Market analysis on GRYPHON GOLD CORP Company Background Gryphon Gold Corp (OTC: GYPH) is involved in acquisition, exploration and development of gold properties. The company mainly operates in Nevada through its many subsidiaries. Gryphon Gold Corp was incorporated in 2003 and started its first exploration project in Borealis property in Nevada. Before Gryphon Gold, Borealis property has been explored by many companies due to its high potential. The property was initially explored by consortium of Houston, Echo Bay and Tenneco which closed down in 1990. Later Santa Fe Gold started exploration efforts on the property between 1990 and 1996 and drilled 32 holes. From 1996 to 2003 Cambior and Golden Phoenix drilled addition 10 holes till 2003 when Gryphon Gold acquired it. Based in Vancouver, Canada, Gryphon Gold initiated the exploration on Borealis property in 2007 with the estimated budget of $4.5 million to drill total of 72 holes in the property. The Borealis property is spread over 27.5 square miles over Walker Lane gold belt in Western Nevada. It is estimated that one square mile of Central Borealis zone has the resources of 1.4 million ounces of indicated gold and 1.1 million ounces of inferred gold. More than 600,000 ounces of gold has been explored by previous companies in the time period of 10 years. Currently five high potential zones are explored by Gryphon in Borealis property which is believed to have high gold resources. The company equips itself with the most experienced and well trained professionals in the fields of exploration and finance. Till now the company has the gold assets of 2.5 million ounces. Other than Borealis property the company also has more than 60 exploration properties in Nevada spread over 70 miles having high potential of gold resources. Nevada has a very good history in gold exploration and is the most mining friendly state in USA. Gryphon Gold Corporation is aggressively enhancing its gold resources and exploring more gold resources on its current properties. Financial Position As per its latest financial statements ending June 30th, 2010 the company’s total assets accumulate up to $5.117 million out of which fixed assets have the highest proportion standing at $2.71 million. The property plant and equipment values up to $1.963 million whereas other long term assets stand $0.75 million. Total current assets accumulate up to $2.403 million out of which cash and cash equivalents have the highest proportion standing at $2.138 million. Total current liabilities stand at $0.746 million.
Gryphon Gold Corp maintains the current ratio of 3.22 times depicting current assets are maintained 3.22 times more than the current liabilities. The company’s strong short term liquidity position is more evident from its cash and cash equivalents covering the current liabilities by 2.86 times. The company’s total cash per share arrives at $0.03 million. The company maintains a strong capital structure with total liabilities stand at $0.746 million against the total equity of $4.37 million. The company has no long term obligations and the current liabilities hold the total proportion the total liabilities. Technical Analysis The share price closed on $0.20 with as on October 22 nd, 2010 with total trading volume of 86,000 shares. The average volume for GYPH stands at 70,000 share per day. Total outstanding shares accumulate up to 87.94 million out of which 83.03 million has been floated in the stock market. The share price maintains the beta value of 1.73 times which depicts that that share price is likely to react by 1.73 times against 1 point change in market index. The share price has traded between the prices ranges of $0.06 to $0.29 in the last 52 weeks. As per price history the share price lowest has been $0.06 in last one year which can be defined as the support level whereas it has touched the highest of $0.29 which can be taken as GYPH resistance level.
The 14day relative strength index value stands at 58.66 times for GYPH which shows that the share price is near to its overbought level but still have a considerable margin for capital gain. Moving averages are showing a very significant sign of major upward movement in the prices as the short term 50day moving average line clearly cuts the long term 200 day moving average line from bottom in upward direction. MACD moving average convergence/divergence signals a bit different trend as the MACD line seems to cut the trigger line from top in downward direction. Looking it at more rationally RSI, MACD and price history signals that the share price is at overbought level.
Bollinger bands are in loosening indicating volatile price movement. Bottoms and tops are made outside bands followed by bottoms and tops made inside the bands call for reversal in share price movement. When prices move outside the Bollinger bands it is predicted that current trend will continue. However the prices did moved out of Bollinger bands in mid October but now are back within the boundaries of the bands. Latest News and Achievements Gryphon Gold Corporation is focusing on its public and investors. The company has recently renewed its contract with Price Target Media Inc which will plan the company’s integrated marketing, media and public relations strategy. The company intends to raise the awareness among its shareholders and be fully transparent for its public. The company’s top management has developed a strategy speed up the exploration process in Borealis Heap Leach Project. The main focus of this decision is to secure the financing for start up of mining operation. As per the company’s latest strategy the ground breaking will start on project by early 2011 and production will commence by the second quarter of 2011. The given timelines are totally dependent on financing. The budget for phase 1 is estimated to be around $7 to $8 million.
The phase 1 involves recovering material which is to be leached so that gold could be recovered on low operating cost. The company will construct the A.D.R plant within the first eight months and ore will be mined through East Ridge project. It is estimated that current installation will result in production of 50,000 ounces of gold per year.