UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

QQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the quarterly period ended: December
31, 2007

£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

Commission file number: 333-127635

|Gryphon Gold Corporation                                             
|---------------------------------------------------------------------
|(Exact name of small business issuer as specified in its
    charter)
|                                                                     
|Nevada                                                               
|(State or other jurisdiction of                                      
|incorporation or organization)                                       
|                                                                     
|1130
    WEST PENDER STREET, SUITE 810                               
|VANCOUVER, BC                                                        
|(Address of principal executive
    offices)                         

Issuer's Telephone Number: (604) 261-2229

Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YesQNo£

Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes£NoQ

As of February 12, 2008 there were 61,712,895
shares of common stock outstanding.

Transitional Small Business
Disclosure Format (check one)

Yes£NoQ

---

GRYPHON GOLD CORPORATION
December 31, 2008
INDEX
Page No.(s)PART I - FINANCIAL INFORMATIONItem 1.
    Unaudited Interim
    Consolidated Financial Statements as ofDecember 31, 2007
    2Unaudited Consolidated Balance Sheet as of December 31, 2007and
    Audited Consolidated Balance Sheet as of March 31, 2007
    2Unaudited Consolidated
    Statements of Operations for thethree and nine months
    ended December 31, 2007 and 2006
    3Unaudited Consolidated Statements of Stockholders Equity
    4Unaudited Consolidated
    Statements of Cash Flows for thethree and nine months
    ended December 31, 2007 and 2006
    5Notes to Unaudited Interim Consolidated Financial Statements
    6Item 2.
    Managements
    Discussion and Analysis
    16Item 3.
    Controls and Procedures
    26PART II -
    OTHER INFORMATIONItem 1.
    Legal Proceedings
    27Item 2.
    Unregistered Sales of
    Equity Securities and Use of Proceeds
    27Item 3.
    Defaults Upon Senior Securities
    27Item 4.
    Submission of Matters
    to a Vote of Security Holders
    27Item 5.
    Other Information
    27Item 6.
    Exhibits
    27SIGNATURES
    301

---



Gryphon Gold Corporation(an exploration stage company)

CONSOLIDATED BALANCE SHEETS(Stated in US dollars)
(unaudited)

|                                                 | As at        |  | As at       
|------------------------------------------------ | ------------ |  | ------------
|                                                 | December 31, |  | March 31,   
|                                                 | 2007         |  | 2007        
|                                                 | $            |  | $           
|                                                 |              |  |             
|ASSETS                                           |              |  |             
|Current                                          |              |  |             
|Cash                                             | 5,541,213    |  | 7,150,154   
|Accounts receivable                              | 85,415       |  | 65,483      
|Prepaid expenses                                 | 157,553      |  | 129,065     
|Total Current Assets                             | 5,784,181    |  | 7,344,702   
|Mineral properties [note 5]                      | 12,619,565   |  | 1,920,371   
|Equipment [note 4]                               | 158,042      |  | 153,362     
|Other assets [note 9]                            | 261,389      |  | 134,759     
|                                                 | 18,823,177   |  | 9,553,194   
|                                                 |              |  |             
|LIABILITIES AND STOCKHOLDERS, EQUITY             |              |  |             
|Current                                          |              |  |             
|Accounts payable and accrued liabilities         | 1,050,614    |  | 786,565     
|Current portion of capital lease [note 11]       | 32,536       |  | 32,977      
|Total current liabilities                        | 1,083,150    |  | 819,543     
|                                                 |              |  |             
|Convertible promissory note [note 12]            | 4,366,656    |  | -           
|Capital lease [note 11]                          | -            |  | 17,308      
|                                                 |              |  |             
|Commitments & contingencies [note 10]            |              |  |             
|                                                 |              |  |             
|Stockholders' equity                             |              |  |             
|Common stock                                     | 61,682       |  | 47,298      
|Additional paid-in capital                       | 37,756,189   |  | 26,649,868  
|Deficit accumulated during the exploration stage | (24,444,500) |  | (17,980,822)
|Total stockholders' equity                       | 13,373,371   |  | 8,716,344   
|                                                 | 18,823,177   |  | 9,553,194   

See accompanying notes

2

---



Gryphon Gold Corporation(an exploration stage company)

CONSOLIDATED STATEMENT OF OPERATIONS(Stated in US dollars)
(Unaudited)

|                                                                           |                    |              |                   |                |              | Period from   
|-------------------------------------------------------------------------- | ------------------ | ------------ | ----------------- | -------------- | ------------ | --------------
|                                                                           |                    |              |                   |                |              | April 24, 2003
|                                                                           | Three Months Ended |              | Nine Months Ended | (inception) to
|                                                                           | December 31,       | December 31, |                   | December 31,   | December 31, | December 31,  
|                                                                           | 2007               | 2006         |                   | 2007           | 2006         | 2007          
|                                                                           | $                  | $            |                   | $              | $            | $             
|                                                                           |                    |              |                   |                |              |               
|Exploration [note 6]                                                       | 661,007            | 1,328,514    |                   | 3,414,405      | 3,649,732    | 13,342,512    
|Management salaries and consulting fees                                    | 529,729            | 855,562      |                   | 1,663,160      | 1,746,164    | 6,906,312     
|General and administrative                                                 | 254,831            | 240,219      |                   | 812,436        | 721,437      | 2,386,964     
|Legal and audit                                                            | 111,020            | 106,258      |                   | 308,877        | 271,017      | 1,269,364     
|Travel and accommodation                                                   | 68,704             | 96,678       |                   | 172,408        | 282,117      | 861,978       
|Depreciation                                                               | 18,746             | 14,625       |                   | 48,983         | 40,107       | 134,413       
|Loss on disposal of equipment                                              | -                  | 19,135       |                   | 6,552          | 19,135       | 26,274        
|Foreign exchange (gain) loss                                               | 3,034              | 25,776       |                   | 18,336         | 4,801        | 523           
|Interest income                                                            | (40,782)           | (66,303)     |                   | (170,332)      | (242,832)    | (672,693)     
|Interest expense                                                           | 130,300            | -            |                   | 188,853        | -            | 188,853       
|Net loss for the period                                                    | (1,736,589)        | (2,620,464)  |                   | (6,463,678)    | (6,491,678)  | (24,444,500)  
|                                                                           |                    |              |                   |                |              |               
|Basic and diluted loss per share                                           | $(0.03)            | $(0.06)      |                   | $(0.13)        | $(0.16)      |               
|                                                                           |                    |              |                   |                |              |               
|Basic and diluted weighted average number of common shares
    outstanding | 58,954,952         | 41,703,926   |                   | 49,764,662     | 40,518,405   |               

See accompanying notes

3

---



Gryphon Gold Corporation(an exploration stage company)

CONSOLIDATED STATEMENT OF 
STOCKHOLDERS EQUITY(Stated in US dollars)
(Unaudited)

|                                                                               |              |         |             | Deficit      |            
|------------------------------------------------------------------------------ | ------------ | ------- | ----------- | ------------ | -----------
|                                                                               |              |         |             | accumulated  |            
|                                                                               |              |         | Additional  | during the   |            
|                                                                               | Common Stock | paid-in | exploration |             
|                                                                               | Shares       | Amount  | capital     | stage        | Total      
|                                                                               | #            | $       | $           | $            | $          
|Balance, inception April 24 , 2003                                             |              |         |             |              |            
|Shares issued                                                                  |              |         |             |              |            
|For private placements                                                         | 33,197,370   | 33,197  | 16,765,307  | --           | 16,798,504 
|Share issue costs                                                              | --           | --      | (645,048)   | --           | (645,048)  
|Initial Public Offering (IPO)                                                  | 6,900,000    | 6,900   | 5,029,597   | --           | 5,036,497  
|Share issue costs (IPO)                                                        | --           | --      | (2,241,940) | --           | (2,241,940)
|Compensation component of shares issued                                        | --           | --      | 226,000     | --           | 226,000    
|Fair value of agent's warrants issued [note 7[b]]                              | --           | --      | 156,740     | --           | 156,740    
|Fair value of underwriters compensation warrant on IPO
    [note 7[b]]         | --           | --      | 135,100     | --           | 135,100    
|Exercise of warrants                                                           | 197,500      | 198     | 194,085     | --           | 194,283    
|Fair value of options granted to                                               |              |         |             |              |            
|consultant [note 7[c]]                                                         | --           | --      | 49,558      | --           | 49,558     
|Net loss for the year                                                          | --           | --      | --          | (9,243,681)  | (9,243,681)
|Balance, March 31, 2006                                                        | 40,294,870   | 40,295  | 19,669,399  | (9,243,681)  | 10,466,013 
|Shares issued                                                                  |              |         |             |              |            
|For private placements                                                         | 5,129,000    | 5,129   | 3,966,518   | --           | 3,971,647  
|Share issue costs                                                              | --           | --      | (95,505)    | --           | (95,505)   
|Fair value of agent's warrants issued                                          |              |         |             |              |            
|on private placements [note 7[b]]                                              | --           | --      | 11,397      | --           | 11,397     
|Fair value of options granted [note 7[c]]                                      | --           | --      | 1,314,961   | --           | 1,314,961  
|Fair value of vested stock grants [note 7[d]]                                  | 108,000      | 108     | 151,138     | --           | 151,246    
|Exercise of warrants                                                           | 1658,275     | 1,658   | 1,548,894   | --           | 1,550,552  
|Exercise of options                                                            | 107,500      | 108     | 83,066      | --           | 83,174     
|Net loss for the year                                                          | --           | --      | --          | (8,737,141)  | (8,737,141)
|Balance, March 31, 2007                                                        | 47,297,645   | 47,298  | 26,649,868  | (17,980,822) | 8,716,344  
|Shares issued                                                                  |              |         |             |              |            
|For private placements                                                         | 9,486,500    | 9,487   | 7,346,341   | --           | 7,355,918  
|For Mineral Properties                                                         | 4,500,000    | 4,500   | 3,444,918   | --           | 3,449,418  
|Share issue costs                                                              | --           | --      | (507,537)   | --           | (507,537)  
|Fair value of agents warrants issued on 
    private placements[note 7[a][b]] | --           | --      | 54,490      | --           | 54,490     
|Fair value of options granted [note 7[c]]                                      | --           | --      | 361,731     | --           | 361,732    
|Fair value of vested stock grants [note 7[d]]                                  | 267,500      | 267     | 321,918     | --           | 322,184    
|Exercise of warrants                                                           | 130,000      | 130     | 84,370      | --           | 84,500     
|Net loss for the period                                                        | --           | --      | --          | (6,463,678)  | (6,463,678)
|Balance, December 31, 2007                                                     | 61,681,645   | 61,682  | 37,756,189  | (24,444,500) | 13,373,371 

See accompanying notes

4

---



Gryphon Gold Corporation(an exploration stage company)

CONSOLIDATED STATEMENT OF CASH FLOWS(Stated in US dollars)
(Unaudited)

|                                                                       |                    |              |                   |                |              | Period from   
|---------------------------------------------------------------------- | ------------------ | ------------ | ----------------- | -------------- | ------------ | --------------
|                                                                       |                    |              |                   |                |              | April 24, 2003
|                                                                       | Three Months Ended |              | Nine Months Ended | (inception) to
|                                                                       | December 31,       | December 31, |                   | December 31,   | December 31, | December 31,  
|                                                                       | 2007               | 2006         |                   | 2007           | 2006         | 2007          
|                                                                       | $                  | $            |                   | $              | $            | $             
|OPERATING ACTIVITIES                                                   |                    |              |                   |                |              |               
|Net Loss for the period                                                | (1,736,589)        | (2,620,464)  |                   | (6,463,678)    | (6,491,678)  | (24,444,500)  
|Items not involving cash:                                              |                    |              |                   |                |              |               
|Depreciation                                                           | 18,745             | 14,625       |                   | 48,982         | 40,107       | 134,412       
|Loss on disposal of equipment                                          | --                 | 19,135       |                   | 6,552          | 19,135       | 26,274        
|Fair value of options, warrants                                        |                    |              |                   |                |              |               
|and other non-cash compensation                                        | 199,422            | 529,683      |                   | 683,916        | 779,747      | 2,504,056     
|Non-cash interest expense                                              | 65,930             | --           |                   | 94,297         | --           | 94,297        
|Changes in non-cash working                                            |                    |              |                   |                |              |               
|capital items:                                                         |                    |              |                   |                |              |               
|Accounts receivable                                                    | (27,859)           | 5,325        |                   | (19,932)       | 26,674       | (85,415)      
|Accounts payable and accrued                                           |                    |              |                   |                |              |               
|Liabilities                                                            | (173,198)          | 101,677      |                   | 264,049        | (506,431)    | 1,050,614     
|Prepaid expenses                                                       | (82,496)           | (54,536)     |                   | (28,487)       | (13,883)     | (157,553)     
|Cash used in operating activities                                      | (1,736,045)        | (2,004,555)  |                   | (5,414,301)    | (6,146,329)  | (20,877,815)  
|INVESTING ACTIVITIES                                                   |                    |              |                   |                |              |               
|Reclamation deposit                                                    | (6,177)            | --           |                   | (60,877)       | (52,100)     | (195,636)     
|Purchase of equipment                                                  | (17,154)           | (17,802)     |                   | (57,374)       | (35,173)     | (251,642)     
|Nevada Eagle acquisition and
    related non-compete agreement[note 3] | --                 | --           |                   | (3,068,340)    | --           | (3,068,340)   
|Mineral property expenditures[note
    5]                              | (5,409)            | --           |                   | (9,119)        | (22,164)     | (1,929,490)   
|Mineral property lease payments received                               | 24,135             | --           |                   | 29,134         | --           | 29,135        
|Proceeds from sale of equipment                                        | --                 | --           |                   | 2,314          | --           | 6,264         
|Cash used by investing activities                                      | (4,605)            | (17,802)     |                   | (3,164,262)    | (109,437)    | (5,409,709)   
|FINANCING ACTIVITIES                                                   |                    |              |                   |                |              |               
|Capital lease principal payments                                       | (6,079)            | (5,437)      |                   | (17,749)       | (12,318)     | (35,660)      
|Cash received for shares                                               | 3,621,211          | 662,053      |                   | 7,494,908      | 1,755,514    | 34,662,045    
|Share issue costs                                                      | (261,123)          | --           |                   | (507,537)      | (3,533)      | (3,186,773)   
|Subscription receivables collected                                     | --                 | --           |                   | --             | --           | 389,125       
|Cash provided by financing activities                                  | 3,354,009          | 656,616      |                   | 6,969,622      | 1,739,663    | 31,828,737    
|                                                                       |                    |              |                   |                |              |               
|Increase (decrease) in cash                                            |                    |              |                   |                |              |               
|during the period                                                      | 1,613,359          | (1,365,741)  |                   | (1,608,941)    | (4,516,103)  | 5,541,213     
|Cash, beginning of period                                              | 3,927,854          | 6,240,563    |                   | 7,150,154      | 9,390,925    | --            
|Cash, end of period                                                    | 5,541,213          | 4,874,822    |                   | 5,541,213      | 4,874,822    | 5,541,213     

See accompanying notes

5

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1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

Gryphon Gold Corporation was incorporated in the State of Nevada in 2003 and
wholly owns its subsidiaries, Borealis Mining Company, Gryphon Nevada Eagle
Holding Company and Nevada Eagle Resources LLC (collectively, the Company).
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. 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, 2007
(the "Annual Financial Statements''), expect for the new revenue recognition and
intangible asset policies described below related to the Nevada Eagle
acquisition (see note 3). 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.

In June 2006, the FASB issued FASB interpretation No. 48  Accounting for
Uncertainty in Income Taxes (FIN 48).  FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
in accordance with FASB Statement No. 109, Accounting for Income Taxes.  FIN 48
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return.  This Interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition.  This interpretation is effective for fiscal
years beginning after December 15, 2006.  Effective April 1, 2007, the Company
adopted FIN 48, which did not have a material impact on the Companys interim
unaudited consolidated financial statements.

Revenue recognition

Mineral lease rentals or option payments are treated as reductions of the cost
of the property as the payor is accumulating an interest in the mineral
property; payments in excess of capitalized costs are recognized in income.
 Some agreements provide for payments in the form of stock and other equity
instruments as well as cash payments.  Stock and other equity instruments are
recognized based on their fair market value at the time of receipt.
 Fluctuations incurred during the holding period are accounted for as gains or
losses from held for trading securities.   The leases provide for the receipt of
royalty payments upon production of the property.  Royalty payments will be
recognized in the period in which production occurs.  There are no properties in
the production stage at this time.

Intangible Assets

Identifiable intangible assets include a non-competition agreement.  The initial
measurement of the non-competition agreements is based on the fair value of the
consideration paid.  The agreement is being amortized on a straight-line basis,
over managements estimated useful like of five years.

6

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3. ACQUISTION OF NEVADA EAGLE RESOUCES LLC

On August 21, 2007 Gryphon Gold Corporation closed the acquisition of Nevada
Eagle Resources LLC, a privately held Nevada limited liability company (Nevada
Eagle), pursuant to a membership interest purchase agreement (the Purchase
Agreement), dated July 4, 2007, by and between the Company, Gerald W. Baughman
and Fabiola Baughman, as sellers (Sellers), and Nevada Eagle. Under the
Purchase Agreement, the company acquired all of the outstanding limited
liability company interests of Nevada Eagle from the Sellers (the Acquisition)
for the following consideration, paid on August 21, 2007 (the Closing Date):

| | (a) | $2,500,000 in cash;
| | --- | -------------------
| |     |                    

| | (b) | 4,500,000 shares of common stock of the Company (the Common Shares) valued
    at $3,449,418; and
| | --- | ---------------------------------------------------------------------------------------------------
| |     |                                                                                                    

| | (c) | a 5% convertible note in the principal amount of $5,000,000 (the
    Convertible Note) with an issue date of August 21, 2007 and a fair value
    of $3,390,640.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Convertible Note, due March 30, 2010, bears interest at an annual rate of 5%
and is convertible at the option of the holder into common shares of the
Registrant at an initial conversion price of $1.00 per share during first the
twelve-month period following the Closing Date, $1.25 per share during the
second twelve-month period following the Closing Date, $1.50 per share
thereafter, and $1.75 per share if converted on March 30, 2010. The interest
payments are due  beginning on January 1, 2008, and payable thereafter on each
January 1, and June 1.

In addition to the purchase consideration, the Sellers were entitled to all
revenues of Nevada Eagle (payable in cash, stock, or other consideration)
calculated to be received and received on the Assets and Properties from January
1, 2007 through midnight on December 31, 2007; however, pursuant to a letter
agreement between the Company and the Sellers, dated August 21, 2007, the
Sellers revenue right did not include revenues generated or arising from any
new agreements entered into by the Company regarding the acquired properties (as
described below) executed after August 21, 2007.

Gryphon granted the Sellers registration rights under which Gryphon agreed to
file, within the later of (i) 90 days of the Closing Date or (ii) any date in
which Gryphon is required to file a registration statement for a third-party in
connection with a financing or acquisition, but no later than 120 days of the
Closing Date, a resale registration statement under the Securities Act of 1933,
as amended (Securities Act), to register the Common Shares issuable at Closing
and the common shares of the Company issuable upon exercise of the Convertible
Note.

Upon completion of the Acquisition, Nevada Eagle became a wholly-owned
subsidiary of Gryphon Nevada Eagle Holding Company, a Nevada corporation, which
is a wholly-owned subsidiary of the Company. Nevada Eagle has interests in 54
prospective gold properties covering over 70 square miles of gold trends in
Nevada. Twenty-four of these properties are in the Walker Lane belt and add to
Gryphons inventory of volcanogenic hosted gold resources. Seven of the
properties are in the Cortez Trend, seven in the Austin-Lovelock Trend, two in
the Carlin Trend and the balance are unique situations throughout Nevada with a
few in contiguous states. These properties offer Gryphon both production
opportunities or royalty income upon production. Twenty-six of the properties
are farmed-out through lease and option agreements that generate a positive
cash flow net of carryings costs. The remaining wholly-owned properties are
retained for Gryphon Golds own exploration effort or additional future farm
outs.

Under the terms of the Purchase Agreement, the closing of the Acquisition was
subject to several closing conditions, including execution of several ancillary
agreements as follows:

| | (a) | A Lock-up Agreement, dated August 21, 2007, under which the Sellers agree
    that for a period of three months following the Closing Date not to sell
    Common Shares issued or issuable under the Purchase Agreement and
    Convertible Note and, thereafter, to limit the sale of such Common Shares to
    20% of the aggregate Common Shares issued under the Purchase Agreement and
    Convertible Note each quarter (with unsold Common Shares aggregating each
    quarter thereafter);
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| | (b) | An Employment Agreement between the Registrant and Mr. Baughman for a term
    of one year, renewable by the parties, to serve as Gryphons Vice President
    of Corporate Development; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---



| | (c) | A Non-Competition Agreement under which the Sellers have agreed not to
    compete with the Company for the latter of (i) twelve (12) months following
    the Closing Date (the Restricted Period), or (ii) twelve (12) months
    following the termination of the Companys employment of Gerald Baughman. 
    The scope of the non-competition obligation relates to the business of
    acquiring and/or holding base metal and precious metal mineral assets
    located in the state of Nevada within the Area of Interest and to properties
    that have been examined by the Company or Mr. Baughman during the course of
    his employment by the Company, in any manner or capacity.  Area of
    Interest is defined as any property owned by the Company, Nevada Eagle, or
    any affiliate of the Company or Nevada Eagle on the latter of (i) Closing
    Date or (ii) the termination date of Gerald Baughmans employment by the
    Company, if any, together with any adjacent areas within one kilometre of
    the exterior boundary of such properties.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Considerationpaid for acquisition of Nevada Eagle

|                             |  | Cash at closing            | $2,500,000  | 
|---------------------------- |  | -------------------------- | ----------- | 
|                             |  | Cash due diligence costs   |             | 
|                             |  | and other expenses         | 568,340     | 
|                             |  |                            | 3,068,340   | 
|                             |  |                            |             | 
|                             |  | Common shares              | 3,449,418   | 
|                             |  | Convertible note and value |             | 
|                             |  | of conversion feature      | 4,272,359   | 
|                             |  |                            | $10,790,117 | 
|                             |  |                           
|Allocation of Purchase Price |  |                           
|                             |  | Mineral properties         | 10,719,209  | 
|                             |  | Non-competition agreement  | 70,908      | 
|                             |  |                            | $10,790,117 | 

4. EQUIPMENT

|                               |         |                   |               
|------------------------------ | ------- | ----------------- | --------------
|                               |         | December 31, 2007 |               
|                               |         | Accumulated       |               
|                               | Cost    | Depreciation      | Net Book Value
|                               | $       | $                 | $             
|                               |         |                   |               
|Office and lab equipment       | 197,986 | 71,002            | 126,984       
|Trucks under
    capital lease | 71,319  | 40,261            | 31,058        
|Total                          | 269,305 | 111,263           | 158,042       
|                               |         |                   |               
|                               |         | March 31, 2007    |               
|                               |         | Accumulated       |               
|                               | Cost    | Depreciation      | Net Book Value
|                               | $       | $                 | $             
|                               |         |                   |               
|Office and lab equipment       | 151,857 | 46,601            | 105,256       
|Trucks under
    capital lease | 71,319  | 23,213            | 48,106        
|Total                          | 223,176 | 69,814            | 153,362       

5. MINERAL PROPERTIES

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. 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.  The
Company paid the full outstanding consideration of $1,000,000, in four quarterly
payments of $250,000 during the year ended March 31, 2006.

Effective August 21, 2007, the Company purchased all the rights and interests of
Nevada Eagle, as described in footnote 3.  $10,719,209 of the purchase price was
allocated to the value of the exploration properties acquired.

8

---



|                                           | Total     
|------------------------------------------ | ----------
|                                           | $         
|                                           |           
|Mineral property costs,
    March 31, 2005 | 1,775,326 
|Expenditures
    during the year           | 122,881   
|Mineral property costs, March 31, 2006     | 1,898,207 
|Expenditures
    during the year           | 22,164    
|Mineral property costs, March 31, 2007     | 1,920,371 
|Nevada Eagle acquisition[note
    3]       | 10,719,209
|Lease payments received                    | (29,134)  
|Expenditures
    during the period         | 9,119     
|Mineral property costs, December 31, 2007  | 12,619,565

6. EXPLORATION

|                                |                    |                   |                |              | Period from   
|------------------------------- | ------------------ | ----------------- | -------------- | ------------ | --------------
|                                |                    |                   |                |              | April 24, 2003
|                                | Three months ended | Nine months ended | (inception) to
|                                | December 30,       | December 31,      | December 30,   | December 31, | December 31,  
|                                | 2007               | 2006              | 2007           | 2006         | 2007          
|                                | $                  | $                 | $              | $            | $             
|                                |                    |                   |                |              |               
|Borealis property               |                    |                   |                |              |               
|Exploration :                   |                    |                   |                |              |               
|Property maintenance            | 194,654            | 96,035            | 546,233        | 527,395      | 2,515,204     
|Project management              | 69,899             | 215,037           | 189,772        | 490,281      | 1,333,973     
|Drilling                        | 262,095            | 764,180           | 1,990,632      | 1,872,538    | 6,584,570     
|Engineering                     | 15,353             | 123,777           | 20,353         | 275,646      | 763,693       
|Geological                      | 106,752            | 109,950           | 609,393        | 445,978      | 1,833,332     
|Metallurgy                      | 9,556              | 19,535            | 35,324         | 37,894       | 289,042       
|Subtotal
    Borealis property  | 658,309            | 1,328,514         | 3,391,707      | 3,649,732    | 13,319,814    
|Other Exploration & Development | 2,698              | -                 | 22,698         | -            | 22,698        
|Total exploration               | 661,007            | 1,328,514         | 3,414,405      | 3,649,732    | 13,342,512    

7. CAPITAL STOCK

[a]

Authorized capital stock consists of 150,000,000 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.

During the quarter ended December 31, 2007, 30,000 (192,500 for the nine months
ended December 31, 2007) common shares were issued to employees and directors of
the Company upon vesting of outstanding Restricted Stock Units.

On December 31, 2007, the Company issued an additional 22,500 (75,000 for the
nine months ended December 31, 2007) common shares to a consultant acting as
financial advisor to the Company in certain transactions.  The issuance is based
on the consulting agreement, which requires 7,500 common shares to be issuable
monthly for the term (March 15, 2007  March 14, 2008) of the consulting
agreement.  The Company charged to expense $16,342 in the quarter attributable
($68,990 for the nine months ended December 31, 2007) to the fair value of the
common shares.

On December 14, 2007, the Company completed the final tranche of a private
placement totalling 4,486,500 units at Cdn$0.80 for gross proceeds of
C$3,589,200.   Each unit consisted of one common share and one series I warrant.
 Each series I warrant entitles the holder to purchase a common share at a price
of Cdn$1.00 per share during the first 12 months after closing and Cdn$1.25 per
share during the second 12 months after closing and until expiry.  Cash
compensation of C$71,624 and 89,530 compensation warrants (series J) were issued
to agents and are exercisable at a price of Cdn$0.80 per share and expire 9
months after closing.  The Company has a right to force warrant holders to
exercise warrants, if the common share price of the Company remains equal to or
greater than, Cdn$1.85 per common share, for a period of twenty consecutive
days.

On August 21, 2007, the Company issued 4,500,000 common shares as partial
consideration for the acquisition of Nevada Eagle (see note 3, Acquisition of
Nevada Eagle Resources LLC).

9

---



7. CAPITAL STOCK (contd)

On August 3, 2007, the Company completed a private placement of 5,000,000 units
at Cdn$0.80 for gross proceeds of C$4,000,000.  Each unit consisted of one
common share and one series G warrant.  Each series G warrant entitles the
holder to purchase a common share at a price of Cdn$1.00 per share during the
first 12 months after closing and Cdn$1.25 per share during the second 12 months
after closing and until expiry.  Cash compensation of C$152,040 and 265,050
compensation warrants (series H) were issued to agents and are exercisable at a
price of Cdn$0.83 per share and expire 9 months after closing. The Company has a
right to force warrant holders to exercise warrants, if the common share price
of the Company remains equal to or greater than, Cdn$1.85 per common share, for
a period of twenty consecutive days.

As at February 14, 2008, the Company has 61,712,895 common shares issued and
outstanding, which includes common shares, issued to consultants (see note 13,
Subsequent Events).

[b]

Warrants:

The following table contains information with respect to all warrants:

|                                                     | Number of Warrants | Fair Value of Warrants
|---------------------------------------------------- | ------------------ | ----------------------
|                                                     | #                  | $                     
|Warrants outstanding, March 31, 2004                 |                   |                      
|Issued for:                                          |                    |                       
|Private placements                                   | 3,407,981          |                      
|Agents compensation                                 | 141,008            | 45,100                
|Exercised                                            |                   |                      
|Warrants outstanding, March 31, 2005                 | 3,548,989          | 45,100                
|Issued for:                                          |                    |                       
|Private placements                                   | 3,015,204          |                      
|Agents compensation on private placement            | 130,000            | 35,100                
|Initial Public Offering (IPO)  Series A             | 6,900,000          |                      
|Underwriters compensation on IPO                    | 690,000            | 135,100               
|Private placements  Series B                        | 2,737,500          |                      
|Agents compensation on private placement  Series C | 280,500            | 76,540                
|Exercised                                            | (197,500)          |                      
|Warrants outstanding, March 31, 2006                 | 17,104,693         | 291,840               
|Issued for:                                          |                    |                       
|Private placements  Series D                        | 64,500             |                      
|Private placements  Series E                        | 5,000,000          |                      
|Agents compensation on private placement  Series F | 85,050             | 11,397                
|Exercised                                            | (1,658,275)        |                      
|Expired                                              | (15,175,410)       |                      
|Warrants outstanding, March 31, 2007                 | 5,420,558          | 303,237               
|Issued for:                                          |                    |                       
|Private placements  Series G                        | 5,000,000          |                      
|Private placements  Series I                        | 4,486,500          |                      
|Agents compensation on private placement  Series H | 265,050            | 44,040                
|Agents compensation on private placement  Series J | 89,530             | 10,450                
|Exercised                                            | (130,000)          |                      
|Expired                                              | (64,500)           |                      
|Warrants outstanding, December 31, 2007              | 15,067,138         | 357,727               

10

---



7. CAPITAL STOCK (contd)

The following table summarizes information about warrants outstanding and
exercisable as at December 31, 2007:

Warrants Outstanding and Exercisable

|           |                        |                |                      
|---------- | ---------------------- | -------------- | ---------------------
|           | Average Remaining Life |                |                      
|Warrants   | Years                  | Exercise Price | Expiry date          
|#          | #                      |                |                      
|141,008    | 0.1                    | $0.65          | January 28, 2008     
|85,050     | 0.1                    | Cdn$0.90       | February 9, 2008     
|5,000,000  | 1.1                    | Cdn$1.10*      | February 9,
    2009 
|5,000,000  | 1.6                    | Cdn$0.80**     | August 3, 2009       
|265,050    | 0.3                    | Cdn$0.83       | May 3, 2008          
|3,254,000  | 1.9                    | Cdn$1.00***    | November 22, 2009    
|1,050,000  | 1.9                    | Cdn$1.00***    | November 27,
    2009
|182,500    | 1.9                    | Cdn$1.00***    | December 14, 2009    
|17,780     | 0.6                    | Cdn$0.80       | August 22,
    2008  
|71,750     | 0.6                    | Cdn$0.80       | August 27, 2008      
|15,067,138 | 1.0                    | $0.90****      |                      

*The warrants are exercisable through February 8,
2008 at Cdn$1.10 and exercisable at Cdn$1.35 per unit thereafter until expiry

**The
warrants are exercisable through August 3, 2008 at Cdn$0.80 and exercisable at
Cdn$1.10 per unit thereafter until expiry

***The
warrants are exercisable through November 21, 26 and December 13, 2008 at
Cdn$1.00 and exercisable at Cdn$1.25per unit thereafter until expiry

****Based on the December 31, 2007 exchange rate of
Cdn$1 equals US$1.0088.

The fair value of agents and underwriters warrants issued during 2007 and 2006
has been estimated using the Black-Scholes Option Pricing Model based on the
following assumptions: a risk-free interest rate of 3.38% to 5.21% as of the
date of transaction; expected life of 1 to 3 years depending on their terms; an
expected volatility of 51% to 70% (based on the average volatility of companies
in the industry at date of issuance for period equivalent to the expected life);
and no expectation for the payment of dividends.

[c]

Stock options:

On October 11, 2007, an investor relations firm was awarded 47,000 stock
options.  The options have vested 100% in this quarter and are exercisable for 5
years at a price of Cdn$0.88 per share.

On September 6, 2007, a director was awarded 100,000 stock options.  The options
vest over one year and are exercisable for 5 years at a price of Cdn$0.77 per
share.

On September 13, 2007, an employee was granted 20,000 stock options that vest
over 2.5 years and are exercisable for 5 years at a price of Cdn$0.81 per share.

On September 21, 2007, four employees were granted 835,000 stock options that
vest over two years and are exercisable for 5 years at a price of Cdn$0.90 per
share.

On July 27, 2007, a consultant was awarded 75,000 stock options that vest over 2
years and are exercisable for 5 years at a price of Cdn$0.91  per share.

On May 11, 2007, two employees were granted a total of 60,000 stock options.
 The options vest over the next 18 months and are exercisable for 5 years at a
price of Cdn$0.95 per share. 40,000 of these options have been subsequently
forfeited.

The Company recognizes stock-based compensation expense over the requisite
service period of the individual grants, which generally equals the vesting
period.  SFAS 123(R) requires forfeitures to be estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ
from those estimates.  The Companys total employees are relatively few in
number and turnover is considered remote, therefore the Company currently
estimates forfeitures to be 5.5%.  Estimate of forfeitures is reviewed on a
quarterly basis.  Stock-based compensation is expensed on a straight-line basis
over the requisite service period.

11

---



7. CAPITAL STOCK (contd)

The Company recorded total stock-based compensation expense related to stock
    options and restricted stock units as follows:

|                       | Three        | Three        | Nine         | Nine        
|---------------------- | ------------ | ------------ | ------------ | ------------
|                       | months ended | months ended | months ended | months ended
|                       | December 31, | December 31, | December 31, | December 30,
|                       | 2007         | 2006         | 2007         | 2006        
|                       | $            | $            | $            | $           
|Management salaries,   |              |              |              |             
|exploration expense, & |              |              |              |             
|consulting fees        | 199,422      | 529,683      | 683,916      | 779,747     

Stock option activity

The following table summarizes the Companys stock option activity for the nine
months ended December 31, 2007:

| |                                      |  |  | Number of 
    Stock 
    Options | Weighted 
    Average exercise 
    price*
| | ------------------------------------ |  |  | --------------------------------- | ------------------------------------------
| | Outstanding, beginning of year       |  |  | 5,282,500                         | $1.02                                     
| | Granted                              |  |  | 1,137,000                         | $0.90                                     
| | Exercised                            |  |  |                                  |                                          
| | Forfeited                            |  |  | (630,000)                         | $1.00                                     
| | Total outstanding at period end      |  |  | 5,789,500                         | $1.00                                     
| | Vested and exercisable at period end |  |  | 4,417,000                         | $1.03                                     

* Based on the December 31, 2007 exchange rate of Cdn$1 equals US$1.0088

The following table summarizes information about stock options outstanding as at
December 31, 2007:

| |               |                   |               | Average        |               
| | ------------- | ----------------- | ------------- | -------------- | --------------
| | Stock Options | Average Remaining | Stock Options | Remaining Life | Exercise price
| | Outstanding   | Life              | Exercisable   | of Exercisable |               
| |               | (Years)           |               | (Years)        |               
| | 1,912,500     | 2.3               | 1,912,500     | 2.3            | $0.75         
| | 115,000       | 2.9               | 115,000       | 2.9            | Cdn$0.85      
| | 90,000        | 3.0               | 72,000        | 3.0            | Cdn$1.15      
| | 50,000        | 3.0               | 50,000        | 3.0            | Cdn$1.25      
| | 190,000       | 3.3               | 158,000       | 3.3            | Cdn$1.37      
| | 1,490,000     | 4.3               | 1,490,000     | 4.3            | Cdn$1.37      
| | 30,000        | 3.4               | 30,000        | 3.4            | Cdn$1.60      
| | 80,000        | 3.6               | 80,000        | 3.6            | Cdn$1.29      
| | 50,000        | 3.8               | 50,000        | 3.8            | Cdn$1.34      
| | 240,000       | 4.0               | 145,000       | 4.0            | Cdn$0.81      
| | 20,000        | 4.0               | 20,000        | 4.0            | Cdn$0.88      
| | 425,000       | 4.2               | 212,500       | 4.2            | Cdn$0.80      
| | 20,000        | 4.3               | 10,000        | 4.3            | Cdn$0.95      
| | 75,000        | 4.6               | 25,000        | 4.6            | Cdn$0.91      
| | 100,000       | 4.6               |              | 4.6            | Cdn$0.77      
| | 20,000        | 4.6               |              | 4.6            | Cdn$0.81      
| | 835,000       | 4.7               |              | 4.7            | Cdn$0.90      
| | 47,000        | 4.8               | 47,000        | 4.8            | Cdn$0.88      
| | 5,789,500     |                   | 4,417,000     |                | $1.05*        

*Based on the December 31, 2007 exchange rate of Cdn$1 equals
US$1.0088

12

---



7. CAPITAL STOCK (contd)

Valuation assumptions

Compensation expense recorded in the financial statements has been estimated
using the Black-Scholes option pricing model. The assumptions used in the
pricing model include:

| |                         | 2008          | 2007         
| | ----------------------- | ------------- | -------------
| |                         |               |              
| | Dividend yield          | 0%            | 0%           
| | Expected volatility     | 49% - 55%     | 55% - 59%    
| | Risk free interest rate | 4.09% - 4.63% | 4.54% - 5.21%
| | Expected lives          | 3 years       | 3 years      

The risk-free interest rate is determined based on the rate at the time of grant
for US government zero-coupon bonds for a 3 year term, which is a term equal to
the estimated life of the option.  Dividend yield is based on the stock options
exercise price and expected annual dividend rate at the time of grant.
 Volatility is derived by measuring the average share price fluctuation of three
publicly listed companies that operate in the same industry.  The period of
historical volatility is the same period as the expected life of the option
being 3 years.

The Black-Scholes option-pricing model used by the Company to calculate option
values was developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Companys stock option awards.  Options pricing models require the
input of
highly subjective assumptions, including future stock price volatility and
expected time until exercise, which greatly affect the calculated values.
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.

[d]

Restricted stock units:

On May 11, 2007, the Board of Directors approved the grant of 10,000 restricted
stock units (RSU) to an employee of the Company which were subsequently
forfeited on July 31, 2007.

On September 5, 2007 the Company entered into a Transition Agreement with an
employee and director (see note 10(c)). Among other things, the agreement
provided a grant of 112,500 RSUs that vest over two years; 18,750 RSUs that
were to vest in January 2008 were forfeited; a grant of 50,000 RSUs was
forfeited and replaced with a new RSU agreement that provides 2,778 units for
each full month of service (subject to a maximum of 50,000 RSUs) completed as a
member of the Board of Directors beginning January 1, 2007 and vest upon
resignation from the Board of Directors.

On November 30, 2007 a consulting Director retired from the company, therefore,
forfeiting 50,000 RSUs.

The following table summarizes information about restricted stock units
outstanding as at December 31, 2007:

| |                                  | RSUs Granted | RSUs
     Vested | Weighted Average Fair 
    Value at Grant Date
| | -------------------------------- | ------------- | ----------------- | ----------------------------------------------
| | Outstanding at April 1, 2006     |              |                  |                                              
| | Issued April 18, 2006            | 8,000         | 8,000             | Cdn$1.63                                      
| | Issued December 12, 2006         | 15,000        | 15,000            | Cdn$0.84                                      
| | Issued January 10, 2007          | 508,750       | 277,500           | Cdn$0.82                                      
| | Issued September 6, 2007         | 112,500       |                  | Cdn$0.77                                      
| | Issued September 6, 2007         | 50,000        |                  | Cdn$0.77                                      
| | Outstanding at December 31, 2007 | 694,250       | 300,500           | $0.83*                                        

*Based on the December 31, 2007 exchange rate of Cdn$1 equals US$1.0088

13

---



8. 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:

During the nine months ended December 31, 2007, the Company paid consulting fees
to a non-independent director in the amount of $32,425 [December 31, 2006 -
$127,303] for services rendered on the exploration of the Borealis property.

9. OTHER ASSETS

|                            | December 31, | March 31,
|--------------------------- | ------------ | ---------
|                            | 2007         | 2007     
|                            | $            | $        
|Reclamation bond & deposits | 195,636      | 134,759  
|Non-compete agreement       | 70,908       |         
|Accumulated Amortization    | (5,155)      |         
|                            | 261,389      | 134,759  

During the nine months ended December 31, 2007, the Company increased the amount
of their performance bond from $113,759 to $168,459 by purchasing a further
performance bond totaling $54,700 from an insurance company.  The total bond
purchase is in support of the potential future obligations the Company may incur
under a Plan of Operation for exploration within the brown-field area of the
Borealis property filed with the U.S. Forest Service.  The Company also holds a
deposit with the Bureau of Land Management (BLM) for $27,177 (March 31, 2007 -
$21,000), which supports its potential future obligations for reclamation during
the Companys exploration activities within the BLM area. The company increased
the amount of this bond by $6,177 in December 2007. At December 31, 2007, the
Company has recorded an estimated reclamation liability of $5,600 (June 30, 2006
 $7,000) representing future obligations related to its drilling activities
completed to December 31, 2007.

As part of the acquisition of Nevada Eagle (footnote 3), the primary interest
holder entered into a non-compete agreement.  The non-compete agreement is being
amortized over 5 years.

10. COMMITMENTS & CONTINGENCIES

[a]

A portion of the Borealis Property is subject to a mining lease. The Company is
required to make monthly lease payments of $9,485, 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 related 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]

The Company rents office space in Vancouver, BC for a 3 year term. The following
are rental lease commitments in relation to the office lease:

| |      | $     
| | ---- | ------
| | 2008 | 10,565
| | 2009 | 17,609

[c]

In September 2007, the Company entered into a Transition Agreement with an
individual under which, the individual will cease to be an employee and will
continue as a director of the Company.  The agreement requires the Company to
pay $12,500 per month, for 18 months beginning October 2007, and the individual
was granted 112,500 Restricted Stock Units the will vest at 37,500 each on April
1, 2009, July 1, 2009 and October 1, 2009.  The agreement provides for certain
incidental expenses for 18 months beginning October 2007.  The Company recorded
a charge to expense of $322,464 during the quarter ended September 30, 2007 to
accrue the cost of the agreement.

[d]

Nevada Eagle holds approximately 23 exploration properties that are not
leased out.  Annual claim fees to hold these properties are approximately
$34,000.

14

---



11. CAPITAL LEASE

The Company leases two trucks that are both accounted for as capital leases,
with the present value of the required lease payments recorded as a liability
and an asset at inception and thereafter lease payments reduce the liability and
result in interest expense and the asset is depreciated.  The actual combined
lease payments are $2,371 per month with a residual payment of $12,000 due
December 2007 (will be paid in January 2008) and $13,854 due May 2008.

The present value of required payments during each fiscal year:

| |      | $     
| | ---- | ------
| | 2008 | 10,565
| | 2009 | 17,609

12. CONVERTIBLE PROMISSORY NOTE

|Convertible promissory note, with a face value of $5,000,000 due March 30,
    2010 unsecured, bearing interest at 5%.  Interest is payable each January 1st
    and June 1st.  Discount accretion for the period from August 21,
    2007 (date of issue) to December 31, 2007, totalled $94,297. | December 31, |      | March 31,
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ---- | ---------
|2007                                                                                                                                                                                                                                                                                               |              | 2007
|$                                                                                                                                                                                                                                                                                                  |              | $   
|4,366,656                                                                                                                                                                                                                                                                                          |              | 0   

Gryphon Gold issued a Convertible Promissory Note to the former owner of Nevada
Eagle with a face amount of $5,000,000, due March 30, 2010, bearing interest at
5% per annum, payable on January 1 and June 1 of each year.  The note is
convertible at the holders option into shares for the first 12 months after
closing at a conversion price of $1 per common share; for the next 12 months at
$1.25 per common share; for the period 24 months from closing to March 29, 2010
at $1.50 per common share and on March 30, 2010 at $1.75 per common share.  The
conversion rate is subject to certain anti-dilution adjustments and is also
subject to adjustment on payment of cash dividends by Gryphon Gold.  Upon an
event of default, which includes amongst other things a change in control of
Gryphon Gold, the holder may demand repayment of the principal amount of the
debenture or exercise the conversion feature for a fixed number of shares. After
an event of default, the interest rate on the convertible debenture increases to
9%.  The change in control in an event of default is considered an embedded
derivative however its issue date fair value is not considered to be
significant, nor is it considered to be significant at December 31, 2007.  The
conversion feature does not require bifurcation in the financial statements
because it is not a beneficial conversion feature and a cash payment is not
required if common shares issued at time of conversion are never successfully
registered.  The Convertible Promissory Note, including the conversion feature
and change in control event of default embedded derivative, has been recorded at
its estimated issue date fair value of $4,272,359 at date of issue, in the
unaudited consolidated balance sheet. Interest and discount accretion of $63,014
and $65,930, for the three months ended December 31, 2007, has been recorded as
interest expense in the unaudited consolidated income statements.  The former
owner of Nevada Eagle is also an employee of the Company (see note 3).

13. SUBSEQUENT EVENTS

On January 10, 2008, 31,250 RSUs vested for three directors and one employee
and common shares were issued.

15

---



Item 2.

Managements Discussion and Analysis.

Overview

Gryphon Gold Corporation was incorporated in Nevada on April 24, 2003 and
has offices in Hawthorne, Nevada and Vancouver, British Columbia. Our objective
is to add to our potential exposure to gold mineralization in Nevada though
exploration, joint ventures and acquisitions. Currently, our most valuable asset
is a 100% interest in the Borealis Property, located in Mineral County, Nevada.
We have not determined if the mineralized material from the Borealis Property
can be economically exploited.  Through the acquisition of Nevada Eagle
Resources LLC, we obtained approximately 54 additional exploration properties.
 None of these properties have known reserves.

In July 2003, we initially acquired from Golden Phoenix Minerals, Inc.
(Golden Phoenix) 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. On January
24, 2006, with a final payment of $250,000, Borealis Mining completed all of its
financial requirements with respect to our acquisition of the interest held by
Golden Phoenix.

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,
through Borealis Mining we also own numerous unpatented mining claims that make
up the balance of the Borealis Property, and we also own 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).

A portion of the Borealis Property is subject to the mining lease. We are
required to make monthly lease payments of $9,094, 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 a royalty
under the terms of the mining lease. The terms of the mining lease and royalty
are described below under the heading Borealis Property. We have also entered
into lease arrangements for offices in Vancouver, British Columbia and
Hawthorne, Nevada and recently we terminated our office lease in Lakewood,
Colorado on December 31, 2006.

On June 26, 2006, we announced that the USDA Forest Service and the Nevada
Bureau of Mining Regulation and Reclamation have both approved the Plan of
Operations and Reclamation Plan, allowing Gryphon Gold to proceed with the
development of a heap leach mine at the Borealis Gold Project. These approvals,
combined with the previously approved operating permits from the State of
Nevada, represented the key regulatory approvals required to place the Borealis
gold mineralization into production.

On November 30, 2006, our board of directors concluded that we would not proceed
with construction and production financing of the Borealis heap leach mine.  The
feed for the proposed mine was remnants from the previously mined open pits, and
heap and dump material associated with the historical mining operations.  The
decision not to proceed was made due to the impact of certain technical
corrections to the previously announced Feasibility Study and related NI 43-101
Technical Report, dated August 15, 2006.  The technical corrections reduced the
anticipated quantity of recoverable gold and silver over the project life, and
resulted in a marginal projected return on investment.  In light of the decision
not to proceed with development of a mine, in December 2006, we closed our
Denver office and terminated operations and engineering staff, including our
Chief Operating Officer Mr. Allen Gordon and our Vice President of Borealis
Project Development Mr. Matt Bender.  Mr. Steven Craig, our Vice President of
Exploration, was relocated to Nevada.  As of December 1, 2006, our Chief
Financial Officer, Mr. Michael Longinotti, commenced working on a part-time
basis.  Under this agreement, his time spent in the office was reduced by 50%
along with his salary, and as of July 1, 2007 Mr. Longinotti resumed full-time
employment.

16

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On January 11, 2007, we announced the results of the revised CIM compliant
resource estimate in accordance with NI 43-101 which had been compiled by Mr.
Alan C. Noble, P.E. of Ore Reserves Engineering.  The results of the report were
independently reviewed by AMEC to insure the methodology and assumptions used in
the calculations were consistent with industry standards.  The resource estimate
includes the results of exploration drilling through February 28, 2006.  The
measured, indicated and inferred gold resource reported in January 2007 was:

|Date              | Measured* | Indicated* | Inferred*
|----------------- | --------- | ---------- | ---------
|                  | Tons      | Grade      | Ozs of   
|                  | (000s)   | opt        | Gold     
|January, 11, 2007 | 16,360    | 0.031      | 503,700  

The updated report confirmed a total gold resource (measured, indicated and
inferred) of 1,822,700 ounces contained in the Borealis property.

*Cautionary Note to investors concerning estimates of Measured, Indicated and
Inferred Mineral Resources:  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.  The table above uses the terms measured, indicated and
inferred in reference to resources.  We advise investors that while these
terms are recognized and required by Canadian regulations, the SEC does not
recognize them.  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.  In the United States, an issuer is not generally permitted
to disclose mineralization unless such mineralization satisfies the definitional
requirements of proven or probable mineral reserve in accordance with SEC
Industry Guide 7, which defines mineral reserve as a part of a mineral deposit,
which could be economically and legally extracted or produced at the time the
reserve determination is made.  Accordingly, information contained in this Form
10-QSB containing descriptions of our mineral deposits in accordance with NI
43-101 may not be comparable to similar information made public by other U.S.
companies under the United States federal securities laws and the rules and
regulations thereunder.  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.

In December 2006, we completed the geophysical survey, which commenced in
September 2006.  The positive geophysical results obtained from induced
polarization (IP) surveys identified multiple chargeability and resisitivity
anomalies coincident with aeromagnetic lows which extended several kilometers
(km) to the north and northwest of the Graben sulphide deposit.  The IP surveys
identified two new mineralized exploration targets located under the pediments
3.0 km (Central Pediments) and 5.3 km (Western Pediment) northwest of the Graben
sulphide deposit.

During our fiscal year ended March 31, 2007, we completed the following private
placements:

1)

On June 10, 2006, we completed private placements to an officer and employee of
129,000 units for gross proceeds of Cdn$174,150. The units were sold at a price
of Cdn$1.35 each and consist of one common share and one-half of one purchase
warrant exercisable at Cdn$1.82 per share.  The warrants expired on June 10,
2007.

2)

On February 9, 2007 we completed a private placement of 5.0 million units at a
price of Cdn$0.90 per unit for gross proceeds of Cdn$4.5 million.  Each unit
consisted of one common share and one full purchase warrant.  The two year
warrants are exercisable at a price of Cdn$1.10 if exercised within twelve
months of the closing and at a price of Cdn$1.35 if exercised after the First
Anniversary but prior to expiry.  We paid qualified registered dealers a 7% cash
commission in the amount of Cdn$77,175 and issued compensation options to
acquire 85,050 common shares (at a price of Cdn$0.90 per share for a period of
12 months from closing) in respect of the 1.225 million units placed by them.
The shares, warrants and underlying shares were not qualified by prospectus,
have not been registered under U.S. securities laws, and are subject to resale
restrictions. The Company granted registration rights to the investors in this
private placement and accordingly filed with the SEC on June 7, 2007 (amended
July 23, 2007), a registration statement under the Securities Act.  The Company
will use commercially reasonable efforts to cause the registration statement to
be declared effective. The proceeds of this offering will be applied to fund the
continuation of our exploration and development program on the Borealis
Property.

17

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For the fiscal year ended March 31, 2007, our exploration work focused on
extension and definition drilling and the broadening of district exploration and
we expended $4.8 million (fiscal year ended March 31, 2006, $3.6 million) on
exploration of the Borealis property.

On July 4, 2007, we entered into a membership interest purchase agreement (the
"Purchase Agreement") with Gerald W. Baughman and Fabiola Baughman, as sellers
("Sellers"), and Nevada Eagle Resources LLC, a Nevada limited liability company
("Nevada Eagle"), under which Gryphon agreed to purchase all of the outstanding
limited liability company interests of Nevada Eagle (the "Acquisition"). The
transaction closed August 21, 2007.  Under the terms of the Purchase Agreement,
Gryphon acquired Nevada Eagle from the Sellers for the following consideration:

(a)     $2,500,000 in cash;

(b)     four million five hundred thousand (4,500,000) shares of common stock of
Gryphon ("Common Shares"); and

(c)     a 5% convertible promissory note in the principal amount of $5,000,000
(the "Convertible Note").

The Convertible Note, due March 30, 2010, bears interest at the annual rate of
5% and is convertible at the option of the holder into Common Shares at an
initial conversion price of $1.00 per common share during first the twelve month
period following the Closing Date, $1.25 per common share during the second
twelve month period following the Closing Date, $1.50 per common share
thereafter and $1.75 per common share if converted on March 10, 2007.  The
interest payments are due on each January 1 and June 1, beginning on January 1,
2008. In addition to the purchase consideration, the Sellers will be entitled to
all revenues of Nevada Eagle (payable in cash, stock, or other consideration)
calculated to be received and received on the assets and properties from January
1, 2007 through midnight on December 31, 2007.

In addition, we granted the Sellers registration rights under which we agreed to
file (within the later of (i) 90 days of the Closing Date or (ii) any date in
which we are required to file a registration statement for a third-party in
connection with a financing or acquisition, but no later than 120 days of the
Closing Date) a resale registration statement to register the Common Shares
issuable at Closing and issuable upon exercise of the Convertible Note under the
Securities Act of 1933, as amended.

At closing, the following agreements were also executed:

(a)     the sellers executed a Lock-up Agreement under which the Sellers agreed
that for a period of three months following the Closing Date not to sell Common
Shares issued or issuable under the Purchase Agreement and Convertible Note and,
thereafter, to limit the sale of such Common Shares to 20% of the aggregate
Common Shares issued under the Purchase Agreement and Convertible Note each
quarter (with unsold Common Shares aggregating each quarter thereafter);

(b)     Mr. Baughman entered into an Employment Agreement for a term of one
year, renewable by the parties, to serve as our Vice President of Corporate
Development; and

(c)     the sellers entered into a Non-Competition Agreement.

Under the terms of the Non-Competition Agreement, the Sellers agreed not to
compete with Gryphon for the latter of (i) twelve (12) months following the
Closing Date (the "Restricted Period"), or (ii) twelve (12) months following the
termination of our employment of Gerald Baughman. The scope of the
non-competition obligation relates to the business of acquiring and/or holding
base metal and precious metal mineral assets located in the state of Nevada
within the Area of Interest and to properties that have been examined by Gryphon
or Gerald Baughman during the course of his employment by us, in any manner or
capacity. "Area of Interest" is defined as any property owned by the Company,
Nevada Eagle, our Affiliates or Nevada Eagle on the latter of (i) Closing Date
or (ii) the termination date of Gerald Baughman's employment by us, if any,
together with any adjacent areas within one kilometer of the exterior boundary
of such properties.

18

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On August 3, 2007, we completed a private placement of 5,000,000 units at
Cdn$0.80 for gross proceeds of approximately Cdn$4,000,000.  Each unit consisted
of one common share and one series G warrant.  Each series G warrant entitles
the holder to purchase a common share at a price of Cdn$1.00 per share during
the first 12 months after closing and Cdn$1.25 per share during the second 12
months after closing and until expiry.  We paid qualified registered dealers a
7% cash commission in the amount of Cdn$152,040 and issued compensation options
to acquire 265,050 common shares (at a price of Cdn$0.83 per share for a period
of 9 months from closing) in respect of the 2,715,000 million units placed by
them. We have a right to force warrant holders to exercise warrants, if the
price of our common stock remains equal to or greater than, Cdn$1.85 per common
share, for a period of twenty consecutive days.  The shares, warrants and
underlying shares were not qualified by prospectus, have not been registered
under U.S. securities laws, and are subject to resale restrictions. We granted
registration rights to the investors in this private placement and will use
commercially reasonable efforts to prepare and file with the SEC, within 120
days of closing, a registration statement under the Securities Act and to cause
such statement to be declared effective. The proceeds of this offering will be
applied to fund the continuation of our exploration and development program on
the Borealis Property.

On December 14, 2007 we completed a private placement of 4,486,500 units at
Cdn$0.80 for gross proceeds of approximately Cdn$3,589,200.  The private
placement closed in three tranches on November 22,  November 27 and December 14,
2007.  Each unit consisted of one common share and one series I warrant.  Each
series I warrant entitles the holder to purchase a common share at a price of
Cdn$1.00 per share during the first 12 months after closing and Cdn$1.25 per
share during the second 12 months after closing and until expiry.  We paid
qualified registered dealers a 7% cash commission in the amount of Cdn$71,624
and issued compensation warrants (series J) to acquire 89,530 common shares (at
a price of Cdn$0.80 per share for a period of 9 months from closing) in respect
of the 1,204,000 million units placed by them. We have a right to force warrant
holders to exercise warrants, if the price of our common stock remains equal to
or greater than, Cdn$1.85 per common share, for a period of twenty consecutive
days.  The shares, warrants and underlying shares were not qualified by
prospectus, have not been registered under U.S. securities laws, and are subject
to resale restrictions. We granted registration rights to the investors in this
private placement and will use commercially reasonable efforts to prepare and
file with the SEC, within 120 days of closing, a registration statement under
the Securities Act and to cause such statement to be declared effective. The
proceeds of this offering will be applied to fund the continuation of our
exploration and development program on the Borealis Property.

Fiscal 2008 Exploration and Development Progress

Our drilling program during fiscal 2008 has focused on expanding the known
Graben deposit and discovering additional deposits in the Central and Western
Pediment areas.  The program consists of a series of Graben deposit expansion
drilling and extension drilling north of the successful G3  G13 fence of holes.
 The drilling of the Graben deposit will alternate with follow up exploration
drilling in the Central and Western Pediments where 10 holes have intersected
two distinct hydrothermal systems hidden beneath the pediments.  In total, 45
holes were completed during the current drilling program totaling 51,255 feet.

In October 2007, we completed a Controlled Source Audio-Frequency
Magnetotelluric (CSAMT) survey on the gold deposits in the Graben.  We have
expanded this survey to other parts of the Borealis property and expect to
survey additional areas of the property during the quarter ended March 31,
2008.

The following activities are planned for the duration of fiscal 2008:

●

Commence detailed review of properties acquired through Nevada Eagle Resources
acquisition and compile exploration and development schedule.

●

Complete joint venture and lease agreements for the un-leased properties held by
Nevada Eagle Resources.

●

Complete CIM compliant NI 43-101 report for the gold resource on the Borealis
property.

●

Complete the CSAMT geophysical study in the Pediment areas and interpretation of
results.

●

Plan the drill program for fiscal 2009, which is expected to commence near the
end of March 2008.

●

Permit required drill sites required for the fiscal 2009 drill program.

19

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Managements Discussion and Analysis

This discussion and analysis should be read in conjunction with the accompanying
Unaudited Interim Financial Statements and related notes. The discussion and
analysis of the financial condition and results of operations are based upon the
unaudited interim financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America
(U.S. GAAP). The preparation of financial statements in conformity with U.S.
GAAP requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of any contingent liabilities at
the financial statement date and reported amounts of revenue and expenses during
the reporting period. On an on-going basis, we review our estimates and
assumptions. The estimates were based on historical experience and other
assumptions that we believe to be reasonable under the circumstances. Actual
results are likely to differ from those estimates under different assumptions or
conditions, but we do not believe such differences will materially affect our
financial position or results of operations. Critical accounting policies, the
policies we believe are most important to the presentation of the financial
statements and require the most difficult, subjective and complex judgments, are
outlined below in Critical Accounting Policies, and have not changed
significantly.

We use words like expects, believes, intends, anticipates,
plans, targets, projects or estimates in this quarterly report. 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. 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 in Exhibit 99.1 titled Risk Factors and
Uncertainties, which Exhibit is hereby incorporated by reference.  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 quarterly report, 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 quarterly
report by the foregoing cautionary statements.

Critical Accounting Policies and Estimates

The preparation of our unaudited interim financial statements is in accordance
with accounting principles generally accepted in the United States.  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 at 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.

Revenue recognition

Mineral lease rentals or option payments are treated as reductions of the
cost of the property as the payor is accumulating an interest in the mineral
property; payments in excess of capitalized costs are recognized in income.
 Some agreements provide for payments in the form of stock and other equity
instruments as well as cash payments.  Stock and other equity instruments are
recognized based on their fair market value at the time of receipt.
 Fluctuations incurred during the holding period are accounted for as gains or
losses from held for trading securities.  Privately held stock, or stock that is
not currently trading is valued at zero.  The leases provide for the receipt of
royalty payments upon production of the property.  Royalty payments will be
recognized in the period in which production occurs.  There are no properties in
the production stage at this time.

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Exploration of mineral property interests

We expense exploration costs as they are incurred. When we determine that a
mining deposit can be economically and legally extracted or produced based on
established proven and probable reserves, development costs incurred after such
determination will be capitalized. The establishment of proven and probable
reserves is based on results of final feasibility studies which indicate whether
a property is economically feasible. Upon commencement of commercial production,
we will transfer capitalized costs to the appropriate asset category and
amortize them over their estimated useful lives and/or ounces produced, as
appropriate. We capitalize the cost of acquiring mineral property interests
(including original claim establishment) 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 and ongoing claim maintenance costs.
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

In December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard 123R, Share-Based Payment, (SFAS 123 (R)) a
revision to SFAS 123.  SFAS 123(R) requires all share-based payments to be
recognized in the financial statements based on their values using either a
modified-prospective or modified-retrospective transition method.

Prior to March 31, 2006, the Companys stock-based employee compensation plans
were accounted for under the recognition and measurement provisions of
Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued
to Employees (APB 25) and related interpretations, as permitted by FASB
Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123).  The
Company did not recognize employee stock-based compensation costs in its
statement of operations for the periods prior to March 31, 2006, as all options
granted had an exercise price equal to the market value of the underlying common
stock on the date of the grant.

Effective April 1, 2006, the Company adopted the fair value recognition
provisions of SFAS No. 123(R), using the modified-prospective-transition
method.  The Companys total employees are relatively few in number and turnover
is considered remote, therefore the Company currently estimates forfeitures to
be 5.5%.  Estimation of forfeitures will be reviewed on a quarterly basis.

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 amount is
then depreciated over the estimated useful life of the asset. Over time, the
liability is increased to reflect an interest element considered in its initial
measurement at fair value. The amount of the liability will be subject to
re-measurement at each reporting period.  Currently, the Company has a
reclamation liability of $5,600 which is disclosed further in Note 9 of the
financial statements.

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.

21

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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 annual period beginning after December
15, 2005. We adopted SFAS 123(R) effective April 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. To date the Company has
not incurred any stripping costs.

In June 2006, the FASB issued FASB interpretation No. 48  Accounting for
Uncertainty in Income Taxes (FIN 48).  FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
in accordance with FASB Statement No. 109, Accounting for Income Taxes.  FIN 48
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in tax return.  This Interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition.  This interpretation is effective for fiscal
years beginning after December 15, 2006.  The adoption of FIN 48 will not have a
material impact on the Companys consolidated financial statements.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements (SFAS
157).  SFAS 157 defines fair value, establishes a framework for measuring fair
value in GAAP, and expands disclosures about fair value measurements.  This
Statement applies under other accounting pronouncements that require or permit
fair value measurements, the Board having previously concluded in those
pronouncements that fair value is a relevant measurement attribute.
 Accordingly, this Statement does not require any new fair value measurements.
 However, the application of this Statement will change current practice,
effective April 1, 2008.  The adoption of SFAS 157 will not have a material
impact on the Companys consolidated financial statements.

Results of Operations

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

Three months ended December 31, 2007 compared to three months ended
December 31, 2006

For the three months ended December 31, 2007 we had a net loss of $1,736,589 or
$0.03 per share compared to a net loss of $2,620,464 or $0.06 per share in the
same period in the prior year, as spending on our exploration activities on the
Borealis property decreased by $667,507 and management salaries and consulting
fees decreased by $325,833.

Exploration expenses during the three months ended December 31, 2007 were
$661,007 or 38% of our total expenses compared to $1,328,514 or 51% of total
expenses in the prior year. During the third quarter ended December 31, 2007 we
completed drilling 5 holes, totaling 5,515 feet (1,681 meters) compared to
completing  11 holes totaling 13,680 feet (4,169 meters) in prior years
comparable period.  Drilling costs for quarter ended December 31, 2007 were
$262,095 versus $764,180 in the prior years comparable quarter.  Drilling costs
decreased because drilling was temporarily suspended beginning mid-November 2007
(versus mid-December 2006) to allow for a larger CSAMT geophysical study to be
completed over the pediment areas and the permitting activity to be completed
for the next years drilling program.

Management salaries and consulting fees in the quarter ended December 31, 2007
were $529,729 compared to $855,562 incurred in the quarter ended December 31,
2006 due to the costs incurred in the prior year associated with closing the
Denver based engineering office.  Total non-cash compensation costs included in
the quarter ended December 31, 2007 were $199,422 versus $529,683 in the prior
years comparable quarter.

22

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General and administrative costs for the quarter ended December 31, 2007 was
$254,831 compared to $240,219 for the quarter ended December 31, 2006, a 6%
increase.  Included in General and administrative are investor relations costs
which increased by $206,311, during the comparable periods.  Legal and audit
fees for the period increased to $111,020 from $106,258 for the three months
ended December 31, 2006, and is mainly due to costs associated with being a
public company that reports in both Canada and the United States, and
registering stock issued under private placements. Travel and accommodation
expense during the quarter ended December 31, 2007 was $68,704, compared to
$96,678 expended on travel in the prior year's comparable quarter. The decrease
is due to cost savings from closing the Denver office in the prior year and
fewer property site visits. Interest income earned on cash deposits was $40,782
for the quarter ended December 31, 2007, compared to $66,303 in the prior year
quarter due to lower average cash balances then the comparable quarter.
 Interest expense was $130,300 during the quarter ended December 31, 2007 due to
the issue of a convertible promissory note as partial payment for the purchase
of the membership interest of Nevada Eagle Resources LLC in August 2007.
 $65,930 of the total interest was non-cash interest expense.

Nine months ended December 31, 2007 compared to nine months ended December
31, 2006

For the nine month period ended December 31, 2007 we incurred a net loss of
$6,463,678 or $0.13 per share compared to a net loss of $6,491,678 or $0.16 per
share incurred during the same period in the prior year, as costs for most
categories of expenditures remained consistent year on year.

Exploration expenses during the six month period ended December 31, 2007 were
$3,414,405 or 53% of our net loss compared to $3,649,732 or 56% of our net loss
in the prior year. During the current fiscal year we have drilled a total of 31
holes at the Borealis property, representing 36,405 feet (11,096 meters)
compared to 41 holes representing 39,715 feet (12,105 meters).  Fewer holes were
drilled during the current year because the drilling program focused on drilling
deep holes in the Graben and Pediment areas versus drilling shallow holes to add
oxide resources in the prior year.

Management salaries and consulting fees in the nine months ended December 31,
2007 were $1,663,160 compared to $1,746,164 for the same period in the prior
year.  Current year costs include $322,464 in one-time costs for a transition
agreement covering a single employee and director including non-cash costs of
$81,235.  The majority of the cash costs will be paid out over an 18 month
period.  Prior years costs include expense for running the Denver engineering
office that was closed effective December 31, 2006.   Total non-cash
compensation costs included in the nine months ended December 31, 2007 were
$683,916 versus $779,747 in the prior years comparable period.

General and administrative expenses were $812,436, versus $721,437 in the prior
years comparable period. The increase is due to a $306,641 spending on investor
relations.  Legal and audit fees for the nine month period increased to $308,877
from $271,017 incurred in the prior years comparable period.  Travel and
accommodation during the nine months ended December 31, 2007 was $172,408,
compared to $282,117 reported in prior year nine month period ended December 31,
2006. The decrease was due to a reduction is site visits and the closure of the
Denver engineering office in late 2006.

Interest income earned on cash deposits was $170,332 for the nine months ended
December 31, 2007, compared to $242,832 for the nine months ended December 31,
2006, due to lower average cash balances during the nine month period.
  Interest expense totaled $188,853 and arose from the issuance of a convertible
promissory note related to the purchase of Nevada Eagle Resources LLC on August
21, 2007.  $94,297 of the interest expense is non-cash.

Liquidity and Capital Resources

Our principal source of liquidity is cash that is raised by way of sale of
common stock from treasury and other equity securities.

At December 31, 2007, we had working capital of $4,701,031.  Current assets
consisted of $5,541,213 in cash, $85,415 in accounts receivable and $157,553 in
prepaid expenses.  We had $1,083,150 in current liabilities at December 31,
2007, consisting of $1,083,150 in accounts payable and accrued liabilities and
$32,536 related to the current portion of capital leases.  The increase in
accounts payable and accrued liabilities compared to the balance at March 31,
2007 is related to the recognition of the transition agreement that will be paid
over 18 months.

23

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During the quarter ended December 31, 2007, we used cash in operating activities
of $1,736,046, which included our net loss during the quarter of $1,736,590,
offset by depreciation of $18,745, non-cash compensation of $199,422, non-cash
interest expense of $65,930 and changes in non-cash working capital used cash of
$283,553.  We used cash in investing activities of $4,604, including $6,177 for
reclamation deposits, $17,153 for equipment purchases, $5,409 in new claim fees
and $24,135 of cash was received in lease payments on Nevada Eagle properties.
 Financing activities provided cash of $3,354,009, which included $3,360,088
from the issuance of shares in connection with a private placement, offset by
capital lease principal payments of $6,079.  Cash increased during the period by
$1,613,359 to $5,541,213 as at December 31, 2007.

Under the terms of the acquisition agreement for Nevada Eagle Resources LLC, we
have a note payable outstanding for $4,366,656.  Refer to the section
Contractual Obligations under this document for a full description of the
acquisition and commitment.

We completed a private placement of 4,486,500 units at Cdn$0.80 for gross
proceeds of approximately Cdn$3,589,000.  The private placement closed in three
tranches on November 22,  November 27 and December 14, 2007.  Each unit
consisted of one common share and one series I warrant.  Each series I warrant
entitles the holder to purchase a common share at a price of Cdn$1.00 per share
during the first 12 months after closing and Cdn$1.25 per share during the
second 12 months after closing and until expiry.  We paid qualified registered
dealers a 7% cash commission in the amount of Cdn$71,624 and issued compensation
warrants (series J) to acquire 89,530 common shares (at a price of Cdn$0.80 per
share for a period of 9 months from closing) in respect of the 1,204,000 million
units placed by them. We have a right to force warrant holders to exercise
warrants, if the price of our common stock remains equal to or greater than,
Cdn$1.85 per common share, for a period of twenty consecutive days.  The shares,
warrants and underlying shares were not qualified by prospectus, have not been
registered under U.S. securities laws, and are subject to resale restrictions.
We granted registration rights to the investors in this private placement and
will use commercially reasonable efforts to prepare and file with the SEC,
within 120 days of closing, a registration statement under the Securities Act
and to cause such statement to be declared effective. The proceeds of this
offering will be applied to fund the continuation of our exploration and
development program on the Borealis Property.

Updated share capital as of December 31, 2007:

|Basic Common Stock Issued and Outstanding          | 61,681,645
|-------------------------------------------------- | ----------
|Warrants, Options and other Convertible Securities | 21,550,888
|Fully Diluted Common Stock                         | 83,232,533

Summary of any product research and development that the company will
perform for the term of the plan.

We do not anticipate performing any product research and development under our
plan of operation.

Expected purchase or sale of plant and significant equipment.

We do not anticipate any significant equipment purchases or sales.

Significant changes in number of employees.

We currently have eight employees.  We do not expect a significant change in
this number.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.

Contractual Obligations

We make advance royalty payments of $9,485 per month to certain leaseholders
while exploration is proceeding on the Borealis Property. In addition, to
maintain its existing claims, we make payments totaling approximately $130,000
annually. These payments are contingent upon us maintaining an interest in the
property.  We also make annual claim payments on certain of the properties
acquired under the Nevada Eagle Resources acquisition.  These costs totaled
approximately $50,000 in 2007.

24

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As of December 31, 2007, we had the following non-cancelable contractual
obligations:

|                               | Payments Due by Period(3)
|------------------------------ | -------------------------
|                               |                          
|                               | Total                    
|                               |                          
|Operating Lease Obligation (1) | $10,565                  
|Capital Lease obligations (2)  | 32,536                   
|Debenture                      | 5,000,000                
|Total                          | $5,043,101               

(1)

Obligation for the rental of office space in Vancouver BC with an initial 3 year
term, terminating August 2008 and payments of approximately $3,388 per month,
based on the December 31, 2007 exchange rate of Cdn$0.9913 equals US$1.

(2)

The capitalized leases are for the purchase of two trucks.

(3)

The table does not include employment contracts with certain executive
management which are described in our 10K-SB filed June 22, 2007 under the
section heading Executive Compensation.

Under the terms of the Purchase Agreement we closed with Gerald W. Baughman and
Fabiola Baughman, as sellers, and Nevada Eagle, we acquired Nevada Eagle from
the Baughmans for the following consideration, paid on August 21, 2007:

(a)     $2,500,000 in cash;

(b)     four million five hundred thousand (4,500,000) shares of our common
stock; and

(c)     a 5% convertible note in the principal amount of $5,000,000.

The Convertible Note, due March 30, 2010, bears interest at the annual rate of
5% and is convertible at the option of the holder into common shares at an
initial conversion price of $1.00 per common share during first the twelve month
period following the Closing Date, $1.25 per common share during the second
twelve month period following the Closing Date, $1.50 per common share
thereafter and $1.75 per common share if converted on March 10, 2007. The
interest payments are due each January 1 and June 1, beginning on January 1,
2008. In addition to the purchase consideration, the Sellers will be entitled to
all revenues of Nevada Eagle (payable in cash, stock, or other consideration)
calculated to be received and received on the assets and properties from January
1, 2007 through midnight on December 31, 2007.

In addition, granted the Sellers registration rights under which we agreed to
file (within the later of (i) 90 days of the Closing Date or (ii) any date in
which we are required to file a registration statement for a third-party in
connection with a financing or acquisition, but no later than 120 days of the
Closing Date) a resale registration statement to register the common shares
issuable at Closing and issuable upon exercise of the Convertible Note under the
Securities Act of 1933, as amended.  We also entered into an Employment
Agreement with Mr. Baughman for a term of one year, renewable by the parties, to
serve as our Vice President of Corporate Development.

Certain information contained in this Management Discussion and Analysis
constitutes forward-looking information and actual results could differ from
estimates, expectations or beliefs contained in such statements.

25

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Item 3.

Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective and that our disclosure controls and procedures were adequately designed and are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms.  In addition, our principal executive officer and principal financial officer have determined that our disclosure controls and procedures are effective to ensure that material information required to be disclosed in our reports that are filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow accurate and timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the companys most recent fiscal quarter and the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART IIOTHER INFORMATION

Item 1.

Legal Proceedings.

Except as provided below, 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.

On September 16, 2005, our subsidiary, Borealis Mining Company, was named as a co-defendant in an ongoing civil action pending in the United States District Court for the District of Nevada, entitled United States v. Walker River Irrigation District(Court Doc. No. In Equity C-125, Subfile C-125-B). The action seeks to determine the existence and extent of water rights held by the federal government in the Walker River drainage area for use on federally reserved lands such as Indian reservations, National Forests, military reservations, and the like. The suit does not dispute nor seek to invalidate any existing water rights (including ours); rather, it seeks to determine the extent and priority of the federal governments water rights. On May 27, 2003, the Court stayed all proceedings to allow the United States, the State of Nevada, the State of California, the Walker River Paiute Tribe, the Walker River Irrigation District, Mono County, California, Lyon County, Nevada, Mineral County, Nevada and the Walker Lake Working Group to attempt to mediate a settlement. Borealis Mining Company was named as one of several hundred co-defendants in this action because it owns water rights within a portion of the Walker River drainage area in Nevada, which were granted under a permit on September 16, 2005. We, like most private water right owners, do not intend to participate in the merits of the lawsuit. We do not believe that this civil action, which will determine the extent and priority of federally reserved water rights in the area, will have any effect on our planned business operations as we currently have permits to access water from two sites for our Borealis Property, one of which is not subject to this action and either of which, individually, would provide a sufficient water supply under our approved plan of operation.

Item 1A.

Risks Factors.

See Exhibit 99.1.

26

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

During the quarter ended December 31, 2007, all transactions in which we have offered and sold the following securities in unregistered securities pursuant to exemptions under the Securities Act of 1933, as amended have been reported on current reports on Form 8K.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

Item 5.

Other Information.

None.

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Item 6.       Exhibits

|Exhibit |          |            
|------- | -------- | -----------
|Number  |          | Description
|        |          |            
|        | 3.1(1)   |            
|        | 3.2(1)   |            
|        | 3.3(1)   |            
|        | 3.4(1)   |            
|        | 3.5(1)   |            
|        | 4.1(4)   |            
|        | 4.2(3)   |            
|        | 4.3(4)   |            
|        | 10.1(1)  |            
|        | 10.2(1)  |            
|        | 10.3(1)  |            
|        | 10.4(1)  |            
|        | 10.5(1)  |            
|        | 10.6(1)  |            
|        | 10.7(1)  |            
|        | 10.8(1)  |            
|        | 10.9(1)  |            
|        | 10.10(1) |            
|        | 10.11(1) |            
|        | 10.12(1) |            
|        |          |            

28  *


|Exhibit |  |            
|------- |  | -----------
|Number  |  | Description
|        |  |            

| | 10.13(1) |  |  | Executive Compensation Agreement, dated February 1, 2004, between Gryphon Gold Corporation and Tony Ker                           
| | -------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------
| | 10.14(1) |  |  | Executive Compensation Agreement, dated November 1, 2004, between Gryphon Gold Corporation and Thomas Sitar                       
| | 10.15(1) |  |  | Executive Compensation Agreement, dated June 1, 2005 between Gryphon Gold Corporation and Donald Ranta                            
| | 10.16(1) |  |  | Gryphon Gold Corporation 2004 Stock Incentive Plan                                                                                
| | 10.17(4) |  |  | Form of Escrow Agreement                                                                                                          
| | 10.18(2) |  |  | Form of Lock Up Agreement  Shareholders                                                                                          
| | 10.19(2) |  |  | Form of Lock Up Agreement for Executive Officers and Directors                                                                    
| | 10.20(2) |  |  | Warrant Agreement dated August 10, 2005, between Gryphon Gold Corporation and Computershare Trust Company, Inc. (Golden, Colorado)
| | 10.21(5) |  |  | Membership Purchase Agreement dated July 4, 2007 related to Nevada Eagle Resources LLC                                            
| | 10.22    |  |  | Transition Agreement                                                                                                              
| | 14.1(2)  |  |  | Code of Business Conduct and Ethics                                                                                               
| | 31.1     |  |  | Certification Required Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                  
| | 31.2     |  |  | Certification Required Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                  
| | 32.1     |  |  | Certification Required Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                  
| | 32.2     |  |  | Certification Required Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                  
| | 99(6)    |  |  | Risk Factors and Uncertainties                                                                                                    
| |          |  |  |                                                                                                                                   

|(1) | Previously filed on Form SB-2 on August 17, 2005. 
|--- | --------------------------------------------------
|    |                                                   
|(2) | Previously filed on Form SB-2 on October 6, 2005. 
|    |                                                   
|(3) | Previously filed on Form SB-2 on October 27, 2005.
|    |                                                   
|(4) | Previously filed on Form SB-2 on November 9, 2005.
|    |                                                   
|(5) | Previously filed on Form 8-K on July 6, 2007.     
|    |                                                   
|(6) | Previously filed on Form 10QSB on August 15, 2007.



29

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GRYPHON GOLD CORPORATION

By:

/s/ Anthony D.J. Ker
Anthony D.J. Ker
Chief Executive Officer 
(On behalf of the registrant and as 
principal executive officer)

Date:

February 12, 2008

By:

/s/ Michael K. Longinotti
Michael K. Longinotti
Chief Financial Officer
(On behalf of the registrant and as 
principal financial and accounting officer)

Date:

February 12, 2008

30

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