Dear Fellow Shareholders... Funny thng is... 'Dear Fellow Shareholders'... JTO is not even a shareholder... AGM letter from July 2012 below... Worth a read... I have bolded the statements I find truly amusing... Remember this was written in July 2012... 7 months ago... Take note of what they say they will deliver versus where we find ourselves today...
Annual Letter to Shareholders
Fiscal Year 2012
Dear Fellow Shareholders:
We accomplished a great deal in fiscal 2012, as we succeeded in returning the historic Borealis Property to production pouring our first gold doré bar on March 30, 2012.
There were numerous challenges in the first half of the fiscal year in the design and execution of the leach pad and refinery. I joined the Company as CFO in January and was made CEO in February. When I joined, construction of the Adsorption Desorption Recovery system, or our refinery, was behind schedule. Also, equipment failures were delaying the formation of the leach pad and design issues slowed the leaching process. We believe we are on track now, but a lot of work is required to achieve our target annual production rate of 25,000 to 30,000 ounces of gold.
Significant Progress Made at Borealis Project
The construction on our heap leach operation was initiated in June of last year and the leaching cycle began in late September. Construction over the last 12 months included the heap leach pad, ponds, carbon columns, miscellaneous infrastructure and the Adsorption, Desorption and Recovery (ADR) plant (the refinery), which was completed in May. The first shipment of loaded carbon was in October, and we poured our first gold doré bar on March 30, 2012. We have been steadily producing since this initial pour.
During fiscal 2012, we delivered 529,726 tons to the leach pad that contained 6,409 recoverable ounces calculated at a 40% recovery rate. The cash cost for gold equivalents produced in fiscal 2012 was $1,314 per ounce. Recovery rates initially have been lower, but as we expand beyond processing previously leached ore, we expect recovery rates to reach the 55% to 80% range, which will contribute to lower costs per ounce and, as we increase production, higher volume will enable us to leverage our infrastructure. Thus far in fiscal year 2013, we have sold 2,764 equivalent gold ounces, reduced our cash cost per ounce to $908, and have also achieved in May roughly half of our monthly target production rate after just two months of production. Currently, we are crushing and loading material to the leach pad at an estimated level of 4,000 tons per day which feeds a weekly pour process.
A time to look forward
This Borealis project is our main priority as we work to achieving our annual production target which we expect to achieve around December 2012. We expect that our capital requirements for fiscal 2013 will be on order of $9 million to $12 million. This will be timed based on our cash flows from production but is necessary to get to our target production rate. In addition to the jaw crusher that we recently received and expect to have in operation in July 2012, we will also be looking at adding and additional cone crusher to accelerate the leach pad expansion. We will also have a $2.5 million to $3.0 million bonding commitment in July for the leach pad expansion.
We will be increasing the capacity and flow through the refinery to achieve our production goal as well by adding additional carbon columns that will enable us to flow pregnant solution direct to the columns and bypass the pond process – this also addresses capacity issues with the pond and enables us to avoid having to invest in pond expansion as well.
Beyond Borealis, we believe we have assembled an excellent team that can find other opportunities where strong operational and execution skills are needed in order to advance a project toward production.
On July 2, 2012, we experienced the untimely passing of Dr. Donald W Gentry, a member of our Board of Directors since 2005. A respected colleague and friend, we will miss his unique insight, energy and judgment which made him an integral leader of the company.
On behalf of our Board of Directors and employees, we thank you for your continued confidence in, and support of, Gryphon Gold Corporation.
Sincerely,
James T. O’Neil Jr.
Chief Executive Officer
July 19, 2012