Mr. James O'Neil reports

GRYPHON GOLD ANNOUNCES JOINT VENTURE WITH WATERTON GLOBAL VALUE L.P.

Gryphon Gold Corp. has entered into agreements with Waterton Global Value LP and a subsidiary of Waterton to form a joint venture with Gryphon's Borealis Mining Co.

Under terms of the agreement, Waterton will convert $17.0-million, or about two-thirds, currently outstanding under its senior credit facility with Gryphon Gold for a 60-per-cent ownership interest in the company's subsidiary, Borealis Mining. Gryphon Gold will own a 40-per-cent interest in Borealis and the amount due under the senior credit facility will be reduced to $8.0-million, which is to be repaid in monthly instalments commencing on Jan. 31, 2013, through the end of the term in November, 2014. The reduction of the amount outstanding under the facility will reduce the company's monthly debt payments from $1.4-million, by approximately $1.0-million, to $400,000.

As previously announced, Borealis's production was adversely impacted as a result of certain operational issues and particularly due to equipment failures at its adsorption-desorption-recovery (ADR) refining facility. The board of directors of the company surveyed a number of alternatives to mitigate the company's working capital deficit. Given the challenging equity markets, the company has determined that the best and most actionable method of preserving shareholder value is to immediately restructure its credit facility with Waterton.

James O'Neil, chief executive officer and interim chief financial officer of Gryphon Gold, stated: "Waterton has been a strong supporter of Gryphon Gold and an integral part of the advancement of the Borealis property. This transaction provides the company with a strengthened capital structure and, importantly, adds Waterton as a joint-venture partner, bringing a wealth of technical expertise and successful gold mining experience. With their partnership, we expect to significantly increase mining efforts and current production activities, including adding additional crushing capabilities and hauling equipment."

Cheryl Brandon, portfolio manager at Waterton, stated: "We are very excited about our partnership with Gryphon Gold and the future potential of the Borealis project. Our expectation is that the near-term initiatives being undertaken at the Borealis property, along with our experience and added capital, will enable us to increase recovery rates and extend the life of the mine."

Concurrent with the joint venture and the debt reduction, Gryphon Gold and Waterton entered into an operating agreement that will govern the operational and financial obligations of both joint-venture parties on a going-forward basis. Gryphon Gold is responsible for the payment of an initial $4.0-million to the joint venture to compensate Borealis for obligations incurred prior to the formation of the joint venture, in addition to 40 per cent of an initial $4-million contemplated capital contribution. Waterton will advance a total of $5.6-million to Gryphon, with $3.0-million already having been advanced, to cover the company's initial capital contributions to the joint venture, which will be repaid, with interest at escalating rates, on or before July 31, 2013. Continuing capital contributions will be determined by the board of managers of Borealis and will be paid by both parties equal to their respective ownership interest in Borealis. If one party fails to meet a financial obligation, it will be subject to dilution in their ownership interest in Borealis. In addition, if Gryphon fails to meet monthly payment obligations under the senior credit facility, its interest in Borealis will be diluted in accordance with the terms of the credit agreement relating to the senior credit facility.

We seek Safe Harbor.