboratory tests will be duplicated in a larger scale test under
on-site conditions or during production.

WE CURRENTLY DEPEND ON A SINGLE PROPERTY -- THE BOREALIS PROPERTY.

Our only mineral property is the Borealis Property. Even though the
Borealis Property encompasses several areas with known gold mineralization,
unless we acquire additional properties or projects or discover additional
deposits at the Borealis Property, we will be solely dependent upon the success
of the Borealis Property as a source of future revenue and profits, if any. We
cannot provide any assurance that we will establish any reserves or successfully
commence mining operations on the Borealis Property or that we will ever obtain
an interest in any other property with mineral potential in order to diversify
our business.

GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR BUSINESS AND PLANNED
OPERATIONS.

We believe that we currently comply with existing environmental and mining
laws and regulations at the Borealis Property and that our proposed development
of the property will also meet those standards. Our mining, processing,
development and mineral exploration activities, if any, are subject to various
laws governing prospecting, mining, development, production, taxes, labor
standards and occupational health, mine safety, toxic substances, land use,
water use, land claims of local people and other matters. We cannot assure you
that new rules and regulations will not be enacted or that existing rules and
regulations will not be applied in a manner which could limit or curtail our
exploration, production or development. At present, there is no royalty payable
to the United States on production from unpatented mining claims, although
legislative attempts to impose a royalty have occurred in recent years.
Amendments to current laws and regulations governing operations and activities
of exploration, development mining and milling or more stringent implementation
thereof could have a material adverse impact on our business and financial
condition and cause increases in exploration expenses, capital expenditures or
production costs or reduction in levels of production assuming we achieve
production or require abandonment or delays in development of new mining
properties.

We have not obtained all of the required permits and governmental approvals
for our planned operations at the Borealis Property.

Government approvals and permits are currently, and may in the future be,
required in connection with our operations, if any. We still require
environmental operating permits, approval of our plan of operations and a water
pollution control permit to commence development of our Borealis Property. To
the extent other approvals are required and not obtained; we may be curtailed or
prohibited from commencing or continuing mining operations or from proceeding
with planned exploration or development of mineral properties.

OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL RISKS.

All phases of our operations, if any, will be subject to federal, state and
local environmental regulation. These regulations mandate, among other things,
the maintenance of air and water quality standards and land reclamation. They
also set forth limitations on the generation, transportation, storage and
disposal of solid and hazardous waste. Environmental legislation is evolving in
a manner which will require stricter standards and enforcement, increased fines
and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees. We cannot be certain that future
changes in environmental regulation, if any, will not adversely affect our
operations, if any. Environmental hazards may exist on the Borealis Property and
on properties which we hold and may hold interests in the future that are
unknown to us at present and that have been caused by previous or existing
owners or operators of the properties.

Failure to comply with applicable laws, regulations and permitting
requirements may result in enforcement actions thereunder, including orders
issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment, or remedial actions. Parties engaged in
mining operations or in the exploration or development of mineral properties may
be required to compensate those suffering loss or damage by reason of the mining
activities and may have civil or criminal fines or penalties imposed for
violations of applicable laws or regulations.

Production, if any, at our mines will involve the use of hazardous
materials. Should these materials leak or otherwise be discharged from their
containment systems then we may become subject to liability for hazards that we
may not be insured against or for clean up work that may not be insured.

WE WILL BE REQUIRED TO LOCATE MINERAL RESERVES FOR OUR LONG-TERM SUCCESS.

Because mines have limited lives based on proven and probable mineral
reserves, we will have to continually replace and expand our mineral reserves,
if any, if and when the Borealis Property produces gold and other base or
precious metals. Our ability to maintain or increase its annual production of
gold and other base or precious metals once the Borealis Property is restarted,
if at all, will be dependent almost entirely on its ability to bring new mines
into production.

The Borealis Property has an estimated nominal mine life of approximately
ten years, which is based solely on preliminary engineering studies and
commodity price assumptions which may not be correct. An increasing gold price
or discovery of additional mineralized material could have the effect of
extending mine life; while a decreasing gold price could shorten mine life.

WE DO NOT INSURE AGAINST ALL RISKS.

Our insurance will not cover all the potential risks associated with a
mining company's operations. We may also be unable to maintain insurance to
cover these risks at economically feasible premiums. Insurance coverage may not
continue to be available or may not be adequate to cover any resulting
liability. Moreover, we expect that insurance against risks such as
environmental pollution or other hazards as a result of exploration and
production may be prohibitively expensive to obtain for a company of our size
and financial means. We might also become subject to liability for pollution or
other hazards which may not be insured against or which we may elect not to
insure against because of premium costs or other reasons. Losses from these
events may cause us to incur significant costs that could have a material
adverse effect upon its financial condition and results of operations.

WE COMPETE WITH LARGER, BETTER CAPITALIZED COMPETITORS IN THE MINING INDUSTRY.

The mining industry is competitive in all of its phases. We face strong
competition from other mining companies in connection with the acquisition of
properties producing, or capable of producing, base and precious metals. Many of
these companies have greater financial resources, operational experience and
technical capabilities than us. As a result of this competition, we may be
unable to maintain or acquire

attractive mining properties on terms we consider acceptable or at all.
Consequently, our revenues, operations and financial condition could be
materially adversely affected.

WE ARE DEPENDENT ON OUR KEY PERSONNEL.

Our success depends on our key executives: Albert Matter, Allen Gordon,
Donald Ranta, Anthony Ker and Thomas Sitar. The loss of the services of one or
more of such key management personnel could have a material adverse effect on
our business. Our ability to manage exploration and development activities, and
hence our success, will depend in large part on the efforts of these
individuals. We face intense competition for qualified personnel, and we cannot
be certain that we will be able to attract and retain such personnel.

OUR GROWTH WILL REQUIRE NEW PERSONNEL.

We are expecting significant growth in our number of employees if we
determine that a mine at the Borealis Property is commercially feasible and we
elect to develop the property. This growth will place substantial demands on us
and our management. Our ability to assimilate new personnel will be critical to
our performance. We will be required to recruit additional personnel and to
train, motivate and manage employees. We will also have to adopt and implement
new systems in all aspects of our operations. This will be particularly critical
in the event we decide not to use a contract miner at the Borealis Property. We
have no assurance that we will be able to recruit the personnel required to
execute our programs or to manage these changes successfully.

OUR DIRECTORS AND OFFICERS MAY HAVE CONFLICTS OF INTEREST

Certain of the directors and officers of Gryphon Gold have served as
officers and directors for other companies engaged in natural resource
exploration and development and may also serve as directors and/or officers of
other companies involved in natural resource exploration and development. For
example, Christopher Herald is the President and CEO of Crown Resources and
Richard Hughes is President of Klondike Gold Corp. and a director of Alamos Gold
Inc. Consequently, there is a possibility that our directors and/or officers may
be in a position of conflict in the future.

DEFINITIONAL STANDARDS FOR REPORTING MINERALIZED MATERIAL DIFFER BETWEEN
UNITED STATES REPORTING STANDARDS AND THE CANADIAN STANDARDS USED IN THIS
PROSPECTUS.

We use the terms "measured mineral resources," "indicated mineral
resources" and "inferred mineral resources" in this prospectus to comply with
reporting standards in Canada. We advise investors that while those terms are
recognized and required by Canadian regulations, the United States Securities
and Exchange Commission, or the SEC, does not recognize them. Investors are
cautioned not to assume that any part or all of the mineral deposits in these
categories will ever be converted into mineral reserves. These terms have a
great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all or any part
of measured mineral resources, indicated mineral resources, or inferred mineral
resources will ever be upgraded to a higher category. In accordance with
Canadian rules, estimates of inferred mineral resources cannot form the basis of
feasibility or other economic studies. Investors are cautioned not to assume
that any part of the reported measured mineral resources, indicated mineral
resources, or inferred mineral resources in this prospectus is economically or
legally mineable.

NEW LEGISLATION, INCLUDING THE SARBANES-OXLEY ACT OF 2002, MAY MAKE IT
DIFFICULT FOR US TO RETAIN OR ATTRACT OFFICERS AND DIRECTORS.

We may be unable to attract and retain qualified officers, directors and
members of board committees required to provide for our effective management as
a result of the recent and currently proposed changes in the rules and
regulations which govern publicly-held companies. Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the Securities and Exchange
Commission that increase responsibilities and

liabilities of directors and executive officers. The perceived increased
personal risk associated with these recent changes may deter qualified
individuals from accepting these roles.

WHILE WE BELIEVE WE HAVE ADEQUATE INTERNAL CONTROL OVER FINANCIAL REPORTING,
WE WILL BE REQUIRED TO EVALUATE OUR INTERNAL CONTROLS UNDER SECTION 404 OF THE
SARBANES-OXLEY ACT OF 2002, AND ANY ADVERSE RESULTS FROM SUCH EVALUATION COULD
RESULT IN A LOSS OF INVESTOR CONFIDENCE IN OUR FINANCIAL REPORTS AND HAVE AN
ADVERSE EFFECT ON THE PRICE OF OUR SHARES OF COMMON STOCK.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we expect that
beginning with our annual report on Form 10-KSB for the fiscal year ended March
31, 2007, we will be required to furnish a report by management on our internal
controls over financial reporting. Such report will contain, among other
matters, an assessment of the effectiveness of our internal control over
financial reporting, including a statement as to whether or not our internal
control over financial reporting is effective. This assessment must include
disclosure of any material weaknesses in our internal control over financial
reporting identified by our management. Such report must also contain a
statement that our auditors have issued an attestation report on our
management's assessment of such internal controls. Public Company Accounting
Oversight Board Auditing Standard No. 2 provides the professional standards and
related performance guidance for auditors to attest to, and report on, our
management's assessment of the effectiveness of internal control over financial
reporting under Section 404.

While we believe our internal control over financial reporting is
effective, we are still compiling the system and processing documentation and
performing the evaluation needed to comply with Section 404, which is both
costly and challenging. We cannot be certain that we will be able to complete
our evaluation, testing and any required remediation in a timely fashion. During
the evaluation and testing process, if we identify one or more material
weaknesses in our internal control over financial reporting, we will be unable
to assert that such internal control is effective. If we are unable to assert
that our internal control over financial reporting is effective as of March 31,
2007 (or if our auditors are unable to attest that our management's report is
fairly stated or they are unable to express an opinion on the effectiveness of
our internal controls), we could lose investor confidence in the accuracy and
completeness of our financial reports, which would have a material adverse
effect on our stock price.

Failure to comply with the new rules may make it more difficult for us to
obtain certain types of insurance, including director and officer liability
insurance, and we may be forced to accept reduced policy limits and coverage
and/or incur substantially higher costs to obtain the same or similar coverage.
The impact of these events could also make it more difficult for us to attract
and retain qualified persons to serve on our board of directors, on committees
of our board of directors, or as executive officers.

RISKS RELATED TO THIS OFFERING

YOU MAY LOSE YOUR ENTIRE INVESTMENT IN OUR SECURITIES.

An investment in our common stock is highly speculative and may result in
the loss of your entire investment. Only potential investors who are experienced
investors in high risk investments and who can afford to lose their entire
investment should consider an investment in us.

WE HAVE NO ACTIVE MARKET FOR OUR SECURITIES.

There is currently no market for Gryphon Gold's common shares and we cannot
be certain that an active market will develop or be sustained after the
offering. We anticipate that the primary market for our common stock will be in
Canada. We cannot assure you that any active trading market will ever develop in
the United States.

The lack of an active public market could have a material adverse effect on
the price and liquidity of the common shares. The price of the common stock to
the public and the commission to the Agent was established by negotiation
between Gryphon Gold and the Agent, and may not be indicative of fair market
value or future market prices.

IF WE DO NOT MAINTAIN AN EFFECTIVE REGISTRATION STATEMENT COVERING THE
WARRANTS OFFERED IN OUR UNITS, OR COMPLY WITH APPLICABLE STATE SECURITIES
LAWS, YOU MAY NOT BE ABLE TO EXERCISE THE WARRANTS OR YOU MAY BE RESTRICTED
FROM SELLING THE UNDERLYING COMMON STOCK.

In order for you to exercise the Class A Warrants, the shares of common
stock underlying them must be covered by an effective registration statement
filed with the United States Securities and Exchange Commission unless an
exemption from such requirements is otherwise available. If the issuance of
shares is not exempt under state securities laws, the shares must be properly
registered with state securities regulators. At present, we plan to maintain an
effective registration statement when the Class A Warrants are exercised.
However, we cannot provide any assurance that state exemptions will be
available, the state authorities will permit us to register the underlying
shares, or that an effective registration statement will be in place at all
relevant times. These factors may limit your ability to exercise the Class A
Warrants unless an applicable registration exemption is available. Even if such
an exemption is available, the underlying shares of common stock may be subject
to regulatory resale restrictions that would effectively limit your ability to
sell the shares. The Class A Warrants are non-transferable.

OUR OFFICERS AND DIRECTORS OWN APPROXIMATELY 30% OF OUR ISSUED AND OUTSTANDING
COMMON STOCK AND SHAREHOLDERS HOLDING MORE THAN 5% OF OUR COMMON STOCK OWN
APPROXIMATELY 37% OF OUR ISSUED AND OUTSTANDING STOCK, WHICH MAY LIMIT YOUR
ABILITY TO INFLUENCE CORPORATE MATTERS.

As of August 17, 2005, Allen Gordon, our President and Chief Executive
Officer and a director, owned 2,250,000 shares of common stock and options
exercisable to acquire an additional 350,000 shares of our common stock; Albert
Matter, our Executive Chairman and Chairman of our Board, owned 2,250,000 shares
of common stock and options exercisable to acquire an additional 350,000 shares
of our common stock; and our other officers and directors, collectively, as a
group, owned 3,830,000 shares of our common stock and options to acquire
1,500,000 shares of our common stock. Together, as of August 17, 2005, our
officers and directors own 8,330,000 shares of our common stock (approximately
30.0% of our issued and outstanding shares of common stock) and options
exercisable to acquire an additional 2,200,000 shares of common stock
(approximately 7.4% of our issued and outstanding shares of common stock, if
fully exercised). In addition, Standard Bank plc holds 3,846,154 shares of our
common stock and warrants exercisable to acquire 1,923,077 shares of common
stock (approximately 13.9% of our issued and outstanding shares of common stock,
or 19.5% assuming the exercise of the warrants) and Bolder Opportunities I
Limited Partnership holds 2,000,000 shares of common stock and warrants
exercisable to acquire 250,000 shares of common stock (approximately 7.2% of our
issued and outstanding common stock, or 8.0% assuming the exercise of the
warrants). Together, Allen Gordon, Albert Matter, Standard Bank and Bolder
Opportunities I hold 10,346,154 shares of common stock or approximately 37% of
our issued and outstanding common stock, excluding options or warrants. These
shareholders could control the outcome of any corporate transaction or other
matter submitted to our shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, and also
could prevent or cause a change in control. The interests of these shareholders
may conflict with the interests of our other shareholders.

Third parties may be discouraged from making a tender offer or bid to
acquire us because of this concentration of ownership.

After the completion of this offering, as a result of the sale of the units
by us, our officers and directors, as a group, together with Standard Bank plc
will have their aggregate holdings of our outstanding shares of common stock
reduced to % assuming we sell the maximum number of units offered, but
excluding exercise by the agents of their option to purchase up to
additional units from us to cover over-allotments, if any.

PURCHASERS OF SHARES OF COMMON STOCK OFFERED IN THIS OFFERING WILL SUFFER AN
IMMEDIATE DILUTION DUE TO THIS OFFERING.

Purchasers of the shares of common stock offered hereby will incur an
immediate and substantial dilution in the net tangible book value per share of
the shares of common stock from the initial public offering price.

"Dilution" per share to new investors in this offering represents the difference
between the amount per share paid by new investors for a share of our common
stock and the as-adjusted, net tangible book value per common share immediately
following our offering. Set forth under the heading "Dilution" in this
prospectus, we have provided information to new investors, assuming the
successful sale of our units assuming the sale of the maximum number of units,
but excluding the exercise by the agent of its option to purchase up to
additional units from us to cover over-allotments, if any. In these
calculations, we have counted one share per unit but have not included any of
the warrants included in the units. After giving effect to the sale of
units, assuming we sold the maximum number of units, the as adjusted, net
tangible book value of our common stock would have been or $
per share at June 30, 2005. Although these calculations show an immediate
increase in the pro forma net tangible book value per common share of
$ , they also disclose the immediate dilution per common share purchased
by new investors of $ . See "Dilution" below.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE THEREBY
DECREASING THE VALUE OF YOUR INVESTMENT.

The market price of our common stock could decline as a result of sales of
substantial amounts of our common stock in the public market, or the perception
that these sales could occur. In addition, these factors could make it more
difficult for us to raise funds through future offerings of common stock. There
will be an aggregate of shares of common stock outstanding immediately
after this offering if the maximum amount is raised, assuming we sold the
maximum number of units offered at an offering price of $ per unit. All
of the shares of common stock sold in the offering will be freely transferable
without restriction or further registration under the Securities Act, except for
any shares purchased by our "affiliates," as defined in Rule 144 of the
Securities Act. The remaining shares of our common stock outstanding will be
"restricted securities" as defined in Rule 144. After the lock up periods
imposed on our existing shareholders, these shares may be sold without
registration under the Securities Act to the extent permitted by Rule 144 or
other exceptions under the Securities Act.

IF WE FAIL TO OBTAIN A LISTING ON AN ESTABLISHED STOCK EXCHANGE, YOU MAY BE
SUBJECT TO U.S. FEDERAL INCOME TAX ON THE DISPOSITION OF YOUR SECURITIES.

We believe that we currently are a "United States real property holding
corporation" under Section 897(c) of the Internal Revenue Code, referred to as a
USRPHC, and that there is a substantial likelihood that we will continue to be
USRPHC. Generally, gain recognized by a Non-U.S. Holder on the sale or other
taxable disposition of common stock should be subject to U.S. federal income tax
on a net income basis at normal graduated U.S. federal income tax rates if we
qualify as a USRPHC at any time during the 5-year period ending on the date of
the sale or other taxable disposition of the common stock (or the Non-US.
Holder's holding period for the common stock, if shorter). Under an exception to
these rules, if the common stock is "regularly traded on an established
securities market," the common stock should be treated as stock of a USRPHC only
with respect to a Non-U.S. Holder that held (directly or under certain
constructive ownership rules) more than 5% of the common stock during the 5-year
period ending on the date of the sale or other taxable disposition of the common
stock (or the Non-US. Holder's holding period for the common stock, if shorter).
There can be no assurances that the common stock will be "regularly traded on an
established securities market." See "United States Federal Income Tax
Consequences To Non-United States Holders" below.

BROKER-DEALERS MAY BE DISCOURAGED FROM EFFECTING TRANSACTIONS IN OUR COMMON
SHARES BECAUSE THEY ARE CONSIDERED A PENNY STOCK AND ARE SUBJECT TO THE PENNY
STOCK RULES.

Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales
practice and disclosure requirements on certain brokers-dealers who engage in
certain transactions involving a "penny stock." Subject to certain exceptions, a
penny stock generally includes any non-NASDAQ equity security that has a market
price of less than $5.00 per share. The additional sales practice and disclosure
requirements imposed upon

broker-dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market.

A broker-dealer selling penny stock to anyone other than an established
customer or "accredited investor," generally, an individual with net worth in
excess of $1,000,000 or an annual income exceeding $200,000, or $300,000
together with his or her spouse, must make a special suitability determination
for the purchaser and must receive the purchaser's written consent to the
transaction prior to sale, unless the broker-dealer or the transaction is
otherwise exempt. In addition, the penny stock regulations require the broker-
dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the United States Securities and Exchange
Commission relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.

IN THE EVENT THAT YOUR INVESTMENT IN OUR SHARES IS FOR THE PURPOSE OF DERIVING
DIVIDEND INCOME OR IN EXPECTATION OF AN INCREASE IN MARKET PRICE OF OUR SHARES
FROM THE DECLARATION AND PAYMENT OF DIVIDENDS, YOUR INVESTMENT WILL BE
COMPROMISED BECAUSE WE DO NOT INTEND TO PAY DIVIDENDS.

We have never paid a dividend to our shareholders, and we intend to retain
our cash for the continued development of our business. We do not intend to pay
cash dividends on our common stock in the foreseeable future. As a result, your
return on investment will be solely determined by your ability to sell your
shares in a secondary market.

FORWARD-LOOKING STATEMENTS

We use words like "expects," "believes," "intends," "anticipates," "plans,"
"targets," "projects" or "estimates" in this prospectus. When used, these words
and other, similar words and phrases or statements that an event, action or
result "will," "may," "could," or "should" occur, be taken or be achieved
identify "forward-looking" statements. Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, provide a statutory safe harbor for forward-looking statements. This
prospectus contains "forward-looking information" which may include, but is not
limited to, statements with respect to the following:

- the timing and possible outcome of pending regulatory and permitting
matters;

- the timing and outcome of our feasibility study;

- the parameters and design of our planned initial mining facilities on the
Borealis Property;

- future financial or operating performances of Gryphon Gold, its
subsidiaries and its projects;

- the estimation of mineral resources and the realization of mineral
reserves, if any, based on mineral resource estimates;

- the timing of exploration, development and production activities and
estimated future production, if any;

- estimates related to costs of production, capital, operating and
exploration expenditures;

- requirements for additional capital;

- government regulation of mining operations, environmental risks,
reclamation and rehabilitation expenses;

- title disputes or claims;

- limitations of insurance coverage; and

- the future price of gold, silver or other metals.

Such forward-looking statements reflect our current views with respect to
future events and are subject to certain risks, uncertainties and assumptions,
including, the risks and uncertainties outlined under the sections titled "Risk
Factors and Uncertainties" beginning at page 7 of this prospectus, "Gryphon Gold
Corporation" beginning at page 17 of this prospectus and "Management's
Discussion and Analysis" beginning at page 78 of this prospectus. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, believed, estimated or expected.

Our management has included projections and estimates in this prospectus,
which are based primarily on management's experience in the industry,
assessments of our results of operations, discussions and negotiations with
third parties and a review of information filed by our competitors with the
Securities and Exchange Commission or otherwise publicly available. We caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. We disclaim any obligation subsequently to
revise any forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

We qualify all the forward-looking statements contained in this prospectus
by the foregoing cautionary statements.

GRYPHON GOLD CORPORATION

NAME AND INCORPORATION

Gryphon Gold Corporation was formed under the laws of the State of Nevada
on April 24, 2003.

We own 100% of the issued and outstanding shares of our operating
subsidiary, Borealis Mining Company. We have no other subsidiary. Borealis
Mining Company was formed under the laws of the State of Nevada on June 5, 2003.

DESCRIPTION AND DEVELOPMENT OF THE BUSINESS

HISTORY AND BACKGROUND OF THE COMPANY

We were established as a private company in April 2003 by our two
co-founders, Albert Matter and Allen Gordon, to acquire and develop gold
properties in the United States.

During the period from our inception on April 24, 2003 through March 31,
2004, we funded our capital needs by raising $2,419,200 in private placements,
issuing 14,376,000 shares of common stock at prices ranging from $0.10 per share
to $0.225 per share.

In July 2003, through our wholly-owned subsidiary Borealis Mining, we
acquired from Golden Phoenix an option to earn up to a 70% joint venture
interest in the mining lease for the Borealis Property (July 2003 Option and
Joint Venture Agreement) by making qualified development expenditures on that
property.

In October 2003, we engaged Behre Dolbear & Company, Inc., mining
consultants, to prepare a preliminary scoping study for the redevelopment of the
Borealis Property. Behre Dolbear prepared a report entitled Preliminary Scoping
Study dated June 7, 2004, which we refer to as the "Behre Dolbear Report," in
accordance with the requirements of NI 43-101.

During 2004, we completed drilling, technical and engineering work
necessary to prepare a Plan of Operation in respect of the development of an
open pit, a heap leach mine on the Borealis Property. We submitted the Plan of
Operation to the U.S. Forest Service on August 27, 2004, and we continue to work
on satisfying all the requirements of the various approval agencies and
completing all necessary reviews,

including the approval of the Nevada Division of Environmental Protection. We
anticipate that the principal mine operating permits will be granted in early
2006.

Following the course established by the recommendations in the Behre
Dolbear Report, and based on additional geologic field work that was completed
in 2004, we retained Ore Reserves Engineering, consulting resource modeling
engineers, to complete an updated resource estimate model in accordance with NI
43-101. In May 2005, Ore Reserves Engineering delivered the report titled
"Technical Report on the Mineral Resources of the Borealis Gold Project Located
in Mineral County, Nevada" which we refer to as the "Technical Report"
throughout this prospectus.

During our fiscal year ended March 31, 2005, we raised $175,000 by issuing
500,000 shares of common stock to an executive officer at $0.35 per share under
the terms of his employment agreement. We raised an additional $4,430,375 by
issuing 6,815,962 units in a series of private placements. Each unit consisted
of one share of common stock and one-half of one share purchase warrant, each
whole warrant exercisable to acquire one share of common stock at $0.90 per
share until the earlier of two years from the issue date and nine months
following the date on which common stock is listed on a public stock exchange.

On January 10, 2005, Borealis Mining entered into a purchase agreement with
Golden Phoenix which gave Borealis Mining the right to purchase the interest of
Golden Phoenix in the Borealis Property for $1,400,000. Golden Phoenix
transferred its interest in the Borealis Property to Borealis Mining on January
28, 2005. Borealis Mining paid $400,000 of the purchase price to Golden Phoenix
upon closing of the purchase, with four additional payments of $250,000 due to
Golden Phoenix on a quarterly basis thereafter.

As of August 17, 2005, Borealis had completed the first two payments and
the final two payments of $250,000 are due on October 28, 2005 and January 27,
2006, respectively. Gryphon Gold guaranteed Borealis Mining's payment
obligations to Golden Phoenix in the Borealis Property by depositing as security
150,000 shares or fifteen percent (15%) of the issued shares of Borealis Mining
into escrow. As Borealis Mining makes each quarterly payment of $250,000, one
quarter of the escrowed shares shall be returned to us. As of August 17, 2005,
75,000 shares have been released from the escrow.

As sole shareholder of Borealis Mining, we control all of the lease rights
to a portion of the Borealis Property, subject to advance royalty, production
royalty, and other payment obligations imposed by the lease. Our acquisition of
the interest of Golden Phoenix in the Borealis Property terminated the July 2003
Option and Joint Venture Agreement. In addition to our leasehold interest to a
portion of the Borealis Property, we also own through Borealis Mining numerous
unpatented mining claims that make up the balance of the Borealis Property, and
all of the documentation and samples from years of exploration and development
programs carried out by the previous operators of the Borealis Property,
totaling thousands of pages of data including, but not limited to, geophysical
surveys, mineralogical studies and metallurgical testing reports.

During our fiscal quarter ended June 30, 2005, we raised $3,919,765 by
issuing 6,030,408 units in a series of private placements. Each unit consisted
of one share of common stock and one-half of one share purchase warrant, each
whole warrant exercisable to acquire one share of common stock at $0.90 per
share until the earlier of two years from the issue date and nine months
following the date on which common stock is listed on a public stock exchange.

On July 11, 2005, we accepted a joint proposal for a feasibility study from
the firms of Samuel Engineering, Inc. and Knight Piesold and Company. Samuel
Engineering provides services including metallurgical process development and
design, and Knight Piesold provides mining, metallurgical and environmental
engineering services. Both companies have worked together recently on completing
similar studies. While work has begun on the feasibility study, we are in the
process of formalizing a definitive agreement with Samuel Engineering and Knight
Piesold.

Effective August 11, 2005, we increased our authorized capital to consist
of 150,000,000 shares of common stock, par $0.001, and 15,000,000 shares of
preferred stock, par $0.001.

BUSINESS OBJECTIVES

We are in the business of acquiring and developing gold properties in the
United States. Our objective is to establish a producing gold company through
the development and extraction of gold deposits, beginning with our Borealis
Property. We aim to achieve our objective by upgrading our mineralized material
to proven and probable reserves at our Borealis Property through completion of a
feasibility study. Once we have completed a feasibility study and, if warranted,
have made a decision to begin development, we intend to develop our Borealis
Property and place it into production. The Plan of Operations does not present
an economic analysis, and we have not placed any information in the Plan of
Operations regarding Capex, Operating costs, ore grade, anticipated revenues, or
projected cash flows. The Plan of Operation, as submitted to the US Forest
Service, was based on the general economic concepts as presented in the Behre
Dolbear Report.

CORPORATE STRENGTHS

We believe that we have the following business strengths that will enable
us to achieve our objectives.

- Our management team has significant mining industry experience ranging
from exploration to mine development and operation.

- As the Borealis Property was the site of surface mining operations from
1981 to 1990, the process to receive permits and start operations on
previously mined operations is less difficult than getting permits for a
previously undisturbed area. The environmental related regulatory review
and approval process, which should allow us to resume surface mining and
on site gold recovery, is well advanced and is rapidly moving through
state and federal permit requirements. We have received approvals for
surface exploration and water wells and have successfully progressed
through the required agency and public review process for those permits.

We have specifically focused our activities on Nevada, which was rated the
highest jurisdiction in the world for mining investment attractiveness by an
independent survey(1). Mining is an integral part of Nevada's economy. In 2003,
the mining industry increased Nevada's output by $5.35 billion including both
direct and indirect impacts, up from $4.8 billion in 2002. Nevada ranks third in
the world in gold production, after South Africa and Australia. Located in the
State of Nevada are well known geological trends such as the Carlin Trend,
Battle Mountain, Getchell Trend and the Walker Lane Trend. The Borealis Property
is also located along the Aurora-Bodie trend which crosses the principal Walker
Lane Trend as shown in the illustration below. Borealis, Bodie, Aurora, and
other historical producing districts, are aligned along this northeast-
southwest belt of significant gold deposits.

---------------

(1) Survey conducted by the Fraser Institute Annual Survey of Mining Companies
2004/2005 Publication Date: March 2005 Publication Format: Survey (an
independent public policy organization based in Vancouver). The survey
ranked 64 jurisdictions including, selected U.S. states, Australian states,
Canadian provinces. The regions were rated based on mineral potential and
effects of government policies on mineral exploration investment.

(NEVADA MINERAL TRENDS MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005; Gryphon
Gold, 2005)

GOLD INDUSTRY AND THE GOLD MARKET

GOLD INDUSTRY

Gold is used as a monetary standard for many nations and is also used in
jewelry, dentistry, and in electronics. Gold is unusual in that it is both a
commodity and a monetary asset. Gold is virtually indestructible and the
majority of gold previously mined still exists above ground in some form or
another. Because gold is relatively easy to transport, upward spikes in price
are often met by the resale of existing stock.

GOLD PRICES AND MARKET STATISTICS

In 2004, gold prices, as expressed in U.S. dollars per ounce, continued to
strengthen, ending the year 12.9% higher over 2003 at an average of $410 per
ounce, as quoted on the London Bullion Market (the primary trading and pricing
market in the world), marking the fourth year of consecutive gains in price. In
December of 2004, gold prices peaked as high as $454. The average spot price in
2004 as quoted on the London Bullion Market was $409.53 per ounce, compared to
$363.83 in 2003. The London P.M fix on August 2, 2005 was $431 per oz of gold.

The chart below shows the historical price of gold for the period from
January 1996 to July 2005 and the net long non-commercial positions (measured in
tons of gold) throughout the period.

(HISTORICAL GOLD PRICE CHART)
---------------

(Source: Bloomberg)

SUPPLY AND DEMAND FUNDAMENTALS

It is estimated that at the end of 2004, above-ground stocks represented a
total quantity of approximately 153,000 tonnes, of which 63% had been mined
since 1950. The supply of gold that satisfies demand each year comes both from
mine production and from the recycling of metal that has been mined in previous
years. The gold from recycling forms a small proportion of total annual supply
flows. Investment holdings, or private investor stocks, account for 16% of the
total stocks of gold. Over the last five years, annual world investment demand
has accounted for 13% of total demand, worth around $5.4 billion. This
calculation of world investment demand includes identified bar hoarding and
official coins. Other elements of gold demand can also be attributed to
investment, including medals/imitation coins and changes in stocks held in gold
exchange traded funds. It is estimated that investment demand increased from a
low of 4.8% of total end-use demand in 2000 to 14% in 2004. Jewelry fabrication
has historically been the largest component of demand. The industrial component
includes electronics, dentistry, other industrial and decorative applications
and medals and imitation coins. The following charts show the last ten years of
world supply of gold and world demand for gold:

(WORLD GOLD SUPPLY AND DEMAND CHART)
---------------

(Source: Gold Field Mineral Services Gold Survey 2005)

BOREALIS PROPERTY

UNLESS STATED OTHERWISE, INFORMATION OF A TECHNICAL OR SCIENTIFIC NATURE
RELATED TO THE BOREALIS PROPERTY IS SUMMARIZED OR EXTRACTED FROM THE "TECHNICAL
REPORT ON THE MINERAL RESOURCES OF THE BOREALIS GOLD PROJECT" DATED MAY 23,
2005, PREPARED BY MR. ALAN C. NOBLE, P.E. OF ORE RESERVES ENGINEERING IN
LAKEWOOD, CO, A "QUALIFIED PERSON", AS DEFINED IN NI 43-101. MR. NOBLE IS
INDEPENDENT FROM US. THE TECHNICAL REPORT WAS PREPARED IN ACCORDANCE WITH THE
REQUIREMENTS OF NI 43-101. Management's plans, expectations and forecasts
related to our Borealis Property are based on assumptions, qualifications and
procedures which are set out only in the full Technical Report. For a complete
description of assumptions, qualifications and procedures associated with the
following information, reference should be made to the full text of the
Technical Report which is available for review on the System for Electronic
Document Analysis and Retrieval (SEDAR) located at the following website:
www.sedar.com. Alternatively, the Technical Report may be inspected during
normal business hours at the offices of Lang Michener LLP, Suite 2500, 181 Bay
Street, Toronto, Ontario during the period of distribution of our common stock
and for 30 days thereafter.

The Borealis Property in Nevada is our principal asset, which we hold
through our subsidiary, Borealis Mining. In the 1980's previous operators of the
Borealis Property mined approximately 600,000 ounces of gold from near-surface
oxide deposits. In this prospectus, the previously mined area is referred to as
the "Borealis site", the "previously disturbed area" or the "previously mined
area", while our references to the Borealis Property refer to the entire
property we own or lease through Borealis Mining. Echo Bay Mines Limited ceased
active mining operations in 1991. Full site reclamation was completed in 1994.
Reclamation bonds were released and Echo Bay relinquished its lease in 1996.

At Borealis, there is one large hydrothermal system, containing at least 14
known gold deposits, some of which are contiguous. There has been historical
production from 8 of these deposits. As there are several other showings of gold
mineralization across the property, there is an opportunity to identify
additional gold deposits.

BOREALIS PROPERTY DESCRIPTION AND LOCATION

The Borealis Property is located in Mineral County in southwest Nevada, 12
miles northeast of the California border. The Borealis Property covers
approximately 14,900 acres. The approximate center of the property is at
longitude 118 DEGREES 45' 34" North and latitude 38 DEGREES 22' 55" West. The
figure below shows the

location and access to the Borealis Property.

LOCATION MAP OF THE BOREALIS PROPERTY

(MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

The Borealis Property is comprised of 747 unpatented mining claims of
approximately 20 acres each, totaling about 14,900 acres, and one unpatented
millsite claim of approximately 5 acres. Of the 747 unpatented mining claims,
122 claims are owned by others but leased to Borealis Mining, and 625 of the
claims were staked by Golden Phoenix or Gryphon Gold and transferred to Borealis
Mining.

Our rights, through Borealis Mining as the owner or lessee of the claims,
allow us to explore, develop and mine the Borealis Property, subject to the
prior procurement of required operating permits and approvals, compliance with
the terms and conditions of the mining lease, and compliance with applicable
federal, state, and local laws, regulations and ordinances. We believe that all
of our claims are in good standing.

The 122 leased claims are owned by John W. Whitney, Hardrock Mining Company
and Richard J. Cavell, whom we refer to as the Borealis Owners. Borealis Mining
leases the claims from the Borealis Owners under a Mining Lease dated January
24, 1997 and amended as of February 24, 1997. The mining lease was assigned to
Borealis Mining by the prior lessee, Golden Phoenix. The mining lease contains
an "area of interest" provision, such that any new mining claims located or
acquired by Borealis Mining within the area of interest after the date of the
mining lease shall automatically become subject to the provisions of the mining
lease.

The term of the mining lease extends to January 24, 2009 and continues
indefinitely thereafter for so long as any mining, development or processing is
being conducted on the leased property on a continuous basis.

The remainder of the Borealis Property consists of 625 unpatented mining
claims and one unpatented millsite claim staked by Golden Phoenix or Gryphon
Gold. Claims staked by Golden Phoenix were transferred to Borealis Mining in
conjunction with our January 28, 2005 purchase of all of Golden Phoenix's
interest in the Borealis Property. A total of 151 claims of the total 625 claims
held by Gryphon Gold are contiguous with the claim holdings, are located outside
of the area of interest, and are not subject to any of the provisions of the
lease.

All of the mining claims (including the owned and leased claims) are
unpatented, such that paramount ownership of the land is in the United States of
America. Claim maintenance payments and related documents must be filed annually
with the Bureau of Land Management (BLM) and with Mineral County, Nevada to keep
the claims from terminating by operation of law. Borealis Mining is responsible
for those actions. At present, the annual BLM maintenance fees are $125 per
claim, or $93,500 per year for all of the Borealis Property claims (747
unpatented mining claims plus one millsite claim). Required documents were
submitted and the fee was paid to the BLM on August 6, 2005 fulfilling the 2006
maintenance requirements. In addition, a county filing fee of $8.50 per claim
plus document fees totaling $6,366 was paid to Mineral County on August 6, 2005,
in fulfillment of the annual filing requirements.

ROYALTY OBLIGATIONS

The leased portion of the Borealis Property is currently subject to advance
royalty payments of approximately $8,614 per month, payable to the Borealis
Owners. These advance royalty payments are subject to annual adjustments based
on change in the United States Consumer Price Index.

The terms of the mining lease require the payment of a net smelter returns
production royalty by Borealis Mining to the Borealis Owners in respect of the
sale of gold (and other minerals) extracted from those claims within the area of
interest specified in the mining lease. The royalty rate for gold is determined
by dividing the monthly average market gold price by 100, with the result
expressed as a percentage. The royalty amount is determined by multiplying that
percentage by the amount of monthly gold production from the claims in the "area
of interest" and by the monthly average market gold price, after deducting all
smelting and refining charges, various taxes and certain other expenses. For
example, using an assumed monthly average market gold price of $400, the royalty
rate would be 4%. Using an assumed monthly production of 5,000 ounces of gold
from the leased claims, the monthly royalty amount would be 5,000 ounces times
$400 per ounce, less allowable deductions, multiplied by 4%.

At present, there is no royalty payable to the United States or the State
of Nevada on production from unpatented mining claims, although legislative
attempts to impose a royalty have occurred in recent years.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Primary access to the Borealis Property is gained from an all weather
county gravel road located about two miles south of Hawthorne from State Highway
359. Hawthorne is about 133 highway miles southeast of Reno. The Borealis
Property is about 16 road miles from Hawthorne.

The elevation on the property ranges from 7,200 ft to 8,200 ft above sea
level. This relatively high elevation produces moderate summers with high
temperatures in the 907F (327C) range. Winters can be cold and windy with
temperatures dropping to 07F (-187C). Average annual precipitation is
approximately 10 inches, part of which occurs as up to 60 inches of snowfall.
Historically, the Borealis Property was operated throughout the year with only
limited weather related interruptions.

Topography ranges from moderate and hilly terrain with rocky knolls and
peaks, to steep and mountainous terrain in the higher elevations.

The vegetation throughout the project area is categorized into several main
community types: pinyon/ juniper woodland, sagebrush, ephemeral drainages and
areas disturbed by mining and reclaimed. Predominate species include pinyon
pine, Utah juniper, greasewood, a variety of sagebrush species, crested wheat
grass and fourwing saltbush.

During the initial phase of operations, if any, we anticipate that power
could be generated on site. There is a power line crossing the Borealis Property
within 2 miles of the center of the planned operations, which we will evaluate
as an alternative power source during our planned engineering feasibility work.
Water is available from two water basins located approximately 5 miles and 7
miles south of the planned mine site, respectively. Water for historical mining
operations was supplied from the basin 5 miles away from the site. We have
obtained a permit from the Nevada Division of Water Resources to access water
from the basin 7 miles away and are in the process of obtaining a permit to
access water from the other basin as well.

The Borealis site has been reclaimed by the prior operator to early 1990's
standards. The pits and the project boundary are fenced for public safety.
Currently, access to the pits and leach heap areas is gained through a locked
gate. No buildings or power lines or other mining related facilities located on
the surface remain. All currently existing roads in the project area are
two -- track roads with most located within the limits of the old haul roads
that have been reclaimed.

The nearest available services for both mine development work and mine
operations are in the small town of Hawthorne, via a wide well-maintained gravel
road. Hawthorne has substantial housing available, adequate fuel supplies and
sufficient infrastructure to meet basic supply requirements. Material required
for property development and mine operations are generally available from
suppliers located in Reno, Nevada.

HISTORY OF THE DISTRICT AND BOREALIS PROPERTY

The original Ramona mining district, now known as the Borealis mining
district, produced less than 1,000 ounces of gold prior to 1981. In 1978 the
Borealis gold deposit was discovered by S. W. Ivosevic (1979), a geologist
working for Houston International Minerals Company (a subsidiary of Houston Oil
and Minerals Corporation). The property was acquired from the Whitney
Partnership, which later became the Borealis Owners, following Houston's
examination of the submitted property. Initial discovery of ore-grade gold
mineralization in the Borealis district and subsequent rapid development
resulted in production beginning in October 1981 as an open pit mining and heap
leaching operation. Tenneco Minerals acquired the assets of Houston
International Minerals in late 1981, and continued production from the Borealis
mine. Subsequently, several other gold deposits were discovered and mined by
open pit methods along the generally northeast-striking Borealis trend, and also
several small deposits were discovered further to the northwest in the Cerro
Duro area. Tenneco's exploration in early 1986 discovered the Freedom Flats
deposit beneath thin alluvial cover on the pediment southwest of the Borealis
mine. In October 1986, Echo Bay Mines acquired the assets of Tenneco Minerals.

With the completion of mining of the readily available oxide ore in the
Freedom Flats deposit and other deposits in the district, active mining was
terminated in January 1990, and leaching operations ended in late 1990. Echo Bay
left behind a number of oxidized and sulfide-bearing gold mineral resources. All
eight open pit operations are reported to have produced 10.7 million tons of ore
averaging 0.059 ounces of gold per ton (opt Au). Gold recovered from the
material placed on heaps was approximately 500,000 ounces, plus an estimated 1.5
million ounces of silver. Reclamation of the closed mine began immediately and
continued for several years. Echo Bay decided not to continue with its own
exploration, and the property was farmed out as a joint venture in 1990-91 to
Billiton Minerals, which drilled 28 reverse circulation (RC) exploration holes
on outlying targets for a total of 8,120 ft. Billiton stopped its farm-in on the
property with no retained interest.

Subsequently Santa Fe Pacific Mining, Inc. entered into a joint venture
with Echo Bay in 1992-93, compiled data, constructed a digital drill-hole
database and drilled 32 deep RC and deep core holes, including a number of holes
into the Graben deposit. Echo Bay completed all reclamation requirements in 1994
and then terminated its lease agreement with the Borealis Owners in 1996.

In 1996 J.D. Welsh & Associates, Inc. negotiated an option-to-lease
agreement for a portion of the Borealis Property from the Borealis Owners. Prior
to 1996, J.D. Welsh had performed contract reclamation work for Echo Bay and was
responsible for monitoring the drain-down of the leach heaps. Upon signing the
lease, J.D. Welsh immediately joint ventured the project with Cambior
Exploration U.S.A., Inc. Cambior performed a major data compilation program and
several gradient IP surveys. In 1998 Cambior drilled 10 holes which succeeded in
extending one existing deposit and in identifying new zones of gold
mineralization.

During the Cambior joint venture period, in late 1997, Golden Phoenix
entered an agreement to purchase a portion of J.D. Welsh's interest in the
mining lease. J.D. Welsh subsequently sold its remaining interest in the mining
lease to a third party, which in turn sold it to Golden Phoenix, resulting in
Golden Phoenix controlling a 100% interest in the mining lease beginning in
2000. Golden Phoenix personnel reviewed project data, compiled and updated a
digital drill-hole database (previous computer-based resource modeling

databases), compiled exploration information and developed concepts, maintained
the property during the years of low gold prices, and developed new mineral
resource estimates for the entire property.

In July 2003 Borealis Mining acquired an option to earn an interest in a
joint venture in a portion of the Borealis Property and in January 2005 Borealis
Mining acquired full interest in the mining lease and mining claims comprising
the Borealis Property. See, "Description and Development of the Business:
History and Background of the Company," above.

We have expended considerable effort consolidating the available historical
data and flat files since acquiring our interest in the Borealis Property. This
data has been scanned, and converted into a searchable electronic form. The
electronic database has formed the basis of re-interpretation of the district
geologic setting, and helped to form the foundation for a new understanding of
the district's potential. We acquired this data from Golden Phoenix in May 2003.

HISTORICAL GOLD PRODUCTION

The Borealis Property is not currently a producing mine. Historical data is
presented for general information and is not indicative of existing grades or
expected production. We have no probable or proven reserves on any of our
properties. We cannot be assured that minerals will be discovered in sufficient
quantities to justify commercial operations.

PHOTOGRAPH OF BOREALIS DISTRICT.
VIEW TO THE EAST, WITH FREEDOM FLATS PIT IN THE FOREGROUND.
THE PHOTOGRAPH SHOWS THE SITE AS IT WAS CIRCA 1991.

(BOREALIS DISTRICT PHOTOGRAPH -- CIRCA 1991)

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

Several gold deposits have been previously defined through drilling on the
Borealis Property by prior owners. Some gold deposits have been partially mined.
Reports on past production vary. The past gold production from pits on the
Borealis Property, as reported by prior owners is tabulated below. The total of
past

gold production was approximately 10.6 million tons of ore averaging 0.057
ounces per ton (opt) gold. Mine production resulting from limited operations in
1990 is not included. Although no complete historical silver production records
still exist at this time, the average silver content of ore mined from all eight
pits appears in the range of five ounces of silver for each ounce of gold. We
have not included silver in our mine planning to date, but intend to monitor the
potential viability of silver recovery, if warranted, as our feasibility study
and more detailed mine planning progress.

REPORTED PAST BOREALIS PRODUCTION, 1981-1990(1)

CRUSHED AND AGGLOMERATED ORE(2) TONS GRADE CONTAINED GOLD
------------------------------- ---------- -------- --------------
(OPT AU) (OZ)

Borealis.......................................... 1,488,900 0.103 153,360
Freedom Flats..................................... 1,280,000 0.153 195,800
Jaime's/Cerro Duro/Purdy.......................... 517,900 0.108 55,900
East Ridge........................................ 795,000 0.059 46,900
Gold View......................................... 264,000 0.047 12,400
---------- ----- -------
TOTAL............................................. 4,345,800 0.107 464,360
========== ===== =======
RUN OF MINE ORE(3)
EAST RIDGE........................................ 2,605,000 0.021 54,700
POLARIS (DEEP ORE FLATS).......................... 250,000 0.038 9,500
GOLD VIEW......................................... 396,000 0.009 3,500
NORTHEAST RIDGE................................... 3,000,000 0.025 75,000
---------- ----- -------
TOTAL............................................. 6,251,000 0.023 142,700
========== ===== =======
GRAND TOTAL....................................... 10,596,800 0.057 607,060
========== ===== =======

---------------

(1) The numbers presented in this table are based on limited production records.
A later report in 1991 published by the Geologic Society of Nevada reports
that production totaled 10.7 million tons with an average grade of 0.059
opt.

(2) Crushed and agglomerated ore is that material which has been reduced in size
by crushing, and as a result may contain a significant portion of very fine
particles which is then, with the aid of a binding agent such as cement,
reconstituted into larger particles and subsequently leached in a heap. The
agglomerated ore typically has greater strength allowing for higher stacked
heaps and may allow better percolation of leach solutions if the ore has
high clay content.

(3) Run of mine ore is that material which was fragmented by blasting only, and
then stacked on the heaps without being further reduced in size by crushing
or other beneficiation processes.

BOREALIS PROPERTY DEVELOPMENT BACKGROUND

In October 2003, we engaged Behre Dolbear & Company, Inc., mining
consultants, to develop a preliminary scoping study for the redevelopment of the
Borealis Property. Behre Dolbear prepared a report titled "Preliminary Scoping
Study" dated June 7, 2004, which we refer to as the "Behre Dolbear Report," in
accordance with the requirements of NI 43-101. Qingping Deng, a "Qualified
Person" as defined in NI 43-101, who is independent from us, authored the Behre
Dolbear Report.

The following information is based on the Behre Dolbear Report. Portions of
the following information are based on assumptions, qualifications and
procedures which are set out only in the Behre Dolbear Report. For a complete
description of assumptions, qualifications and procedures associated with the
following information, reference should be made to the full text of the Behre
Dolbear Report which is available for review on the System for Electronic
Document Analysis and Retrieval (SEDAR) located at the following website:
www.sedar.com. Alternatively, the Behre Dolbear Report may be inspected during
normal business hours at the offices of Lang Michener LLP, Suite 2500, 181 Bay
Street, Toronto, Ontario during the period of distribution of our common stock
and for 30 days thereafter.

In its report, Behre Dolbear performed a resource estimate in which it
identified, measured and indicated mineral resources on the Borealis Property
and concluded that the Borealis Property had excellent exploration potential. As
a result of enhanced geologic interpretations based on detailed geologic
analysis, re-logging of available core and RC samples, and drilling of the
preexisting heaps and dumps, the mineral resources at Borealis as reported in
the Technical Report were increased as presented in further detail below under
the heading "Mineral Resources."

Behre Dolbear also analyzed the historical data on the property and
produced a series of recommendations to evaluate and potentially develop the
Borealis Property. The principal recommendations of the Behre Dolbear Report
were to:

1. Pursue a three phase business plan to evaluate:

(a) the existing leach pads and mine dump materials for the
possibility of releaching and gold production,

(b) the remaining oxide ores that could be mined and transported to
the new leach pad, and

2. Pursue the following mining scenario on the Borealis Property (assuming
we determine that development of the proposed mining scenario is
commercially feasible):

(a) process pre-existing heaps and dumps to provide initial feed to
the heap leach recovery plant;

(b) expand the mining operations to include the oxidized resources in
areas outside the heaps and dumps in order to generate funds for
further exploration and development; and

Following the recommendations in the Behre Dolbear Report, and based on
additional geologic field work, we retained Ore Reserves Engineering, consulting
resource modeling engineers, to complete an updated resource estimate model in
accordance with NI 43-101. In May 2005, Ore Reserves Engineering delivered a
report titled the "Technical Report on the Mineral Resources of the Borealis
Gold Project Located in Mineral County, Nevada." The results of this analysis
are reported below under the heading "Mineral Resources." The Behre Dolbear
Report, which preceded the Technical Report, was reviewed by Alan C. Noble, the
author of the Technical Report. The mineral resources estimates referred to in
the conclusions of the Behre Dolbear Report were determined to be reasonable by
Alan C. Noble (in the case of the heaps and dumps referred to under the heading
"Mineral Resources") and were improved upon (in the case of the other zones
referred to under the heading "Mineral Resources").

According to the Behre Dolbear Report, the principal steps to the
development of the Borealis Property consist of:

- completing the permitting process;

- continuing our drilling program and developing a feasibility study on the
previously disturbed area of the Borealis Property, also referred to as
the "Borealis site";

- building the mine facilities, if warranted by project economics, on the
Borealis site.

It is our intention to continue with the recommendations established in the
Behre Dolbear Report with the objective of developing the Borealis Property,
subject to further optimizing of the mining scenario contemplated as more
detailed information becomes available. We aim to complete these principal steps
by the second half of 2006.

GEOLOGICAL SETTING

-- REGIONAL GEOLOGY

The Borealis mining district lies within the northwest-trending Walker Lane
mineral belt of the western Basin and Range province, which hosts numerous gold
and silver deposits. Mesozoic metamorphic rocks in the region are intruded by
Cretaceous granitic plutons. In the Wassuk range the Mesozoic basement is
principally granodiorite with metamorphic rock inclusions. Overlying these rocks
are minor occurrences of Tertiary rhyolitic tuffs and more extensive andesite
flows. Near some fault zones, the granitic basement rocks exposed in the eastern
part of the district are locally weakly altered and limonite stained.

The oldest exposed Tertiary rocks are rhyolitic tuffs in small isolated
outcrops which may be erosional remnants of a more extensive unit. The rhyolitic
tuffs may be correlative with regionally extensive Oligocene rhyolitic
ignimbrites found in the Yerington area to the north and within the northern
Wassuk Range. On the west side of the Wassuk Range, a thick sequence of older
Miocene andesitic volcanic rocks unconformably overlies and is in fault contact
with the granitic and metamorphic rocks, which generally occur east of the
Borealis district. The age of the andesites is poorly constrained due to limited
regional dating, but an age of 19 to 15 Ma is suggested ("Ma" refers to million
years before present). In the Aurora district, 10 miles southwest of the
Borealis district, andesitic agglomerates and flows dated at 15.4 to 13.5 Ma
overlie Mesozoic basement rocks and host gold-silver mineralization. Based on
these data, the andesites in the Borealis region can be considered as 19 to 13.5
Ma.

The Borealis district lies within the northeast-trending
Bodie-Aurora-Borealis mineral belt; the Aurora district, with 1.9 million ounces
of past gold production, lies 10 miles southwest of Borealis and the Bodie
district, with 1.5 million ounces of gold production, lies 19 miles southwest in
California. All three mining districts are hosted by Miocene volcanics. The
intersection of northwesterly and west-northwesterly trending Walker Lane
structures with the northeasterly trending structures of the Aurora-Borealis
zone probably provided the structural preparation conducive to extensive
hydrothermal alteration and mineralization at Borealis.

-- LOCAL GEOLOGY

The Borealis district mineralization is hosted by Miocene andesite flows,
laharic breccias, and volcaniclastic tuffs, which exceed 1000 to 1200 ft in
thickness, strike northeasterly, and dip shallowly to the northwest. The
andesite is internally subdivided into upper and lower volcanic packages which
are laterally extensive and constitute the predominant bedrock in the district.
These packages host most of the gold ore deposits. The most favorable host
horizon is the upper andesite and the contact zone between the two andesite
packages. An overlying upper tuff is limited in aerial extent due to erosion.
All of these units are cut by steeply dipping northeast-trending faults that
probably provided conduits for mineralizing hydrothermal fluids in the principal
mineralized trends. Pediment gravels cover the altered-mineralized volcanic
rocks at lower elevations along the range front and overlie many of the best
exploration targets. Wide-spaced drilling indicates that the majority of the
altered-mineralized area is covered by pediment gravels over a seven-mile long
zone in the southern and southwestern parts of the district. Much of this area
has received only minor testing.

Structures in the district are dominantly northeast-striking normal faults
with steep northwest dips, and generally west-northwest-striking range-front
faults with steep southerly dips. Both of these fault systems lie in regional
trends which are defined large structural zones in the earth's crust and by the
locations of several known district scale mineral deposits and other smaller
mineralized systems. Borealis appears to be at a major intersection of two of
these mineralized trends, the Walker Lane and the Bodie-Aurora-Borealis cross
trend.

A number of the pre-mineral faults of both orientations in the Borealis
district appear to control the occurrence and concentration of gold
mineralization, and may have been conduits for migration of higher-grade gold
bearing hydrothermal solutions. The hydrothermal solutions often followed the
planes of the faults to zones where the proper geologic conditions allowed for
concentration of the solutions and formation of gold deposits.

Movement along most of the faults in the Borealis district appears to be
normal, although some faults also display a strike-slip component of movement.
In the mined part of the district, rocks are mostly down dropped on the
northwest side of northeast-trending faults, which is part of a graben. The
Graben gold deposit appears to be controlled by a north-northeast trending
structure dipping steeply to the east, and no other structures of this
orientation have been identified.

-- MINERAL DEPOSITS

The gold deposits contained within the larger, district scale, Borealis
hydrothermal system are recognized as high-sulfidation type systems with
high-grade gold mineralization occurring along steeply dipping structures and
lower grade gold mineralization both surrounding the high-grade and commonly
controlled by more permeable volcanic rocks in relatively flat-lying zones. The
gold deposits, some with minor amounts of silver mineralization are hosted by
Miocene andesitic flows, laharic breccias, and volcaniclastic tuffs, which all
strike northeasterly and dip shallowly to the northwest. Pediment gravels cover
the altered-mineralized volcanic rocks at lower elevations along the mountain
front and there is potential for discovery of more blind deposits, similar to
the Graben deposit.

The surface "footprints" of the high-grade pods or pipe-like bodies, found
to date are rather small and they can be easily missed with patterns of too
widely spaced geophysical surveys and drill holes. Most of the drilling on the
property by prior owners, including the Graben deposit, is vertical, and
therefore did not adequately sample the steep higher-grade zones. Drill-hole
orientation has compounded the underestimation of grades within the district.
The coarse gold component can best be captured with very careful sampling of
drill cuttings and core and collecting large samples.

Several drill holes to the west of Freedom Flats and Borealis encountered
gold within the alluvium stratigraphically above known deposits. These holes
trace a gold-bearing zone that in plan appears to outline a paleochannel of a
stream or gently sloping hillside that may have had its origin in the eroding
Borealis deposit. The zone is at least 2,500 feet long, up to 500 feet wide, and
several tens up to 100 feet thick. At this point it is unknown if this is a true
placer deposit, an alluvial deposit of broken ore, or some combination of both.
Additional drilling and beneficiation tests are needed to determine if an
economic gold deposit exists.

EXPLORATION

Since the late 1970's, considerable exploration has been completed at the
Borealis Property with the primary objective of finding near surface deposits
with oxide type gold mineralization. Exploration work has consisted of field
mapping, surface sampling, geochemical surveys, geophysical surveys, and shallow
exploration drilling. Only limited drilling and geological field work has been
completed in areas covered by pediment gravels, even though Freedom Flats was an
unknown, blind deposit, without surface expression when discovered.

Many geophysical surveys have been conducted by others in the Borealis
district since 1978. In addition, regional magnetics and gravity maps and
information are available through governmental sources. The most useful
geophysical data from the exploration programs has been induced polarization
(IP) (chargeability), aeromagnetics, and, to a lesser degree, resistivity.

Areas with known occurrences of gold mineralization, which have been
defined by historical exploration drilling, and have had historical mine
production include: East Ridge and Gold View, Northeast Ridge, Freedom Flats,
Borealis, and Deep Ore Flats (also known as Polaris). All of these deposits
still have gold mineralization remaining in place, contiguous with the portions
of each individual deposit which has been mined

Discovery potential on the Borealis Property includes oxidized gold
mineralization adjacent to existing pits, new oxide gold deposits at shallow
depth within the large land position, gold associated with sulfide minerals
below and adjacent to the existing pits, in possible feeder zones below surface
mined ore and deeper gold-bearing sulfide mineralization elsewhere on the
property. Both oxidized and sulfide-bearing gold deposits exhibit lithologic and
structural controls for the locations and morphologies of the gold deposits.

The following areas have not been subject to historic mine production, but
have been subject to historical exploration that has identified gold
mineralization.

BOREALIS EXTENSION

The Borealis Extension deposit occurs at shallow to intermediate depth
beneath the northern and western parts of the former Borealis pit. Most of the
mineralization begins at 110 to 375 ft below the surface. Generally the top of
this target occurs at or slightly below the 7,000-ft elevation. The primary
target is defined by 16 contiguous drill holes completed by previous operators
that have potential ore-grade intercepts and that penetrate beneath the 7,000-ft
elevation. Thickness of low-grade mineralized intercepts ranges from 15 to 560
ft with nine holes having from 155 to 560 ft of +0.01 opt of gold; average
thickness of the zone is 236 ft. Grades have been divided into sub-zones of
0.01-0.03 opt, which averages 0.018 opt of gold, and of +0.03 opt, which
averages 0.084 opt of gold.

GRABEN DEPOSIT

The Graben deposit is currently defined with approximately 36 RC holes and
19 core holes. Drilling has defined a zone of gold mineralization, using an 0.01
opt Au boundary, that extends at least more than 2,000 ft in a north-south
direction and between 200 and 750 ft east-west, and up to 300 ft thick. The top
of the deposit is from 500 to 650 ft below the surface. Near its southern margin
the axis of the deposit is within 800 ft of the Freedom Flats deposit and along
one portion of the southeastern margin low-grade mineralization may connect with
the Freedom Flats mineralization through an east-west trending splay. Drilling
data appears to confirm mineralization at the southern margin of the deposit is
closed off. Along the western margin a suspected post-mineralization fault may
have down-dropped the deposit and apparently serves as an effect western
boundary to mineralization and brings tertiary gravels in contact with the
Graben zone. Much of the eastern margin has not been defined by drilling. To the
north mineralization remains open. An airborne magnetic survey and a gradient IP
survey reveal anomalies along the northern extension of the Graben zone,
suggesting that the deposit continues in that direction.

NORTH GRABEN PROSPECT

The North Graben prospect is defined by the projection of known
mineralization, verified by drilling sampling and coincident with a large
intense aeromagnetic low and a broad chargeability (IP) high. Only one hole has
been drilled, but not completed, into the southern margin of the North Graben
prospect, about 1,400 ft north of the most northerly significant Graben
mineralization. While this hole failed to reach its target depth, alteration
typical of the margin of the Graben deposit was encountered. This blind untested
target lies on trend of the north-northeast-elongate Graben mineralized zone. In
1989, Echo Bay had completed a district-wide helicopter magnetic/electromagnetic
survey, which identified a large, intense type aeromagnetic low in the North
Graben area. This coincident magnetic low/chargeability high is now interpreted
as being caused by an intensive and extensive hydrothermal
alteration-mineralization system.

Cambior conducted a gradient IP survey in 1997, which identifies a
deep-source broad chargeability anomaly that extends northerly from the northern
margin of the Freedom Flats deposit, covers only part of the Graben zone and
most of the North Graben area, and extends to the limit of the surveyed area.
This anomaly is interpreted to be caused by high-sulfide mineralization. The
North Graben prospect thus represents the possible extension of known
mineralization of the Graben zone.

One angle hole was drilled by Cambior in 1998 to test the southern most
portion of the North Graben target chargeability anomaly, and it was well south
of a large aeromagnetic low. The upper 725 ft of this hole contained
post-mineral gravel and sediments and relatively unaltered andesitic volcanics,
before intersecting altered and mineralized andesite near the bottom of the
hole. The pre-mineral andesite flows contain alteration ranging from propylitic
to chalcedonic silica down the hole. Hole 98005 was lost at a depth of 780 ft
due to hole caving. Although no significant gold mineralization was encountered
in the hole, alteration was most intense at the bottom. Hydrothermal alteration
noted in samples from the hole fits better with patterns found at the margin of
a Graben-type deposit.

SUNSET WASH PROSPECT

The Sunset Wash prospect consists of a gravel-covered pediment underlain by
extensive hydrothermal alteration in the western portion of the Borealis
district. Sixteen holes drilled by Echo Bay Mines indicate that intense
alteration occurs within a loosely defined west-southwest belt that extends
westerly from the Jaime's Ridge/Cerro Duro deposits. At the western limit of the
west-southwest belt, Cambior's IP survey and drilling results can be interpreted
to indicate that the alteration system projects toward the southeast into the
pediment along a mineralized northwest-oriented fault. Cambior conducted a
gradient array induced polarization (IP) survey over the Sunset Wash area
effectively outlining a 1,000 by 5,000 ft chargeability anomaly. The anomaly
corresponds exceptionally well to alteration and sulfide mineralization
identified by Echo Bay's drill-hole results. Two structures appear to be mapped
by the chargeability anomaly; one is a 5,000-ft long west-southwest-trending
structure and the other is a smaller, northwest-trending structure that cuts off
the W-SW structure at its western limit. Alteration types and intensity
identified by the drilling, combined with the strong IP chargeability high and
the aeromagnetic low, strongly suggest that the robust hydrothermal system at
Sunset Wash is analogous to the mineralized systems at Graben and Freedom Flats.

Geologic observations based on mapping and drill hole logging indicate that
both the Freedom Flats and the Graben deposits are localized along a favorable
horizon near the contact between the upper and lower volcanic units. This same
contact zone appears to underlie the Sunset Wash pediment at a shallow depth.
The target concept suggests that mineralization should favor zones where
mineralizing structures crosscut the upper and lower volcanic contact. Cambior
drilled three holes to test portions of the Sunset Wash geophysical anomaly and
to offset other preexisting drill holes with significant alteration. Each of the
three holes was drilled vertically to maximize the depths tested. The three
holes were collared in the upper volcanic unit, but only one crossed the
contact.

The westernmost of Cambior's three holes encountered the most encouraging
alteration and best gold mineralization suggesting that this drillhole is near
the most prospective area. This drill-hole intercepted altered rock from bedrock
surface to total depth, including an extremely thick zone of chalcedonic
replacement in the lower two-thirds of the hole.

BULLION RIDGE/BOUNDARY RIDGE

The northeast-trending alteration zone extending along Boundary Ridge into
Bullion Ridge contains intense silicification that is surrounded by
argillization, with abundant anomalous gold. Widely spaced shallow holes
completed by previous operators have tested several of the alteration/anomalous
gold zones defining discrete zones of mineralized material.

LUCKY BOY PROSPECT

Another prospect area similar to North Graben and Sunset Wash is the Lucky
Boy area, which may be in a shallower pediment environment in the central
portion of the district near the range front. Drill holes in the periphery have
thick zones of silification and traces of gold mineralization. Echo Bay's
aeromagnetic map shows another magnetic low and Cambior's IP map shows a
coincident chargeability high in the area of the silicification.

MINERALIZATION

-- OVERVIEW

Finely disseminated gold mineralization found in the Borealis epithermal
system was associated with pyrite and other gold bearing sulfide minerals such
as marcasite when initially deposited by the gold rich hydrothermal fluids. In
some portions of the deposits, over time through natural oxidation, the pyrite
was transformed to limonite releasing the gold particles. Through this geologic
process, the mineral character of the deposit was altered, and gold was exposed
so that conventional hydrometallurgical processes (e.g. gold heap leaching)
could be effectively applied to recover the gold. Gold still bound in pyrite or
pyrite-silica which was not as readily oxidized in the geologic process, is not
as easily recovered by a simple heap leach operations

and may require some type of more advanced milling operation. Limited evidence
suggests that in certain deposits such as the Borealis and Freedom Flats
deposits, that some coarse gold exists, probably in the higher-grade zones.

-- OXIDE GOLD MINERALIZATION

Oxide gold mineralization is generally more amenable to direct cyanidation
processes such as heap leaching as compared to sulfide gold mineralization.

Oxide deposits in the district have goethite, hematite, and jarosite as the
supergene oxidation products after iron sulfides, and the limonite type depends
primarily on original sulfide mineralogy and abundance. Iron oxide minerals
occur as thin fracture coatings, fillings, earthy masses, as well as
disseminations throughout the rock. The degree of supergene oxidation, mineral
constituents, and form and occurrence of the oxide minerals in the host rock are
significant factors in determining metallurgical performance and ultimate gold
recovery. As demonstrated in previous operations, this type of gold bearing
material is amenable to conventional heap leaching methodology.

Depth of oxidation is variable throughout the district and is dependent on
alteration type, structure, and rock type. Oxidation ranges from approximately
250 ft in argillic and propylitic altered rocks to over 600 ft in fractured
silicified rocks. A transition zone from oxides to sulfides with depth is common
with a mixing of oxide and sulfide minerals.

Except for the Graben deposit, all of the known gold deposits are at least
partially oxidized. Typically the upper portion of a deposit is totally oxidized
and the lower portions unoxidized. In places, such as the Ridge deposits, there
is an extensive transition zone of partially oxidized sulfide bearing gold
mineralization. Oxidation has been observed to at least 1,000 ft below the
surface. Therefore, we believe that if additional gold deposits are found under
gravel cover, some portion of them may be oxidized.

-- SULFIDE GOLD MINERALIZATION

Sulfide gold mineralization is generally less amenable to conventional
direct cyanidation metallurgical processes, and may require more advanced
processes such as milling, flotation and oxidation prior to cyanidation.

Sulfide deposits in the district are mostly contained within quartz-pyrite
alteration with the sulfides consisting mostly of pyrite with minor marcasite,
and lesser arsenopyrite and cinnabar. Many trace minerals of copper, antimony,
arsenic, mercury and silver have also been identified. Pyrite content ranges
from 5 to 20 volume percent with local areas of nearly massive sulfides in the
quartz-pyrite zone and it occurs with grain sizes up to 1mm. At Borealis,
euhedral pyrite grains are commonly rimmed and partially replaced with a later
stage of anhedral pyrite overgrowths. Study of this phenomenon in other
epithermal districts in Nevada has shown that gold occurs only in the late
overgrowths. Mineralogical studies of Borealis samples suggest that this may
also be true at Borealis, but are not fully conclusive.

The Graben deposit is the best example found to date of the size and
quality of sulfide deposits within the district. In addition sulfide mineral
resources occur in the bottoms of most of the pits, but the most significant
mineral resource in a pit environment is found beneath the Freedom Flats pit.
Potential targets below most pits would include the feeder structures, many of
which would be expected to have high-grade sulfide gold mineralization. Drilling
of the Graben deposit has defined a total mineral resource of approximately 20
million tons with an average grade of 0.044 ounces of gold per ton containing
about 880,000 ounces of gold within the deposit, using a 0.01 opt cutoff grade,
as stated in the Technical Report. The high-grade zones within the Graben
deposit are estimated to contain 780,000 tons of measured and indicated resource
and 220,000 tons of inferred resource with an average grade of 0.29 ounces of
gold per ton. While the larger deposit is a target for additional exploration,
the higher-grade zones represent an attractive deposit for development at most
gold prices.

DRILLING

We have conducted a drilling program of existing heaps and dumps of the
Borealis site. Set out below is a summary of the drilling work conducted on the
Borealis Property by prior owners and by us.

-- HISTORICAL DRILL HOLE DATABASE

The drill-hole database used for the main Borealis project study area
contains 1,747 drill holes with a total drilled length of 510,712 ft, including
1,626 which intersected gold mineralization. These holes were drilled by various
prior operators. Drill-hole types include diamond core holes, reverse
circulation (RC) holes and rotary holes. Only a few core holes have down-hole
survey information. Mineralized zones covered by these drill holes include the
Freedom Flats, Graben, Borealis, Polaris, East Ridge and Northeast Ridge. Except
for Graben, all have been partially mined by previous operators of the project;
the Borealis and Deep Ore Flats (also known as Polaris) pits have been
back-filled with waste from the Freedom Flats pit. There are an additional 487
drill holes with a total drilled length of 103,562 ft scattered throughout the
district, and mostly in the Cerro Duro, Jamie's Ridge, and Purdy Peak area, at
approximately three miles distant northwest of the main Borealis mine area. The
total existing drilling for the entire Borealis Property, therefore, is 2,234
holes with a total drilled length of 614,274 ft. None of these historical holes
were drilled by us.

Drill hole sampling length is generally 5 ft for the RC holes, but varies
for the core holes based on geological intervals. Sampling length is up to 25 ft
for some of the early rotary holes. Gold assays in parts per billion (ppb) and
troy ounces per short ton (opt) are provided for most of the sampling intervals.
Silver assays in parts per million (ppm) and opt are also provided for some of
the sampling intervals. Silver grade was not modeled in this study.

SUMMARY OF DRILL HOLE SAMPLE STATISTICS FOR
DRILL HOLES INTERSECTING THE MINERALIZED ZONES(1)(2)

AVERAGE
TOTAL INTERVALS TOTAL ASSAY AVERAGE
NUMBER SAMPLE NOT INTERVALS ASSAYED LENGTH GOLD GRADE
HOLES(3) INTERVALS(4) ASSAYED ASSAYED FOOTAGE (FEET) OPT OF GOLD
---------- -------------- ----------- ----------- ------- --------- --------------

Graben...................... 61 2,620 131 2,489 12,362 4.97 0.054
Freedom Flats............... 143 6,223 217 6,006 30,029 5.00 0.064
Borealis.................... 321 5,611 127 5,484 27,835 5.08 0.042
Deep Ore Flats (Polaris).... 163 6,223 217 6,006 30,029 5.00 0.064
Crocodile Ridge............. 37 2,593 25 2,568 12,879 5.02 0.012
Alluvium.................... 253 1,673 175 1,498 7,490 5.00 0.007
East Ridge.................. 188 4,466 104 4,362 21,892 5.02 0.020
Mid Ridge................... 60 1,307 24 1,283 6,415 5.00 0.008
Northeast Ridge............. 210 6,008 115 5,893 29,495 5.01 0.016
Outside Zones............... 1,342 56,188 3,564 52,624 267,047 5.07 0.001
Southwest Model Total....... 1,080 69,221 4,144 65,077 328,339 5.05 0.012
Northeast Model Total....... 546 18,020 341 17,679 89,850 5.08 0.011

---------------

Notes

(1) Reference should be made to the Technical Report for further explanation of
the above tabular information

(2) This table summarizes drilling within known gold deposits of 1,747 holes and
does not reflect the remaining 487 drill holes. Total drilling amounts to
2,234 holes with a total footage of 614,274 feet.

(3) Drill holes may intersect more than one zone, therefore the number of holes
by zone is not additive.

(4) All distances are presented in feet.

The database subset used for the computer generated resource model referred
to in the Technical Report consists of 1,604 of the drill holes with a total
footage of 447,860 ft and 82,756 assayed intervals. Many of the

high-grade intervals were assayed more than once to check and confirm the actual
grades, so the total number of assays exceeds 82,756. The average depth of holes
is 275 ft but the bulk of the holes are less than 200 ft with a limited number
of holes in selective locations extending 1,000-2,000 ft to test deeper
mineralization. The average assayed interval was slightly larger than 5 ft, with
the bulk of the samples representing 5-ft intervals. The drill holes discussed
above were completed by other operators at Borealis, and were not drilled by
Gryphon.

-- DRILLING OF EXISTING HEAPS AND DUMPS

In May 2004 we completed a drilling program on the five Borealis site heaps
and parts of the Freedom Flats and Borealis site dumps. This program consisted
of 32 holes totaling 2,478.5 ft. Dump holes were drilled deep enough to
penetrate the soil horizon below the dump, while holes on the heaps were drilled
to an estimated 10-15 ft above the heap's liner. We are currently conducting an
ongoing drill program targeted at expanding the limits of known gold deposits.
See "Development and Exploration -- Resource Expansion and Exploration Program."

SAMPLING AND ANALYSIS

-- GENERAL

The Borealis Mine operated from 1981 through 1990 producing approximately
10.7 million tons of ore averaging 0.059 ounces of gold per ton from seven open
pits. The mined ore contained approximately 635,000 ounces of gold of which
approximately 500,000 ounces of gold were recovered through a heap leach
operation (please refer to footnote to table "Reported Past Borealis Production
1981-1990"). This historic production can be considered a bulk sample of the
deposits validating the database that was used for feasibility studies and
construction decisions through the 1980s. With over 2,200 drill holes in the
database that was compiled over a 20-year period by major companies, the amount
of information on the project is extensive. It is primarily these data that have
been used as the foundation of the current mineral resource estimate. The bulk
of the data was collected beginning in 1978, the year of discovery of the
initial ore-grade mineralization, and was continuously collected through the
final year of full production. Subsequent owners who conducted exploration
programs through the 1990s added to the database.

-- PREVIOUS MINING OPERATIONS -- SAMPLING, ANALYSIS, QUALITY CONTROL AND
SECURITY

Specific detailed information on sampling methods and approaches by the
various mine operators is not available to us. However, a report written in 1981
(referred to in the Technical Report) noted that the drilling, sampling and
analytical procedures as well as assay checks were reported as acceptable by
industry practice.

Echo Bay Mines performed quality checks on their drill cuttings, sampling
and assaying methods as part of their evaluation of the property prior to and
following its purchase from Tenneco Minerals, indicating that the original
assays were reliable and representative. During their exploration and
development programs they also drilled a number of core hole twins of reverse
circulation rotary drill holes to compare assay results in the same areas.

Houston Oil and Minerals, Tenneco, and Echo Bay Mines are reported to have
used standard sample preparation and analytical techniques in their exploration
and evaluation efforts, but detailed descriptions of the procedures have not
been found. Most of the drill-hole assaying was accomplished by major
laboratories that were in existence at the time of the drilling programs.
Various labs including Monitor Geochemical, Union Assaying, Barringer, Chemex,
Bondar-Clegg, Metallurgical Laboratories, Cone Geochemical, the Borealis Mine
lab and others were involved in the assaying at different phases of the
exploration and mining activity.

We believe that early work on the property relied on assay standards that
were supplied by the laboratories doing the assaying. However, Echo Bay Mines
(1986) reported using seven internal quality control standards for their
Borealis Mine drill-hole assaying program. The seven standards ranged in gold
concentrations from 170 ppb to 0.37 opt. Assay labs involved in the standards
analyses were Cone Geochemical, Chemex, and the Borealis Mine lab, and the
precision of the three labs was reported as

excellent (+/- 1 to 8%) for the higher gold grades (0.154-0.373 opt); acceptable
(+/- 3 to 14%) for the lower grades (0.029-0.037 opt); and fair (+/- 4 to 20%)
for the geochemical anomaly grades (0.009 opt to 170 ppb). These data provide an
initial estimation of the precision and accuracy of gold analyses of Borealis
mineralization.

During 1986, Echo Bay instructed Chemex to analyze duplicate samples for
five selected drill holes. A comparison was made of (a) 1/2 assay-ton fire assay
with a gravimetric finish, versus (b) 1/2 assay-ton fire assay with an atomic
absorption finish, versus (c) hot cyanide leach of a 10-gram sample. The 1/2
assay-ton fire assay -- gravimetric and the 1/2 assay-ton fire assay -- atomic
absorption gave essentially the same results. However the hot cyanide leach gave
results that were 5-11 percent higher in one comparison and significantly lower
in another, prompting Chemex to conclude that cyanide leach assaying was not
appropriate for Borealis samples. The great majority of the assays in the
database are based on fire assays.

We have no information relating to the sample security arrangements made by
the previous operators.

-- GRYPHON GOLD OPERATIONS -- SAMPLING, ANALYSIS, QUALITY CONTROL AND SECURITY

We engaged an independent contractor in 2004 to drill 32 holes on the five
previously leached heaps and two waste dumps. The drilling was completed with a
sonic rig to retrieve a core-like sample. All drill holes were drilled vertical,
and samples represent "true thickness" of the dump or heap material.

Sampling intervals were originally designed to be every 10 ft, but were
contingent upon drilling conditions. During drilling, sample intervals were
subject to when the sample tube was extracted from the hole. Individual runs
varied from 1 to 3 ft, which were then combined to produce a sample with an
interval length as close to 10 ft as practicable (the combination was completed
at American Assay Labs). Combined intervals varied from 9 ft to 11 ft, except at
the bottom of a hole where the interval was as short as 4 ft.

When the sample tube was extracted from the hole, the sample was
immediately slid into a plastic sleeve that was sealed and marked with the drill
hole number and footage interval. These plastic sample sleeves were not reopened
until they reached the analytical lab. All of the drill procedures and handover
to the analytical lab was monitored by an independent geologist hired through
Geotemps Inc. The contract field geologist also maintained lithology logs for
each drill hole. A non-blind standard was added as the last sample of each hole,
which was obvious to the lab since the standard was in a pulp bag, although the
lab did not know the gold value of the standard.

All samples were submitted to American Assays Labs of Sparks, Nevada. At
the lab each of the individual samples were combined into an analytical sample
at approximated 10 ft intervals. Each analytical sample was split in a rotary
splitter with a one-fifth of the sample removed for assay and the remaining
four-fifths retained for metallurgical testing. Each analytical split was
weighed, dried and weighed again. The difference between the two weights
represents the amount of water in the original sample. Each dried sample was
crushed to one-quarter inch passing and a 300 to 500 gram sample was riffled off
for assay. The remaining sample was retained at the lab. Each assay sample was
pulverized and assayed for gold and silver by one assay ton fire assay, and a
two hour 200 gram cyanide shake assay for dissolvable gold.

Two additional samplings were undertaken on one of the heaps. Twelve
samples were collected along the new road cut and one "bulk" sample was
collected from a backhoe cut made during reclamation. The road cut samples were
collected as rock chips over 10 ft intervals. Each sample was about 5 pounds of
material that was collected to represent the size distribution of the material
in the cut. Six of the samples were from the south side mid-point along the heap
and six from near the east base. Each sample was assayed by American Assay Labs
using one assay ton fire assay for gold and silver. The average grade of the 12
samples is 0.009 opt Au, which compares favorably with the average grade of the
three holes drilled into the heap, which is 0.008 opt Au. About 20 pounds of
representative material was collected from the backhoe trench. At American Assay
Labs one-quarter of the sample was split out and assayed by one assay ton fire
assay for gold and silver. This sample contains 0.008 opt Au, which corresponds
with the average value for the heap as determined by drilling. The remaining
three-quarters of the sample was sieved into four size fractions and assayed in
the same manner as noted above.

As part of the quality control program standards were submitted to American
Assay Labs (AAL) with each drill hole, several assayed pulps and two standards
were submitted to ALS Chemex, and three of the duplicates and two standards were
submitted to ActLabs-Skyline.

-- HISTORICAL MINING AND METALLURGICAL OPERATIONS

The historical mining operations processed both a run-of-mine ore and an
ore that was crushed to a nominal 1 1/2-inch product as the primary feed
material that was placed on the heap for leaching. The fines fraction was
agglomerated with cement, mixed with the coarse fraction, and leached with
sodium cyanide solution. Gold mineralization is finely disseminated and/or
partially bonded with pyrite, and although there are very little ore mineralogy
data available, historical operating reports suggest that some coarse gold may
exist. Gold that is bound in pyrite or pyrite-silica is not easily recovered by
simple heap leach cyanidation, however gold recovery in oxide ores is reported
to average about 80% for the ore treated. There are no reports of carbonaceous
refractory components within the old heap or dump materials. The previous mine
operators employed a Merrill Crowe circuit to enhance ease of silver recovery,
followed by a retort to remove mercury.

Laboratory testing subsequent to mine shut down in 1990 indicates that gold
recoveries of 55 to 80 percent can be expected from remaining oxide material on
the Borealis Property by heap leaching.

Based on limited testwork, gold bearing sulfide material appears to respond
to conventional flotation concentration and cyanidation of oxidized
concentrates. In the laboratory testing, chemical oxidation and bioxidation
treatment of the sulfide material yield a high level of oxidation and
correspondingly high gold recoveries after cyanidation of the oxidized material.
Aeration of concentrate slurries may be a suitable oxidation method for the
sulfide material.

MINERAL RESOURCES

We retained Ore Reserves Engineering to update the resource models for
several deposits within the limits of the Borealis Property in accordance with
NI 43-101 standards. These gold deposits are summarized in the first and second
table below. An updated resource estimate was also completed which includes all
of the deposits identified in the table and material containing gold in the
heaps and dumps which are located within the boundaries of the study area. These
resource models form the basis of the measured, indicated and inferred resources
presented in the Technical Report. The total measured and indicated resource
including in situ and previously mined material in heaps and dumps, effective as
of the date of the Technical Report, is 44.7 million tons with an average grade
of 0.028 opt of gold, containing about 1.25 million ounces of gold. There is
also an estimated inferred resource in the study area of 34.4 million tons with
an average grade of 0.021 opt of gold, containing about 0.73 million ounces of
gold.

Historical estimates for other known gold deposits (Cerro Duro, Jaime's
Ridge, Purdy's Peak and Boundary Ridge Zone) located on the Borealis Property
(but outside the boundaries of the areas noted in the table) indicate an
additional total of 5.2 million tons of mineralized material with an average
grade of 0.027 opt of gold, containing about 0.14 million ounces of gold. The
historical estimates are based on calculations done by prior operators, which
were completed before the adoption of the guidelines of NI 43-101; and have not
been reviewed or verified by the Technical Report and should not be relied upon.
This historical estimate did not classify the mineralized material using NI
43-101 terminology. We have interpreted this historical estimate to closely
approximate inferred resources as we report them. The historical estimate is
relevant for the purposes of identifying exploration targets but not for the
purposes of making any assessment of the development potential of these other
known gold deposits.

The updated mineral resource estimate for in situ resources was prepared by
Alan C. Noble, P.E. of Ore Reserves Engineering. The resource estimate of the
material contained in the heaps and dumps was prepared by us and reviewed and
approved by Ore Reserves Engineering. Summaries of mineral resources appear in
the following tables. The first and second tables related to all areas of the
Borealis Property included in the

estimates, excluding the existing heaps and dumps. The third and fourth tables
relate only to the heaps and dumps of the Borealis Property.

CAUTIONARY NOTE TO INVESTORS CONCERNING ESTIMATES OF MEASURED AND
INDICATED MINERAL RESOURCES: The section below uses the terms "measured
mineral resources" and "indicated mineral resources." We advise investors
that while those terms are recognized and required by Canadian regulations,
the SEC does not recognize them. Investors are cautioned not to assume that
any part or all of the mineral deposits in these categories will ever be
converted into mineral reserves.

CANADIAN NI 43-101 NON-RESERVES -- MEASURED AND INDICATED MINERAL RESOURCES

SUMMARY OF MEASURED PLUS INDICATED MINERAL RESOURCE ESTIMATES
(NOT INCLUDING EXISTING HEAPS AND DUMPS)

MEASURED INDICATED MEASURED + INDICATED
--------------------------------------- ------------------------------ ------------------------------
CONTAINED CONTAINED CONTAINED
RESOURCE ZONE CUTOFF TONS GRADE GOLD TONS GRADE GOLD TONS GRADE GOLD(1)
------------- ------ -------- ----- ----------- -------- ----- ----------- -------- ----- -----------
(OPT) (X 1000) (OPT) (OZ X 1000) (X 1000) (OPT) (OZ X 1000) (X 1000) (OPT) (OZ X 1000)

AREAS MODELED
AND ESTIMATED IN THIS
STUDY
ALLUVIUM
Oxide................. 0.005 -- -- -- 806 0.009 6.9 806 0.009 6.9
Partially Oxidized.... -- -- -- -- -- -- -- -- --
Predominantly
Sulfide............. -- -- -- -- -- -- -- -- --
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... -- -- -- 806 0.009 6.9 806 0.009 6.9
------ ----- ----- ------ ----- ----- ------ ----- -------
BOREALIS
Oxide................. 0.010 1,067 0.047 50.1 184 0.031 5.7 1,251 0.045 55.8
Partially Oxidized.... 0.010 24 0.019 0.5 14 0.025 0.4 38 0.021 0.8
Predominantly
Sulfide............. 0.010 1,490 0.030 45.0 1,174 0.033 38.9 2,664 0.031 83.9
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 2,581 0.037 95.6 1,372 0.033 44.9 3,953 0.036 140.5
------ ----- ----- ------ ----- ----- ------ ----- -------
CROCODILE RIDGE
Oxide................. 0.010 139 0.013 1.8 269 0.012 3.2 408 0.012 5.0
Partially Oxidized.... 0.010 16 0.013 0.2 18 0.012 0.2 34 0.012 0.4
Predominantly
Sulfide............. 0.010 20 0.015 0.3 67 0.013 0.9 87 0.013 1.2
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 175 0.013 2.4 354 0.012 4.2 529 0.012 6.6
------ ----- ----- ------ ----- ----- ------ ----- -------
EAST RIDGE
Oxide................. 0.010 1,211 0.017 20.5 654 0.018 11.6 1,865 0.017 32.1
Partially Oxidized.... 0.010 2,093 0.017 35.8 1,195 0.018 21.3 3,288 0.017 57.1
Predominantly
Sulfide............. 0.010 4,072 0.016 66.0 877 0.018 16.0 4,949 0.017 81.9
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 7,376 0.017 122.2 2,726 0.018 48.9 10,102 0.017 171.1
------ ----- ----- ------ ----- ----- ------ ----- -------
FREEDOM FLATS
Oxide................. 0.010 261 0.043 11.3 183 0.024 4.4 444 0.035 15.8
Partially Oxidized.... 0.010 169 0.059 10.0 9 0.050 0.4 178 0.059 10.5
Predominantly
Sulfide............. 0.010 1,507 0.054 81.7 841 0.031 26.2 2,348 0.046 107.8
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 1,937 0.053 103.0 1,033 0.030 31.0 2,970 0.045 134.1
------ ----- ----- ------ ----- ----- ------ ----- -------
GRABEN
Oxide................. -- -- -- -- -- -- -- -- --
Partially Oxidized.... -- -- -- -- -- -- -- -- --
Predominantly
Sulfide............. 0.010 2,412 0.047 113.3 8,230 0.050 414.2 10,642 0.050 527.5
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 2,412 0.047 113.3 8,230 0.050 414.2 10,642 0.050 527.5
------ ----- ----- ------ ----- ----- ------ ----- -------

MIDDLE RIDGE
Oxide................. 0.010 812 0.013 10.7 379 0.014 5.3 1,191 0.013 16.0
Partially Oxidized.... 0.010 428 0.014 5.9 285 0.015 4.1 713 0.014 10.0
Predominantly
Sulfide............. 0.010 165 0.014 2.2 28 0.014 0.4 193 0.014 2.6
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 1,405 0.013 18.9 692 0.014 9.8 2,097 0.014 28.7
------ ----- ----- ------ ----- ----- ------ ----- -------
NORTHEAST RIDGE
Oxide................. 0.010 501 0.017 8.6 365 0.018 6.4 866 0.017 15.0
Partially Oxidized.... 0.010 1,468 0.019 27.6 1,303 0.019 24.5 2,771 0.019 52.1
Predominantly
Sulfide............. 0.010 1,041 0.017 17.7 503 0.017 8.6 1,544 0.017 26.2
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 3,010 0.018 53.9 2,171 0.018 39.4 5,181 0.018 93.3
------ ----- ----- ------ ----- ----- ------ ----- -------
DEEP ORE FLATS
(POLARIS)
Oxide................. 0.010 813 0.021 17.1 409 0.021 8.6 1,222 0.021 25.7
Partially Oxidized.... 0.010 372 0.023 8.4 182 0.022 3.9 554 0.022 12.3
Predominantly
Sulfide............. 0.010 319 0.018 5.7 340 0.018 6.0 659 0.018 11.6
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 1,504 0.021 31.1 931 0.020 18.5 2,435 0.020 49.6
------ ----- ----- ------ ----- ----- ------ ----- -------
OUTSIDE ZONES
Oxide................. -- -- -- -- -- -- -- -- --
Partially Oxidized.... -- -- -- -- -- -- -- -- --
Predominantly
Sulfide............. -- -- -- -- -- -- -- -- --
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... -- -- -- -- -- -- -- -- --
------ ----- ----- ------ ----- ----- ------ ----- -------
TOTAL OF AREAS MODELED
AND ESTIMATED IN THE
TECHNICAL REPORT
Oxide................. 4,804 0.025 120.2 3,249 0.016 52.1 8,053 0.021 172.3
Partially Oxidized.... 4,570 0.019 88.4 3,006 0.018 54.9 7,576 0.019 143.2
Predominantly
Sulfide............. 11,026 0.030 331.9 12,060 0.042 510.9 23,086 0.037 842.8
------ ----- ----- ------ ----- ----- ------ ----- -------
All Material.......... 20,400 0.026 540.4 18,315 0.034 617.9 38,715 0.030 1,158.3
------ ----- ----- ------ ----- ----- ------ ----- -------

---------------

(1) The contained gold represents estimated contained metal in the ground and
metallurgical recoveries have not been applied. The estimated metallurgical
recoveries to be applied for gold will be determined upon the completion of
definitive metallurgical testing and in conjunction with the historical
results.

CAUTIONARY NOTE TO INVESTORS CONCERNING ESTIMATES OF INFERRED MINERAL
RESOURCES: The section uses the term "inferred mineral resources." We
advise investors that while this term is recognized and required by
Canadian regulations, the SEC does not recognize it. "Inferred mineral
resources" have a great amount of uncertainty as to their existence, and
great uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an inferred mineral resource will ever be
upgraded to a higher category. In accordance with Canadian rules estimates
of inferred mineral resources cannot form the basis of feasibility or other
economic studies. Investors are cautioned not to assume that any part or
all of the inferred mineral resource exists, or is economically or legally
mineable.

CANADIAN NI 43-101 NON-RESERVES -- INFERRED MINERAL RESOURCES

SUMMARY OF INFERRED MINERAL RESOURCES (NOT INCLUDING EXISTING HEAPS AND DUMPS)

INFERRED
------------------------------
CONTAINED
RESOURCE ZONE CUTOFF TONS GRADE GOLD(1)
------------- ------ -------- ----- -----------
(OPT) (X 1000) (OPT) (OZ X 1000)

AREAS MODELED AND ESTIMATED IN THE TECHNICAL
REPORT
ALLUVIUM
Oxide.......................................... 0.005 688 0.007 4.8
Partially Oxidized............................. -- -- --
Predominantly Sulfide.......................... -- -- --
------ ----- -----
All Material................................... 688 0.007 4.8
------ ----- -----
BOREALIS
Oxide.......................................... 0.010 411 0.014 5.6
Partially Oxidized............................. 0.010 2 0.034 0.1
Predominantly Sulfide.......................... 0.010 902 0.029 26.2
------ ----- -----
All Material................................... 1,315 0.024 31.9
------ ----- -----
CROCODILE RIDGE
Oxide.......................................... 0.010 117 0.011 1.3
Partially Oxidized............................. 0.010 1 0.011 0.0
Predominantly Sulfide.......................... 0.010 116 0.012 1.4
------ ----- -----
All Material................................... 234 0.012 2.7
------ ----- -----
EAST RIDGE
Oxide.......................................... 0.010 494 0.016 8.0
Partially Oxidized............................. 0.010 882 0.016 14.1
Predominantly Sulfide.......................... 0.010 1,978 0.016 31.6
------ ----- -----
All Material................................... 3,354 0.016 53.7
------ ----- -----
FREEDOM FLATS
Oxide.......................................... 0.010 2 0.035 0.1
Partially Oxidized............................. 0.010 -- -- --
Predominantly Sulfide.......................... 0.010 198 0.024 4.8
------ ----- -----
All Material................................... 200 0.024 4.8
------ ----- -----
GRABEN
Oxide.......................................... -- -- --
Partially Oxidized............................. -- -- --
Predominantly Sulfide.......................... 0.010 9,376 0.038 354.1
------ ----- -----
All Material................................... 9,376 0.038 354.1
------ ----- -----
MIDDLE RIDGE
Oxide.......................................... 0.010 330 0.013 4.2
Partially Oxidized............................. 0.010 141 0.013 1.8
Predominantly Sulfide.......................... 0.010 126 0.014 1.7
------ ----- -----
All Material................................... 597 0.013 7.7
------ ----- -----

INFERRED
------------------------------
CONTAINED
RESOURCE ZONE CUTOFF TONS GRADE GOLD(1)
------------- ------ -------- ----- -----------
(OPT) (X 1000) (OPT) (OZ X 1000)

NORTHEAST RIDGE
Oxide.......................................... 0.010 120 0.015 1.8
Partially Oxidized............................. 0.010 164 0.019 3.1
Predominantly Sulfide.......................... 0.010 490 0.017 8.5
------ ----- -----
All Material................................... 774 0.017 13.5
------ ----- -----
DEEP ORE FLATS (POLARIS)
Oxide.......................................... 0.010 21 0.017 0.3
Partially Oxidized............................. 0.010 18 0.026 0.5
Predominantly Sulfide.......................... 0.010 14 0.019 0.3
------ ----- -----
All Material................................... 53 0.020 1.1
------ ----- -----
OUTSIDE ZONES
Oxide.......................................... 421 0.016 6.8
Partially Oxidized............................. 28 0.017 0.5
Predominantly Sulfide.......................... 2,766 0.019 51.6
------ ----- -----
All Material................................... 3,215 0.018 58.9
------ ----- -----
TOTAL OF AREAS MODELED AND ESTIMATED IN THE
TECHNICAL REPORT
Oxide.......................................... 2,604 0.013 32.9
Partially Oxidized............................. 1,236 0.016 20.1
Predominantly Sulfide.......................... 15,966 0.030 480.2
------ ----- -----
All Material................................... 19,806 0.027 533.2
------ ----- -----

---------------

Cutoff assumptions are detailed in the Technical Report, and range from
0.005 opt to 0.010 opt of gold. The results shown above are partially diluted
mineral resources with allowance made for surface mining with conventional
equipment on a 20 ft mining bench.

During 2004 we drilled and sampled the five heaps and portions of the
Freedom Flats and Borealis waste dumps. Previously, J.D. Welsh & Associates,
Inc. drilled one of the heaps. Assays from these programs are the basis for
resource estimates of the gold-bearing above ground material (found in the heaps
and dumps of the previous mine operations on the Borealis Property). Gold
resources (measured, indicated and inferred) estimated in the heaps and
stockpiled materials, within the boundaries of the study area are presented in
the following tables:

CANADIAN NI 43-101 NON-RESERVES -- MEASURED AND INDICATED MINERAL RESOURCES

SUMMARY OF MEASURED AND INDICATED MINERAL RESOURCE ESTIMATES IN EXISTING HEAPS
AND DUMPS.

MEASURED INDICATED MEASURED + INDICATED
--------------------------------------- ------------------------------ ------------------------------
CONTAINED CONTAINED CONTAINED
RESOURCE ZONE CUTOFF TONS GRADE GOLD(1) TONS GRADE GOLD(1) TONS GRADE GOLD(1)
------------- ------ -------- ----- ----------- -------- ----- ----------- -------- ----- -----------
(OPT) (X 1000) (OPT) (OZ X 1000) (X 1000) (OPT) (OZ X 1000) (X 1000) (OPT) (OZ X 1000)

HEAPS & DUMPS
Oxide................. 0.008 4,879 0.015 75.4 1,100 0.014 15.5 5,979 0.015 90.9
Partially Oxidized.... -- -- -- -- -- -- -- -- --
Predominantly
Sulfide............. -- -- -- -- -- -- -- -- --
----- ----- ---- ----- ----- ---- ----- ----- ----
All Material.......... 4,879 0.015 75.4 1,100 0.014 15.5 5,979 0.015 90.9
----- ----- ---- ----- ----- ---- ----- ----- ----

---------------

CANADIAN NI 43-101 NON-RESERVES -- INFERRED MINERAL RESOURCES

SUMMARY OF INFERRED MINERAL RESOURCES IN EXISTING HEAPS AND DUMPS

INFERRED
------------------------------
CONTAINED
RESOURCE ZONE CUTOFF TONS GRADE GOLD(1)
------------- ------ -------- ----- -----------
(OPT) (X 1000) (OPT) (OZ X 1000)

HEAPS & DUMPS
Oxide.......................................... 0.008 14,578 0.013 195.9
Partially Oxidized............................. -- -- --
Predominantly Sulfide.......................... -- -- --
------ ----- -----
All Material................................... 14,578 0.013 195.9
------ ----- -----

---------------

ESTIMATES OF NON-RESERVES

We report our mineralized material under two separate standards to meet the
requirements for reporting in both the United States and Canada. United States
reporting requirements for disclosure of mineral properties are governed by SEC
Industry Guide 7. Canadian and United States standards are substantially
different, and none of our property has any probable or proven reserves under
either Canadian or United States standards.

US SEC INDUSTRY GUIDE 7 NON-RESERVES -- MINERALIZED MATERIAL

The following table summarizes our estimated US SEC Industry Guide 7
non-reserves (mineralized material) as of May 23, 2005:

BOREALIS PROPERTY
------------------------
AVERAGE
NON-RESERVES GOLD GRADE TONS
------------ ----------- ----------
(OZ AU/TON)

Mineralized Material(1)..................................... 0.025 79,078,000

---------------

(1) See Glossary of Technical Terms -- SEC Industry Guide 7 Definition for
definitions of non-reserves -- mineralized material.

Canadian reporting requirements for disclosure of mineral properties are
governed by NI 43-101. The definitions given in NI 43-101 are adopted from those
given by the Canadian Institute of Mining Metallurgy and Petroleum. Our measured
and indicated mineral resources reported in this prospectus have been estimated
in conformance with definitions set out in Canadian NI 43-101. We have filed
Technical Reports on our mineral reserves and mineral resources for the Borealis
Property as required under NI 43-101. See our "Glossary of Technical Terms." The
total measured and indicated mineral resources for our properties have been
estimated at a cut-off grade ranging from 0.005 to 0.01 opt based on economic
constraints that we believe are realistic.

The following illustration is a representation which graphically
demonstrates our generalized interpretation of the three predominate types of
gold bearing material that have been defined in the Graben, Freedom Flats, and
Borealis deposits by drilling and sampling. Drilling at the Graben indicates
that this deposit contains predominantly sulfide gold mineralization. Limited
drilling in the Borealis Extension deposit shows that the deposit is comprised
of a mix of partially oxidized and oxidized gold mineralization. Near-surface
deposits at Freedom Flats, Borealis and other deposits that were partially
mined, and shown to be amenable to gold heap leaching, still contain potentially
heap leachable gold mineralization in zones immediately adjacent to historical
pits.

Drilling completed by us and previous operators shows that gold
mineralization often extends beyond the limits of previously mined pits. In
addition, past mining operations have left dumps and heaps which were previously
processed. We have evaluated portions of this stockpiled material with drilling,
sampling, assaying and metallurgical testing and have determined that certain of
these stockpiles still contain mineralized material with significant gold
values.

(PREDOMINANT TYPES OF GOLD BEARING MATERIAL ILLUSTRATION)
---------------

(Source: Gryphon Gold)

-- EXPLANATION OF MINERAL RESOURCE MODEL, ESTIMATING METHODOLOGY AND
ASSUMPTIONS

Set out below is an explanation of the mineral resource model, the
estimating methodology, and assumptions we developed for the purposes of
estimating the mineral resources presented in the Technical Report and
summarized above.

MINERAL RESOURCE MODEL

The mineral resource model is based on a series of three dimensional blocks
with grade values estimated using composited drill hole assay data. The assays
were composited, or averaged, weighted by the length of the drill interval.
Grade values for each block were assigned by all industry standard method as
described below

under the subheading "Grade Estimation", weighting the contribution of each
assay composite by the distance from the center of each block being estimated.
In block modeling, an Inversed Distance to a Power (IDP) computerized modeling
method was used. The key components to the mineral resource model are described
below.

Block Models. Two three-dimensional block models, the Northeast Model and
the Southwest Model, were used to estimate the gold resource. Each of these
models used 20x20x20 foot blocks which covered the study area. The models
overlap slightly to facilitate continuity across model boundaries.

MAP SHOWING THE NORTHEAST AND SOUTHWEST MODEL BOUNDARIES
WITH DEPOSIT AREAS AND GOLD GRADE THICKNESS.

(MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

Drill-Hole Data. We used the data compiled from 1,626 total drill holes in
the model areas, most of which intersect more than one mineralized zone. Average
grades inside the mineralized zones range from 0.007 opt to 0.064 opt of gold.
Variability of assays is moderate to high.

Compositing. Raw assays were composited to 20-foot lengths for resource
estimation using length-weighted averaging. Composite intervals were generally
set at the top and bottom of the 20-foot model benches unless the length of the
composite was greater than 45 feet, at which point 20-foot intervals were
composited starting from the beginning of the first assayed interval in the
drill-hole. Missing values were treated as missing for calculation of the
composited value, but the composite average was set to "missing", if less than
of 10 feet of assayed drill samples was available.

Topographic Data. The topographic contours for the "original" topography
before the construction of the original mine operations, the "end mining"
topography following the construction of the original mine operations, and the
current topography (as at June 2004) were considered in developing the models.

Geologic Model for the Thickness of the Alluvium and TCV
Formations. Models for the thickness of the alluvium and the thickness of the
Tertiary Coal Valley (TCV) formation were developed for the Southwest Model.
These models were based on depths of the bottom of each formation from the drill
hole logs. Continued improvement of the alluvium and TCV contact models is
recommended both to improve the accuracy of the resource model and to improve
the geological understanding of the deposit.

Model of the Depth of Oxidation and Partial Oxidation. The same procedure
was used to create the model of the depth of oxidation and the depth of partial
oxidation (mixed oxides and sulfides) as was defined above for the alluvium and
TCV contacts.

Grade Zone Models and Basic Statistics. Grade zone models were created for
mineral resource estimation to control the shape and continuity of the
mineralized zones and to better define grade-zoning patterns inside the
mineralized envelopes. In general, a low-grade, mid-grade, and high-grade zone
was created for each deposit.

GRADE ESTIMATION

Grade estimation was done using inverse-distance-power (IDP) interpolation.
Control of the estimation was maintained using the grade zones, the composite
selection and grade caps, and the IDP parameters, as follows:

1. Composite selection and grade caps were applied individually for each
grade zone in each deposit. This procedure lets grade estimation use
similar data from grade zones that overlap the current distribution but
ignores unique data points that are very much higher grade than
surrounding grade values. Thus, continuity across the grade boundaries
is maintained without smearing of high-grade data into low-grade blocks,
or vice-versa.

2. The search and weighting parameters for IDP estimation were adjusted to
provide block estimates that were unbiased relative to the
nearest-neighbor estimate (referred to as an NN estimate), but with a
variance that was 50% to 60% of the variance of the NN estimate. Where
production data were available, parameters were adjusted to match
production data to the extent possible.

COMPARISON OF MINERAL RESOURCE ESTIMATES TO PREVIOUS PRODUCTION

The resource models were compared to reported production to verify the
accuracy of the models. Although this comparison is somewhat limited because of
uncertainties in both the production records and in the cutoff grades used for
production, the overall comparison for the pits of the prior mine operations is
good.

MINERAL RESOURCE CLASSIFICATION

Resource classifications were based on the drill-hole grid spacing
necessary to establish the continuity of mineralization, for measured and
indicated resources, and to provide reliable estimates for production planning
for measured resources. Continuity of mineralization at 100 foot or fewer
intervals (also referred to as 100 foot drill grid) was considered acceptable
for defining measured resources. A minimum 200-foot grid was used to classify
indicated resources.

The mineral resource estimates for the heaps and dumps of the prior mine
operations of the Borealis site are a product of data derived from historical
mine production records, estimates of quantities of mined material and the
results of our drilling program. In the cases where only limited portions of the
piles appear to contain recoverable gold based on the actual drilling and
sampling, total mineralized material tonnages have been reduced accordingly. For
this purpose we estimated the density of the heaps and dumps at 21 cubic ft. per
ton to 25 cubic ft. per ton, with an average of 22.47 cubic ft. per ton.

Resource estimates for the dumps and heaps from the prior mine operations
are classified as measured and indicated based on drill hole spacing of
approximately 200 feet and projections of less than 200 feet beyond drill holes.
Inferred resource estimates are based on metallurgical balances and tonnage
estimates based on data from previous operations and have not been drill tested.

DEVELOPMENT AND EXPLORATION

The principal steps to the development of the Borealis Property were based,
in part, on the recommendations set forth in the Behre Dolbear Report. Our
development and exploration plans are outlined below:

PERMITTING PROCESS

We will continue the process of obtaining the permits necessary for mine
start up. Obtaining the permits necessary for mine start up does not require us
to complete a feasibility study. The principal permits are expected to be issued
in early 2006, while ordinary course permits will be sought prior to mine start
up.

The permitting process is described below under the heading "Permitting"
and consists principally of:

- Filing a Plan of Operation with the U.S. Forest Service to obtain a mine
operation permit. We filed our Plan of Operation in August 2004.

- Preparation of an Environmental Assessment. We have retained a third
party contractor to prepare the assessment for us, and we expect this
process will be completed in early 2006.

- Obtaining water rights from the Nevada Division of Water Rights. We have
obtained the rights to one basin and applied for rights to a second
basin.

- Obtaining a Water Pollution Control Permit from the Nevada Division of
Environmental Protection, Bureau of Mining Regulation and Reclamation
(the "BMRR") in respect of the heap leach and process solution ponds. We
filed our application in February 2005.

- Obtaining a reclamation permit from the BMRR. Our application for a
reclamation permit was filed in August 2004. We will need to post a
reclamation bond with the U.S. Forest Service prior to commencement of
site disturbance.

DRILLING AND FEASIBILITY

We plan to continue our drilling program and develop a feasibility study
designed to delineate gold reserves to support construction of mining
operations. On July 11, 2005, we accepted a joint proposal for a feasibility
study by Samuel Engineering, Inc. and Knight Piesold and Company. Samuel
Engineering provides services including metallurgical process development and
design, and Knight Piesold provides mining, metallurgical, and environmental
engineering services. Both companies have worked together recently on completing
similar studies. Work has begun on the feasibility study while we are in the
process of formalizing a definitive agreement with Samuel Engineering and Knight
Piesold.

FUTURE MINE DEVELOPMENT

We propose to build a mine operation, if warranted by project economics, on
the Borealis site. Our plan could change based on additional information as it
is acquired and analyzed in our ongoing engineering studies and feasibility
study. We have described below the principal steps to the proposed development
of the mine operations which is based substantially on the Plan of Operations,
and which is subject to review by the

U.S. Forest Service. The Plan of Operations does not present an economic
analysis, and we have not placed any information in the Plan of Operations
regarding capital expenditures, operating costs, ore grade, anticipated
revenues, or projected cash flows. The Plan of Operation, as submitted to the US
Forest Service, was based on the general economic concepts as presented in the
Behre Dolbear Preliminary Scoping Study.

We have submitted a Plan of Operations #2-04-08 to the U.S. Forest Service
in August 27, 2004. The proposed Plan of Operations consists of the reopening of
a previously reclaimed open pit mining operation. The proposed surface
disturbance consists of pit and waste rock facility expansion and the
construction of a new leach pad, processing and support facilities, surface
water diversions, yard areas, utilities, and mine roads. The proposed
disturbance is approximately 455 acres and is located entirely within the
footprint of the previously disturbed and reclaimed project area. The proposed
mine will initially be located in and around mine workings left by previous
operators. We anticipate that mine development will start, if warranted, after
the acquisition of the principal federal and State of Nevada environmental
protection and operating permits. We anticipate that mine construction and
construction of support facilities will be scheduled soon after receipt of
permits, and as weather and seasonal climatic conditions allow. We plan to begin
exploiting known mineral deposits using conventional surface mining methods.

We plan to initially use a mining and crushing contractor for the mining
and crushing operations. Leaching and gold production is expected to be
undertaken by company employees. Initial permits are expected to allow for an
initial heap size of approximately 10 million tons of material. The heaps are
expected to be expanded as the operation grows to occupy additional surface area
as required to continue the operation.

The projected initial mine life, based on our current plans, is 10 to 12
years, which includes: eight to ten years of active gold production, heap drain
down, and reclamation; and two to three years of post reclamation monitoring and
repairs. Mine life may be adjusted as mining plans are further refined through
the feasibility study and the property is further explored and developed.

Planned Heap Leach Operations. The Plan of Operations calls for a new
double-lined heap leach pad to be constructed within and adjacent to two of the
existing reclaimed pads in a two phase approach. Phasing of the construction
will allow for the re-mining of the existing ore on these pads and limit the
extent of the areas disturbed for mineral processing. The re-mined material from
existing heaps, and material newly mined from the five pits will be crushed and
agglomerated with lime and then placed on the new leach pads in lifts up to
25-feet high using a conveyor system. The leach pad is designed to hold
10-million tons of mineralized material once the phased construction is
completed.

Our plan calls for the agglomerated material to be placed on the heap leach
pad and leached with a dilute cyanide solution. After the solution percolates
through the heaped material, it will be collected in a series of pipes and lined
ditches that will drain to the Pregnant Solution Tank. The pregnant solution
will then be pumped to the Adsorption, Desorption and Refining (ADR) Plant where
gold and other precious minerals will be removed from the solution. Two large
storage ponds will also be located in this area. The first pond, which will have
a double synthetic liner with leak detection system, will be used for recycling
barren solution and storing excess water generated during storm events. The
second pond, which will have a single synthetic liner, will be constructed when
the second phase leach pad construction is completed. It will be used solely to
contain excess water generated during storm events.

Planned Access and Access Roads. Secondary access roads are proposed
around the perimeter of the new heap leach pad. Ditches and culverts will be
installed, wherever necessary, to maintain adequate drainage.

Planned Surface Mining Activities. Planned mining in the pits will consist
of conventional drilling and blasting, loading, and hauling. Surface mining
equipment sized for moderate sized open pit mine operation should be used. The
final equipment list will be contingent on availability form a mining
contractor. Any acid-generating waste identified during mining will be
encapsulated within the non-acid-generating waste rock.

Mining is scheduled to begin with the East Ridge and Polaris Pits. The
waste rock will be transported to the East Ridge Waste Rock Facility (WRF) and
Polaris WRF, respectively. As the schedule progresses, open pit mining
operations is planned to gradually shift to the Borealis and Northeast Ridge
Pits starting

with pre-stripping of waste rock. The waste rock from the Borealis will be
hauled to the Borealis South WRF and the Borealis North WRF while the NE Ridge
waste rock will be hauled to the NE Ridge WRF.

Planned Ancillary Facilities and Infrastructure Requirements. The site
laboratory, administration, warehouse, and leach pad maintenance facilities are
planned to be centrally located near the ADR plant and storage Ponds. Standard
manufactured modular facilities will be placed on concrete slabs. A graded
parking lot is also planned for construction in this area for employees and
visitors.

The truck maintenance shop, light vehicle shop, fuel storage area, and
truck ready line will be located north of the storage ponds.

The Project's water will be supplied by two new production wells to be
installed approximately three miles south of the mining area at a water basin in
respect of which we have obtained water rights. The pre-existing production
waterline, which was left buried in place by the previous operator, will be
utilized to convey the water to the ADR plant and storage ponds if it is still
in good condition. If the existing line is in poor condition, a new pipeline
will be installed within the same pipeline corridor.

A propane storage tank will be located in a fenced area near the ADR.
Propane will be used to supply fuel for heat to the various buildings and
processing equipment (i.e., solution heater, rotary kiln, and melting furnace).
A new electrical line will be installed to the project area from a nearby
utility power line using the same utility corridor as was used for the previous
mine operation. Generators may also be used to provide additional electrical
power for the project during the start-up operations.

Future Exploration and Reclamation. The Plan of Operations also
contemplates eventual underground exploration as well as post mining reclamation
and land use.

Depending on the results of exploration, and development drilling and other
factors, a higher grade underground mining operation may be deemed feasible in
the future. If this is the case, a more efficient metallurgical process and mill
may be required to treat higher grade ores.

RESOURCE EXPANSION AND EXPLORATION PROGRAM

The Borealis property embraces numerous areas with potential for discovery
of mineable gold deposits. The defined target areas can be grouped into
categories based on our expectation for deposit expansion or potential for
discovery. Our current emphasis is focused on targets which are the extensions
of previously mined deposits, specifically the East Ridge-Gold View-Northeast
Ridge mineralized trend, and around the margins of the Borealis, Freedom Flats,
and Deep Ore Flats/Polaris deposits. Each has the potential to add to the
material that can be developed as part of the initial mine plan. Results from
drilling will be incorporated into the preparation of the feasibility study.

In addition to the drilling program required for the preparation of the
feasibility study, we propose to undertake a systematic district scale
exploration program designed to discover and delineate large gold deposits
within the greater Borealis Property, outside of the known mineral deposits,
which will focus along known mineralized trends that project into untested
gravel-covered areas with coincident geophysical anomalies. The greatest
potential in the district lies beneath a large gravel-covered area at the
mountain front with several potential blind deposits (with no surface
expression). The Graben zone is an example of this type of deposit, and other
high-potential targets include North Graben, Sunset Wash, Lucky Boy, and others
yet to be named.

Planned activities and expenditures include both field and compilation
geology, geophysics, geochemistry, permitting and claim maintenance, road
construction and drill-site preparation, reverse circulation (RC) and core
drilling, drill-hole assaying, sampling protocol studies and assay quality
control, preliminary metallurgical testing, and database management. We estimate
that nearly 50% of the budget would be spent directly on drilling (mostly on RC
drilling) with approximately 13% on geologists, 10% on assaying, and the
remainder divided among the other items. The budget is expected to be sufficient
to discover and delineate one or more deposits, but additional funding will be
required for detailed development drilling and other development activities.

Our most significant mineral resource exploration and expansion prospects
are described below. All except for Sunset Wash and Lucky Boy are included (or
partially included, as is the case for North Graben) within the boundaries of
the previously disturbed area. In addition, several other identified resource
areas on the Borealis Property are open for further discovery. These prospect
(or target) areas have known or projected mineralization and coincident
geophysical signatures, and extend under alluvial cover in pediment areas in the
southern and southwestern portion of the property. In some areas of the Borealis
Property, alluvial gravel covers the altered-mineralized volcanic rocks at lower
elevations along the mountain front and overlies some of the best exploration
targets. The names of deposits and exploration targets on the Borealis Property
are shown on the map below. The map also shows the boundary of the claim
holdings that comprise the Borealis Property.

BOREALIS GOLD DISTRICT
23 SQUARE MILES

(MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

The following describes some of the target areas that have gold-bearing
rock reported in drill holes or areas that have been mined historically, or are
on trend or at depth that have not been tested adequately. Several deposits have
been targeted for sampling in the current drill program as noted below.

TARGETS WITH POTENTIAL FOR EXPANSION OF KNOWN GOLD DEPOSITS

Freedom Flats. The silicified zone under the current resource has been
inadequately drill tested. Several deeper holes have intercepted gold below and
adjacent to the current pit bottom. Limited drill evidence, an aeromagnetic
survey anomaly, and structural reconstruction of geology in the pit suggest that
a second zone may exist a short distance to the south of the pit. Additional
drilling is planned to define the limits of the northern and southwestern edges
of the deposit and the edges of the mineralized zone found in the bottom of the
pit. These holes may range from 200 to about 800 ft deep.

Borealis Extension. Beneath the Borealis deposit ranging from 250 to 500
ft below the surface, several holes intercepted a flat lying to shallowly
dipping mineralized zone that has yet to be fully delineated. Furthermore, the
Borealis deposit appears to be cut on the northwest side by the extension of the
Freedom Flat fault and a portion of the Borealis deposit may be in this
down-dropped block. The primary target is defined by 16 contiguous drill holes
that have potential ore-grade intercepts and that penetrate beneath the

7,000 ft. elevation, as shown below. Additional drilling is planned to better
define the limits of the mineralization along edges of the old Borealis pit for
mining purposes as well as testing the deeper mineralized area to the north and
northwest of the previously mined Borealis pit area. These planned holes may
range from 100 to 500 ft deep, and if warranted up to 800 ft in special
circumstances.

SCHEMATIC CROSS SECTION OF BOREALIS EXTENSION DEPOSIT AREA

(MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

The grades shown above are the average of the intercepts for a particular drill
hole (calculated over the lengths of the drill hole indicated).

Deep Ore Flats (also referred to as Polaris). Additional drilling is
planned to better define the limits of the mineralization along edges of the
existing pit for mining purposes. These planned holes may be 100- to 200-ft
deep.

Crocodile Ridge. This silicified zone is an extension of the Borealis
deposit to the northeast. Several holes have intercepted low-grade gold
mineralization. Additional and deeper drilling is required to fully test this
target;

East Ridge. The feeder zone to the East Ridge deposit has never been drill
tested. This zone lies either underneath the current pit or lies to the south
and originates from a major fault zone bringing up basement granite. Additional
drilling is planned to better define the limits of the mineralization along the
south flank and bottom of the existing pit for mining purposes. These planned
holes may be 50- to 500-ft deep.

Northeast Ridge. As with East Ridge, the feeder zone to the Northeast
Ridge deposit has never been drill tested. This untested zone lies either
underneath the current pit or lies to the south and originating from a major
fault zone. Additional drilling is planned to better define the limits of the
mineralization around the pit for mining purposes. These planned holes may be
50- to 500-ft deep.

Other targets have been defined based on historical exploration activities.
The most important of these targets include the areas noted below. In general,
in these target areas, additional field work will be required preceding further
drilling.

Cerro Duro. The Cerro Duro deposit is localized along the major Cerro Duro
fault zone. Additional deeper drilling into the root zone of this pipe is
required and new drilling should be done to identify other blind deposits that
may also be localized along this fault. Specific drilling plans will be
finalized as more field work is completed.

Jaime's Ridge. Several drill holes drilled to the west of the Jaime's
Ridge deposit identified some low grade mineralization along splays of the major
Cerro Duro fault system. Additional drilling should be conducted to determine if
mineable reserves could be found in the area. Specific drilling plans will be
finalized as more field work is completed.

Purdy's Peak. The Purdy's Peak mineralization needs to be further drilled
with deeper holes and offset holes. The area lies at the juncture of two faults
along trend with the Cerro Duro fault system. Specific drilling plans will be
finalized as more field work is completed.

Bullion Ridge/Boundary Ridge. The northeast-trending alteration zone
extending along Boundary Ridge into Bullion Ridge contains intense
silicification that is surrounded by argillization, with abundant anomalous
gold. Widely spaced shallow holes have tested several of the
alteration/anomalous gold zones defining mineral resources, but more exploration
is needed to determine the total potential of the area.

Graben Deposit. The Graben deposit is a north-trending, mineralized zone
that appears to have at least three mineralized bodies which may be similar to
the Freedom Flats deposit. These have yet to be fully delineated by drilling,
but existing drill holes demonstrate a higher grade zone which may continue for
more than 1,400 feet in strike length. The trend remains open to the north and
has been traced by geophysical surveys, which suggest that this is a superior
exploration target.

SCHEMATIC CROSS SECTION OF THE GRABEN DEPOSIT AREA

(MAP)
---------------

(Source: A. Noble, Ore Reserves Engineering, Technical Report, 2005)

The grades shown above are the average of the intercepts for a particular drill
hole (calculated over the lengths of the drill hole indicated).

IDENTIFIED TARGETS WITH POTENTIAL FOR NEW DISCOVERIES

North Graben Extension. Prior surface exploration has defined an extension
of the mineralized structural trend identified in the Graben deposit. This new
target is defined by an aeromagnetic anomaly with a coincident IP anomaly.
Several test holes are warranted, and will be located as determined through
further geologic evaluation and analysis.

West Pediment. This defined target area incorporates the prospects
referred to as Sunset Wash, Flatlands, and Gnat Flats. The target has thin to
modest thickness of alluvial cover, as revealed by several

widely scattered drill holes. A large intense aeromagnetic low over the area
suggests strong alteration in the underlying andesite and a coincident subtle
chargeability high anomaly indicates a mineralized system. This aeromagnetic
low/chargeability high anomaly along the projection of a known mineralized trend
has not been drilled. In an adjacent area, very widely spaced and relatively
shallow drill holes in the area of a strong chargeability anomaly intersected
substantial pyrite, argillization, and silicification, and locally anomalous
gold in bedrock beneath the alluvium. It appears from an initial review of the
data that several untested targets exist which will require further analysis and
future drill sampling and testing.

Lucky Boy Prospect. Another prospect area similar to North Graben and
Sunset Wash is the Lucky Boy area, which may be in a shallower pediment
environment in the central portion of the district near the range front. Drill
holes in the periphery have thick zones of silification and traces of gold
mineralization. Echo Bay's aeromagnetic map shows another bulls-eye magnetic low
and Cambior's IP map shows a coincident chargeability high in the area of the
silicification. Additional required data compilation work is in progress.

UNITED STATES MINING LAWS

Mining in the State of Nevada is subject to federal, state and local law.
Three types of laws are of particular importance to the Borealis Property: those
affecting land ownership and mining rights; those regulating mining operations;
and those dealing with the environment.

The Borealis Property is situated on lands owned by the United States
(Federal Lands). Borealis Mining, as the owner or lessee of the unpatented
mining claims, has the right to conduct mining operations on the lands subject
to the prior procurement of required operating permits and approvals, compliance
with the terms and conditions of the mining lease, and compliance with
applicable federal, state, and local laws, regulations and ordinances. On
Federal Lands, mining rights are governed by the General Mining Law of 1872 as
amended, 30 U.S.C. sec.sec. 21-161 (various sections), which allows the location
of mining claims on certain Federal Lands upon the discovery of a valuable
mineral deposit and proper compliance with claim location requirements. A valid
mining claim provides the holder with the right to conduct mining operations for
the removal of locatable minerals, subject to compliance with the General Mining
Law and Nevada state law governing the staking and registration of mining
claims, as well as compliance with various federal, state and local operating
and environmental laws, regulations and ordinances. Historically, the owner of
an unpatented mining claim could, upon strict compliance with legal
requirements, file a patent application to obtain full fee title to the surface
and mineral rights within the claim; however, continuing Congressional
moratoriums have precluded new mining claim patent applications since 1993.

The operation of mines is governed by both federal and state laws. Part of
the Borealis Property is situated within the Toiyabe National Forest, and that
part is administered by the U.S. Forest Service. The rest of the Borealis
Property is administered by the Bureau of Land Management (BLM). In general, the
federal laws that govern mining claim location and maintenance and mining
operations on Federal Lands, including the Borealis Property, are administered
by the BLM. The Forest Service is concerned with surface land use, disturbances
and rights-of-way on Federal Lands that it manages. Additional federal laws,
such as those governing the purchase, transport or storage of explosives, and
those governing mine safety and health, also apply. Various permits or approvals
from the BLM and other federal agencies will be needed before any mining
operations on the Borealis Property can begin.

The State of Nevada likewise requires various permits and approvals before
mining operations can begin, although the state and federal regulatory agencies
usually cooperate to minimize duplication of permitting efforts. Among other
things, a detailed reclamation plan must be prepared and approved, with bonding
in the amount of projected reclamation costs. The bond is used to ensure that
proper reclamation takes place, and the bond will not be released until that
time. The bond amount for a large mining operation is significant. Local
jurisdictions (such as Mineral County) may also impose permitting requirements
(such as conditional use permits or zoning approvals).

Mining activities on the Borealis Property are subject also to various
environmental laws, both federal and state, including but not limited to the
federal National Environmental Policy Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Recovery and Conservation
Act, the

Clean Water Act, the Clean Air Act and the Endangered Species Act, and certain
Nevada state laws governing the discharge of pollutants and the use and
discharge of water. Various permits from federal and state agencies are required
under many of these laws. See, "Permitting Requirements," below. Local laws and
ordinances may also apply to such activities as waste disposal, road use and
noise levels.

PERMITTING

-- PERMIT ACQUISITION AND FUNDAMENTAL ENVIRONMENTAL PERMITTING CONSIDERATIONS

We have initiated a plan to obtain the required principal environmental
operating permits in anticipation of a possible mine start-up in 2006. Current
engineering, results from permit negotiations, and updated mineral resource
estimates will serve as the basis for a feasibility study that is scheduled for
completion by the end of 2005.

A staged permit acquisition program is in progress. The first permitting
stage, started in the fall of 2003, has been completed. Permits obtained at that
time authorized exploration activities needed to prove the mineral resource,
condemn the heap sites and support infrastructure, and obtain environmental
baseline data to support the permitting packages. A second stage of application
for exploration drilling permits was submitted in December 2004 and approval was
obtained in May 2005. A Plan of Operations for a new mine was submitted in
August 2004 to the U.S. Forest Service and Nevada State agencies. A Water
Pollution Control Permit application for the reopening and expansion of the mine
was submitted to the Nevada Bureau of Mining Regulation and Reclamation in
January 2005. Future exploration activities and mine expansion initiatives will
be included in applications for subsequent approvals on a case-by-case and
as-needed basis.

The permit we applied for focuses on the approximately 460 acre area
previously disturbed by mining operations. Deposits within this boundary,
subject to permit applications generally, include the oxidized and partially
oxidized portions of Borealis, Deep Ore Flats (also known as Polaris), East
Ridge, Freedom Flats, and Northeast Ridge which are amenable to a conventional
hydrometallurgical gold recovery process such as heap leaching. Also included in
the Plan of Operations is the option for development of underground access to
the Graben deposit to be used for exploration and future development activities,
although no production plan has been submitted for consideration in this
mineralized zone at this date. Crocodile Ridge, Middle Ridge, and other deposits
within the study area boundaries of the Borealis Property will be added to the
permit applications if warranted based on ongoing engineering and in-fill
drilling results.

-- PERMITTING PROCESS OVERVIEW

The development, operation, closure and reclamation of mining projects in
the United States require numerous notifications, permits, authorizations and
public agency decisions. This section does not attempt to exhaustively identify
all of the permits and authorizations that need to be gained, but instead
focuses on those that are considered to be the main efforts that are on the
critical path for project start-up.

-- ENVIRONMENTAL INVENTORIES

There are certain environmental evaluations that routinely must be
completed in order to provide the information against which project impacts are
measured. Both the U.S. Forest Service and the Nevada Bureau of Mining
Regulation and Reclamation (BMRR) have requirements to profile existing
conditions and to evaluate what effects will result from implementing the
project plans on those mineral resources.

Background information on geology, air quality, soils, biology, water
resources, social and economic conditions, and cultural resources are currently
being assembled for us and will be submitted to the appropriate regulatory
agency.

-- PERMITTING REQUIREMENTS

U.S. FOREST SERVICE REQUIREMENTS

The Bridgeport Ranger District of the U.S. Forest Service will be the lead
agency regulating mining and reclamation activities at the Borealis Property.
The permitting process with the U.S. Forest Service consists of filing a Plan of
Operations pursuant to the requirements of 36 CFR Part 228, Subpart A. Our Plan
of Operations was filed in August 2004 describing the project plans in a
step-by-step process. The Plan of Operations describes the development of the
deposits identified in the Technical Report and recognizes and anticipates the
effects of market impacts such as reductions or increases in gold price, and
describes the measures that will be taken to adjust for these changing
conditions. The emphasis of the Plan of Operations is on defining the spatial
and temporal aspects, as they will affect the land that is managed by the
agency. The Plan of Operations also describes the plans to reclaim the site, and
includes an estimate of the cost to accomplish that reclamation. This cost
estimate is the first step toward establishing the reclamation surety for the
site.

In order to satisfy the reclamation surety requirements of the U.S. Forest
Service, we propose to obtain an insurance policy for its benefit. This policy,
if obtained on terms acceptable to us, would require us to pay into a
"commutation" account of the insurer the agreed cost of the initial future
reclamation work. The initial amount covered under the policy will be funded by
a deposit of $2.8 million into the "commutation" account. The amount covered by
the policy is expected to increase as reclamation costs increase due to expanded
mining related disturbances. This additional policy coverage is expected to be
funded from mining revenue once the mine is in operation. Once funded, the
account will be available to pay for concurrent and final reclamation expenses
as they are incurred. The policy is expected to provide us a mechanism to manage
the overall cost of reclamation for a known cost for the entire life of mine and
provide financial assurance required by the U.S. Forest Service. We would
propose to acquire the policy once the plan of operations and associated
reclamation plan are approved by the U.S. Forest Service.

The National Environmental Policy Act (NEPA) requires that any decision
made by a Federal agency must consider the environmental effects of that
decision. The USFS will decide whether or not there is a decision to be made,
and whether that decision is significant or not. If there is no decision to be
made, as in the instance of Categorical Exclusions (CE), the project can proceed
with notification only. CE's are allowed when surface disturbances are limited
to less than one mile of new road building. If a decision must be made, an
environmental impact evaluation is completed and from that analysis, a
determination of whether the environmental impact is significant or not. If the
determination is a "finding of no significant impact" (FONSI), then the agency
is authorized to approve the plan based on the Environmental Assessment (EA)
findings. If the decision is that the impacts are in fact significant, then an
Environmental Impact Statement (EIS) is required to arrive at the final
decision. There is a significantly increased time period for review and public
comment for an EIS versus an EA. Approvals of Gryphon Gold's site exploration
activities to date were authorized under a CE.

The USFS Bridgeport Ranger District (District) has determined that
preparation of an Environmental Assessment (EA) is necessary to comply with the
requirements of the National Environmental Policy Act (NEPA). The USFS and we
have mutually agreed to have Knight Piesold and Co. (KPCO), a third-party NEPA
contractor, prepare the EA.

At the completion of the NEPA process and decision, the reclamation surety
must be posted with the USFS prior to any surface disturbance on site. The
reclamation cost estimate provided in the Plan of Operations will be reviewed
and refined by the agency and an acceptable amount agreed upon among the U.S.
Forest Service, BMRR and us.

NEVADA DIVISION OF WATER RESOURCES REQUIREMENTS

Development of the Borealis Property will involve significant water demand
in an arid region where the water basin has been over-appropriated and for which
project water rights have been withdrawn. Successful

mining and processing will require careful control of project water and
efficient reclamation of project solutions back into the leaching process.

The Nevada Division of Water Resources (NDWR) is the responsible agency for
granting water rights permits. There are two basins from which water rights
could be appropriated. The first basin was the water supply for the mining
reclamation activities at Borealis during the 1980's and early 1990's. Although
this basin appears to be over allocated to various users, many of these rights
go unused, so it may be possible to transfer existing appropriations to the
project if necessary. The second basin, located south of the Borealis Property
boundary, is undeveloped. Our wholly owned subsidiary, Borealis Mining, holds
the only water right in this undeveloped basin.

We believe that water rights granted to us by the NDWR are sufficient to
conduct planned operations. A wellfield to perfect this water supply has not yet
been tested or developed. We are negotiating with the NDWR for a second set of
water rights to the second basin. Granting of the second water right will allow
for sufficient capacity to allow for a backup source and capacity for expansion
if required.

NDEP BUREAU OF MINING REGULATION AND RECLAMATION REQUIREMENTS

The Nevada Division of Environmental Protection, Bureau of Mining
Regulation and Reclamation (BMRR) regulates mining activities within the state
including water pollution control and reclamation.

The heap leach and process solution ponds are presented in the water
pollution control permit application that was filed in January 2004. The permit
application package includes the engineering design report for the heap and
ponds, certified by a Nevada registered professional engineer. In addition to
the engineering report, operating plans describing the mineral processing
circuit, fluid management plan, monitoring plans, emergency response plan,
temporary closure plan and tentative permanent closure plan were presented. The
Water Pollution Control Permit is expected to be issued before the end of 2005
and such permits are issued on five year, renewable terms.

BMRR also administers and enforces the requirements relating to the
reclamation of land subject to mining or exploration projects.

A Reclamation Plan that contains the identical information as was contained
in the Plan of Operations was submitted to the BMRR in August 2004. The
Reclamation Plan is currently under review and a decision may be received by the
end of 2005.

We may be required to post a reclamation bond from a financial institution
or otherwise set aside a corresponding amount for the benefit of BMRR. We
anticipate that BMRR will accept the reclamation bond we post for the benefit of
the U.S. Forest Service.

NEVADA DIVISION OF ENVIRONMENTAL PROTECTION -- BUREAU OF AIR QUALITY
REQUIREMENTS

Prior to the commencement of construction activities, an air quality permit
will be necessary. The Nevada Bureau of Air Quality (BAQ) regulations state that
a process flow diagram must be generated to communicate the technical aspects of
the process/activity and determine which class of permit will be required. We
plan to prepare the required process flow diagram and submit our permit
application in the third quarter of 2005.

The time period prescribed by Nevada rules for an air quality permit of the
type we expect to require is 10 business days for technical completeness plus 60
calendar days to issue or deny the permit.

UNITED STATES REGULATORY MATTERS

General

All of our exploration activities in the United States are subject to
regulation by governmental agencies under various mining and environmental laws.
The nature and scope of regulation depends on a variety of factors, including
the type of activities being conducted, the ownership status of land on which
the operations

are located, the nature of the resources affected, the states in which the
operations are located, the delegation of federal air and water-pollution
control and other programs to state agencies, and the structure and organization
of state and local permitting agencies. We believe that we are in substantial
compliance with all such applicable laws and regulations. While these laws and
regulations govern how we conduct many aspects of our business, we do not
believe that they will have a material adverse effect on our operations or
financial condition. We evaluate our projects in light of the cost and impact of
regulations on the proposed activity, and evaluate new laws and regulations as
they develop to determine the impact on, and changes necessary to, our
operations.

Generally, compliance with environmental and related laws and regulations
requires us to obtain permits issued by regulatory agencies and to file various
reports and keep records of our operations. Some permits require periodic
renewal or review of their conditions and may be subject to a public review
process during which opposition to our proposed operations may be encountered.

U.S. Federal and State Environmental Law

Our past and future activities in the United States may cause us to be
subject to liability under various federal and state laws. Proposed mining
activities on federal land trigger regulations promulgated by the U.S. Forest
Service (USFS), the Bureau of Land Management (BLM), and potentially other
federal agencies, depending on the nature and scope of the impacts. For
operations on federal public lands administered by the BLM that disturb more
than five acres, an operator must submit a Plan of Operations to BLM. On
USFS-administered lands, the USFS requires the submission of a notice for all
mining operations, regardless of size, and a Plan of Operations if the USFS
determines that there will be any "significant" disturbance of the surface.

The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (CERCLA), imposes strict, joint, and several liability on
parties associated with releases or threats of releases of hazardous substances.
Liable parties include, among others, the current owners and operators of
facilities at which hazardous substances were disposed or released into the
environment and past owners and operators of properties who owned such
properties at the time of such disposal or release. This liability could include
response costs for removing or remediating the release and damages to natural
resources. We are unaware of any reason why our undeveloped properties would
currently give rise to any potential CERCLA liability. We cannot predict the
likelihood of future CERCLA liability with respect to our properties or
surrounding areas that have been affected by historic mining operations.

Under the Resource Conservation and Recovery Act (RCRA) and related state
laws, mining companies may incur costs for generating, transporting, treating,
storing, or disposing of hazardous or solid wastes associated with certain
mining-related activities. RCRA costs may also include corrective action or
clean up costs.

Mining operations may produce air emissions, including fugitive dust and
other air pollutants, from stationary equipment, such as crushers and storage
facilities, and from mobile sources such as trucks and heavy construction
equipment. All of these sources are subject to review, monitoring, permitting,
and/or control requirements under the federal Clean Air Act and related state
air quality laws. Air quality permitting rules may impose limitations on our
production levels or create additional capital expenditures in order to comply
with the permitting conditions.

Under the federal Clean Water Act and delegated state water-quality
programs, point-source discharges into "Waters of the State" are regulated by
the National Pollution Discharge Elimination System (NPDES) program. Section 404
of the Clean Water Act regulates the discharge of dredge and fill material into
"Waters of the United States," including wetlands. Stormwater discharges also
are regulated and permitted under that statute. All of those programs may impose
permitting and other requirements on our operations.

The National Environmental Policy Act (NEPA) requires an assessment of the
environmental impacts of "major" federal actions. The "federal action"
requirement can be satisfied if the project involves federal

land or if the federal government provides financing or permitting approvals.
NEPA does not establish any substantive standards. It merely requires the
analysis of any potential impact. The scope of the assessment process depends on
the size of the project. An "Environmental Assessment" (EA) may be adequate for
smaller projects. An Environmental Impact Statement (EIS), which is much more
detailed and broader in scope than an EA, is required for larger projects. NEPA
compliance requirements for any of our proposed projects could result in
additional costs or delays.

The Endangered Species Act (ESA) is administered by the U.S. Department of
Interior's U.S. Fish and Wildlife Service. The purpose of the ESA is to conserve
and recover listed endangered and threatened species and their habitat. Under
the ESA, "endangered" means that a species is in danger of extinction throughout
all or a significant portion of its range. "Threatened" means that a species is
likely to become endangered within the foreseeable future. Under the ESA, it is
unlawful to "take" a listed species, which can include harassing or harming
members of such species or significantly modifying their habitat. We conduct
wildlife and plant inventories as required as part of the environmental
assessment process prior to initiating exploration projects. We currently are
unaware of any endangered species issues at any of our projects that would have
a material adverse effect on our operations. Future identification of endangered
species or habitat in our project areas may delay or adversely affect our
operations.

We are committed to fulfilling our requirements under applicable
environmental laws and regulations. These laws and regulations are continually
changing and, as a general matter, are becoming more restrictive. Our policy is
to conduct our business in a manner that safeguards public health and mitigates
the environmental effects of our business activities. To comply with these laws
and regulations, we have made, and in the future may be required to make,
capital and operating expenditures.

U.S. Federal and State Reclamation Requirements

We are subject to land reclamation requirements under state and federal
law, which generally are implemented through reclamation permits that apply to
exploration activities. These requirements often mandate concurrent reclamation
and require the posting of reclamation bonds or other financial assurance
sufficient to guarantee the cost of reclamation. If reclamation obligations are
not met, the designated agency could draw on these bonds and letters of credit
to fund expenditures for reclamation requirements.

Reclamation requirements generally include stabilizing, contouring and
re-vegetating disturbed lands, controlling drainage from portals and waste rock
dumps, removing roads and structures, neutralizing or removing process
solutions, monitoring groundwater at the mining site, and maintaining visual
aesthetics. We believe that we currently are in substantial compliance with and
are committed to maintaining all of our financial assurance and reclamation
obligations pursuant to our permits and applicable laws.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of units in this offering
will amount to approximately $13,000,000 after deducting commissions payable to
the agents and expenses of the offering payable by us of approximately $800,000,
and assuming that we succeed in raising the maximum of $15,000,000 in gross
proceeds.

Investors should be aware that there is no assurance as to the amount to be
raised in this offering. The following table illustrates how we estimate we will
use those net proceeds from our offering, assuming the maximum offering is
raised:

AMOUNT OF
DESCRIPTION NET PROCEEDS
----------- ------------

Exploration, sampling and testing of the Borealis
Property.................................................. $ 1,500,000
Mine capital costs.......................................... $ 5,600,000
Reclamation bond deposit.................................... $ 3,000,000
General corporate purposes, including working capital
needs..................................................... $ 2,900,000
-----------
TOTAL..................................................... $13,000,000
===========

The allocation set forth above assumes that we raise the maximum offering,
but it is possible that we will raise a smaller amount, down to a minimum of
$ . To the extent we do not succeed in raising the maximum amount of the
offering we intend to reduce the allocation of proceeds to develop the Borealis
Property. We may also raise more than the maximum offering noted above through
the over-allotment option available to the agent, which would result in up to an
additional $2,250,000 in gross proceeds. Net proceeds received from the exercise
of the over-allotment option will be allocated to further exploration and mine
development on the Borealis Property.

We intend to spend the net proceeds available as stated above. There may be
circumstances where, for sound business reasons, a reallocation of funds may be
necessary. We expect that such a reallocation would principally arise based on
the results of our feasibility study and ongoing exploration. For example, our
estimates relating to mine planning and exploration have had no third party
confirmation as to costs, and may need to be adjusted.

Pending the uses described above, we intend to invest the net proceeds in
short- to medium-term, interest-bearing, investment-grade securities.

DIVIDEND POLICY

We anticipate that we will retain any earnings to support operations and to
finance the growth and development of our business. Therefore, we do not expect
to pay cash dividends in the foreseeable future. Any further determination to
pay cash dividends will be at the discretion of our board of directors and will
be dependent on the financial condition, operating results, capital requirements
and other factors that our board deems relevant. We have never declared a
dividend.

CONSOLIDATED CAPITALIZATION

The following table sets forth our consolidated capitalization as at the
dates indicated after giving effect to this offering. The table should be read
in conjunction with our consolidated financial statements and notes thereto and
"Management's Discussion and Analysis" contained elsewhere in this prospectus.

The as adjusted capitalization at June 30, 2005 reflects our sale of
units in this offering at an offering price of $ per unit and
after deducting the estimated agent commission and estimated offering expenses
payable by us.

ACTUAL ACTUAL AS ADJUSTED(1)(2)
AS AT AS AT AS AT
MARCH 31, 2005 JUNE 30, 2005 JUNE 30, 2005
--------------- --------------- -----------------
(AUDITED) (UNAUDITED) (UNAUDITED)

Cash................................ $ 3,065,436 $ 5,859,298 $
--------------- --------------- ---------------
Stockholders' Equity
Common Stock, $0.001 par value,
150,000,000 shares
authorized(3)..................... $ 21,692 $ 27,722 $
(21,691,962) (27,722,370) ( shares)
shares shares
Preferred Stock, $.001 par value,
15,000,000 shares authorized, none
issued and outstanding actual..... -- --
Additional paid in capital.......... 6,891,968 10,745,415
Accumulated deficit................. (3,381,045) (4,198,963)
--------------- --------------- ---------------
Total stockholders' equity........ $ 3,532,615 $ 6,574,174 $
=============== =============== ===============

---------------

(1) Assumes no exercise by the agents of their option to purchase up to 15% of
the number of units sold in the offering to cover over-allotments, if any.

(2) We estimate offering expenses to be approximately $800,000.

(3) Effective August 11, 2005, we amended our articles of incorporation to
increase our authorized capital to consist of 165,000,000 shares, including
150,000,000 shares of common stock, $0.001 par value, and 15,000,000 shares
of preferred stock, $0.001 par value.

DILUTION

Our net tangible book value was $6,574,174 or $0.24 per share of common
stock as of June 30, 2005. Net tangible book value per share represents the
amount of our total tangible assets reduced by the amount of our total
liabilities, divided by 27,722,370 shares of common stock outstanding as of June
30, 2005.

"Dilution" per share to new investors in this offering represents the
difference between the amount per share paid by new investors for a share of our
common stock and the as adjusted, net tangible book value per common share
immediately following our offering. Set forth below, we have provided
information to new investors, assuming the successful sale of the maximum number
of units. In these calculations, we have counted one share per unit but have not
included any of the warrants included in the units or the exercise by the agent
of its option to purchase up to 15% of the number of units sold in the offering
to cover over-allotments, if any. Accordingly, after giving effect to the sale
of units in our offering at an offering price of $ per unit and
the use of the net proceeds derived from their sale, the as adjusted, net
tangible book value of our common stock would have been $ or $
per share at June 30, 2005. Although these calculations show an immediate
increase in the pro forma net tangible book value per common share of
$ , they also disclose the immediate dilution per common share purchased
by new investors of $ .

The following table illustrates the per share effect of this dilution on
the common shares purchased by new investors in this offering assuming we raise
$15,000,000 at an offering price of $ per unit based on a June 30, 2005
pro forma:

UNITS(1)(2)
---------------

Initial public offering price...............................
Net tangible book value per share at June 30, 2005........ $0.24
Increase in net tangible book value attributable to new
investors..............................................
As adjusted net tangible book value.........................
Dilution per share to new investors.........................
Dilution percentage per share to new investors..............

---------------

(1) Assumes the sale of units in our offering at an offering price of
per unit.

(2) Assumes no exercise by the agent of its option to purchase up to 15% of the
number of units sold in the offering to cover over-allotments, if any.
Assumes no exercise of the warrants included in the units, which are
exercisable at $ per share.

PRIOR SALES OF SECURITIES

During the 12 month period prior to date of this prospectus, we sold
securities in the following transactions:

On September 7, 2004, we reserved for issuance and later sold 500,000
shares of common stock to Thomas Sitar, our chief financial officer at
$0.35 per share under the terms of his employment agreement.

On September 28, 2004, we sold 778,500 shares of common stock at $0.65 per
share for gross proceeds of $506,025. On January 26, 2005, we issued to
each of those purchasers one-half of one warrant for each common share
purchased for no consideration in conjunction with a private placement of
units consisting of one share and one-half of one warrant. Each whole
warrant is exercisable to acquire one share of common stock at $0.90 per
share until the earlier of September 28, 2006 and nine months following the
date on which common stock is listed on a public stock exchange. The
proceeds of this offer and sale were used for general corporate purposes.

On January 26, 2005, we sold 1,410,077 units at $0.65 per unit for gross
proceeds of $916,550. Each unit consisted of one share of common stock and
one-half of one share purchase warrant, each whole warrant exercisable to
acquire one share of common stock $0.90 per share until the earlier of
January 26, 2007 and nine months following the date on which common stock
is listed on a public stock exchange. The proceeds of this offer and sale
were used for general corporate purposes.

On March 28, 2005, we sold 4,627,385 units at $0.65 per unit for gross
proceeds of $3,007,800. Each unit consisted of one share of common stock
and one-half of one share purchase warrant, each whole warrant exercisable
to acquire one share of common stock $0.90 per share until the earlier of
March 28, 2007 and nine months following the date on which common stock is
listed on a public stock exchange. The proceeds of this offer and sale were
used for general corporate purposes.

On April 1, 2005, we sold 1,300,000 units at $0.65 per unit for gross
proceeds of $845,000. Each unit consisted of one share of common stock and
one-half of one share purchase warrant, each whole warrant exercisable to
acquire one share of common stock $0.90 per share until the earlier of
April 1, 2007 and nine months following the date on which common stock is
listed on a public stock exchange. The proceeds of this offer and sale were
used for general corporate purposes.

On April 25, 2005, we sold 4,221,154 units at $0.65 per unit for gross
proceeds of $2,743,750. Each unit consisted of one share of common stock
and one-half of one share purchase warrant, each whole warrant exercisable
to acquire one share of common stock $0.90 per share until the earlier of
April 25, 2007 and

nine months following the date on which common stock is listed on a public
stock exchange. The proceeds of this offer and sale were used for general
corporate purposes.

On June 22, 2005, we sold 509,254 units at $0.65 per unit for gross
proceeds of $331,015. Each unit consisted of one share of common stock and
one-half of one share purchase warrant, each whole warrant exercisable to
acquire one share of common stock $0.90 per share until the earlier of June
22, 2007 and nine months following the date on which common stock is listed
on a public stock exchange. The proceeds of this offer and sale were used
for general corporate purposes.

LEGAL PROCEEDINGS

Neither we nor any of our property, including the Borealis Property, are
currently subject to any material legal proceedings or other regulatory
proceedings, and to our knowledge no such proceedings are contemplated.

DIRECTORS AND OFFICERS

DIRECTORS AND EXECUTIVE OFFICERS

Our directors hold office until the next annual meeting of the stockholders
and the election and qualification of their successors. Officers are elected
annually by the Board of Directors and serve at the direction of the Board of
Directors.

The following table and information that follows sets forth the names, ages
and positions of our directors and executive officers:

NAME AND MUNICIPALITY OF CURRENT OFFICE WITH PRINCIPAL OCCUPATION
RESIDENCE GRYPHON GOLD LAST FIVE YEARS DIRECTOR SINCE
------------------------ ----------------------- ------------------------ -----------------

ALLEN S. GORDON................ Director, Chief Executive Officer, April 30, 2003
Lakewood, Colorado Chief Executive Officer Gryphon Gold Corporation
and President since August 2005;
President, 2003 to
present, and Chief
Operating Officer, 2003
to August 2005, Gryphon
Gold Corporation; Senior
Vice President of Mining
Operations, National
Gold Corporation in
2002; Chief Operating
Officer of NRX Global
(USA) Corp., 2000 to
2002.

ALBERT J. MATTER............... Director and Executive Chairman, April 30, 2003
Vancouver, Executive Chairman and since August 2005;
British Columbia Chairman of the Board Chairman of the Board
and Vice President of
Corporate Development,
Gryphon Gold
Corporation, 2003 to
present. President
National Gold
Corporation, 1999 to
2002.

DONALD E. RANTA................ Director, Vice President, Gryphon June 14, 2003
Lakewood, Colorado Vice President of Gold Corporation 2003 to
Exploration present. Consulting
geologist 2001-2003.
President, NRX Global
(USA) Corp., 2000-2002.

CHRISTOPHER E. HERALD.......... Director President and CEO, December 30, 2003
Wheat Ridge, Colorado Crown Resources
Corporation, 1988 to
present.

RICHARD E. HUGHES.............. Director President of Klondike June 14, 2003
Vancouver, Gold Corp. 1985 to
British Columbia present.

ROHAN HAZELTON................. Director Corporate Controller, July 6, 2005
North Vancouver, 2004 to present and Mgr.
British Columbia Treasury and Finance,
2002 to 2004, Goldcorp
Inc. (and Predecessor
Wheaton River Minerals
Ltd.) Auditor, Deloitte
& Touche LLP, 1999 to
2002.

DONALD W. GENTRY............... Director President, Chief July 18, 2005
Executive
Bella Vista, Arkansas Officer, Chairman and
Director of PolyMet
Mining Corporation, 1998
to 2003

ANTHONY (TONY) D. J. KER....... Director, Executive Vice May 7, 2004
President,
Vancouver, Executive Vice Gryphon Gold
British Columbia President, Secretary Corporation, 2003 to
and Treasurer present, General
Manager,
Transcontinental
Printing Inc., 1996 to
2004.

THOMAS SITAR................... Chief Financial Chief Financial Officer, --
Vancouver, Officer Gryphon Gold
British Columbia Corporation, 2004 to
present, Vice President
Finance, Weldwood of
Canada Limited, 1998 to
2003.

The following is a description of the business background of the directors
and executive officers of the Corporation.

ALLEN S. GORDON, 54, Director, has served as our President and Chief
Operating Officer since its inception in early 2003 and was appointed Chief
Executive Officer on August 10, 2005. From 2000 to the present, Mr. Gordon has
served as Executive Director and sole member of Evergreen Mineral Ventures LLC,
a privately held management services company. During 2002 Mr. Gordon served as
Senior Vice President of Mining Operations for National Gold Corporation, a
public mining development company listed on the TSX Venture Exchange (Canada).
From 2000 to 2002 Mr. Gordon served as Chief Operating Officer of NRX Global
(USA) Corp., (London Stock Exchange AIM listed) a mining software developer.
During 2000 Mr. Gordon also served as interim Chairman of the Board, President
and Chief Executive Officer of Greenstone Resources Ltd., a Toronto Stock
Exchange and NASDAQ listed gold mining company. From 1997 to 2000 Mr. Gordon
served as Managing Director of Union Hill Partners, a private mining investment
adviser. Prior to 1997 Mr. Gordon served as Senior Vice President Technical
Services and Project

Development for Kinross Gold Corporation. Kinross Gold Corporation is a public
corporation listed on the Toronto Stock Exchange and the New York Stock
Exchange. Mr. Gordon's experience includes international business experience in
North America, Mexico, Central America, Europe, Central Asia, and the Russian
Far East. Mr. Gordon has a M.S. in Mining Engineering and a B.S. in Geology from
University of Idaho.

ALBERT J. MATTER, 58, Director, has served as our Chairman of the Board,
Vice President of Corporate Development, past Secretary and Treasurer since its
inception in early 2003 and was appointed Executive Chairman on August 10, 2005.
From 1999 to December of 2002 Mr. Matter served as President and Chief Executive
Officer of National Gold Corporation. From spring of 1998 to fall of 1999 Mr.
Matter was in retirement. Mr. Matter has over 30 years of experience of
providing corporate finance, strategic planning, mergers and acquisition, and
business development assistance to numerous corporations and high net worth
individuals, especially in Western Canada. Successful corporate financing
highlights include projects for Consumers Distributing Ltd., CN/CP Telecom,
Madison Ventures Ltd., Rea Gold Corporation, Echo Bay Mines Ltd., Russell Steel
Ltd., Blackdome Mining Ltd., Southward Energy Ltd., Winspear Resources Ltd. and
National Gold Corporation. Mr. Matter holds a B.A. in Economics from the
University of British Columbia.

DONALD E. RANTA, 62, Director, has served as our Vice President of
Exploration since June 14, 2003, has held the following positions for the past
five years: Director, President and Managing Director, Union Hill Partners,
1997-2000; President, NRX Global (USA) Corp., 2000-2002; Consulting Geologist,
2001 to 2003. Mr. Ranta is an internationally recognized exploration executive
experienced in planning, implementing, and directing successful exploration and
acquisition programs throughout North America, South America, Africa and other
international locations. Mr. Ranta has extensive experience in generative
exploration, project exploration and appraisal, geologic-engineering-economic
evaluation, strategic and business planning, and management. Mr. Ranta has over
30 years of business experience and has served in various positions for mining
companies, including President, Managing Director, Vice President of
Exploration, Manager of North American Exploration, Project Manager and Chief
Geologist. Mr. Ranta has a Ph.D. in Geological Engineering/Geology from Colorado
School of Mines, a M.S. in Geological Engineering/Geology from University of
Nevada and a B.S. in Geological Engineering from University of Minnesota.

CHRISTOPHER E. HERALD, 52, Director, has been President and Chief Executive
Officer of Crown Resources Corporation since 1993. Prior to that Mr. Herald was
Vice President of Exploration for Crown Resources Corporation. Crown Resources
Corporation is a public company listed on the over the counter bulletin board.
Mr. Herald also has served as Chief Executive Officer and a director of
Solitario Resources Corporation since 1993. Solitario Resources Corporation is a
public company listed on the Toronto Stock Exchange. He is also a Director of
TNR Gold Corp. and Maestro Ventures Ltd., both of which are public companies.
Mr. Herald has over 25 years in domestic and international mineral exploration
with an emphasis in the gold sector. Mr. Herald's experience ranges from
in-the-field supervision of significant gold projects to corporate management of
US-based public exploration companies. He holds a M.S. in Geology from Colorado
School of Mines and a B.S. in Geology from the University of Notre Dame.

RICHARD W. HUGHES, 72, Director, has been the President of Klondike Gold
Corp. for over 10 years. Mr. Hughes is currently a Director of Alamos Gold Inc.,
a Toronto Stock Exchange listed company. He is a founder of the Hemlo gold mines
in Ontario and the Balmoral Mine in Quebec. Mr. Hughes controls Hastings
Management Corp., and is the president of Sedex Mining Corp., Golden Chalice
Resources, and Abitibi Mining Corp. He is also a Director of Golden Goliath
Resources Limited, Kalahari Resources Inc. and Neodym Technology Inc., all of
which are public companies. He was also involved in discovering and putting into
production the Sleeping Giant Mine and the Beaufor Mine which are located in
Northwestern Quebec.

ROHAN HAZELTON, 31, Director, joined our board in July 2005 and was
appointed Chairman of the Audit Committee. Mr. Hazelton is currently Corporate
Controller for Goldcorp Inc. Prior to Goldcorp's merger with Wheaton River
Minerals Ltd; he was a key member of Wheaton's management team since 2002 during
Wheaton's rapid growth and significant increase in shareholder value. Mr.
Hazelton is a Chartered Accountant and previously worked for Deloitte & Touche
LLP and Arthur Andersen LLP. Prior to that,

Mr. Hazelton was a commercial loans officer for Dialog Bank Moscow, Russia. Mr.
Hazelton holds a B.A. in Math and Economics from Harvard University.

DONALD W. GENTRY, 62, Director, joined our board in July 2005 after
retiring from PolyMet Mining Corporation as its President, Chief Executive
Officer, Chairman and Director from 1998 to 2003. He is a retired Professor
Emeritus of the Colorado School of Mines, having served that institution from
1972 to 1998 as Professor, Department Head and Dean of Engineering. He has an
international reputation as a consulting mining engineer, professional educator
and mining executive. His primary interests center on the financial aspects of
project evaluation, investment decision analysis, project financing, and
corporate investment strategies. He previously served as a Director of Santa Fe
Pacific Gold Corporation, Newmont Mining Corporation, and Newmont Gold Company
and currently is a Director of Golden Gryphon Explorations (a company which is
unrelated to Gryphon Gold Corporation). He was elected President of the Society
for Mining, Metallurgy and Exploration, Inc. in 1993 and the American Institute
of Mining, Metallurgical and Petroleum Engineers in 1996, and to the National
Academy of Engineering in 1996. He holds B.S., M.S. and PhD. degrees in mining
engineering from the University of Illinois, Mackay School of Mines, and
University of Arizona, respectively.

ANTHONY KER, 49, Director, has served as our Secretary and Treasurer since
August 2003. From 1999 to February 2003, Mr. Ker served as Director, Treasurer,
Secretary and Chief Financial Officer for National Gold Corporation, a TSX
Venture Exchange listed company that merged into Alamos Gold, Inc. (TSX) during
the spring of 2003. From 1996 and concurrent with the positions at National Gold
Corporation, he was General Manager for Transcontinental Printing, Inc., British
Columbia Division, a Toronto Stock Exchange listed company, and the second
largest printer in Canada. Prior to the Transcontinental Printing, Inc.
position, Mr. Ker managed a large coastal sawmill for International Forest
Products Limited and Weldwood of Canada Limited in British Columbia. Mr. Ker
holds a Bachelor of Science in Forestry from University of British Columbia.

THOMAS SITAR, 50, has served as our Chief Financial Officer of Gryphon Gold
since November 2004. From 1998 to 2003 Mr. Sitar was Vice President, Finance of
Weldwood of Canada Limited, a large Western Canadian forest products producer,
which merged into West Fraser Timber Ltd., previously owned by International
Paper Company. Mr. Sitar has 25 years of experience in the financial management
of public companies, including his position as Treasurer of Weldwood when it was
a Toronto Stock Exchange listed company. Mr. Sitar has a Bachelor of Commerce
from the University of Windsor and is a member of Institute of Chartered
Accountants of B.C.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors has established four board committees: an Audit
Committee, a Compensation Committee and a Corporate Governance/Nominating
Committee and a Project Development, Environmental & Sustainability Committee.

The information below sets out the current members of each of Gryphon
Gold's board committees and summarizes the functions of each of the committees
in accordance with their mandates.

AUDIT COMMITTEE

Our Audit Committee has been structured to comply with Multilateral
Instrument 52-110-Audit Committees (MI 52-110) and Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. Our Audit Committee is comprised of Chris
Herald, Don Gentry and Rohan Hazelton, all of whom are independent directors
under MI 52-110 and the audit committee rules of the American Stock Exchange.
Rohan Hazelton is the Chairman of the Audit Committee. Both Rohan Hazelton and
Chris Herald satisfy the criteria for an audit committee financial expert under
Item 401(e) of Regulation S-B of the rules of the Securities and Exchange
Commission.

The Audit Committee meets with management and Gryphon Gold's external
auditors to review matters affecting financial reporting, the system of internal
accounting and financial controls and procedures and the

audit procedures and audit plans. The Audit Committee reviews Gryphon Gold's
significant financial risks, will be involved in the appointment of senior
financial executives and will annually review Gryphon Gold's insurance coverage
and any off-balance sheet transactions.

The Audit Committee is mandated to monitor Gryphon Gold's audit and the
preparation of financial statements and to review and recommend to the board of
directors all financial disclosure contained in Gryphon Gold's public documents.
The Audit Committee is also mandated to appoint external auditors, monitor their
qualifications and independence and determine the appropriate level of their
remuneration. The external auditors report directly to the Audit Committee and
to the board of directors. The Audit Committee and board of directors each have
the authority to terminate the external auditor's engagement (subject to
confirmation by shareholders). The Audit Committee will also approve in advance
any services to be provided by the external auditors which are not related to
the audit.

COMPENSATION COMMITTEE

The Compensation Committee is comprised of Richard Hughes, Chris Herald,
and Rohan Hazelton, all of whom are independent directors. The Compensation
Committee is responsible for considering and authorizing terms of employment and
compensation of Directors, executive officers and providing advice on
compensation structures in the various jurisdictions in which Gryphon Gold
operates. In addition, the Compensation Committee reviews both the overall
salary objectives of Gryphon Gold and significant modifications made to employee
benefit plans, including those applicable to directors and executive officers,
and proposes any awards of stock options, incentive and deferred compensation
benefits.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

The Corporate Governance and Nominating Committee is comprised of Richard
Hughes, Chris Herald, Don Gentry and Don Ranta. The Corporate Governance and
Nominating Committee is responsible for developing Gryphon Gold's approach to
corporate governance issues and compliance with governance rules. The Corporate
Governance and Nominating Committee is also mandated to plan for the succession
of Gryphon Gold, including recommending director candidates, review of board
procedures, size and organization, and monitoring of senior management with
respect to governance issues. The committee is responsible for the development
and implementation of corporate communications to ensure the integrity of
Gryphon Gold's internal control and management information systems. The purview
of the Corporate Governance and Nominating Committee also includes the
administration of the board's relationship with the management of Gryphon Gold,
monitoring the quality and effectiveness of Gryphon Gold's corporate governance
system and ensuring the effectiveness and integrity of Gryphon Gold's
communication and reporting to shareholders and the public generally.

PROJECT DEVELOPMENT, ENVIRONMENTAL & SUSTAINABILITY COMMITTEE

The Project Development, Environmental & Sustainability Committee is
comprised of Don Gentry, Don Ranta and Tony Ker. The committee is to review and
provide technical and commercial guidance for major project development plans,
ensure management has appropriate systems in place to plan, implement and track
performance of project development. The Committee shall establish environmental
policy, monitor compliance and audit our performance relative to policy. The
Committee shall establish health and safety policies monitor compliance and
audit our practices and actions. The Committee shall establish policy for
involving communities of interest in the design and implementation of project
development towards sustainable mining development.

CODE OF CONDUCT

We intend to adopt a Code of Business Conduct and Ethics that applies to
all of our directors, officers and employees. The Code of Business Conduct and
Ethics will summarize the legal, ethical and regulatory standards that we must
follow and will serve as a reminder to our directors, officers and employees, of
the

seriousness of that commitment. Compliance with this code and high standards of
business conduct will be mandatory for each of our employees.

-- Corporate Cease Trade Orders and Bankruptcies

Except as disclosed in this prospectus, none of our directors or officers
is, or has been within the ten years before the date of this prospectus, a
director or officer of any other company that, while such person was acting in
that capacity or within two years prior thereto, was the subject of a cease
trade or similar order, or an order that denied the company access to any
statutory exemptions under the Canadian securities legislation, for a period of
more than 30 consecutive days, or was declared bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency or was subject to or
instituted any proceedings, arrangements or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold the assets of that
business.

Allen Gordon served as interim President, Chief Executive Officer and as a
director of Greenstone Resources Ltd. from February through June of 1999, ten
months prior to the insolvency of Greenstone in March 2000.

Donald E. Ranta served as a director of Greenstone Resources from February
1999 to December 1999, four months prior to the insolvency of Greenstone in
March 2000.

Christopher Herald was Chief Executive Officer at Crown Resources
Corporation when it filed to reorganize under Chapter 11 of the federal
bankruptcy laws in May 2002. Crown subsequently emerged from the reorganization.

-- Penalties and Sanctions

None of our directors or officers has been subject to any penalties or
sanctions imposed by a court relating to Canadian securities legislation or by a
Canadian securities regulatory authority or has entered into a settlement
agreement with a Canadian securities regulatory authority or been subject to any
other penalties or sanctions imposed by a court or regulatory body that would
likely be considered important to a reasonable investor in making an investment
decision.

-- Personal Bankruptcies

None of our directors or officers have, within the ten years before the
date of this prospectus, become bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangements or compromises with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director or
officer.

-- Conflicts of Interest

To our knowledge, and other than as disclosed in this prospectus, there are
no known existing or potential conflicts of interest among us, our promoters,
directors and officers, or other members of management, or of any proposed
director, officer or other member of management as a result of their outside
business interests except that certain of the directors and officers serve as
directors and officers of other companies, and therefore it is possible that a
conflict may arise between their duties to us and their duties as a director or
officer of such other companies.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth compensation paid to each of the individuals
who served as our Chief Executive Officer and our other most highly compensated
executive officers (the "named executives officers") for the fiscal years ended
March 31, 2005 and 2004.

ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------ --------------------------------------
AWARDS PAYOUTS
-------------------------- ---------
RESTRICTED LONG TERM
COMMON SHARES OR INCENTIVE
OTHER ANNUAL SHARES UNDER RESTRICTED PLAN
SALARY BONUS(2) COMPENSATION OPTIONS/SARS SHARE UNITS PAYOUTS
NAME AND PRINCIPAL POSITION FISCAL YEAR ($) ($) ($) GRANTED(#) ($) ($)
--------------------------- ----------- ------- -------- ------------ ------------ ----------- ---------

ALLEN GORDON.............. 2005 120,000(1) 42,550 -- -- -- --
President and 2004 105,000 130,000(5) -- -- -- --
Chief Executive Officer
ALBERT MATTER............. 2005 120,000(1) 42,550 -- -- -- --
Executive Chairman 2004 105,000 130,000(5) -- -- -- --
ANTHONY KER(3)............ 2005 120,000(1) 42,550 -- -- -- --
Executive Vice President 2004 11,375 12,000 -- -- -- --
THOMAS SITAR(4)........... 2005 66,750(1) 24,800 -- -- -- --
Chief Financial Officer
DONALD E. RANTA........... 2005 66,350 42,550 -- -- -- --
Vice President 2004 19,556 -- -- -- -- --
of Exploration

ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)
--------------------------- ------------

ALLEN GORDON.............. --
President and --
Chief Executive Officer
ALBERT MATTER............. --
Executive Chairman --
ANTHONY KER(3)............ --
Executive Vice President --
THOMAS SITAR(4)........... --
Chief Financial Officer
DONALD E. RANTA........... --
Vice President --
of Exploration

---------------

(1) Includes salary paid to the applicable officer in his capacity as an
employee from January 1, 2005 to March 31, 2005 in the amount of $30,000.
Prior thereto, each of those named executive officers was retained through a
consulting arrangement either individually or through an entity controlled
by the individual, and the balance of all amounts recorded as salary and
bonus paid to them represents consulting fees.

(2) Performance bonuses paid or payable to officer or an entity controlled by
the officer since April 24, 2003 (inception).

(3) Mr. Ker was appointed Executive Vice President on February 1, 2004.

(4) Mr. Sitar was appointed Chief Financial Officer on November 1, 2004.

(5) Includes signing bonus in the amount of $60,000.

STOCK OPTION/STOCK APPRECIATION RIGHTS ("SARS") GRANTS

We adopted a Stock Plan during the year ended March 31, 2005. The plan
permits the company to issue up to 3,000,000 shares of common stock to officers,
directors, employees and consultants, in the form of options. The plan was
approved by our shareholders at the annual meeting of shareholders held on May
13, 2005.

The following table sets forth the stock options granted to our named
executive officers and directors during the year ended March 31, 2005. No stock
appreciation rights were awarded.

NUMBER OF PERCENT OF TOTAL MARKET VALUE
SECURITIES OPTIONS/SARSS OF UNDERLYING
UNDERLYING GRANTED TO EXERCISE OR SECURITIES ON
OPTIONS/SARS EMPLOYEES IN BASE PRICE THE DATE OF
NAME GRANTED (#) FISCAL YEAR(1) ($/SHARE) GRANT(2) EXPIRATION DATE
---- ------------ ---------------- ----------- ------------- ---------------

ALLEN GORDON................ 350,000 18.4% $0.75 $ -- March 29, 2010
President, Chief Executive
Officer
ALBERT MATTER............... 350,000 18.4% $0.75 $ -- March 29, 2010
Executive Chairman
ANTHONY KER................. 325,000 17.1% $0.75 $ -- March 29, 2010
Executive Vice President
THOMAS SITAR................ 250,000 13.2% $0.75 $ -- March 29, 2010
Chief Financial Officer
DONALD E. RANTA............. 325,000 17.1% $0.75 $ -- March 29, 2010
Director, Vice President of
Exploration

---------------

(1) We issued options to acquire a total of 1,900,000 shares of common stock to
our officers, directors and employees during the fiscal year ended March 31,
2005. Subsequent to March 31, 2005, we granted options exercisable to
acquire a total of 300,000 shares of common stock at $0.75 per share to two
directors upon their appointment.

(2) Our common shares were not traded on any public market on the date of grant.
We issued units consisting of one share of common stock and one-half of one
share purchase warrant in 2005 at a price of $0.65 per unit. Accordingly,
$0.65 may be considered to be a measure of market value of a share of common
stock on the date of grant.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

We had no option/SAR exercises during our fiscal year ended March 31, 2005.

LONG TERM INCENTIVE PLAN AWARDS

No long-term incentive awards have been made by us to date.

DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE

We do not provide retirement benefits for the directors or officers.

COMPENSATION OF DIRECTORS

Beginning in July 2005, independent board members who are not employed by
us in any capacity other than as a director will be compensated for their
services as follows:

- For any Board or Committee meeting not requiring travel, such as a
telephone conference call -- a meeting fee of $250.

- For any fully constituted meeting of the Board or a Committee requiring
travel of over four hours in aggregate -- a meeting fee of $1,000.

- Any expenses, travel, administrative, telephone or other costs associated
with a Board member's fulfilling his or her duties as a Board member will
be reimbursed by Gryphon Gold.

Previously, we had no standard arrangement pursuant to which directors were
compensated for their services in their capacity as such. During our most
recently completed financial year, directors did not receive any compensation
from us in their capacity as directors of Gryphon Gold.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

Gryphon Gold is a party to employment contracts providing for an annual
salary of $120,000 for each of Messrs. Matter, Gordon, Ker and Sitar. Pursuant
to those agreements they are entitled to compensation for termination of their
employment in certain circumstances, including termination without cause and
change of control. Mr. Ranta is a party to an employment agreement under which
he is paid on a per diem basis an annualized salary of $120,000, and pursuant to
which he is entitled to compensation for termination of his employment in
certain circumstances, including termination without cause and change of
control. The employment agreements provide for the payment of compensation that
will be triggered by a termination of the executive officer's employment by
either Gryphon Gold or the executive officer following a change of control of
Gryphon Gold, or by Gryphon Gold at any time, other than for "cause." In such
event, each officer will be entitled to receive an amount equal to one year's
annual salary plus bonus (equal to the amount of bonus in the prior year) earned
in the year of change of control, and existing benefits for a period of 12
months.

Except as described above, and the payment of directors' fees, there are no
service contracts of any director or officer of Gryphon Gold and there is no
arrangement or agreement made or proposed to be made between Gryphon Gold and
any of its named executive officers pursuant to which a payment or other benefit
is to be made or given by way of compensation in the event of that officer's
resignation, retirement or other termination of employment, or in the event of a
change of control of Gryphon Gold or a change in the named executive officer's
responsibilities following such change in control.

REPORT ON REPRICING OF OPTIONS/SARS

None.

STOCK OPTIONS

OUTSTANDING OPTIONS

We have granted 2,300,000 stock options pursuant to the terms of our stock
option plan as described below, each with an exercise price of $0.75. 2,000,000
of the stock options will expire March 29, 2010 and 300,000 will expire August
2, 2010:

NUMBER OF COMMON
CLASS OF OPTIONEE (NUMBER OF OPTIONEES IN CLASS) SHARES UNDER OPTION EXERCISE PRICE
------------------------------------------------ ------------------- --------------

Executive officers as a group(5)...................... 1,600,000 $0.75
Directors who are not also executive officers as a
group(4)............................................ 600,000 $0.75
Consultants(1)........................................ 100,000 $0.75
---------
TOTAL -- ALL OPTIONS................................ 2,300,000
=========

We may issue up to 3,000,000 shares of common stock under the terms of our
stock option plan; accordingly, we may issue options to purchase up to an
additional 700,000 shares of common stock under our stock option plan.

On March 29, 2005, our board of directors adopted a stock option plan
(which we sometimes refer to as the Incentive Plan). The Plan was approved by
our shareholders on May 13, 2005. We have no equity compensation plans that have
not been approved by our shareholders.

STOCK OPTION PLAN

Our Stock Option Plan provides that the total number of shares of common
stock which may be issued pursuant to the Plan shall not exceed 3,000,000 shares
of common stock.

It is intended that the Plan be administered by the Compensation Committee,
which will have full and final authority with respect to the granting of options
thereunder. Options may be granted under the Plan to such directors, officers,
employees or consultants of Gryphon Gold and its subsidiaries as the
Compensation

Committee may from time to time designate (referred to as a "participant"). Each
option will generally entitle a participant to purchase one share of common
stock during the term of the option upon payment of the exercise price. The
exercise price of any options granted under the Plan shall be determined by the
Compensation Committee and may not be less than the market price of our common
stock on the date of grant of the options (calculated in accordance with the
rules of the Toronto Stock Exchange as the volume weighted average trading price
for the five trading days preceding the date of grant). Gryphon Gold may provide
financial assistance to eligible persons to purchase shares of common stock
under the Plan, subject to applicable law and the rules and policies of any
securities regulatory authority or stock exchange with jurisdiction over the
Corporation or a trade in its securities. Any financial assistance so provided
will be repayable with full recourse and the term of any such financing shall
not exceed the term of the option to which the financing applies.

The term of any options granted shall be determined by the Compensation
Committee at the time of the grant but the term of any options granted under the
Plan shall not exceed ten years. If desired by the Compensation Committee,
options granted under the Plan may be subject to vesting provisions. Options
granted under the Plan are not transferable or assignable other than by will or
otherwise by operation of law. In the event of death or disability of an option
holder, options granted under the Plan expire one year from the death or
disability of the option holder.

Certain restrictions contained in the Plan include:

- the number of shares of common stock which may be issued pursuant to the
Plan (or any other employee-related plan or options for service) to any
one person may not exceed 5% of all the common shares issued and
outstanding on a non-diluted basis from time to time; and

- the number of shares of common stock which may be issued pursuant to the
Plan (or any other employee-related plan or options for services) to
insiders (as defined in the rules of the Toronto Stock Exchange to
include generally directors, senior officers of Gryphon Gold or its
subsidiaries or shareholders who own more than 10% of our common stock)
during any twelve month period may not exceed 10% of the common stock
issued and outstanding on a non-diluted basis from time to time (unless
approval of disinterested shareholders has been obtained in accordance
with the rules of the Toronto Stock Exchange).

- the number of shares of common stock which may be reserved for issuance
in respect of options granted to insiders pursuant to the Plan (or any
other employee-related plan or options for service) may not exceed 10% of
the common stock issued and outstanding on a non-diluted basis from time
to time unless approval of disinterested shareholders has been obtained
in accordance with the rules of the Toronto Stock Exchange).

Gryphon Gold's board of directors may at any time terminate or amend the
Plan in any respect, provided however, that the board may not, without the
approval of the shareholders, amend the Plan or any option granted thereunder in
any manner that requires shareholder approval under applicable law or the rules
and policies of any stock exchange or quotation system upon which the common
shares are listed or quoted.

PRINCIPAL STOCKHOLDERS

The following tables set forth information as of August 17, 2005 regarding
the ownership of our common stock by:

- each person who is known by us to own more than 5% of our shares of
common stock; and

- each named executive officer, each director and all of our directors and
executive officers as a group.

The number of shares beneficially owned and the percentage of shares
beneficially owned are based on 27,722,370 shares of common stock outstanding as
of August 17, 2005 and shares of common stock outstanding upon
consummation of this offering assuming we raise $15,000,000 at an offering price
of

$ per unit and excluding share of common stock issuable upon exercise of
warrants underlying the units.

For the purposes of the information provided below, shares subject to
options and warrants that are exercisable within 60 days following August 17,
2005 are deemed to be outstanding and beneficially owned by the holder for the
purpose of computing the number of shares and percentage ownership of that
holder but are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. Except as indicated in the footnotes
to these tables, and as affected by applicable community property laws, all
persons listed have sole voting and investment power for all shares shown as
beneficially owned by them.

PRINCIPAL STOCKHOLDERS

IMMEDIATELY AFTER
THE CONSUMMATION
OF THIS OFFERING
MAXIMUM NUMBER
AS OF AUGUST 17, 2005 OF UNITS*
--------------------- ------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES PERCENT SHARES PERCENT
--------------------------------------- --------- ------- ------ -------

ALLEN GORDON............................... 2,600,000(3) 9.26%(3) (3) %(3)
390 Union Blvd., Suite 360
Lakewood, CO 80228

ALBERT MATTER.............................. 2,600,000(3) 9.26%(3) (3) %(3)
Suite 810, 1130 West Pender Street
Vancouver, BC V6E 4A4

ANTHONY KER................................ 1,475,000(4) 5.23%(4) (4) %(4)
Director, Executive Vice President
Suite 810, 1130 West Pender Street
Vancouver, BC V6E 4A4

STANDARD BANK PLC.......................... 5,769,231(5) 19.46%(5) (5) %(5)
25 Dowate Hill, Cannon Bridge House
London, United Kingdom EC4R 2SB

BOLDER OPPORTUNITIES I LIMITED
PARTNERSHIP.............................. 2,250,000(6) 8.04%(6) (6) %(6)
800 - 1450 Creekside Dr.
Vancouver, BC, Canada V6J 5B3

Other Directors and Officers -- as a
group(2) 4,127,500(7) 14.22%(7) (7) %(7)

---------------

(1) Beneficial ownership is determined in accordance with the rules of the
United States Securities and Exchange Commission and includes voting and
investment power with respect to shares. Unless otherwise indicated, the
persons named in this table have sole voting and sole investment control
with respect to all shares beneficially owned. Figures shown are on a
non-diluted basis.

(2) Figure shown represents the sum of shares owned or controlled individually
by directors and officers (other than Mr. Matter and Mr. Gordon) and
includes ownership by spouses (335,000 shares) where it may be considered
that direction and control over these shares rests with the director or
officer.

(3) Includes 350,000 shares acquirable upon exercise of vested stock options.

(4) Includes vested options exercisable to acquire 325,000 shares of common
stock and 50,000 shares upon exercise of warrants.

(5) Includes 1,923,077 shares acquirable upon exercise of warrants.

(6) Includes 250,000 shares acquirable upon exercise of warrants.

(7) Includes 1,175,000 shares acquirable upon exercise of vested stock options
and 122,500 shares acquirable upon exercise of warrants.

* Assumes no exercise of the over-allotment option exercisable by the agent to
purchase 15% of the number of units sold to cover over-allotments.

MANAGEMENT

IMMEDIATELY AFTER
THE CONSUMMATION
OF THIS OFFERING
MAXIMUM NUMBER
AS OF AUGUST 17, 2005 OF UNITS*
---------------------- ------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES PERCENT SHARES PERCENT
--------------------------------------- ---------- ------- ------ -------

ALLEN GORDON...................................... 2,600,000(2) 9.26%(2) (2) %(2)
Director, President and Chief Executive Officer
390 Union Blvd., Suite 360
Lakewood, CO 80228

ALBERT MATTER..................................... 2,600,000(2) 9.26%(2) (2) %(2)
Executive Chairman
Suite 810, 1130 West Pender Street
Vancouver, BC V6E 4A4

ANTHONY KER....................................... 1,475,000(3) 5.23%(3) (3) %(3)
Director, Executive Vice President
Suite 810, 1130 West Pender Street
Vancouver, BC V6E 4A4

THOMAS SITAR...................................... 937,500(4) 3.33%(4) (4) %(4)
Chief Financial Officer
Suite 810, 1130 West Pender Street
Vancouver, BC V6E 4A4

DONALD E. RANTA................................... 960,000(5) 3.40%(5) (5) %(5)
Director, Vice President of Exploration
390 Union Blvd., Suite 360
Lakewood, CO 80228

All directors and executive officers as a group
(9) persons).................................... 10,702,500(6) 35.56%(6) (6) %(6)

---------------

(1) Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power with respect to shares. Unless
otherwise indicated, the persons named in this table have sole voting and
sole investment control with respect to all shares beneficially owned.

(2) Includes vested options exercisable to acquire 350,000 shares of common
stock.

(3) Includes vested options exercisable to acquire 325,000 shares of common
stock and 50,000 shares upon the exercise of warrants.

(4) Includes vested options exercisable to acquire 250,000 shares of common
stock and 62,500 shares upon the exercise of warrants.

(5) Includes vested options exercisable to acquire 325,000 shares of common
stock and 50,000 shares upon the exercise of warrants.

(6) Includes vested options exercisable to acquire 2,200,000 shares of common
stock and 172,500 shares upon the exercise of warrants.

* Assumes no exercise of the over-allotment option exercisable by the agent to
purchase 15% of the number of units sold to cover over-allotments.

We have no knowledge of any arrangements, including any pledge by any
person of our securities, the operation of which may at a subsequent date result
in a change in our control.

We are not, to the best of our knowledge, directly or indirectly owned or
controlled by another corporation or foreign government.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except for the transactions described below, none of our directors, senior
officers or principal shareholders, nor any associate or affiliate of the
foregoing have any interest, direct or indirect, in any transaction, from April
23, 2003 (date of inception) to the date of this prospectus, or in any proposed
transactions, which has materially affected or will materially affect us.

During the fiscal year ended March 31, 2005 and the period from April 24,
2003 (inception) to March 31, 2004, our directors and officers received loans
bearing interest at a rate of 1 1/2% to 2% from us for the purpose of purchasing
shares of the company. Most loans were repaid during the fiscal year ended March
31, 2005 and all loans were fully repaid by June 30, 2005. Details of the loans
are listed below:

FINANCIAL ASSISTED
LARGEST AMOUNT AMOUNT SECURITIES
OUTSTANDING DURING OUTSTANDING PURCHASED DURING
THE YEAR ENDED AS AT YEAR ENDED
NAME AND PRINCIPAL POSITION MARCH 31, 2005 JUNE 30, 2005 MARCH 31, 2005
--------------------------- ------------------ ------------- ------------------
$ $ (COMMON STOCK)

ALBERT J. MATTER........................ 87,500 0 875,000
Executive Chairman and Director

ALLEN GORDON............................ 87,500 0 875,000
President, Chief Executive Officer and
Director

CHRISTOPHER HERALD...................... 50,000 0 333,333
Director

ANTHONY KER............................. 96,250 0 516,666
Executive Vice-President and Director

DONALD E. RANTA......................... 30,375 0 202,800
Vice-President of Exploration and
Director

RICHARD HUGHES.......................... 37,500 0 250,000
Director

THOMAS SITAR............................ 96,625 0 300,000
Chief Financial Officer

Other than compensatory arrangements described above under "Executive
Compensation", sales of securities to certain officers described under "Prior
Sales of Securities" and loans described above, we have had no other
transactions, directly or indirectly, with our directors, senior officers or
principal shareholders, or any of their associates or affiliates, which have
materially affected or will materially affect us.

DESCRIPTION OF SECURITIES

Our authorized capital stock of Gryphon Gold consists of one hundred fifty
million (150,000,000) shares of common stock, par value $0.001 per share and
fifteen million (15,000,000) shares of Preferred Stock, par value $0.001 per
share. No other class or series of capital stock is currently authorized under
the Corporation's articles of incorporation.

COMMON STOCK

We had 27,722,370 shares of common stock outstanding as of August 17, 2005.

Holders of common stock are entitled to one vote per share on all matters
subject to stockholder vote. The common stock has no preemptive or other
subscription rights. All of the presently outstanding shares of common stock are
fully paid and non assessable. If the corporation is liquidated or dissolved,
holders of shares of common stock will be entitled to share ratably in assets
remaining after satisfaction of liabilities and subject to the rights, if any,
of the holders of our preferred stock.

The holders of the common stock are entitled to receive dividends when and
as declared by the Board of Directors, out of funds legally available therefore.
The corporation has not paid cash dividends with respect to its common stock in
the past. No share of common stock of the corporation which is fully paid is
liable to calls or assessment by the corporation.

PREFERRED STOCK

Our articles of incorporation authorize our board of directors to issue, by
resolution and without any action by our stockholders, one or more series of
preferred stock and to establish the designations, dividend rights, dividend
rate, conversion rights, voting rights, terms of redemption, liquidation
preference, sinking fund terms and all other preferences and rights of any
series of preferred stock, including rights that could adversely affect the
voting power of the holders of our common stock.

One of the effects of undesignated preferred stock may be to enable the
board of directors to render more difficult or to discourage an attempt to
obtain control of us by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of our management. The issuance
of shares of preferred stock pursuant to the board of directors' authority
described above may adversely affect the rights of holders of common stock. For
example, preferred stock issued by us may rank prior to the common stock as to
dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of common stock. Accordingly, the
issuance of shares of preferred stock may discourage bids for the common stock
at a premium or may otherwise adversely affect the market price of the common
stock.

OUR UNITS

Each of our units consists of one share of common stock and one-half of one
non-transferable Class A Warrant. Each whole Class A Warrant is exercisable to
purchase one share of our common stock. At the closing of our offering of units
we will deliver certificates to the investors representing shares of common
stock and non-transferable Class A Warrants.

OUR CLASS A WARRANTS

Each unit of our offering includes one-half of one Class A Warrant. The
Class A Warrants will be governed by the terms of a warrant indenture we will
enter into with Computershare Trust Company, Inc., Golden, Colorado, as the
warrant trustee, on or prior to the date of the issuance of the Units. Each
whole Class A Warrant we will issue in this offering as part of our units may be
exercised at any time until 5:00 p.m. (New York time) on . Each whole
warrant entitles the holder to purchase one share of common stock at an exercise
price of $ per share. The Class A Warrants are non-transferable. This
exercise price will be adjusted upon the occurrence of certain events, described
below. A warrantholder will not be deemed a shareholder of our underlying common
stock until the warrant is exercised.

Warrantholders may exercise their warrants only if the common shares
underlying their warrants are covered by an effective registration statement or
an exemption from registration is available under the Securities Act; provided
that the common shares issuable upon their exercise are qualified for sale under
the securities laws of the state in which the warrantholder resides. We intend
to have a registration statement effective when the warrants are exercised.
Investors should be aware, however, that we cannot provide absolute assurances
that state exemptions will be available to us or that we will have an effective
registration statement in place at the time warrantholders intend to exercise
their warrants.

To exercise a warrant, a warrantholder must deliver to our transfer agent
the warrant certificate on or before the warrant expiration date with the form
on the reverse side of the warrant certificate fully executed and completed as
instructed on the certificate, accompanied by payment of the full exercise price
for the number of warrants being exercised. We will not issue any fractional
shares of common stock upon exercise of the warrants.

The warrant indenture provides for adjustment in the number of shares of
common stock issuable upon the exercise of the Class A Warrants and/or the
exercise price per share in the event of: (i) the subdivision or consolidation
of our shares of common stock or issuance of a stock dividend on our shares or
other distribution of shares or securities convertible into shares (other than a
"dividend paid in the ordinary course", as defined in the warrant indenture);
(ii) the issuance of rights, options or warrants to purchase shares or
securities convertible into shares to holders of shares of common stock at less
than 95% of the "current market price" (as defined in the warrant indenture) of
the shares of common stock; and (iii) the distribution to all or

substantially all the holders of shares of common stock or any other class or of
rights, options or warrants (other than those referred to in (ii), above) to
acquire shares of common stock or securities convertible into shares of common
stock or property or other assets of the corporation or of evidences of
indebtedness or of assets. The warrant indenture also provides for adjustment in
the class and/or number of securities issuable upon the exercise of the Class A
Warrants and/or exercise price per security in the event of: (i) any
reclassification of our common stock; (ii) an amalgamation, merger,
consolidation or other business combination of the corporation with another
entity; or (iii) the transfer of all or substantially all of our assets.

No adjustment in the exercise price or the number of shares of common stock
purchasable upon the exercise of the Class A Warrants will be required to be
made unless the cumulative effect of such adjustment or adjustments would change
the exercise price by at least 1%. Holders of Class A Warrants do not have any
voting or pre-emptive rights or any other rights which a holder of common stock
has, and a warrant holder will not be deemed a shareholder of our underlying
common stock until the warrant is exercised. The rights of the holders of Class
A Warrants are subject to modification by "extraordinary resolution", which is
defined in the warrant indenture as a resolution either passed at a meeting of
the holders of Class A Warrants by holders of not less than 66% of the Class A
Warrants represented at the meeting or adopted by instruments in writing signed
by the holders of not less than 66% of all Class A Warrants then outstanding.

OTHER WARRANTS

As at August 17, 2005, we had 6,423,185 share purchase warrants issued and
outstanding. Each whole warrant entitles the holder to purchase one share of
common stock at an exercise price of $0.90 per share. The warrants were
exercisable for a period of two years from the date of issuance and expire as
follows:

1,094,289 warrants were issued on January 26, 2005;

2,313,692 warrants were issued on March 31, 2005;

650,000 warrants were issued on April 1, 2005;

2,110,577 warrants were issued on April 25, 2005; and

254,627 warrants were issued on June 22, 2005.

In addition, we issued a total of 271,008 broker compensation warrants
exercisable at a price of $0.65 per share, of which 141,008 expire on January
26, 2008 and 130,000 expire on April 1, 2007.

The exercise price of the warrants will be adjusted if we declare any stock
dividends to our stockholders or if we effect a stock split or share combination
in connection with our common stock. If we effect a stock split or stock
combination involving our common stock, the warrant exercise price in effect
immediately prior to the stock split or combination will be proportionately
reduced or increased, as the case may be. Any adjustment to the warrant exercise
price will also result in an adjustment to the number of our common shares
underlying a warrant or, if we elect, an adjustment of the number of warrants
outstanding.

INVESTOR RIGHTS AGREEMENT

Our shareholders are subject to an Investor Rights Agreement dated as of
May 1, 2003, as amended. The following describes the material terms of our
Investor Rights Agreement:

- our shareholders are entitled to preemptive rights to purchase their pro
rata share if we allot, issue, sell or resell shares of common stock at a
price lower than the shareholder paid for its shares, except for certain
issuances including issuance under incentive stock option plans, stock
dividends and shares issued in a qualified initial public offering;

- our shareholders agreed not to sell, transfer, assign or dispose of
shares of common stock unless the shares are offered first to us and then
to other shareholders, on a pro rata basis, prior to offering their
shares to third parties; provided that a shareholder may transfer shares
to certain family members;

- Allen Gordon and Albert Matter, our founders, agreed to offer their
shares first to us then to the other shareholders on a pro rata basis;
provided that a shareholder may transfer shares to certain family
members;

- our shareholders agreed to take actions as may be required to elect up to
six directors and to elect directors designated by our founders, provided
that at least two members shall not be members of our senior management
and at all times 25% of our board shall be outside directors;

- our shareholders have agreed to enter into lock up arrangements for the
period(s) specified by the agent or underwriter following the effective
date of a registration statement in connection with a qualified initial
public offering;

- we shall maintain an audit committee, compensation committee and
corporate compliance committee; and

- we shall deliver certain reports to our shareholders, including audited
financial statements.

The Investor Rights Agreement will terminate upon our completion of a
qualified initial public offering or if more than 75% of the shares subject to
the agreement agree in writing to terminate the agreement. A qualified initial
public offering is defined as either an underwritten public offering resulting
in gross proceeds of more than $5,000,000 or obtaining a listing for our shares
on the Toronto Stock Exchange, the TSX Venture Exchange, the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Stock Market or the National
Association of Security Dealers Automated Quotation bulletin board.

This offering will qualify as a qualified initial public offering under the
terms of the Investor Rights Agreement and the agreement will terminate upon the
closing of this offering. Each of our current shareholders is expected to enter
into a lock up agreement in connection with the offering.

NEVADA LAWS

The Nevada Business Corporation Law contains a provision governing
"Acquisition of Controlling Interest." This law provides generally that any
person or entity that acquires 20% or more of the outstanding voting shares of a
publicly-held Nevada corporation in the secondary public or private market may
be denied voting rights with respect to the acquired shares, unless a majority
of the disinterested stockholders of the corporation elects to restore such
voting rights in whole or in part. The control share acquisition act provides
that a person or entity acquires "control shares" whenever it acquires shares
that, but for the operation of the control share acquisition act, would bring
its voting power within any of the following three ranges:

- 20 to 33 1/3%;

- 33 1/3 to 50%; or

- more than 50%.

A "control share acquisition" is generally defined as the direct or
indirect acquisition of either ownership or voting power associated with issued
and outstanding control shares. The stockholders or board of directors of a
corporation may elect to exempt the stock of the corporation from the provisions
of the control share acquisition act through adoption of a provision to that
effect in the articles of incorporation or bylaws of the corporation. Our
articles of incorporation and bylaws do not exempt our common stock from the
control share acquisition act.

The control share acquisition act is applicable only to shares of "Issuing
Corporations" as defined by the Nevada law. An Issuing Corporation is a Nevada
corporation, which;

- has 200 or more stockholders, with at least 100 of such stockholders
being both stockholders of record and residents of Nevada; and

- does business in Nevada directly or through an affiliated corporation.

At this time, we do not have 100 stockholders of record resident in Nevada.
Therefore, the provisions of the control share acquisition act do not apply to
acquisitions of our shares and will not until such time as these requirements
have been met. At such time as they may apply, the provisions of the control
share acquisition act may discourage companies or persons interested in
acquiring a significant interest in or control of us, regardless of whether such
acquisition may be in the interest of our stockholders.

The Nevada "Combination with Interested Stockholders Statute" may also have
an effect of delaying or making it more difficult to effect a change in control
of us. This statute prevents an "interested stockholder" and a resident domestic
Nevada corporation from entering into a "combination," unless certain conditions
are met. The statute defines "combination" to include any merger or
consolidation with an "interested stockholder," or any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, in one transaction or a series
of transactions with an "interested stockholder" having;

- an aggregate market value equal to 5 percent or more of the aggregate
market value of the assets of the corporation;

- an aggregate market value equal to 5 percent or more of the aggregate
market value of all outstanding shares of the corporation; or

- representing 10 percent or more of the earning power or net income of the
corporation.

An "interested stockholder" means the beneficial owner of 10 percent or
more of the voting shares of a resident domestic corporation, or an affiliate or
associate thereof. A corporation affected by the statute may not engage in a
"combination" within three years after the interested stockholder acquires its
shares unless the combination or purchase is approved by the board of directors
before the interested stockholder acquired such shares. If approval is not
obtained, then after the expiration of the three-year period, the business
combination may be consummated with the approval of the board of directors or a
majority of the voting power held by disinterested stockholders, or if the
consideration to be paid by the interested stockholder is at least equal to the
highest of:

- the highest price per share paid by the interested stockholder within the
three years immediately preceding the date of the announcement of the
combination or in the transaction in which he became an interested
stockholder, whichever is higher;

- the market value per common share on the date of announcement of the
combination or the date the interested stockholder acquired the shares,
whichever is higher; or

- if higher for the holders of preferred stock, the highest liquidation
value of the preferred stock.

MANAGEMENT'S DISCUSSION AND ANALYSIS

You should read the following discussion and analysis of our financial
condition and results of operations together with our financial statements and
related notes appearing elsewhere in this prospectus. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of many factors, including, but
not limited to, those set forth under "Risk Factors and Uncertainties" and
elsewhere in this prospectus.

This Management's Discussion and Analysis provides an analysis of our
business and compares our financial results for the year ended March 31, 2005
with the period from our incorporation (April 24, 2003) to March 31, 2004 and
the three month period ended June 30, 2005. You should read this information
together with our consolidated financial statements and the notes to our
consolidated financial statements, which appear elsewhere in this prospectus.
References to any year are to a financial year, thus a reference to "in year
2005", or similar, means the year ended March 31, 2005, unless specifically
noted otherwise.

This section contains forward-looking statements that involve risks and
uncertainties, including statements regarding our plans, objectives, goals,
strategies and financial performance. Our actual activities and results could
differ materially from those anticipated in these forward-looking statements as
a result of factors described under "Risks Factors and Uncertainties" and
elsewhere in this prospectus.

OVERVIEW AND PLAN OF OPERATIONS

Gryphon Gold Corporation was incorporated in Nevada on April 24, 2003 and
has corporate offices in Vancouver, British Columbia, and Lakewood, Colorado.
Our objective is to establish a producing gold company through the development
and extraction of gold deposits, beginning with the Borealis Property. Currently
our sole asset is a 100% interest in the Borealis Property, located in Mineral
County, Nevada. We have not determined if the mineral resources from the
Borealis Property can be economically exploited.

In July 2003 we initially acquired from Golden Phoenix Minerals, Inc. an
option to earn a 70% joint venture interest in the Borealis Property by
incurring qualified development expenditures. On January 28, 2005 we acquired
the remaining interest held by Golden Phoenix in the Borealis Property for
$1,400,000. Our subsidiary, Borealis Mining, paid to Golden Phoenix $400,000
upon closing of the purchase on January 28, 2005, with four additional quarterly
payments of $250,000 due to Golden Phoenix. As of August 17, 2005, Borealis
completed the first two payments and the final two payments of $250,000 are due
October 25, 2005 and January 27, 2006, respectively. We guaranteed these payment
obligations to Golden Phoenix and deposited as security fifteen percent (15%) of
the issued shares of our subsidiary, Borealis Mining Company, into escrow. As
each quarterly payment of $250,000 is made, a pro rata portion of the escrowed
shares shall be released to us.

A portion of the Borealis Property is subject to the mining lease. We are
required to make monthly lease payments of $8,614, adjusted annually based on
change in the Consumer Price Index. In addition, the production of precious
metals from the Borealis Property will be subject to the payment of the royalty
under the terms of the mining lease. We have also entered into office lease
arrangements for offices in Vancouver, British Columbia, Lakewood, Colorado and
Hawthorne, Nevada. The terms of the mining lease and royalty are described under
"Borealis Property".

In May 2005 we initiated a new drilling program, expected to continue
through the summer of 2005. Approximately 140 holes (30,000 feet of RC drilling)
are planned in the area of existing mineralization in order to allow us to
complete a feasibility study with the aim of identifying gold reserves and, if
economically feasible, building a mine.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements is in accordance
with accounting principles generally accepted in the United States. We do not
reconcile our consolidated financial statement to Canadian

generally accepted accounting principles. The following are critical accounting
policies and estimates which we believe are important to understanding our
financial results.

USE OF ESTIMATES

The preparation of financial statements requires us to make estimates and
assumptions which affect the reported amounts of assets and liabilities and the
date of the financial statements and the revenues and expenses for the period
reported. By their nature, these estimates are subject to measurement
uncertainty and the effect on the financial statements of changes in such
estimates in future periods could be significant. Actual results will likely
differ from these estimates.

EXPLORATION AND DEVELOPMENT OF MINERAL PROPERTY INTERESTS

We expense exploration costs as they are incurred. Development costs are
expensed until we have established that a mineral deposit is commercially
mineable and production decision has been made by management to develop a mine,
at which point we will capitalize the costs to develop the mine on the property
until mining operations commence. We capitalize the cost of acquiring mineral
property interests (including claims establishment and maintenance) until we
have determined the viability of the property. We expense capitalized
acquisition costs if we determine that the property has no future economic
value. We will also write down capitalized amounts if estimated future cash
flows, including potential sales proceeds, related to the mineral property are
estimated to be less than the carrying value of the property.

STOCK-BASED COMPENSATION

As permitted by the Statement of Financial Accounting Standards we have
elected to follow Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees and related interpretations for our employee
stock-based compensation. Based on these standards, no compensation expense is
recognized at the time of any option grant if the exercise price of the employee
stock option is fixed and equals or exceeds the fair value of the underlying
common stock on the date of the grant and the number of shares to be issued
pursuant to the exercise of such option are known and fixed at the date of
grant.

ASSET RETIREMENT OBLIGATIONS

We record the fair value of an asset retirement obligation as a liability
in the period in which it incurs as a legal obligation associated with the
retirement of tangible long-lived assets that results from the acquisition,
construction, development or normal use of the assets with a corresponding
increase in the carrying amount of the related long-lived asset. This liability
is subsequently expensed over its expected life. Currently, we have no asset
retirement obligations.

TAX VALUATION ALLOWANCE

We have recorded a valuation allowance that fully reserves for our deferred
tax assets because at this time we cannot establish that we will be able to
utilize the tax loss carryforwards in the future. If in the future we determine
that we will be able to use all or a portion of our deferred tax assets in the
future, based on our projections of future taxable income, we will reduce the
valuation allowance, thereby increasing income in that period.

FOREIGN CURRENCY TRANSLATION

The United States dollar is our functional currency. Transactions involving
foreign currencies for items included in operations are translated into U.S.
dollars using average exchange rates; monetary assets and liabilities are
translated at the exchange rate prevailing at the balance sheet date and all
other balance sheet items are translated at the historical rates applicable to
the transactions that comprise those amounts. Translation gains and losses are
included in our determination of net income.

RECENT ACCOUNTING PRONOUNCEMENTS

The United States Securities and Exchange Commission recently announced
that it would provide for a phased-in implementation process for FASB Statement
No. 123(R), Share-Based Payment ("SFAS 123(R)"). Registrants must adopt SFAS
123(R)'s fair value method of accounting for share-based payments to employees
no later than the beginning of the first interim or annual period beginning
after December 15, 2005. We plan to adopt SFAS 123(R) effective January 1, 2006.

The Financial Accounting Standards Board ratified the consensus of the
Emerging Issues Task Force that stripping costs incurred during the production
phase of a mine are variable production costs that should be included in the
costs of the inventory produced during the period that the stripping costs are
incurred. This consensus is effective for the first reporting period in fiscal
years beginning after December 15, 2005, with early adoption permitted. We plan
to adopt the consensus effective April 1, 2006.

RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2005 COMPARED TO PERIOD FROM INCORPORATION TO MARCH 31,
2004

We are in an exploration stage and currently have no producing mineral
properties and thus we had no revenues during all relevant reporting periods.

For the year ended March 31, 2005 we had a net loss of $2.3 million, or
$0.15 per share, compared to a net loss of $1.0 million in the period from
incorporation on April 23, 2003 to March 31, 2004. Expenditure levels increased
in all categories as activities gradually increased from the initial start-up
from incorporation and acquisition of an earn-in option on the Borealis Property
in 2004. This included activities on the Borealis Property (exploration and
permitting) and corporate activities, all of which were performed by our
officers and by contract consultants. During fiscal year 2004 and until December
2004, management and consulting services of four of our senior officers (Messrs.
Matter, Gordon, Ker and Sitar) were provided pursuant to consulting contracts.
Starting on January 1, 2005 these senior officers entered into employment
relationships with Gryphon Gold and are compensated by way of salaries, bonuses
and stock options.

Exploration and development expenses reached $1,009,000 in 2005, up from
$442,000 in the prior period reflecting the fact that we entered into the Option
and Joint Venture Agreement part way through the 2004 fiscal year. As a result,
many costs incurred in 2004 related to due diligence activities and early
evaluation of the Borealis Property. In addition, the 2004 fiscal year was only
11 months. During 2005, activities related to the Borealis Property continued to
increase in scope. Efforts were directed to the preparation of the Plan of
Operations, which was submitted to the U.S. Forest Service in August 2004, and
improving our geologic understanding of the Borealis Property. This involved
spending in the following categories: drilling $129,000, engineering $119,000,
project management $198,000 and property maintenance $461,000, all up
significantly from the partial prior period.

Legal and audit costs increased from $105,000 to $217,000 in 2005
reflecting the costs related to the negotiation of our purchase of 100% interest
in the Borealis property and increased level of financing activity during the
year.

Management salaries, bonuses and consulting fees were $876,000 in 2005, up
from $329,000 due to increased use of consultants and addition of two officers
(Messrs. Ker and Sitar) as business activity increased significantly in 2005.

THREE MONTH PERIOD ENDED JUNE 30, 2005

We are in the exploration stage and currently have no producing mineral
properties and thus we had no revenues during the reporting periods.

For the three month period ended June 30, 2005 we had a net loss of
$817,918 or $0.03 per share. We had expenses of $855,807 during the quarter
ended June 30, 2005. Our largest expense related to exploration and development
costs of $340,072 related to our Borealis Property, which was 39.7% of our total
expenses. Exploration and development expenses are anticipated to increase
significantly as we increase activities on the

Borealis Property. Management salaries and consulting fees paid to our executive
officers were a primary expense, amounting to $196,301 during the quarter ended
June 30, 2005 and constituting 22.9% of our total expenditures during the
quarter. Salaries and consulting fees are expected to increase in future periods
as we anticipate that we will be required to hire additional personnel if we
commence development of the Borealis Property. Expenses related to legal and
audit fees of $169,859 were significantly higher than prior periods as we
undertook efforts to improve our corporate governance and explored financing
alternatives, and are expected to increase in future periods as a result of
anticipated reporting obligations as a public company in the United States and
Canada. Other expenses during the quarter ended June 30, 2005 included travel
and accommodation expenses of $53,986, general and administrative expenses of
$79,091 and a foreign exchange loss of $14,763. General and administrative
expenses will increase with the opening of our office in Lakewood, Colorado in
August, 2005. We had interest income of $37,889.

OUTLOOK

Our plan for the 2006 fiscal year (ending March 31, 2006) is to work
towards designing and building an open pit heap-leach mine. The following
activities are planned for fiscal 2006:

- Continuation of the permitting process, with the aim of obtaining
substantial permits for mine development expected in early 2006. We will
also work on obtaining minor permits which will continue right up to the
mine start-up.

- Completion of a drilling program and a feasibility study designed to
classify current resources into ore reserves and to develop an economic
mine plan.

- In preparation for mine start-up we will be initiating additional
engineering work, securing long lead-time material and equipment and
securing key mine personnel.

We have also initiated an exploration program primarily focused on the
mineralized Graben area. This is a longer-term project which will depend
primarily on the availability of funds and personnel.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is cash which was raised by way of sale
from treasury of common shares and warrants (on a private placement basis). The
majority of our cash balance is deposited in an interest-bearing bank account.
At March 31, 2005 we had a cash balance of $3.1 million and working capital of
$1.7 million (March 31, 2004 -- $1.1 million). During the quarter ended June 30,
2005, we issued 6,030,408 units at $0.65 per unit to raise an additional $3.9
million of cash.

We had current liabilities at March 31, 2005 consisting of $453,193 in
accounts payable and accrued liabilities plus a mineral property obligation of
$1 million owed to Golden Phoenix related to our purchase of the Borealis
Property. The Golden Phoenix obligation is repayable in four equal quarterly
installments of $250,000, two of which have been paid as of August 17, 2005, and
two final payments which are due on October 28, 2005 and January 27, 2006,
respectively.

As of June 30, 2005, we had working capital of $4,743,631, and we had
current assets consisting of $5,859,298 in cash and $28,396 in prepaid expenses.
We had $1,147,371 in current liabilities at June 30, 2005, consisting of
$397,371 in accounts payable and accrued liabilities and $750,000 in obligations
to Golden Phoenix. We believe we have sufficient working capital to fund
completion of our drilling program, permitting and feasibility study, costs
related to lease and claim maintenance fees, our payment obligations to Golden
Phoenix and general and administrative expenses for approximately 12 months
(without giving effect to the offering).

We will need substantial additional funds to allow us to develop the mine,
secure a reclamation bond and to fund future property exploration activities. In
order to initiate the mine development on the Borealis Property we will require
a minimum additional $10 million of financing. Failure to obtain sufficient
financing may result in delaying or indefinite postponement of exploration,
development or production on the property.

We cannot be certain that additional capital or other types of financing will be
available if and when needed or that, if available, the terms of such financing
will be favorable to us.

Our only long term commitments at present are our obligations under the
Mining Lease, the Office Leases and under the employment contracts described
above. We expect our long term commitments to increase significantly if, as and
when, we commit to the building of the mine on the Borealis site.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

Our contractual obligations as of August 17, 2005, were as follows:

PAYMENTS DUE BY PERIOD
----------------------------------------------------------
LESS THAN MORE THAN
TOTAL 1 YEAR 2-3 YEARS 4-5 YEARS 5 YEARS
-------- --------- ----------- --------- ---------
(UNAUDITED)

Long-term Debt................... Nil
Mineral property acquisition
obligations.................... $500,000 $500,000 -- -- --
Operating Leases................. $281,000 $ 67,600 $137,200 $76,200 --
-------- -------- -------- ------- ---------
Total............................ $781,000 $567,000 $137,200 $76,200

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our major market risk exposure is potential fluctuation in the price of
gold. Historically, gold prices have been volatile, and that volatility is
expected to continue. We are engaged in exploring gold properties and related
activities. As a result, changes in the price of gold could significantly affect
our stock price. We do not have any debt that would expose us to market risks
related to changes in interest rates.

DESCRIPTION OF PROPERTY

We lease our principal corporate and executive office at 390 Union Blvd.,
Suite 360, Lakewood, CO 80228. We also lease an administrative and finance
office at Suite 810, 1130 West Pender Street, Vancouver, BC V6E 4A4. We do not
currently maintain any investments in real estate, real estate mortgages or
securities of persons primarily engaged in real estate activities, nor do we
expect to do so in the foreseeable future.

We describe our mineral properties under the heading "Description and
Development of Business" in this prospectus.

TRANSFER AGENT AND REGISTRAR

The registrar and transfer agent for our shares of common stock will be
Computershare Trust Company, Inc. at its offices in Toronto, Canada.

The registrar and transfer agent for our Class A Warrants will be
Computershare Trust Company, Inc. at its offices in Golden, Colorado.

LEGAL

The validity of the securities offered hereby will be passed upon for
Gryphon Gold Corporation by Snell and Wilmer LLP.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS

U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the anticipated material U.S. federal income
tax consequences to a Non-U.S. Holder (as defined below) arising from and
relating to the exercise of Class A Warrants and the acquisition, ownership, and
disposition of common stock.

This summary is for general information purposes only and does not purport
to be a complete analysis or listing of all potential U.S. federal income tax
consequences that may apply to a Non-U.S. Holder as a result of the exercise of
Class A Warrants or the acquisition, ownership, and disposition of common stock.
In addition, this summary does not take into account the individual facts and
circumstances of any particular Non-U.S. Holder that may affect the U.S. federal
income tax consequences of the exercise of Class A Warrants and the acquisition,
ownership, and disposition of common stock. Accordingly, this summary is not
intended to be, and should not be construed as, legal or U.S. federal income tax
advice with respect to any Non-U.S. Holder. Each Non-U.S. Holder should consult
its own financial advisor, legal counsel, or accountant regarding the U.S.
federal, U.S. state and local, and foreign tax consequences of the exercise of
Class A Warrants and the acquisition, ownership, and disposition of common
stock.

SCOPE OF THIS DISCLOSURE

AUTHORITIES

This summary is based on the Internal Revenue Code of 1986, as amended,
referred to in this section as the "Code", Treasury Regulations (whether final,
temporary, or proposed), published rulings of the Internal Revenue Service
(IRS), published administrative positions of the IRS, and U.S. court decisions
that are applicable and, in each case, as in effect and available, as of the
date of this registration statement. Any of the authorities on which this
summary is based could be changed in a material and adverse manner at any time,
and any such change could be applied on a retroactive basis. This summary does
not discuss the potential effects, whether adverse or beneficial, of any
proposed legislation that, if enacted, could be applied on a retroactive basis.

NON-U.S. HOLDERS

For purposes of this summary, a "Non-U.S. Holder" is a beneficial owner of
Class A Warrants or common stock, as the case may be, that, for U.S. federal
income tax purposes, is other than (a) an individual who is a citizen or
resident of the U.S., (b) a corporation, or any other entity classified as a
corporation for U.S. federal income tax purposes, that is created or organized
in or under the laws of the U.S. or any state in the U.S., including the
District of Columbia, (c) an estate if the income of such estate is subject to
U.S. federal income tax regardless of the source of such income, or (d) a trust
if (i) such trust has validly elected to be treated as a U.S. person for U.S.
federal income tax purposes or (ii) a U.S. court is able to exercise primary
supervision over the administration of such trust and one or more U.S. persons
have the authority to control all substantial decisions of such trust.

NON-U.S. HOLDERS SUBJECT TO SPECIAL U.S. FEDERAL INCOME TAX RULES NOT
ADDRESSED

This summary does not address the U.S. federal income tax consequences of
the exercise of Class A Warrants or the acquisition, ownership, and disposition
of common stock to Non-U.S. Holders that are subject to special provisions under
the Code, including the following Non-U.S. Holders: (a) a Non-U.S. Holder that
is a tax-exempt organization or governmental entity; (b) a Non-U.S. Holder that
is a financial institution or insurance company; (c) a Non-U.S. Holder that is a
dealer in securities or currencies or a Non-U.S. Holder that is a trader in
securities that elects to apply a mark-to-market accounting method; (d) a
Non-U.S. Holder that is liable for the alternative minimum tax under the Code;
(e) a Non-U.S. Holder that owns common stock or Class A Warrants as part of a
straddle, hedging transaction, conversion transaction, constructive sale, or
other arrangement involving more than one position; (f) a Non-U.S. Holder that
acquired common stock or

Class A Warrants in connection with the exercise of employee stock options or
otherwise as compensation for services; (g) a Non-U.S. Holder that is a
"controlled foreign corporation" under Section 957 of the Code; (h) a Non-U.S.
Holder that is a "passive foreign investment company" under Section 1297 of the
Code; (i) a Non-U.S. Holder that is a former citizen or long-term resident of
the U.S. subject to Section 877 of the Code; or (j) a Non-U.S. Holder that holds
common stock or Class A Warrants other than as a capital asset within the
meaning of Section 1221 of the Code. Non-U.S. Holders that are subject to
special provisions under the Code, including Non-U.S. Holders described
immediately above, should consult their own financial advisor, legal counsel or
accountant regarding the U.S. federal, U.S. state and local, and foreign tax
consequences of the exercise of Class A Warrants and the acquisition, ownership,
and disposition of common stock.

If an entity that is classified as partnership (or "pass-through" entity)
for U.S. federal income tax purposes holds Class A Warrants or common stock, the
U.S. federal income tax consequences to such partnership (or "pass-through"
entity) and the partners of such partnership (or owners of such "pass-through"
entity) generally will depend on the activities of the partnership (or
"pass-through" entity) and the status of such partners (or owners). Partners of
entities that are classified as partnerships (or owners of "pass-through"
entities) for U.S. federal income tax purposes should consult their own
financial advisor, legal counsel or accountant regarding the U.S. federal income
tax consequences of the exercise of Class A Warrants and the acquisition,
ownership, and disposition of common stock.

TAX CONSEQUENCES OTHER THAN U.S. FEDERAL INCOME TAX CONSEQUENCES NOT ADDRESSED

This summary does not address the U.S. state and local, U.S. federal estate
and gift, or foreign tax consequences to Non-U.S. Holders of the exercise of
Class A Warrants or the acquisition, ownership, and disposition of common stock.
Each Non-U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the U.S. state and local, U.S. federal estate and gift, and
foreign tax consequences of the exercise of Class A Warrants and the
acquisition, ownership, and disposition of common stock.

ALLOCATION OF PURCHASE PRICE WITH RESPECT TO UNITS

For U.S. federal income tax purposes, the acquisition of a Unit by a
Non-U.S. Holder should be treated as the acquisition of an "investment unit"
consisting of two components: one share of common stock and one-half of a Class
A Warrant. The purchase price for each Unit will be allocated between these two
components in proportion to their relative fair market values on the date that
the Unit is purchased by the Non-U.S. Holder. This allocation of the purchase
price for each Unit will establish a Non-U.S. Holder's initial tax basis in the
share of common stock and the one-half of a Class A Warrant that comprise each
Unit for U.S. federal income tax purposes.

For this purpose, we will allocate $ of the purchase price for each
Unit to the share of common stock and $ of the purchase price for each
Unit to the one-half of a Class A Warrant. The IRS will not be bound by our
allocation of the purchase price for each Unit between the share of common stock
and the one-half of a Class A Warrant, and accordingly, the IRS may allocate the
purchase price for each Unit between the share of common stock and the one-half
of a Class A Warrant in a manner that is different than the allocation set forth
above. Each Non-U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the allocation of the purchase price for each
Unit between the share of common stock and the one-half of a Class A Warrant.

U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXERCISE OF CLASS A WARRANTS

A Non-U.S. Holder should not recognize gain or loss on the exercise of a
Class A Warrant and related receipt of common stock. A Non-U.S. Holder's initial
tax basis in the common stock received on the exercise of a Class A Warrant
generally should be equal to the sum of (a) such Non-U.S. Holder's tax basis in
such Class A Warrant plus (b) the exercise price paid by such Non-U.S. Holder on
the exercise of such Class A Warrant. A Non-U.S. Holder's holding period for the
common stock received on the exercise of a Class A Warrant generally should
begin on the day after the date that such Class A Warrant is exercised by such
Non-U.S. Holder.

Under Section 305 of the Code, an adjustment to the number of shares of
common stock that will be issued on exercise of the Class A Warrants, or an
adjustment to the exercise price of the Class A Warrants, may be treated as a
constructive distribution by us to a Non-U.S. Holder of the Class A Warrants if,
and to the extent that, such adjustment has the effect of increasing such
Non-U.S. Holder's proportionate interest in our "earnings and profits" or
assets, depending on the circumstances of such adjustment (for example, if such
adjustment is to compensate for a distribution of cash or other property to our
shareholders). (See more detailed discussion of the rules applicable to
distributions made by us at "Distributions on Common Stock" below).

Upon the lapse or expiration of a Class A Warrant, a Non-U.S. Holder should
recognize a loss in an amount equal to such Non-U.S. Holder's tax basis in the
Class A Warrant. Any such loss generally should be a capital loss (provided that
the common stock to be issued on the exercise of such Class A Warrant would have
been a capital asset if acquired by the Non-U.S. Holder). Any such capital loss
will be short-term capital loss or long-term capital loss, depending on whether
the Class A Warrants are held for more than one year. Deductions for capital
losses and net capital losses are subject to complex limitations under the Code.

U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP, AND
DISPOSITION OF COMMON STOCK

DISTRIBUTIONS ON COMMON STOCK

A distribution by us, including a constructive distribution, with respect
to the common stock will be treated as a dividend to the extent of our current
or accumulated "earnings and profits." To the extent that a distribution exceeds
our current and accumulated "earnings and profits," such distribution will be
treated (a) first, as a tax-free return of capital to the extent of a Non-U.S.
Holder's tax basis in the common stock and, (b) thereafter, as gain from the
sale or exchange of such common stock. (See more detailed discussion at
"Disposition of common stock" below).

Except as discussed below, a dividend paid by us to a Non-U.S. Holder
should be subject to U.S. federal income tax at a rate of 30% (or a reduced rate
under an income tax treaty) on the gross amount of such dividend. We generally
will be required to withhold this U.S. federal income tax upon the payment of a
dividend to a Non-U.S. Holder. In order to obtain a reduced U.S. federal income
tax rate under an income tax treaty, a Non-U.S. Holder generally must complete
and file a Form W-8BEN. Each Non-U.S. Holder should consult its own financial
advisor, legal counsel, or accountant regarding the procedure for claiming a
reduced U.S. federal income tax rate under an income tax treaty.

A dividend paid by us to a Non-U.S. Holder that is effectively connected
with the conduct of a trade or business within the U.S. by such Non-U.S. Holder
(or, if an income tax treaty applies, is attributable to a permanent
establishment or fixed base in the U.S. of such Non-U.S. Holder) should be
subject to U.S. federal income tax on a net income basis at normal graduated
U.S. federal income tax rates. In addition, such a dividend may also be subject
to a 30% U.S. branch profits tax (or reduced U.S. branch profits tax rate under
an income tax treaty) if the recipient Non-U.S. Holder is a corporation. Such a
dividend generally should not be subject to the U.S. federal withholding tax
described above if a Non-U.S. Holder completes and files a Form W-8ECI. For
taxable years beginning before January 1, 2009, such a dividend generally should
be taxed at the preferential tax rates applicable to long-term capital gains if
(a) the Non-U.S. Holder receiving such dividend is an individual, estate, or
trust, and (b) such dividend is paid on common stock that has been held by such
Non-U.S. Holder for at least 61 days during the 121-day period beginning 60 days
before the "ex-dividend date."

DISPOSITION OF COMMON STOCK

A Non-U.S. Holder will recognize gain or loss on the sale or other taxable
disposition of common stock in an amount equal to the difference, if any,
between (a) the amount of cash plus the fair market value of any property
received and (b) such Non- U.S. Holder's tax basis in the common stock sold or
otherwise disposed

of. Gain, if any, recognized by a Non-U.S. Holder on the sale or other taxable
disposition of common stock should not be subject to U.S. federal income tax,
except as follows:

- Gain recognized by a Non-U.S. Holder that is effectively connected with
the conduct of a trade or business within the U.S. by such Non-U.S.
Holder (or, if an income tax treaty applies, is attributable to a
permanent establishment or fixed base in the U.S. of such Non-U.S.
Holder) should be subject to U.S. federal income tax on a net income
basis at normal graduated U.S. federal income tax rates. Preferential tax
rates generally should apply to long-term capital gains of a Non-U.S.
Holder that is an individual, estate, or trust. Deductions for capital
losses and net capital losses are subject to complex limitations under
the Code. There are currently no preferential tax rates for long-term
capital gains of a Non-U.S. Holder that is a corporation. In addition,
such gain may also be subject to a 30% U.S. branch profits tax (or
reduced U.S. branch profits tax rate under an income tax treaty) if the
Non-U.S. Holder is a corporation.

- Gain recognized by a Non-U.S. Holder who is an individual and who is
present in the U.S. for 183 days or more during the taxable year of the
sale or other taxable disposition of the common stock (and who satisfies
certain other conditions) should be subject U.S. federal income tax at a
rate of 30%, which gain generally may be offset by U.S. source capital
losses.

- Gain recognized by a Non-U.S. Holder should, except as discussed below,
be subject to U.S. federal income tax on a net income basis at normal
graduated U.S. federal income tax rates if we qualify as a "United States
real property holding corporation" under Section 897(c) of the Code (a
"USRPHC") at any time during the 5-year period ending on the date of the
sale or other taxable disposition of the common stock (or the Non-U.S.
Holder's holding period for the common stock, if shorter). Preferential
tax rates generally should apply to long-term capital gains of a Non-U.S.
Holder that is an individual, estate, or trust. Deductions for capital
losses and net capital losses are subject to complex limitations under
the Code. There are currently no preferential tax rates for long-term
capital gains of a Non-U.S. Holder that is a corporation. In addition,
such gain may also be subject to a 30% U.S. branch profits tax (or
reduced U.S. branch profits tax rate under an income tax treaty) if the
Non-U.S. Holder is a corporation. Under an exception to these rules, if
the common stock is "regularly traded on an established securities
market," the common stock should be treated as stock of a USRPHC only
with respect to a Non-U.S. Holder that held (directly or under certain
constructive ownership rules) more than 5% of the common stock during the
5-year period ending on the date of the sale or other taxable disposition
of the common stock (or the Non-U.S. Holder's holding period for the
common stock, if shorter). We generally will be a USRPHC if the fair
market value of our "United States real property interests" as defined in
Section 897(c) of the Code ("USRPIs") equals or exceeds 50% of the
aggregate fair market value of (a) our USRPIs, (b) our interests in
foreign real property, and (c) our other assets that are used or held for
use in a trade or business. We believe that we currently are a USRPHC and
that there is a substantial likelihood that we will continue to be
USRPHC. There can be no assurances, however, that the common stock will
be "regularly traded on an established securities market." Each U.S.
Holder should consult its own financial advisor, legal counsel, or
accountant regarding our potential qualification as a USRPHC and whether
the common stock is "regularly traded on an established securities
market."

INFORMATION REPORTING; BACKUP WITHHOLDING TAX

We generally will be required to report certain information to the IRS upon
the payment of a dividend to a Non-U.S. Holder (regardless of whether any
withholding of tax was required by us). Copies of these information returns also
may be made available under the provisions of a specific income tax treaty in
which the Non-U.S. Holder is a resident. Dividends paid by us to a Non-U.S.
Holder generally will be subject to U.S. backup withholding tax at the rate of
28%, unless a Non-U.S. Holder certifies its non-U.S. status (generally on Form
W-8BEN) or otherwise establishes an exemption.

The payment of proceeds from the sale or other taxable disposition of
common stock effected by or through a U.S. office of a broker (whether U.S. or
foreign) generally will be subject to information reporting

to the IRS and U.S. backup withholding tax at the rate of 28%, unless a Non-U.S.
Holder certifies its non-U.S. status (generally on Form W-8BEN) or otherwise
establishes an exemption. The payment of proceeds from the sale or other taxable
disposition of common stock effected by or through a foreign office of a foreign
broker generally will not be subject to information reporting to the IRS or U.S.
backup withholding tax. The payment of proceeds from the sale or other taxable
disposition of common stock effected by or through a foreign office of broker
generally will be subject to information reporting to the IRS (but not U.S.
backup withholding tax) if such broker is (a) a U.S. person, (b) a foreign
person that derived 50% or more of its gross income for certain periods from the
conduct of a trade or business within the U.S., (c) a "controlled foreign
corporation" under Section 957 of the Code, or (d) a foreign partnership at
least 50% of the capital or profits interest in which is owned by U.S. persons
or that is engaged in a trade or business within the U.S., unless such broker
has documentary evidence of a Non-U.S. Holder's non-U.S. status or the Non-U.S.
Holder otherwise establishes an exemption.

Any amounts withheld under the U.S. backup withholding tax rules will be
allowed as a credit against a Non-U.S. Holder's U.S. federal income tax
liability, if any, or will be refunded, if such Non-U.S. Holder furnishes
required information to the IRS. Each Non-U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the information
reporting and U.S. backup withholding tax rules.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering we will have shares of common
stock issued and outstanding, assuming we raise $15,000,000 at an offering price
of $ per unit, based on 27,722,370 shares of common stock outstanding as
of August 17, 2005. All of the shares of common stock sold in this offering will
be freely transferable without restriction or further registration or
qualification, except that shares held by our "affiliates," as that term is
defined in Rule 144 under the Securities Act, may generally only be sold in
compliance with the limitations of Rule 144 described below.

Future sales of substantial amounts of our common stock in the public
market, or the perception that such sales could occur, could adversely affect
the prevailing market price of our common stock or make it difficult for us to
raise additional equity capital in the future.

LOCK-UP AGREEMENTS

All of our shareholders are subject to an Investor Rights Agreement dated
March 3, 2003, as amended. Under the terms of the Investor Rights Agreement,
each shareholder has agreed that it would enter into a lock up arrangement
imposed by the agent in connection with a qualified initial public offering of
our common stock. This offering is expected to satisfy the requirements of a
qualified initial public offering, and each shareholder and we are expected to
comply with the lock up arrangements imposed by the agents in connection with
this offering. See "Description of Securities -- Investor Rights Agreement."

We anticipate that all of the shares of our common stock currently
outstanding will be subject to lock-up agreements. Under the terms of the
proposed lock up agreements, our shareholders are expected to agree not to,
without the prior consent of the lead agent, directly or indirectly, offer, sell
or otherwise dispose of any common stock except as follows:

- during the first twelve months following the termination of the offering,
the greater of 5,000 shares or up to 20% of the number of shares of
common stock held by a shareholder may be sold during each quarter;

- during the period beginning after the first twelve months and ending
eighteen months following the termination of the offering, the greater of
5,000 shares or up to 20% of the number of shares of common stock held by
a shareholder may be sold during each quarter plus shares of common stock
not previously sold during the prior quarter during the six month period;
and

- the lock up provisions terminate 18 months after the termination of the
offering.

Under the terms of the proposed lock up agreements, officers, directors and
insiders of Gryphon Gold are expected to agree not to, directly or indirectly,
offer, sell or otherwise dispose of any common stock except as follows:

- during the period beginning six months after the termination of the
offering, the greater of 5,000 shares or up to 20% of the number of
shares of common stock held by an officer, director or insider may be
sold during each quarter; and

- the lock up provisions terminate 18 months after the termination of the
offering.

All shareholders will be required to enter into lock up agreements as a
condition to closing of the offering.

With the exception of the agency agreement, there are no present agreements
between the agents and us or any of our executive officers or directors
releasing them or us from these lock-up agreements. The lead agent may give this
consent at any time without public notice.

In addition, all of our executive officers and directors are subject to the
escrow provisions under applicable Canadian securities regulatory policy. See
"Escrowed Securities" described below.

RULE 144

Rule 144 provides a safe harbor from the registration requirements of the
Securities Act. In general, under Rule 144, a person (or persons whose shares
are aggregated) who owns shares that were acquired from us or one of our
affiliates at least one year prior to the proposed sale will be entitled to
sell, in any three-month period, a number of shares that does not exceed the
greater of (a) 1% of the then-outstanding shares of our common stock, which will
equal approximately shares after the offering or (b) the average weekly
trading volume in our common stock on all national securities exchanges and/or
reported through the automated quotation system of a registered securities
association during the four calendar weeks preceding the date on which notice of
such sale is filed. Sales under Rule 144 are also subject to certain
requirements concerning availability of public information, manner of sale, and
notice of sale. In addition, our affiliates must comply with the restrictions
and requirements of Rule 144, other than the one-year holding period
requirement, in order to publicly sell shares of our common stock that are not
restricted securities. Our common stock will be eligible to be sold pursuant to
Rule 144, subject to the volume restrictions and lock-up restrictions described
above, beginning 90 days after the date of this prospectus.

RULE 144(K)

Under Rule 144(k), a stockholder who is not one of our affiliates and has
not been our affiliate for at least three months prior to the sale and who has
beneficially owned restricted shares of our common stock for at least two years
may resell the shares without limitation. In meeting the one and two year
holding periods described above, a holder of restricted shares of our common
stock can include the holding periods of a prior owner who was not our
affiliate. The one and two year holding periods described above do not begin to
run until the full purchase price is paid by the person acquiring the restricted
shares of our common stock from us or one of our affiliates. Based on the shares
outstanding as of the date of this prospectus, an aggregate of approximately
1,585,000 shares of our common stock will be eligible to be sold pursuant to
Rule 144(k) after the date of this prospectus. However, all such shares are
subject to the Lock-up Agreement described above and will only become eligible
for sale upon the expiration or termination of such agreements.

RULE 701

In general, under Rule 701 of the Securities Act as currently in effect,
each of our directors, officers, employees, consultants or advisors who
purchased shares from us before the date of this prospectus in connection with a
compensatory stock plan or other written compensatory agreement plan or other
written compensatory agreement is eligible to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, but without
compliance with restrictions, including the holding period, contained in Rule
144.

STOCK PLANS

On March 29, 2005, our board of directors adopted our 2004 Stock Option
Plan, and the plan was approved by our shareholders on May 13, 2005. We reserved
3,000,000 shares of common stock for issuance to our employees, officers,
directors, consultants and advisors under the plan. As of August 17, 2005, we
had granted options exercisable to acquire 2,300,000 shares of common stock
under the plan.

ESCROWED SECURITIES

Following completion of our initial public offering, applicable Canadian
securities regulatory policy requires that our promoters, officers, directors
and 20% shareholders place their stock in us into escrow with ComputerShare
Trust Company, Inc., our transfer agent. As of the closing of our initial public
offering, the following securities will be placed into escrow.

NUMBER OF SECURITIES PERCENTAGE OF
DESIGNATION OF CLASS HELD IN ESCROW CLASS
-------------------- -------------------- -------------

Common Stock(1)........................................ 10,702,500(2) 38.6%

---------------

(1) Includes warrants and stock options.

(2) The aggregate number of shares of common stock will be released from escrow
as to 25% on the closing of our initial public offering, as to a further 25%
six months after the closing of our initial public offering, as to the next
25% 12 months after the closing of our initial public offering, and as to
the remaining escrowed securities, 18 months after the closing of our
initial public offering.

PLAN OF DISTRIBUTION

We intend to enter into an Agency agreement with Desjardins Securities Inc.
to serve as lead agent of our offering on a commercially reasonable "best
efforts" basis. This means that the agent has not committed to buy any of our
units, but shall use commercially reasonable efforts to sell our units for us.
The units will be offered in the United States and each of the provinces of
Canada. The units will be offered in the United States through Desjardins
Securities International Inc.

No public trading market currently exists for our units, common stock or
warrants.

We have agreed to pay the agent an 8% sales commission on the units sold,
plus expenses. In addition, we have agreed to issue the agent compensation
options exercisable to acquire a number of shares of common stock equal to 10%
of the number of units sold. The agent compensation options are exercisable to
acquire shares of common stock at $ per share until . The
shares of common stock issuable upon exercise of the agent's compensation
options are registered under this prospectus.

The agent will use commercially reasonable efforts to sell units in the
aggregate amount of $15,000,000 before our offering terminates. The offering
will not be completed unless Units having an aggregate purchase price of a
minimum of $ are sold. If subscriptions for such minimum number of Units
have not been received by the termination date, being the date which is 90 days
following the date of the (final) prospectus, the offering may not continue
without the consent of those who have subscribed for Units on or before such
date. We may elect to hold more than one closing until we have sold all of units
offered or until our offering terminates. We have also granted to the agent an
over-allotment option, exercisable for up to 30 days following the closing of
this offering, to purchase units equal to 15% of the number of units sold in
this offering.

Our units in this offering contain one common share and one-half of one
non-transferable Class A Warrant. Each Class A Warrant entitles its holder to
purchase one share of our common stock at the exercise price of $ at any
time after the effective date of this prospectus until . Our Class A
Warrants will only be exercisable if we have an effective registration statement
covering the common shares underlying our warrants or an exemption from
registration is otherwise available. We will use commercially reasonable efforts
to keep an effective registration statement in effect during the term of the
Class A Warrants.

The obligations of the agent under the agency agreement may be terminated
by the agent in its discretion on the basis of its assessment of the state of
the financial markets and may also be terminated in certain stated circumstances
and upon the occurrence of certain stated events.

The agent, or registered sub-agents who assist the agent in the
distribution of the units offered hereunder, conditionally offer the units,
subject to prior sale, if, as and when issued by us and accepted by the agent in
accordance with the conditions contained in the agency agreement and subject to
the approval of certain legal matters, on behalf of counsel to both us and the
agents. While the agent will solicit expressions of interest and arrange for
subscriptions for units prior to closing, the agent will not accept proceeds
prior to closing. Subscriptions for the common stock and warrants constituting
the units will be received subject to rejection or allotment in whole or in part
and the right is reserved to close the subscription books at any time without
notice.

We have agreed not to issue or sell, or enter into an agreement to issue or
sell, any shares of our common stock or securities convertible into or
exchangeable or exercisable for shares of our common stock without the prior
written consent of the agent, for a period of 120 days after the date of the
closing of this offering, subject to certain exceptions.

COMMISSIONS AND EXPENSES

The agent has advised us that it proposes to offer the units directly to
the public at the public offering price presented on the cover page of this
prospectus, and to selected dealers, who may include the agent, at the public
offering price less a selling concession not in excess of $ per unit.
The agent may allow, and the selected dealers may reallow, a concession not in
excess of $ per unit to brokers and dealers. After the offering, the
agents may change the offering price and other selling terms.

The following table summarizes the agent's discounts and commissions that
we will pay to the agent in connection with this offering. These amounts are
shown assuming a maximum offering.

MAXIMUM OFFERING
PER UNIT NUMBER OF UNITS(1)(2)
-------- ---------------------

Total Offering Proceeds................................... $ $15,000,000
Agent's Commission........................................ $ $ 1,200,000
Agent's Expenses(3)....................................... $ $
------- -----------
Proceeds to Gryphon Gold Corporation...................... $ $

---------------

(1) At an offering price of $ per unit.

(2) Assumes no exercise by the agents of their option to purchase up to 15% of
the number of units sold in the offering to cover over-allotments, if any.

(3) Estimated.

INDEMNIFICATION

We have agreed to indemnify the agents against certain liabilities related
to the offering, including liabilities under the Securities Act of 1933, as
amended, and applicable Canadian securities laws and liabilities arising from
breaches of the representations and warranties contained in the agency
agreement, and to contribute to payments that the agents may be required to make
for these liabilities.

OFFERING PRICE DETERMINATION

Prior to this offering, there has been no public market for our common
stock. The initial public offering price has been negotiated between the agent
and us. In determining the initial public offering price of our units, the agent
considered

- prevailing market conditions;

- estimates of our business potential and prospects;

- an overall assessment of our management; and

- the consideration of these factors in relation to market valuation of
similarly situated companies.

STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

The agent may engage in over-allotment, stabilizing transactions, syndicate
covering transactions and penalty bids or purchases for the purpose of pegging,
fixing or maintaining the price of the common stock, in accordance with
Regulation M under the Securities Exchange Act of 1934.

Pursuant to rules of certain Canadian securities regulators, the agent may
not, throughout the period of distribution, bid for or purchase shares of common
stock. The foregoing restriction is subject to certain exceptions, on the
conditions that the bid or purchase not be engaged for the purpose of creating
actual or apparent active trading in, or raising the price of, our common stock.
Such exceptions include a bid or purchase permitted under applicable by-laws and
rules of the relevant self-regulatory authorities relating to market
stabilization and passive market making activities and a bid or purchase made
for and on behalf of a customer where the order was not solicited during the
period of distribution. Under the first-mentioned exception, in connection with
this offering and subject to the foregoing, the agent may over-allot or effect
transactions that stabilize or maintain the market price of our common stock at
levels above that which would otherwise prevail in the open market. Such
transactions, if commenced, may be discontinued at any time.

The agent and its affiliates have performed, and may continue to perform,
various financial advisory and investment banking services for us, for which
they will receive customary fees and expenses.

EXPERTS

The consolidated financial statements as of March 31, 2005 and 2004 and for
the year ended March 31, 2005 and for the period from April 24, 2003 (inception)
to March 31, 2004, included in this prospectus and elsewhere in the registration
statement have been audited by Ernst & Young LLP, independent registered public
accounting firm, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
auditing and accounting in giving said reports.

The estimates of our mineralized material have been included in this
prospectus in reliance upon the "Technical Report on the Mineral Resources of
the Borealis Gold Project" dated May 23, 2005, prepared by Mr. Alan C. Noble,
P.E. of Ore Reserves Engineering in Lakewood, CO, a "Qualified Person", as
defined in National Instrument 43-101.

The information contained in the "Technical Report -- Preliminary Scoping
Study of Project Development for the Borealis Gold Project, Nevada, USA" dated
June 7, 2004 prepared by Qingping Deng of Behre Dolbear and Company, Inc. in
Denver, CO, a "Qualified Person", as defined in National Instrument 43-101.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL MATTERS

Our financial statements included in this prospectus have been audited by
Ernst & Young LLP, independent registered public accounting firm for the years
ended March 31, 2005 and 2004 and for the year ended March 31, 2005 and for the
period from April 24, 2003 (inception) to March 31, 2004, as stated in their
report appearing elsewhere herein, and are included in reliance upon the reports
of such firms given upon their authority as experts in accounting and auditing.

Effective on or about June 20, 2005, we terminated the services of our
former independent auditor, DeVisser Gray, Chartered Accountants of Vancouver,
British Columbia.

No adverse opinion or disclaimer of opinion was issued during the past two
years by our former accountant, and no opinion of our former accountant was
qualified or modified as to uncertainty, audit scope or accounting principles.

The change in auditors was recommended by our Board of Directors.

During the two most recent fiscal years and the interim period preceding
such dismissal, we are not aware of any disagreements with our former accountant
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement(s), if not
resolved to the satisfaction of our former accountant, would have caused it to
make references to the subject matter of the disagreement(s) in connection with
its report.

We are not aware of any events (reportable under Item 304 (a)(1)(B) of
Regulation S-B) that have occurred during the two most recent fiscal years and
the interim period preceding the dismissal of our former accountant.

We have engaged Ernst & Young LLP, Vancouver, as our new principal
independent accountant effective on or about June 20, 2005, to audit our
financial records. During the two most recent fiscal years and the interim
period preceding the appointment of Ernst & Young, we have not consulted Ernst &
Young regarding either:

- The application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on our financial statements, and neither a written report nor
oral advice was provided to us that we considered an important factor in
reaching a decision as to the accounting or financial reporting issue; or

- Any matter that was either the subject of a disagreement or event
(reportable under Regulation S-B, Item 304(a)(1)(iv)(B)).

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form SB-2 (including
exhibits, schedules and amendments) under the Securities Act with respect to the
shares of units to be sold in this offering. This prospectus does not contain
all the information set forth in the registration statement. For further
information with respect to us and the shares of common stock to be sold in this
offering, please refer to the registration statement. Statements contained in
this prospectus as to the contents of any contract, agreement or other document
referred to include those terms of such documents that we believe are material.
Whenever a reference is made in this prospectus to any contract or other
document of ours, you should refer to the exhibits that are a part of the
registration statement for a copy of the contract or document.

You may read and copy all or any portion of the registration statement or
any other information that Gryphon Gold Corporation files at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room. Our SEC filings, including the
registration statement, are also available to you on the SEC's website at
www.sec.gov.

As a result of this offering, we will become subject to the information and
reporting requirements of the Exchange Act, and, in accordance with those
requirements, will file periodic reports, proxy statements and other information
with the SEC. Such periodic reports, proxy statements and other information will
be available for inspection and copying at the public reference room and on the
SEC website referred to above.

GLOSSARY OF TECHNICAL TERMS

Definitions of Certain terms used under U.S. and Canadian reporting
standards.

We report our reserves to two separate standards to meet the requirements
for reporting in both the United States and Canada. U.S. reporting requirements
for disclosure of mineral properties are governed by SEC Industry Guide 7.
Canadian reporting requirements for disclosure of mineral properties are
governed by National Instrument 43-101 (referred to as "NI 43-101"). The
definitions given in NI 43-101 are adopted from those given by the Canadian
Institute of Mining Metallurgy and Petroleum. These reporting standards have
similar goals in terms of conveying an appropriate level of confidence in the
disclosures being reported, but embody differing approaches and definitions.

We estimate and report our resources and reserves according to the
definitions set forth in SEC Industry Guide 7 and modify and reconcile them as
appropriate to conform to NI 43-101 for reporting in Canada. The definitions for
each reporting standard are presented below with supplementary explanation and
descriptions of the parallels and differences.

SEC INDUSTRY GUIDE 7 DEFINITIONS

RESERVE....................... The term "reserve" refers to that part of a
mineral deposit which could be economically and
legally extracted or produced at the time of
the reserve determination. Reserves must be
supported by a feasibility study(1) done to
bankable standards that demonstrates the
economic extraction. ("Bankable standards"
implies that the confidence attached to the
costs and achievements developed in the study
is sufficient for the project to be eligible
for external debt financing.) A reserve
includes adjustments to the in-situ tonnes and
grade to include diluting materials and
allowances for losses that might occur when the
material is mined.

PROVEN RESERVE................ The term "proven reserve" refers to reserves
for which (a) quantity is computed from
dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality
are computed from the results of detailed
sampling and (b) the sites for inspection,
sampling and measurement are spaced so closely
and the geologic character is so well defined
that size, shape depth and mineral content of
reserves are well-established.

PROBABLE RESERVE.............. The term "probable reserve" refers to reserves
for which quantity and grade and/or quality are
computed from information similar to that used
for proven (measured) reserves, but the sites
for inspection, sampling, and measurement are
farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower
than that for proven reserves, is high enough
to assume continuity between points of
observation.

MINERALIZED MATERIAL(2)....... The term "mineralized material" refers to
material that is not included in the reserve as
it does not meet all of the criteria for
adequate demonstration for economic or legal
extraction.

NON-RESERVES.................. The term "non-reserves" refers to mineralized
material that is not included in the reserve as
it does not meet all of the criteria for
adequate demonstration for economic or legal
extraction.

EXPLORATION STAGE............. An "exploration stage" prospect is one which is
not in either the development or production
stage.

DEVELOPMENT STAGE............. A "development stage" project is one which is
undergoing preparation of an established
commercially mineable deposit for its
extraction but which is not yet in production.
This stage occurs after completion of a
feasibility study.

PRODUCTION STAGE.............. A "production stage" project is actively
engaged in the process of extraction and
beneficiation of mineral reserves to produce a
marketable metal or mineral product.
---------------

(1) For Industry Guide 7 purposes this study must include adequate information
on mining, processing, metallurgical, economic, and other relevant factors
that demonstrate, at the time of reporting, that economic extraction is
justified.

(2) This category is substantially equivalent to the combined categories of
measured, indicated and inferred mineral resources specified in NI 43-101.

NI 43-101 DEFINITIONS

MINERAL RESERVE............... The term "mineral reserve" refers to the
economically mineable part of a measured or
indicated mineral resource demonstrated by at
least a preliminary feasibility study. The
study must include adequate information on
mining, processing, metallurgical, economic,
and other relevant factors that demonstrate, at
the time of reporting, that economic extraction
can be justified. A mineral reserve includes
diluting materials and allowances for losses
that might occur when the material is mined.

MINERAL RESOURCE.............. The term "mineral resource" refers to a
concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or
on the Earth's crust in such form and quantity
and of such a grade or quality that it has
reasonable prospects for economic extraction.
The location, quantity, grade, geological
characteristics and continuity of a mineral
resource are known, estimated or interpreted
from specific geological evidence and
knowledge.

MEASURED MINERAL RESOURCE..... The term "measured mineral resource" refers to
that part of a mineral resource for which
quantity grade or quality, densities, shape and
physical characteristics are so well
established that they can be estimated with
confidence sufficient to allow the appropriate
application of technical and economic
parameters, to support production planning and
evaluation of the economic viability of the
deposit. The estimate is based on detailed and
reliable exploration, sampling and testing
information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes that
are spaced closely enough to confirm both
geological and grade continuity.

INDICATED MINERAL RESOURCE.... The term "indicated mineral resource" refers to
that part of a mineral resource for which
quantity, grade or quality, densities, shape
and physical characteristics can be estimated
with a level of confidence sufficient to allow
the appropriate application of technical and
economic parameters, to support mine planning
and evaluation of the economic viability of the
deposit. The estimate is based on detailed and
reliable exploration and testing information
gath-

ered through appropriate techniques from
locations such as outcrops, trenches, pits,
workings and drill holes that are spaced
closely enough for geological and grade
continuity to be reasonably assumed.

INFERRED MINERAL RESOURCE..... The term "inferred mineral resource" refers to
that part of a mineral resource for which
quantity and grade or quality can be estimated
on the basis of geological evidence and limited
sampling and reasonably assumed, but not
verified, geological and grade continuity. The
estimate is based on limited information and
sampling gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes.

QUALIFIED PERSON.............. The term "qualified person" refers to an
individual who is an engineer or geoscientist
with at least five years of experience in
mineral exploration, mine development,
production activities and project assessment,
or any combination thereof, including
experience relevant to the subject matter of
the project or report and is a member in good
standing of a self-regulating organization.

DEFINITIONS OF TECHNICAL TERMS

Following are definitions of certain technical terms used in this
prospectus.

AU. The chemical symbol for gold.

AEROMAGNETIC. Detection of changes in the Earth's magnetic field with
survey instruments mounted in an aircraft. Provides an interpretation of
subsurface geology and indications of the presence of certain mineral
assemblages which may indicate traces of hydrothermal activity.

ALLUVIUM/ALLUVIAL. Unconsolidated, to loosely consolidated, gravel,
silt, sand, clay, etc. deposited in valleys, usually by water.

ANDESITE. Igneous (formed from molten material) rock that solidified
at the Earth's surface and is principally composed of plagioclase feldspar,
biotite, and hornblende.

ANDESITE FLOW. A lava flow composed of andesite.

ANOMALY. Geophysical or geochemical measurements that are outside of
the normal, or average, range of values.

ARGILLIZATION. The conversion of minerals to clay by either
hydrothermal alteration, or during the weathering process.

ASSAY. To analyze the proportions of metals in an ore; to test an ore
or mineral for composition, purity, weight, or other properties of
commercial interest.

ASSAY TON. A weight of 29.166+ g, used in assaying to represent
proportionately the assay value of an ore. Because it bears the same ratio
to 1 mg that a ton of 2,000 lb bears to the troy ounce, the weight in
milligrams of precious metal obtained from an assay ton of ore equals the
number of ounces to the ton.

BASIN AND RANGE. The geologic province centered on Nevada consisting
of northerly striking mountain ranges and intervening valleys.

BRECCIA. A rock made of fragments of one or more rock types that has
formed as a result of movement along faults, or the activity of fluids that
may carry mineralization.

CHALCEDONIC. Extremely fine-grained quartz.

CHARGEABILITY. A geophysical measurement of how much electricity can
be stored in the ground that is commonly used to development an estimate of
the abundance of metallic sulfide minerals below the surface.

CRETACEOUS. The geologic time that is part of the Mesozoic era
covering the period from 144 to 66 million years ago.

CRUSHED AND AGGLOMERATED ORE. That material which has been reduced in
size mechanically by crushing, (and which may as a result contain a
significant portion of very fine particles) which is then, with the aid of
a binding agent such as cement, reconstituted into larger particles and
subsequently leached in a heap. The agglomerated ore typically has greater
strength allowing for higher stacked heaps and may allow better percolation
of leach solutions if the ore has high clay or fine particle content.

FAULT. A planar feature produced by breaking of the Earth's crust
with movement on one, or both, sides of the plane.

FEASIBILITY STUDY. A comprehensive study of a deposit in which all
geological, engineering, operating, economic and other relevant factors are
considered in sufficient detail that it could reasonably serve as the basis
for a final decision by a financial institution to finance the development
of the deposit for mineral production.

GEOPHYSICS/GEOPHYSICAL. Surveys that are conduced to measure the
Earth's physical properties as a means of identify areas where anomalous
features may exist.

GOLD DEPOSIT. An accumulation of gold mineralization in the Earth's
crust, with no reference to size and grade of the deposit.

GOLD HEAP-LEACHING. A hydrometallurgical process whereby gold is
recovered from ore by heaping broken ore on sloping impermeable pads,
repeatedly spraying the heaps with a diluted cyanide solution which
dissolves the gold content in the ore, collecting the gold-laden solutions,
and stripping the solution of gold.

GRANITE. An igneous (formed from molten material) rock that
solidified within the Earth's crust and is principally composed of quartz,
feldspar, and biotite.

HYDROTHERMAL. Hot water that originates within the Earth's crust and
ascend toward the surface. This water is commonly associated with the
formation of mineral deposits and hot springs.

HYDROTHERMAL ALTERATION. Changes brought about in rock by the
exposure to hydrothermal solutions, or mineral laden hot water from within
the Earth's crust.

INDUCED POLARIZATION/IP. A geophysical survey technique that measures
the passage of electrical current sent into the ground (see chargeability).

LAHAR. A mudflow composed principally of volcanic material.

LITHOLOGY/LITHOLOGIC. A general term used to define specific types of
rocks.

LEACH. The dissolution of soluble constituents from a rock or orebody
by the natural or artificial action of percolating solutions.

MA. In geological terms, a million years.

MARCASITE. A yellow iron sulphide mineral similar to pyrite in
physical and chemical properties but which is less stable; and at Borealis
is an important ore forming mineral containing gold.

MESOZOIC. A subdivision of geologic time that covers the period from
about 245 to 66 million years ago.

MINE. An opening or excavation in the ground for the purpose of
extracting minerals; a pit or excavation from which ores or other mineral
substances are taken by digging; an opening in the ground made for the
purpose of taking out minerals; an excavation properly underground for
digging out some

usual product, such as ore, including any deposit of any material suitable
for excavation and working as a placer mine; collectively, the underground
passage and workings and the minerals themselves. At Borealis there is
potential for both surface and underground mining operations.

MINERALIZING/MINERALIZED. Material added by hydrothermal solutions,
principally in the formation of ore deposits. Often refers to the presence
of a mineral of economic interest in a rock.

MIOCENE. This is a subdivision of geologic time that covers the
period from about 5 to 24 million years ago.

OPEN PIT MINING. The process of excavating an ore body from the
surface in progressively deeper layered cuts or steps. Sufficient waste
rock adjacent to the ore body is removed to maintain mining access and to
maintain the stability of the resulting pit.

OPEN PIT. A surface mine working open to daylight, such as a quarry.

OPT/OPT. Abbreviation for ounces per ton, generally used in this
prospectus to refer to the number of ounces of gold per ton.

ORE. The naturally occurring material from which a mineral or
minerals of economic value can be extracted profitably or to satisfy social
or political objectives. The term is generally but not always used to refer
to metalliferous material, and is often modified by the names of the
valuable constituent; e.g., gold ore.

OUNCE or "OZ.". A unit of weight equal to 31.1 grams.

OXIDIZATION/OXIDIZED. The conversion of sulfide minerals to oxide
minerals, usually through weathering at, or near, the Earth's surface.

PEDIMENT. A gravel covered bedrock surface that is along the margin
of a mountain range. The bedrock surface commonly has a gentle dip into the
valley, outward from the mountain range.

PIPE-LIKE. Geologic masses that have two short dimensions and one
long dimension, and commonly have a near vertical orientation.

PROPYLITIC ALTERATION. A type of hydrothermal alteration that
produces only a modest change in the character of the rock. This type of
alteration is commonly found at the margins of mineralized areas.

PYRITE. A yellow iron sulphide mineral, which at Borealis is an
important ore forming mineral containing gold.

RESISTIVITY. A measurement of conductivity of electricity through
rock.

"RC" or REVERSE CIRCULATION. The circulation of bit-coolant and
cuttings-removal liquids, drilling fluid, mud, air, or gas down the
borehole outside the drill rods and upward inside the drill rods. Often
used to describe an advanced drilling and sampling method that takes a
discrete sample from a drill interval with the objective of maintaining
sample integrity.

RESERVE. Measurement of size and grade of a mineral deposit that
infers parameters have been applied to assess the potential for economic
development.

RESOURCE. The measurement of size and grade of a mineral deposit,
without any inferred economic parameters.

RUN OF MINE ORE. Material which was fragmented by blasting only, and
then stacked on the heaps without being further reduced in size by crushing
or other beneficiation processes.

STRATIGRAPHIC. The relationship of layered rocks to each other.

SEDIMENTS. Material that has been deposited on the surface of the
Earth through geologic means, usually transported and deposited by water.
This material may eventually be cemented into rock.

SILICIFICATION. The process by which quartz is added to rock by
hydrothermal solutions.

STRIKE. The course or bearing of the outcrop of an inclined bed,
vein, or fault plane on a level surface; the direction of a horizontal line
perpendicular to the direction of the dip.

STRUCTURAL ZONE. Area that commonly contain several faults and
fractured rock.

SULFIDE. Minerals that contain metals combined with sulfur.

TCV. Tertiary Coal Valley formation, a local sedimentary rock unit
which in may areas at the Borealis Property covers rocks hosting gold
mineralization.

TERTIARY. A geologic time period ranging from approximately 66 to 26
million years before the present.

TONS. A unit of weight measurement. In this prospectus it means dry
short tons (2,000 pounds).

UNCONFORMABLE. Two groups of sedimentary rocks that are separated by
a break in the depositional cycle and commonly have different orientations.

UNPATENTED MINING CLAIMS. Land which has been staked and recorded in
appropriate mining registries and in respect of which the owner has the
right to explore for and exploit the minerals contained in such land and to
conduct mining operations thereon. In this prospectus, unpatented mining
claims refers to lode claims (and not placer claims).

VOLCANIC ROCK. A group of igneous rocks that consolidated from molten
material at the surface of the earth.

INDEX TO FINANCIAL STATEMENTS

GRYPHON GOLD CORPORATION
A NEVADA CORPORATION

AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2005 AND
THE PERIOD FROM APRIL 24, 2003 (INCEPTION) TO MARCH 31, 2004

Report of Independent Registered Public Accounting Firm..... F-3

Consolidated Balance Sheets as of March 31, 2005 and March
31, 2004.................................................. F-4

Consolidated Statements of Operations for the Year Ended
March 31, 2005 and the Period from April 24, 2003
(inception) to March 31, 2004............................. F-5

Consolidated Statements of Stockholders' Equity for the Year
Ended March 31, 2005 and the Period from April 24, 2003
(inception) to March 31, 2004............................. F-6

Consolidated Statements of Cash Flows for the Year Ended
March 31, 2005 and the Period from April 24, 2003
(inception) to March 31, 2004............................. F-7

Notes to Consolidated Financial Statements.................. F-8

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2005 AND
THE PERIOD FROM APRIL 24, 2003 (INCEPTION) TO JUNE 30, 2005

Consolidated Balance Sheets as of June 30, 2005 and March
31, 2005.................................................. F-18

Consolidated Statements of Operations for the Three Months
Ended June 30, 2005 and the Period from April 24, 2003
(inception) to June 30, 2005.............................. F-19

Consolidated Statements of Stockholders' Equity for the
Three Months Ended June 30, 2005 and the Period from April
24, 2003 (inception) to June 30, 2005..................... F-20

Consolidated Statements of Cash Flows for the Three Months
Ended June 30, 2005 and the Period from April 24, 2003
(inception) to June 30, 2005.............................. F-21

Notes to Unaudited Interim Consolidated Financial
Statements................................................ F-22

F-1

Consolidated Financial Statements

GRYPHON GOLD CORPORATION
(an exploration stage company)
March 31, 2005 and 2004
(Stated in U.S. dollars)

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of
GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

We have audited the accompanying consolidated balance sheets of Gryphon
Gold Corporation (an exploration stage company) as of March 31, 2005 and 2004
and the related consolidated statements of operations, stockholders' equity, and
cash flows for the year ended March 31, 2005 and the period from April 24, 2003
(inception) to March 31, 2004. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Gryphon Gold
Corporation (an exploration stage company) at March 31, 2005 and 2004, and the
consolidated results of its operations and its cash flows for the year ended
March 31, 2005 and the period from April 24, 2003 (inception) to March 31, 2004,
in conformity with U.S. generally accepted accounting principles.

Vancouver, Canada /s/ Ernst & Young LLP
June 29, 2005, Chartered Accountants
except as to Note 11 which
is as of August 17, 2005.

F-3

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS
(Stated in U.S. dollars)

AS AT MARCH 31,
-----------------------
2005 2004
---------- ----------

ASSETS
CURRENT
Cash........................................................ $3,065,436 $ 975,551
Accounts receivable......................................... 8,735 1,504
Subscriptions receivable [note 7]........................... 54,360 289,125
Prepaid expenses............................................ 27,615 7,734
---------- ----------
TOTAL CURRENT ASSETS........................................ 3,156,146 1,273,914
---------- ----------
Reclamation deposit [note 9]................................ 31,400 --
Subscriptions receivable [note 7]........................... -- 100,000
Equipment [note 3].......................................... 22,936 14,440
Mineral property costs [note 4]............................. 1,775,326 199,753
---------- ----------
$4,985,808 $1,588,107
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities.................... $ 453,193 $ 72,332
Mineral property acquisition obligation [note 4]............ 1,000,000 --
Liability to issue shares................................... -- 136,500
---------- ----------
TOTAL LIABILITIES........................................... 1,453,193 208,832
---------- ----------
Commitments [note 10]
STOCKHOLDERS' EQUITY
Common stock................................................ 21,692 14,376
Additional paid-in capital.................................. 6,891,968 2,404,824
Deficit accumulated during the exploration stage............ (3,381,045) (1,039,925)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY.................................. 3,532,615 1,379,275
---------- ----------
$4,985,808 $1,588,107
========== ==========

On behalf of the Board:

/s/ ALBERT J. MATTER /s/ ANTHONY (TONY) D.J. KER
--------------------------------------------- ---------------------------------------------
Director Director

See accompanying notes

F-4

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. dollars)

PERIOD FROM PERIOD FROM
APRIL 24, 2003 APRIL 24, 2003
YEAR ENDED (INCEPTION) TO (INCEPTION) TO
MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005
---------- -------------- --------------

EXPENSES
Exploration and development [note 5]........... $1,009,173 $ 442,232 $1,451,405
Management salaries and consulting fees........ 875,571 328,860 1,204,431
Legal and audit................................ 217,457 105,083 322,540
Travel and accommodation....................... 125,950 83,709 209,659
General and administrative..................... 116,219 86,823 203,042
Amortization................................... 6,596 2,548 9,144
Gain on foreign exchange....................... (200) (7,510) (7,710)
Interest income................................ (9,646) (1,820) (11,466)
---------- ---------- ----------
NET LOSS AND COMPREHENSIVE LOSS FOR THE
PERIOD....................................... $2,341,120 $1,039,925 $3,381,045
========== ========== ==========
Basis and diluted loss per share............... $ 0.15 $ 0.13
========== ==========
Basic and diluted weighted average number of
common shares outstanding.................... 15,287,736 7,879,432
========== ==========

See accompanying notes

F-5

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Stated in U.S. dollars)

DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
-------------------- PAID-IN EXPLORATION
SHARES (#) AMOUNT CAPITAL STAGE TOTAL
---------- ------- ---------- ----------- -----------

Balance, April 24,
2003................... -- $ -- $ -- $ -- $ --
Shares issued:
For private placements
[note 6[a]]......... 14,376,000 14,376 2,404,824 -- 2,419,200
Net loss for the
period................. -- -- -- (1,039,925) (1,039,925)
---------- ------- ---------- ----------- -----------
Balance, March 31,
2004................... 14,376,000 14,376 2,404,824 (1,039,925) 1,379,275
Shares issued:
For private placements
[note 6[a]]......... 7,315,962 7,316 4,598,059 -- 4,605,375
Share issue costs [note
6[a]]............... -- -- (118,854) -- (118,854)
Fair value of agent's
warrants issued [note
6[b]].................. -- -- 7,939 -- 7,939
Net loss for the year.... -- -- -- (2,341,120) (2,341,120)
---------- ------- ---------- ----------- -----------
BALANCE, MARCH 31,
2005................... 21,691,962 $21,692 $6,891,968 $(3,381,045) $ 3,532,615
========== ======= ========== =========== ===========

See accompanying notes

F-6

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. dollars)

PERIOD FROM PERIOD FROM
APRIL 24, 2003 APRIL 24, 2003
YEAR ENDED (INCEPTION) TO (INCEPTION) TO
MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005
----------- -------------- --------------

OPERATING ACTIVITIES
Net loss for the period....................... $(2,341,120) $(1,039,925) $(3,381,045)
Items not involving cash:
Amortization................................ 6,596 2,548 9,144
Shares issued for consulting fee............ 8,375 70,000 78,375
Changes in non-cash working capital items:
Amounts receivable.......................... (7,231) (1,504) (8,735)
Accounts payable and accrued liabilities.... 380,861 72,332 453,193
Prepaid expenses............................ (19,881) (7,734) (27,615)
----------- ----------- -----------
CASH USED IN OPERATING ACTIVITIES............. (1,972,400) (904,283) (2,876,683)
----------- ----------- -----------

INVESTING ACTIVITIES
Reclamation deposit........................... (31,400) -- (31,400)
Purchase of equipment......................... (15,092) (16,988) (32,080)
Mineral property expenditures................. (575,573) (199,753) (775,326)
----------- ----------- -----------
CASH USED IN INVESTING ACTIVITIES............. (622,065) (216,741) (838,806)
----------- ----------- -----------

FINANCING ACTIVITIES
Cash received for shares issued............... 4,460,500 2,096,575 6,557,075
Share issue costs............................. (110,915) -- (110,915)
Subscription receivables collected............ 334,765 -- 334,765
----------- ----------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES......... 4,684,350 2,096,575 6,780,925
----------- ----------- -----------

INCREASE IN CASH DURING THE PERIOD............ 2,089,885 975,551 3,065,436
Cash, beginning of period..................... 975,551 -- --
----------- ----------- -----------
CASH, END OF PERIOD........................... $ 3,065,436 $ 975,551 $ 3,065,436
=========== =========== ===========

See accompanying notes

F-7

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Stated in U.S. dollars)

1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

Gryphon Gold Corporation and its subsidiary, Borealis Mining Company
(collectively, "the Company"), were incorporated in the State of Nevada in 2003.
The Company is an exploration stage company in the process of exploring its
mineral properties, and has not yet determined whether these properties contain
reserves that are economically recoverable.

The recoverability of amounts shown for mineral property interests in the
Company's consolidated balance sheets are dependent upon the existence of
economically recoverable reserves, the ability of the Company to arrange
appropriate financing to complete the development of its properties, the receipt
of necessary permitting and upon achieving future profitable production or
receiving proceeds from the disposition of the properties. The timing of such
events occurring, if at all, is not yet determinable.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These consolidated financial statements are prepared in accordance with
U.S. generally accepted accounting principles (GAAP). The consolidated financial
statements include the accounts of the Company and its wholly owned subsidiary.
All intercompany transactions and balances have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of any contingent assets
and liabilities as at the date of the consolidated financial statements as well
as the reported amounts of expenses incurred during the period. Significant
areas requiring the use of management estimates include the determination of
potential impairments of asset values, the calculation of fair values of options
and warrants, and rates for depreciation of equipment. Actual results could
differ from those estimates.

FINANCIAL INSTRUMENTS

The Company's financial instruments consist of current assets and current
liabilities the fair value of which approximate their carrying values due to
their short-term nature. Financial risk is the risk arising from fluctuations in
foreign currency exchange rates. The Company does not use any derivative or
hedging instruments to reduce its exposure to fluctuations in foreign currency
exchange rates or metal prices.

MINERAL PROPERTY ACQUISITION COSTS

The costs of acquiring mineral properties are capitalized and will be
amortized over their estimated useful lives following the commencement of
production or written-off if the properties are sold or abandoned.

Cost includes cash consideration and the fair market value of shares issued
on the acquisition of mineral properties. Properties acquired under option
agreements, whereby payments are made at the sole discretion of the Company, are
recorded in the accounts at such time as the payments are made.

The recoverable amounts for mineral properties is dependent upon the
existence of economically recoverable reserves; the acquisition and maintenance
of appropriate permits, licenses and rights; the ability of the Company to
obtain financing to complete the development of the properties and upon future
profitable production or alternatively upon the Company's ability to recover its
spent costs from the sale of its interests.

F-8

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

The amounts recorded as mineral properties reflect actual costs incurred and are
not intended to express present or future values.

EXPLORATION AND DEVELOPMENT COSTS

Exploration and development costs are expensed as incurred.

FOREIGN CURRENCY TRANSLATION

The U.S. dollar is the functional currency of the Company. Transactions
involving foreign currencies for items included in operations are translated
into U.S. dollars using average exchange rates; monetary assets and liabilities
are translated at the exchange rate prevailing at the balance sheet date and all
other balance sheet items are translated at the historical rates applicable to
the transactions that comprise the amounts. Translation gains and losses are
included in the determination of net income.

EQUIPMENT

Equipment is recorded at cost and is comprised of office furniture and
computer equipment which is amortized over its estimated useful life on a
straight line basis over 5 years.

INCOME TAXES

Income taxes are accounted for using the liability method of tax
allocation. Under this method deferred income tax assets and liabilities are
recognized for the tax consequences of temporary differences by applying enacted
statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities.

The effect on deferred taxes for a change in tax rates is recognized in
income in the period that includes the enactment. In addition, deferred tax
assets are recognized to the extent their realization is more likely than not.

STOCK-BASED COMPENSATION

As permitted by Statement of Financial Accounting Standards ("SFAS") No.
123(R), Share Based Payment ("SFAS No. 123(R)), the Company has elected to
follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees ("APB No. 25"), and related interpretations for its employee
stock-based compensation. Under APB No. 25, no compensation expense is
recognized at the time of option grant if the exercise price of the employee
stock option is fixed and equals or exceeds the fair value of the underlying
common stock on the date of the grant and the number of shares to be issued
pursuant to the exercise of such option are known and fixed at the date of
grant.

LOSS PER SHARE

Loss per common share is determined based on the weighted average number of
common shares outstanding during the year. Diluted earnings per share are
calculated by the treasury stock method. Under the treasury stock method, the
weighted average number of common shares outstanding for the calculation of
diluted earnings per share assumes that the proceeds to be received on the
exercise of dilutive stock options and warrants are applied to repurchase common
shares at the average market price for the period. Stock options and warrants
are dilutive when the Company has income from continuing operations and when the
average market price of the common shares during the period exceeds the exercise
price of the options and warrants.

F-9

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

ASSET RETIREMENT OBLIGATIONS

The Company records the fair value of an asset retirement obligation as a
liability in the period in which it incurs a legal obligation associated with
the retirement of tangible long-lived assets that results from the acquisition,
construction, development or normal use of the assets with a corresponding
increase in the carrying amount of the related long-lived asset. This liability
is subsequently allocated to expense over its expected life. Currently, the
Company has no asset retirement obligations.

RECENT ACCOUNTING PRONOUNCEMENTS

On April 15, 2005, the U.S. Securities and Exchange Commission ("SEC")
announced that it would provide for a phased-in implementation process for FASB
Statement No. 123(R), Share-Based Payment ("SFAS 123(R)"). The SEC would require
that registrants adopt SFAS 123(R)'s fair value method of accounting for
share-based payments to employees no later than the beginning of the first
interim or annual period beginning after December 15, 2005. The Company now
plans to adopt SFAS 123(R) effective January 1, 2006.

On March 30, 2005, the Financial Accounting Standards Board ("FASB")
ratified the consensus of the Emerging Issues Task Force ("EITF") of the FASB
Issue 04-6 that stripping costs incurred during the production phase of a mine
are variable production costs that should be included in the costs of the
inventory produced during the period that the stripping costs are incurred. This
consensus is effective for the first reporting period in fiscal years beginning
after December 15, 2005, with early adoption permitted. The Company plans to
adopt the consensus effective April 1, 2006.

3. EQUIPMENT

MARCH 31, 2005
---------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
------- ------------ --------

Office equipment...................................... $32,080 $9,144 $22,936

MARCH 31, 2004
---------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
------- ------------ --------

Office equipment...................................... $16,988 $2,548 $14,440

4. MINERAL PROPERTY

The Company initially entered into a property option agreement dated July
21, 2003 to acquire up to a 70% interest in the Borealis property in Nevada, USA
from Golden Phoenix Minerals, Inc. ("GPXM") for cash consideration of $125,000
and the obligation to make qualifying expenditures over several years. On
January 28, 2005, the Company purchased outright the rights to a full 100%
interest in the property for $1,400,000. A cash payment of $400,000 was made on
closing with four quarterly payments of $250,000 to be made over the following
12 months. The Company pledged 15% of the shares of its subsidiary, Borealis
Mining Company, as security to GPXM against non-payment of the outstanding
obligation.

2005 2004
---------- --------

ACQUISITION COSTS, OPENING.................................. $ 199,753 $ --
Current expenditures........................................ 1,575,573 199,753
---------- --------
ACQUISITION COSTS, CLOSING.................................. $1,775,326 $199,753
========== ========

F-10

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

5. EXPLORATION AND DEVELOPMENT

PERIOD FROM
APRIL 23, 2003 PERIOD FROM
YEAR ENDED (INCEPTION) TO INCORPORATION
MARCH 31, MARCH 31, TO MARCH 31,
2005 2004 2005
---------- -------------- -------------

NEVADA, USA
BOREALIS PROPERTY
Exploration and development
Property maintenance.......................... $ 461,105 $118,371 $ 579,476
Project management............................ 198,343 149,826 348,169
Drilling...................................... 129,014 5,480 134,494
Engineering................................... 119,299 23,476 142,775
Geological.................................... 66,641 115,376 182,017
Metallurgy.................................... 30,673 3,938 34,611
Maps, reports and reproductions............... 4,098 25,765 29,863
---------- -------- ----------
TOTAL EXPLORATION AND DEVELOPMENT............... $1,009,173 $442,232 $1,451,405
========== ======== ==========

F-11

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

6. CAPITAL STOCK

a] Authorized capital stock consists of 60,000,000 common shares with a par
value of $0.001 per share and 15,000,000 preferred shares with a par value
of $0.001 per share.

Issued common shares:

ADDITIONAL
PRICE PER NUMBER OF PAID-IN
SHARE SHARES (#) PAR VALUE CAPITAL TOTAL
--------- ---------- --------- ------------------ ----------

Balance, at inception......... $ -- -- $ -- $ -- $ --
Issued for:
private placements.......... 0.10 3,000,000 3,000 297,000 300,000
private placements.......... 0.15 3,500,000 3,500 521,500 525,000
private placements.......... 0.20 7,116,000 7,116 1,416,084 1,423,200
private placements.......... 0.225 760,000 760 170,240 171,000
---------- ------- ---------- ----------
Balance at March 31, 2004..... -- 14,376,000 14,376 2,404,824 2,419,200
Issued for:
private placements.......... 0.35 500,000 500 174,500 175,000
private placements.......... 0.65 6,815,962 6,816 4,423,559 4,430,375
Less:
share issue costs
-- cash............... -- -- -- (110,915) (110,915)
share issue costs -- fair
value of agent's
warrants............... -- -- -- (7,939) (7,939)
Fair value of warrants issued
to agent as compensation for
services provided(b)........ -- -- -- 7,939 7,939
---------- ------- ---------- ----------
BALANCE AT MARCH 31, 2005..... 21,691,962 $21,692 $6,891,968 $6,913,660
========== ======= ========== ==========

During fiscal 2005, the private placements at $0.65 were for units
comprising one common share and 1/2 of one common share warrant. Each whole
warrant entitles the holder to purchase a common share at a price of $0.90 per
share for a period of 24 months from the date of issue or 9 months following the
date the Company becomes listed on a recognized stock exchange, whichever is
earlier. The Company also issued compensation warrants ("broker warrants") to an
agent with respect to a private placement of common shares.

F-12

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

b] Warrants:

The following table contains information with respect to all warrants:

NUMBER OF FAIR VALUE OF
WARRANTS (#) WARRANTS
------------ -------------

WARRANTS OUTSTANDING, MARCH 31, 2004........................ -- $ --
Issued for:
private placements........................................ 3,407,981 --
agent's compensation...................................... 141,008 7,939
Exercised................................................... -- --
--------- ------
WARRANTS OUTSTANDING, MARCH 31, 2005........................ 3,548,989 $7,939
========= ======

The following table summarizes information about warrants outstanding as at
March 31, 2005:

WARRANTS OUTSTANDING AND EXERCISABLE
--------------------------------------------------------------------------------------
AVERAGE LIFE WEIGHTED
SHARES (#) YEARS AVERAGE PRICE
--------------------------- --------------------------- ---------------------------

3,407,981 1.9 $0.90
141,008 2.8 0.65
--- -----
3,548,898 1.9 $0.89
=== =====

The fair value of agent's warrants issued has been estimated using the
Black-Scholes Option Pricing Model based on the following assumptions: a
risk-free interest rate of 3.02%; expected life of 3 years; an expected
volatility of 0% (the stock has no trading history and accordingly volatility is
not determinable); and no expectation for the payment of dividends.

c] Stock options:

On March 29, 2005, the Board of Directors adopted the 2004 Stock Incentive
Plan ("the Plan") and on May 13, 2005 the Plan was approved by the shareholders.
Under the Plan total of 3,000,000 stock options may be granted over a 10 year
period, with vesting provisions determined by the Board. On the date of adoption
2,000,000 options were granted to directors, officers and a consultant, which
vested immediately and are exercisable for 5 years at a price of $0.75 per share

The following table summarizes information about stock options outstanding
as at March 31, 2005:

OPTIONS OUTSTANDING AND EXERCISABLE
--------------------------------------------------------------------------------------
WEIGHTED AVERAGE
CONTRACTUAL LIFE
SHARES (#) YEARS EXERCISE PRICE
--------------------------- --------------------------- ---------------------------

2,000,000 5.0 $0.75

There would be no effect on the net loss for the year had the Company
recognized stock-based compensation using a fair value method for all stock
awards granted, modified or settled during the year,

F-13

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

because the fair value of each option estimated on the date of the grant using
the Black-Scholes option pricing model and the assumptions described below, is
nil.

2005 2004
------- -------

Dividend yield.............................................. 0% --
Expected volatility......................................... 0% --
Risk free interest rate..................................... 3.24% --
Expected lives.............................................. 4 years --

Options pricing models require the input of highly subjective assumptions,
particularly as to the expected price volatility of the stock. Changes in these
assumptions can materially affect the fair value estimate and therefore it is
management's view that the existing models do not necessarily provide a single
reliable measure of the fair value of the Company's equity instruments.

7. RELATED PARTY TRANSACTIONS

All transactions with related parties have occurred in the normal course of
operations and are measured at their exchange amount as determined by
management. All material transactions and balances with related parties not
disclosed elsewhere are described below.

Directors and officers of the Company were paid $429,946 in 2005 [$395,817
for the period from inception to March 31, 2004] through consulting arrangements
for technical and management services. As at March 31, 2005, $10,250 was
included in accounts payable and accrued liabilities for the above services
(2004: $1,500).

The Company issued common shares to officers and directors for which
proceeds of $54,360 are receivable at March 31, 2005 [2004 -- $389,125].
Promissory notes bearing interest of 1.5% and 2% for full amounts outstanding
have been issued to the Company as partial consideration for these shares and
the Company is holding the related share certificates.

F-14

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

8. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax balances are as follows:

2005 2004
----------- --------

DEFERRED TAX ASSETS
Net operating loss carryforwards............................ $ 953,044 $273,282
Exploration and development costs........................... 87,885 27,531
----------- --------
Total deferred tax assets................................... 1,040,929 300,813
Valuation allowance......................................... (1,039,505) (297,675)
----------- --------
Net deferred tax assets..................................... 1,425 3,138
----------- --------

DEFERRED TAX LIABILITIES
Equipment................................................... (776) (272)
Prepaid expenses............................................ (648) (2,866)
----------- --------
Total deferred tax liabilities.............................. (1,425) (3,138)
----------- --------
$ -- $ --
=========== ========

The potential income tax benefits relating to the deferred tax assets have
not been recognized in the consolidated financial statements as their
realization did not meet the requirements of "more likely than not" under the
liability method of tax allocation. Accordingly, no deferred tax assets have
been recognized as at March 31, 2005 and 2004.

The reconciliation of income taxes attributable to continuing operations
computed at the statutory income tax rates to income tax recovery, at the
statutory tax rate of 37.06% [2004 -- 37.06%] is as follows:

2005 2004
--------- ---------

Tax at statutory tax rates.................................. $(784,081) $(353,575)
State taxes, net of federal benefit......................... (61,175) (24,548)
Non-deductible items........................................ 103,426 80,447
Change in valuation allowance............................... 741,830 297,675
--------- ---------
$ -- $ --
========= =========

At March 31, 2005 the Company has non-capital losses of approximately $2.6
million in the United States available for future deduction from taxable income
and which expire prior to 2025. The Company has not recognized as an asset any
of these potential deductions as it cannot be considered likely that they will
be utilized.

9. RECLAMATION DEPOSIT

The Company has purchased a performance bond for $31,400 from an insurance
company in support of its potential future obligations under a Plan of Operation
for exploration filed with the U.S. Forest Service. At March 31, 2005, the
Company had no outstanding performance obligations related to reclamation work

F-15

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)

following drilling activities secured by this bond. The Company continues to
hold the bond in support of potential future obligations under the Plan of
Operation for exploration filed with the U.S. Forest Service.

10. COMMITMENTS

A portion of the Borealis Property is subject to a mining lease. The
Company is required to make monthly lease payments of $8,614, adjusted annually
based on the Consumer Price Index, for the duration of the lease term. In
addition, production of precious metals from the Borealis Property will be
subject to the payment of a royalty under the terms of the mining lease. The
mining lease expires in 2009, but may be renewed by the Company annually
thereafter, so long as mining activity continues on the Borealis Property. The
Company has the option to terminate the mining lease at any time prior to expiry
in 2009.

11. SUBSEQUENT EVENTS

a] Subsequent to March 31, 2005, 6,030,408 units comprising one share of common
stock and 1/2 of one common share warrant, were issued pursuant to private
placements at a price of $0.65 per unit. An additional 130,000 compensation
warrants were issued pursuant to the private placement described above.

b] On August 2, 2005, the Company granted stock options for a total of 300,000
shares to two newly appointed directors. These options vest immediately and
are exercisable for 5 years at a price of $0.75 per share.

c] Effective August 11, 2005, the Company increased its authorized capital from
60,000,000 shares of common stock with a par value of $0.001 per share to
150,000,000 shares of common stock with a par value of $0.001 per share and
15,000,000 shares of preferred stock with a par value of $0.001 per share.

d] On August 17, 2005, a registration statement and prospectus was filed with
the United States Securities and Exchange Commission and all provincial
securities regulatory authorities in Canada in respect of an initial public
offering of securities by the Company.

F-16

Unaudited Interim Consolidated Financial Statements

GRYPHON GOLD CORPORATION
(an exploration stage company)
June 30, 2005
(Stated in U.S. dollars)

F-17

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS
(Stated in U.S. dollars)
(Unaudited)

AS OF:
-----------------------
JUNE 30, MARCH 31,
2005 2005
---------- ----------

ASSETS
CURRENT
Cash........................................................ $5,859,298 $3,065,436
Accounts receivable......................................... 3,308 8,735
Subscriptions receivable.................................... -- 54,360
Prepaid expenses............................................ 28,396 27,615
---------- ----------
TOTAL CURRENT ASSETS........................................ 5,891,002 3,156,146
---------- ----------
Reclamation deposit [note 7]................................ 31,400 31,400
Equipment [note 3].......................................... 23,817 22,936
Mineral property costs [note 4]............................. 1,775,326 1,775,326
---------- ----------
$7,721,545 $4,985,808
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities.................... $ 397,371 $ 453,193
Mineral property acquisition obligation [note 4]............ 750,000 1,000,000
---------- ----------
TOTAL LIABILITIES........................................... 1,147,371 1,453,193
---------- ----------
Commitments [note 8]
STOCKHOLDERS' EQUITY
Common stock................................................ 27,722 21,692
Additional paid-in capital.................................. 10,745,415 6,891,968
Deficit accumulated during the exploration stage............ (4,198,963) (3,381,045)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY.................................. 6,574,174 3,532,615
---------- ----------
$7,721,545 $4,985,808
========== ==========

On behalf of the Board:

/s/ ALBERT J. MATTER /s/ ANTHONY (TONY) D. J. KER
--------------------------------------------- ---------------------------------------------
Director Director

See accompanying notes
F-18

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. dollars)
(Unaudited)

PERIOD FROM
THREE MONTHS APRIL 24, 2003
ENDED (INCEPTION)
JUNE 30, TO JUNE 30,
2005 2005
------------ --------------

EXPENSES
EXPLORATION AND DEVELOPMENT [note 5]....................... $ 340,072 $ 1,791,477
Management salaries and consulting fees.................... 196,301 1,400,732
Legal and audit............................................ 169,859 492,399
Travel and accommodation................................... 53,986 263,645
General and administrative................................. 79,091 282,133
Depreciation............................................... 1,735 10,879
Foreign exchange loss...................................... 14,763 7,053
Interest income............................................ (37,889) (49,355)
---------- -----------
NET LOSS FOR THE PERIOD.................................... $ (817,918) $(4,198,963)
========== ===========

Basic and diluted loss per share........................... $ (0.03)
==========

Basic and diluted weighted average number of common shares
outstanding.............................................. 26,150,210
==========

See accompanying notes
F-19

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Stated in U.S. dollars)
(Unaudited)

DEFICIT
ACCUMULATED
COMMON STOCK DURING THE
-------------------- ADDITIONAL EXPLORATION
SHARES (#) AMOUNT PAID-IN CAPITAL STAGE TOTAL
---------- ------- --------------- ----------- -----------

Balance, April 24,
2003.................. -- $ -- $ -- $ -- $ --
Shares issued:
For private
placements......... 14,376,000 14,376 2,404,824 -- 2,419,200
Net loss for the
period................ -- -- -- (1,039,925) (1,039,925)
---------- ------- ----------- ----------- -----------
Balance, March 31,
2004.................. 14,376,000 14,376 2,404,824 (1,039,925) 1,379,275
Shares issued:
For private
placements......... 7,315,962 7,316 4,598,059 -- 4,605,375
Share issue costs..... -- -- (118,854) -- (118,854)
Fair value of agent's
warrants issued [note
6[b]]................. -- -- 7,939 -- 7,939
Net loss for the year... -- -- -- (2,341,120) (2,341,120)
---------- ------- ----------- ----------- -----------
Balance, March 31,
2005.................. 21,691,962 21,692 6,891,968 (3,381,045) 3,532,615
Shares issued:
For private
placements......... 6,030,408 6,030 3,913,735 -- 3,919,765
Share issue costs..... -- -- (65,588) -- (65,588)
Fair value of agent's
warrants issued [note
6[b]]................. -- -- 5,300 -- 5,300
Net loss for the
period................ -- -- -- (817,918) (817,918)
---------- ------- ----------- ----------- -----------
BALANCE, JUNE 30,
2005.................. 27,722,370 $27,722 $10,745,415 $(4,198,963) $ 6,574,174

See accompanying notes
F-20

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. dollars)
(Unaudited)

PERIOD FROM
THREE MONTHS APRIL 24, 2003
ENDED (INCEPTION) TO
JUNE 30, MARCH 31,
2005 2005
------------ --------------

OPERATING ACTIVITIES
Net loss for the period.................................... $ (817,918) $(4,198,963)
Items not involving cash:
Depreciation............................................. 1,735 10,879
Shares issued for consulting fee......................... -- 78,375
Changes in non-cash working capital items:
Amounts receivable....................................... 5,427 (3,308)
Accounts payable and accrued liabilities................. (55,822) 397,371
Prepaid expenses......................................... (781) (28,396)
---------- -----------
CASH USED IN OPERATING ACTIVITIES.......................... (867,359) (3,744,042)
---------- -----------

INVESTING ACTIVITIES
Reclamation deposit........................................ -- (31,400)
Purchase of equipment...................................... (2,616) (34,696)
Mineral property expenditures.............................. (250,000) (1,025,326)
---------- -----------
CASH USED IN INVESTING ACTIVITIES.......................... (252,616) (1,091,422)
---------- -----------

FINANCING ACTIVITIES
Cash received for shares issued............................ 3,919,765 10,476,840
Share issue costs.......................................... (60,288) (171,203)
Subscription receivables collected......................... 54,360 389,125
---------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES...................... 3,913,837 10,694,762
---------- -----------

INCREASE IN CASH DURING THE PERIOD......................... 2,793,862 5,859,298
Cash, beginning of period.................................. 3,065,436 --
---------- -----------
CASH, END OF PERIOD........................................ $5,859,298 $ 5,859,298
========== ===========

See accompanying notes
F-21

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Stated in U.S. dollars)
(Unaudited)

1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

2. BASIS OF PRESENTATION

These interim unaudited consolidated financial statements have been
prepared by the Company in accordance with U.S. generally accepted accounting
principles (GAAP) for interim financial statements, applied on a consistent
basis. These interim financial statements follow the same significant accounting
policies and methods of application as those disclosed in Note 2 to the
Company's audited consolidated financial statements as at and for the year ended
March 31, 2005 (the "Annual Financial Statements"). Accordingly, they do not
include all disclosures required for annual financial statements. These interim
unaudited consolidated financial statements and notes thereon should be read in
conjunction with the Annual Financial Statements.

The preparation of these interim unaudited consolidated financial
statements and the accompanying notes requires management to make estimates and
assumptions that affect the amounts reported. In the opinion of management,
these interim unaudited consolidated financial statements reflect all
adjustments (which include only normal, recurring adjustments) necessary to
state fairly the results for the periods presented. Actual results could vary
from these estimates and the operating results for the interim periods presented
are not necessarily indicative of the results expected for the full year.

3. EQUIPMENT

JUNE 30, 2005
---------------------------------
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------- ------------ --------

Office equipment...................................... $34,696 $10,879 $23,817

MARCH 31, 2005
---------------------------------
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------- ------------ --------

Office equipment...................................... $32,080 $9,144 $22,936

4. MINERAL PROPERTY

F-22

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)
(Unaudited)

made over the following 12 months. The Company pledged 15% of the shares of its
subsidiary, Borealis Mining Company, as security to GPXM against non-payment of
the outstanding obligation.

2005
----------

ACQUISITION COSTS, MARCH 31, 2005........................... $1,775,326
Current expenditures........................................ --
----------
ACQUISITION COSTS, JUNE 30, 2005............................ $1,775,326
==========

5. EXPLORATION AND DEVELOPMENT

PERIOD FROM
THREE MONTHS APRIL 24, 2003
ENDED (INCEPTION) TO
JUNE 30, JUNE 30,
2005 2005
------------ --------------

NEVADA, USA
BOREALIS PROPERTY
Exploration and development
Property maintenance..................................... $ 66,803 $ 646,279
Project management....................................... 5,023 363,192
Drilling................................................. 160,362 284,856
Engineering.............................................. -- 142,775
Geological............................................... 107,884 290,901
Metallurgy............................................... -- 34,611
Maps, reports and reproductions.......................... -- 28,863
-------- ----------
TOTAL EXPLORATION AND DEVELOPMENT.......................... $340,072 $1,791,477
======== ==========

6. CAPITAL STOCK

a] Authorized share capital consists of 60,000,000 common shares with a par
value of $0.001 per share and 15,000,000 preferred shares with a par value
of $0.001 per share. (See subsequent event note 9.)

b] Warrants:

The following table contains information with respect to all warrants:

NUMBER OF FAIR VALUE OF
WARRANTS (#) WARRANTS
------------ -------------

WARRANTS OUTSTANDING, MARCH 31, 2005........................ 3,548,989 $ 7,939
Issued for:
private placement......................................... 3,015,204 --
agent's compensation...................................... 130,000 5,300
Exercised................................................... -- --
--------- -------
WARRANTS OUTSTANDING, JUNE 30, 2005......................... 6,694,193 $13,239
========= =======

F-23

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)
(Unaudited)

The following table summarizes information about warrants outstanding as at
June 30, 2005:

WARRANTS OUTSTANDING AND EXERCISABLE
---------------------------------------------------------------------------------------
AVERAGE REMAINING LIFE
SHARES (#) YEARS WEIGHTED AVERAGE PRICE
--------------------------- --------------------------- ---------------------------

6,423,185 1.7 $0.90
271,008 2.2 0.65
---------- --- -----
6,694,193 1.8 $0.89
---------- === =====
----------

The fair value of agent's warrants issued has been estimated using the
Black-Scholes Option Pricing Model based on the following assumptions: a
risk-free interest rate of 3.02% and [3.24%]; expected life of 3 and 2 years
depending on their terms; an expected volatility of 0% (the stock has no trading
history and accordingly volatility is not determinable); and no expectation for
the payment of dividends.

c] Stock options:

The following table summarizes information about stock options outstanding
as at June 30, 2005:

OPTIONS OUTSTANDING AND EXERCISABLE
--------------------------------------------------------------------------------------------
WEIGHTED AVERAGE CONTRACTUAL LIFE
SHARES (#) YEARS EXERCISE PRICE
--------------------------- --------------------------------- ---------------------------

2,000,000 5.0 $0.75

There would be no effect on the net loss for the year had the Company
recognized stock-based compensation using a fair value method for all stock
awards granted, modified or settled during the year, because the fair value of
each option estimated on the date of the grant using the Black-Scholes option
pricing model and the assumptions described below, is nil.

2005 2004
------- -------

7. RECLAMATION DEPOSIT

The Company has purchased a performance bond for $31,400 from an insurance
company in support of its potential future obligations under a Plan of Operation
for exploration filed with the U.S. Forest Service. At June 30, 2005, the
Company recorded a reclamation liability of $10,000 related to drilling activity
during the

F-24

GRYPHON GOLD CORPORATION
(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Stated in U.S. dollars)
(Unaudited)

quarter The Company continues to hold the bond in support of current and future
obligations under the Plan of Operation for exploration filed with the U.S.
Forest Service.

8. COMMITMENTS

a] A portion of the Borealis Property is subject to a mining lease. The Company
is required to make monthly lease payments of $8,614, adjusted annually
based on the Consumer Price Index, for the duration of the lease term. In
addition, production of precious metals from the Borealis Property will be
subject to the payment of a royalty under the terms of the mining lease. The
mining lease expires in 2009, but may be renewed by the Company annually
thereafter, so long as mining activity continues on the Borealis Property.
The Company has the option to terminate the mining lease at any time prior
to expiry in 2009.

b] During the first quarter of 2006, the Company entered into leases for office
space in Lakewood, CO and Vancouver, BC for 5 and 3 year terms respectively.
The following are related commitments in the next 5 years:

$
------

2006........................................................ 42,000
2007........................................................ 68,000
2008........................................................ 68,700
2009........................................................ 48,000
2010........................................................ 38,000

9. SUBSEQUENT EVENTS

a] On August 2, 2005, the Company granted stock options for a total of 300,000
shares to two newly appointed directors. These options vest immediately and
are exercisable for 5 years at a price of $0.75 per share.

b] Effective August 11, 2005, the Company increased its authorized capital from
60,000,000 shares of common stock with a par value of $0.001 per share to
150,000,000 shares of common stock with a par value of $0.001 per share and
15,000,000 shares of preferred stock with a par value of $0.001 per share.

c] On August 17, 2005, a registration statement and prospectus was filed with
the United States Securities and Exchange Commission and all provincial
securities regulatory authorities in Canada in respect of an initial public
offering of securities by the Company.

F-25

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

GRYPHON GOLD CORPORATION

UNITS

Each unit will be offered at a price of $ per unit and will consist
of one (1) share of our common stock and one-half of one (1/2) non-transferable
Class A Warrant; each whole Class A Warrant is exercisable to acquire one share
of common stock at a price of $ until 5:00 p.m. (New York time)
on .

--------------------------------------------------------------------------------

PROSPECTUS

, 2005

No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus in connection with the offer made by this prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the company or the representative. Neither the delivery of this
prospectus nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in the affairs of the company since
the date hereof. This prospectus does not constitute an offer or solicitation by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to anyone to whom it is unlawful to make such offer or solicitation.

Until ________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This delivery requirement is in addition to the obligation of
dealers to deliver a prospectus when acting as agents and with respect to their
unsold allotments or subscriptions.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 23. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than the
agent's discounts and commissions, payable by the Registrant in connection with
the sale of the Common Stock being registered. All amounts are estimates except
the SEC registration fee, the NASD filing fees and the Toronto Stock Exchange
listing fees.

AMOUNT TO
BE PAID
---------

SEC registration fee........................................ $3,502.33
NASD filing fee............................................. $3,476.00
TSX listing fee............................................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Printing expenses........................................... *
Blue sky fees and expenses (including legal fees)........... *
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
Total..................................................... *

---------------

* To be supplied by amendment.

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Bylaws and Articles of Incorporation (the "Certificate of
Incorporation") provide that we shall, to the full extent permitted by the
Nevada General Business Corporation Law, as amended from time to time (the
"Nevada Corporate Law"), indemnify all of our directors and officers. Section
78.7502 of the Nevada Corporate Law provides in part that a corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.

Similar indemnity is authorized for such persons against expenses
(including attorneys' fees) actually and reasonably incurred in defense or
settlement of any threatened, pending or completed action or suit by or in the
right of the corporation, if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct. Under our Certificate of Incorporation, the
indemnitee is presumed to be entitled to indemnification and we have the burden
of proof to overcome that presumption. Where an officer or a director is
successful on the merits or otherwise in the defense of any action referred to
above, we must indemnify him against the expenses which such offer or director
actually or reasonably incurred. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for

II-1

indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

ITEM 25. RECENT SALES OF UNREGISTERED SECURITIES.

Since our inception we have offered and sold the following securities in
unregistered transactions pursuant to exemptions under the Securities Act of
1933, as amended.

On or about May 15, 2003, we issued 3,000,000 shares of common stock
to our founding shareholders at $0.10 per share. We offered and sold shares
outside the United States to non-U.S. persons in off-shore transactions
pursuant to the exemption from registration available under Regulation S of
the Securities Act and in the United States in private transactions not
involving a public offering pursuant to exemptions available under Rule 506
of Regulation D and Section 4(2) of the Securities Act.

On or about June 15, 2003, we issued 1,980,000 shares of common stock
at $0.15 per share to our directors and 75,000 shares of common stock at
$0.20 per share. We offered and sold shares outside the United States to
non-U.S. persons in off-shore transactions pursuant to the exemption from
registration available under Regulation S of the Securities Act and in the
United States in private transactions not involving a public offering
pursuant to exemptions available under Rule 506 of Regulation D and Section
4(2) of the Securities Act.

On or about August 15, 2003, we issued 1,802,500 shares of common
stock at $0.20 per share and 637,500 shares of common stock at $0.225 per
share payable by installment promissory notes. We offered and sold shares
outside the United States to non-U.S. persons in off-shore transactions
pursuant to the exemption from registration available under Regulation S of
the Securities Act and in the United States in private transactions not
involving a public offering pursuant to exemptions available under Rule 506
of Regulation D and Section 4(2) of the Securities Act.

On or about September 16, 2003, we issued 270,000 shares of common
stock at $0.15 per share to a director, 1,400,000 shares of out common
stock at $0.20 per share, and an additional 100,000 shares of our common
stock at $0.225 per share payable by installment promissory notes. We
offered and sold shares outside the United States to non-U.S. persons in
off-shore transactions pursuant to the exemption from registration
available under Regulation S of the Securities Act and in the United States
in private transactions not involving a public offering pursuant to
exemptions available under Rule 506 of Regulation D and Section 4(2) of the
Securities Act.

On or about December 17, 2003, we issued 3,488,500 shares of common
stock at $.20 per share and 122,500 shares of common stock at $0.225 per
share payable by installment promissory notes. We offered and sold shares
outside the United States to non-U.S. persons in off-shore transactions
pursuant to the exemption from registration available under Regulation S of
the Securities Act and in the United States in private transactions not
involving a public offering pursuant to exemptions available under Rule 506
of Regulation D and Section 4(2) of the Securities Act.

On or about March 8, 2004, we issued 1,500,000 shares of common stock
at $0.15 per share. We offered and sold shares outside the United States to
non-U.S. persons in off-shore transactions pursuant to the exemption from
registration available under Regulation S of the Securities Act and in the
United States in private transactions not involving a public offering
pursuant to exemptions available under Rule 506 of Regulation D and Section
4(2) of the Securities Act.

II-2

On September 7, 2004, we reserved for issuance and later sold 500,000
shares of common stock to Tom Sitar, our chief financial officer at $0.35
per share under the terms of his employment agreement. The shares were
issued in a private transaction not involving a public offering pursuant to
exemptions available under Section 4(2) of the Securities Act.

On September 28, 2004, we sold 778,500 shares of common stock at $0.65
per share and subsequently issued 389,250 share purchase warrants to each
purchaser exercisable to acquire one share of common stock at $0.90 per
share until the earlier of two years from the date of issuance or nine
months after our shares of common stock are listed for trading on a
recognized exchange. We offered and sold units outside the United States to
non-U.S. persons in off-shore transactions pursuant to the exemption from
registration available under Regulation S of the Securities Act. We offered
and sold units to accredited investors in the United States in private
transactions not involving a public offering pursuant to exemptions
available under Rule 506 of Regulation D and Section 4(2) of the Securities
Act.

On January 26, 2005, we sold 1,410,077 units at $0.65 per unit. Each
unit consisted of one share of common stock and one-half of one share
purchase warrant, each whole warrant exercisable to acquire one share of
common stock at $0.90 per share until the earlier of two years from the
date of issuance or nine months after our shares of common stock are listed
for trading on a recognized exchange. We offered and sold units outside the
United States to non-U.S. persons in off-shore transactions pursuant to the
exemption from registration available under Regulation S of the Securities
Act. We offered and sold units to accredited investors in the United States
in private transactions not involving a public offering pursuant to
exemptions available under Rule 506 of Regulation D and Section 4(2) of the
Securities Act.

On March 28, 2005, we sold 4,627,385 units at $0.65 per unit. Each
unit consisted of one share of common stock and one-half of one share
purchase warrant, each whole warrant exercisable to acquire one share of
common stock at $0.90 per share until the earlier of two years from the
date of issuance or nine months after our shares of common stock are listed
for trading on a recognized exchange. We offered and sold units outside the
United States to non-U.S. persons in off-shore transactions pursuant to the
exemption from registration available under Regulation S of the Securities
Act. We offered and sold units to accredited investors in the United States
in private transactions not involving a public offering pursuant to
exemptions available under Rule 506 of Regulation D and Section 4(2) of the
Securities Act.

On or about March 29, 2005, we granted options exercisable to acquire
2,000,000 shares of common stock at $0.75 per share to officers, directors,
employees and a consultant in compensatory transactions not involving a
public offering pursuant to exemptions available under Rule 701 of the
Securities Act.

On April 1, 2005, we sold 1,300,000 units at $0.65 per unit. Each unit
consisted of one share of common stock and one-half of one share purchase
warrant, each whole warrant exercisable to acquire one share of common
stock at $0.90 per share until the earlier of two years from the date of
issuance or nine months after our shares of common stock are listed for
trading on a recognized exchange. We offered and sold units outside the
United States to non-U.S. persons in off-shore transactions pursuant to the
exemption from registration available under Regulation S of the Securities
Act. We offered and sold units to accredited investors in the United States
in private transactions not involving a public offering pursuant to
exemptions available under Rule 506 of Regulation D and Section 4(2) of the
Securities Act.

On April 25, 2005, we sold 4,221,154 units at $0.65 per unit. Each
unit consisted of one share of common stock and one-half of one share
purchase warrant, each whole warrant exercisable to acquire one share of
common stock at $0.90 per share until the earlier of two years from the
date of issuance or nine months after our shares of common stock are listed
for trading on a recognized exchange. We offered and sold units outside the
United States to non-U.S. persons in off-shore transactions pursuant to the
exemption from registration available under Regulation S of the Securities
Act. We offered and sold units to accredited investors in the United States
in private transactions not involving a public offering pursuant to
exemptions available under Rule 506 of Regulation D and Section 4(2) of the
Securities Act.

On June 22, 2005, we sold 509,254 units at $0.65 per unit. Each unit
consisted of one share of common stock and one-half of one share purchase
warrant, each whole warrant exercisable to acquire one

II-3

share of common stock at $0.90 per share until the earlier of two years
from the date of issuance or nine months after our shares of common stock
are listed for trading on a recognized exchange. We offered and sold units
outside the United States to non-U.S. persons in off-shore transactions
pursuant to the exemption from registration available under Regulation S of
the Securities Act. We offered and sold units to accredited investors in
the United States in private transactions not involving a public offering
pursuant to exemptions available under Rule 506 of Regulation D and Section
4(2) of the Securities Act.

On August 3, 2005, we granted options exercisable to acquire 300,000
shares of common stock at $0.75 per share to two new independent directors
in compensatory transactions not involving a public offering pursuant to
exemptions available under Rule 701 of the Securities Act.

II-4

ITEM 26. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

The following is a list of exhibits filed as part of this Registration
Statement:

EXHIBIT
NUMBER DESCRIPTION
------- -----------

1.1* Form of Agency Agreement

3.1 Articles of Incorporation of Gryphon Gold Corporation, filed
April 24, 2003

3.2 Certificate of Amendment to Articles of Incorporation of
Gryphon Gold Corporation, filed August 9, 2005

3.3 Bylaws of Gryphon Gold Corporation

3.4 Articles of Incorporation of Borealis Mining Company, filed
June 5, 2003

3.5 Bylaws of Borealis Mining Company

4.1* Specimen Common Stock certificate

4.2* Form of Warrant Indenture

5.1* Opinion of United States Counsel

10.1 Investor Rights Agreement by and among Gryphon Gold
Corporation and the Stockholders Party Hereto, dated as of
May 1, 2003, as amended

10.2 Assignment of Borealis Mining Lease, dated January 10, 2005,
between Golden Phoenix Mineral Company and Borealis Mining
Company

10.3 Agreement and Consent to Assignment of Borealis Mining
Lease, entered into as of January 26, 2005, between Richard
J. Cavell, Hardrock Mining Company, John W. Whitney, Golden
Phoenix Minerals, Inc., Borealis Mining Company and Gryphon
Gold Corporation

10.4 Escrow Agreement, dated January 10, 2005, between Borealis
Mining Company, Gryphon Gold Company and Lawyers Title
Agency of Arizona (Regarding Purchase Agreement dated
January 10, 2005)

10.5 Purchase Agreement dated January 10, 2005, as amended,
Seller: Golden Phoenix Minerals, Inc., Buyer: Borealis
Mining Company and Guarantor: Gryphon Gold Corporation

10.6 Agreement between Golden Phoenix Minerals, Inc. and Borealis
Mining Company (Borealis Property, Mineral County, Nevada),
dated July 21, 2003

10.7 Agency Agreement/Investment Advisory Retainer, between
Gryphon Gold Corporation and Desjardins Securities Inc.,
signed March 9, 2005

10.8 Service Agreement between Gryphon Gold Corporation and The
Kottmeier Resolution Group Ltd., dated May 17, 2005

10.9 Office Building Lease dated June 22, 2005, related to
Lakewood, Colorado office

10.10 Executive Compensation Agreement, dated October 1, 2003,
between Gryphon Gold Corporation and Allen Gordon dba
Evergreen Mineral Ventures LLC

10.11 Assignment Assumption Agreement between Gryphon Gold
Corporation and Allen Gordon

10.12 Executive Compensation Agreement, dated October 1, 2003,
between Gryphon Gold Corporation and Albert Matter

10.13 Executive Compensation Agreement, dated February 1, 2004,
between Gryphon Gold Corporation and Tony Ker

10.14 Executive Compensation Agreement, dated November 1, 2004,
between Gryphon Gold Corporation and Thomas Sitar

10.15 Executive Compensation Agreement, dated June 1, 2005 between
Gryphon Gold Corporation and Donald Ranta

10.16 Gryphon Gold Corporation 2004 Stock Incentive Plan

10.17* Form of Escrow Agreement

10.18* Form of Lock Up Agreement

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EXHIBIT
NUMBER DESCRIPTION
------- -----------

14.1* Code of Business Conduct and Ethics

23.1 Consent of Ernst & Young LLP

23.2* Consent of United States Counsel (included in the opinion
filed as Exhibit 5.1.)

23.3 Consent of Mr. Alan C. Noble, P.E. of Ore Reserves
Engineering in Lakewood, CO

23.4 Consent of Qingping Deng of Behre Dolbear and Company, Inc.
in Denver, CO

24.1 Powers of Attorney (included on Signature Page)

99.1 "Technical Report on the Mineral Resources of the Borealis
Gold Project" dated May 23, 2005, prepared by Mr. Alan C.
Noble, P.E. of Ore Reserves Engineering in Lakewood, CO

99.2 "Technical Report -- Preliminary Scoping Study of Project
Development for the Borealis Gold Project, Nevada, USA"
dated June 7, 2004 prepared by Quigping Deng of Behre
Dolbear and Company, Inc. in Denver, CO

---------------

* To be filed by amendment.

(b) Financial Statement Schedules.

Omitted because they are either inapplicable or the required information
has been given in the consolidated financial statements or the notes thereto.

ITEM 27. UNDERTAKINGS.

The Registrant hereby undertakes to provide to the Agent at the closing
specified in the Agency Agreement, certificates in such denominations and
registered in such names as required by the Agents to permit prompt delivery to
each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-6

(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form SB-2 and authorized
registration statement to be signed on its behalf by the undersigned, in the
city of Vancouver, British Columbia, Canada, on August 17, 2005.

GRYPHON GOLD CORPORATION

By: /s/ ALLEN S. GORDON
------------------------------------
ALLEN S. GORDON
President and Director
(Chief Executive Officer)

In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement was signed by the following persons in the
capacities and on the dates stated:

/s/ ALLEN S. GORDON Director, President and August 17, 2005
------------------------------------------------ Chief Executive Officer
ALLEN S. GORDON (Principal Executive Officer)

/s/ ALBERT J. MATTER Executive Chairman and August 17, 2005
------------------------------------------------ Chairman of the Board
ALBERT J. MATTER

/s/ DONALD E. RANTA Director August 17, 2005
------------------------------------------------
DONALD E. RANTA

/s/ CHRISTOPHER E. HERALD Director August 17, 2005
------------------------------------------------
CHRISTOPHER E. HERALD

Director
------------------------------------------------
RICHARD E. HUGHES

/s/ ROHAN HAZELTON Director August 17, 2005
------------------------------------------------
ROHAN HAZELTON

/s/ DONALD W. GENTRY Director August 17, 2005
------------------------------------------------
DONALD W. GENTRY

/s/ ANTHONY (TONY) D. J. KER Director August 17, 2005
------------------------------------------------
ANTHONY (TONY) D. J. KER

/s/ THOMAS SITAR Chief Financial Officer August 17, 2005
------------------------------------------------ (Principal Financial and
THOMAS SITAR Accounting Officer)

II-8

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints each of
Allen Gordon and Thomas Sitar his or her attorney-in-fact and agent, with the
full power of substitution and resubstitution and full power to act without the
other, for them in any and all capacities, to sign any and all amendments,
including post-effective amendments, and any registration statement relating to
the same offering as this registration that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, to this
registration statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ ALLEN S. GORDON Director, President and August 17, 2005
------------------------------------------------
ALLEN S. GORDON Chief Executive Officer

/s/ ALBERT J. MATTER Executive Chairman and August 17, 2005
------------------------------------------------
ALBERT J. MATTER Chairman of the Board

/s/ DONALD E. RANTA Director August 17, 2005
------------------------------------------------
DONALD E. RANTA

/s/ CHRISTOPHER E. HERALD Director August 17, 2005
------------------------------------------------
CHRISTOPHER E. HERALD

Director
------------------------------------------------
RICHARD E. HUGHES

/s/ ROHAN HAZELTON Director August 17, 2005
------------------------------------------------
ROHAN HAZELTON

/s/ DONALD W. GENTRY Director August 17, 2005
------------------------------------------------
DONALD W. GENTRY

/s/ ANTHONY (TONY) D. J. KER Director August 17, 2005
------------------------------------------------
ANTHONY (TONY) D. J. KER

/s/ THOMAS SITAR Chief Financial Officer August 17, 2005
------------------------------------------------
THOMAS SITAR (Principal Financial Officer)

II-9