I am hoping for some more M&A activity amongst the junior gold...

I am hoping for some more M&A activity amongst the junior gold space soon. Especially West African goldies including my GRY and AMX holdings. The following is my speculation after thinking through a possible short term scenario.

Gryphon (GRY) marriage with Perseus (PRU)- friendly or otherwise.

GRY is in a vulnerable position due to both its share price weakness and need for large CAPEX fundrasing in next 12 months to fund Banfora Gold Project assuming positive PFS.

Compare the 12 month price comparison chart of GRY and PRU on any trading platform. From Aug 2011 to early Apr 2012 the share price movements of both companies were in lock step until sudden divergance from April 2012 to now. GRY shares are now at a 40% relative discount to PRU since April. If PRU were looking at GRY, the time to strike would be soon.

Van Eck became a substantial shareholder of GRY (approx 6%)in Aug 2011 and has built up it's shareholding of GRY to 11% as of this week.

Van Eck became a substantial shareholder of PRU in Apr 2011 and has built up it's shareholding of PRU to approx 8.5%.

A number of scenarios could play out. Perseus acquiring Van Ecks stake in GRY would be a nice blocking/holding stake for them and entry onto GRY's register. This could pre-empt or facilitate a merger initiated by PRU. Then again, Van Eck may play the ring master with large stakes in both companies and agitate for or propose a merger of equals.

PRU is a profitable producer, with demonstrated mine develpment capability with cash in the bank, and has stated it is looking for new corporate opportunities.(Preference for med to large, open pit, free-milling projects in West Africa). A new mine in Burkina Faso would be a strategic diversification into a 3rd country after it's Ghana and Cote d Ivoire mines. GRY's exploration footprint in Mauritania an added bonus.

PRU gets low risk diversification and growth with GRY.
GRY gets to become part of a larger growth focused gold outfit substantially internally funded for development with PRU; rather than risking possible heavy dilution by share issue as part of debt/equity raising for Banfora (circa $300m).

Market Cap approx $1.1B vs $220m.

This is my speculation only to provide food for thought for the weekend. I hold GRY but not PRU. Hey I would like GRY to go it alone in some respects as the margins and profits should be robust, it is just that companies looking for cash are at the mercy of the markets especially when large $$$ are required. I would discount complete debt funding by banks for the Banfora project, hence some dilution through cap raising would be needed in due course next year.