Dynacor Announces Plan to Increase 2019 Second Half Production by 30%

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Overig advies 15/08/2019 18:22
MONTREAL, Aug. 15, 2019 (GLOBE NEWSWIRE) — Dynacor Gold Mines Inc. (“Dynacor” or the “Corporation”) (TSX:DNG) (OTC:DNGDF) a leading ore purchasing and processing corporation servicing artisanal and small-scale miners (ASM) in Peru, today announced a new ASM plan to increase production to an annualized rate of 88-92,000 of gold. The Corporation is forecasting to produce 44-46,000 ounces of gold in the 2nd half of 2019, a 30% increase from the first half.

The plan focuses on four significant measures:
1.On May 2, 2019, Dynacor signed an ASM mining agreement authorizing a group of local miners to carry out underground extraction work on the Corporation’s Tumipampa exploration project. To date fifteen new high-grade deliveries of 544 tonnes averaging 1.44 oz/t Au have made its way to the Corporation’s ore-processing plant near Chala, Peru.

2.Dynacor began work with a second and new ASM mining group to extract mineralized material from one of the Corporation’s other mining concession located in northern Peru. The group’s first delivery took place in June 2019.

3.Currently, the Corporation is nearing completion to sign with new groups of ASMs to add four (4) new gold mining concessions to its portfolio. Dynacor expects to see significant throughput from these further concessions on or before December 31, 2019.

4.An additional group of ASMs located near the Corporation’s Tumipampa exploration project is currently in negotiations with Dynacor to further augment production from the high-grade underground zone. The new ASM group expects to start operations in another section of high-grade veins on or before December 31, 2019.

Dynacor’s ASM plan has come to fruition on schedule. In June 2019, the Corporation generated its best June on record with ore purchases amounting to 8,500 tons. Following through into July 2019, the Corporation then generated a new all-time record-breaking month of purchased mineralized material. Dynacor purchased just over 10,000 tons.

MONTREAL, Aug. 15, 2019 (GLOBE NEWSWIRE) — Dynacor Gold Mines Inc. (TSX: DNG / OTC: DNGDF) (Dynacor or the Corporation), reports its financial results for its second quarter ended June 30, 2019.

The unaudited condensed consolidated financial statements and the management’s discussion and analysis (MD&A) for the three-month and six-month periods ended June 30, 2019, have been filed electronically with SEDAR at www.sedar.com and will be available on the Corporation’s website www.dynacor.com.

(All figures in this press release are in millions of US$ unless stated otherwise. Earnings per share and cash flow per share are in US$. All variance % are calculated from rounded figures).

For the three-month period ended June 30, 2019, Dynacor completed its thirty third (33rd) consecutive quarter of profits with a net income of $0.8 M ($0.02 per share), compared to $1.3 M ($0.03 per share) for the same period of 2018.


With a similar volume processed (22,737 tonnes in Q2-2019 vs. 23,172 tonnes in Q2-2018), our production, however, decreased by 12.2% compared to Q2-2018 (18,095 ounces in Q2-2019 vs. 20,610 ounces in Q2-2018). This decline is mainly explained by a 9.4% decrease in the average grade of the available ore processed during the period. Volume of gold sold has decreased by 19.2% compared to 2018 due to the lower production combined with the variances of gold in process.

Those situations had a direct impact on our Q2-2019 financial results. Nevertheless, gold production increased by 13.1% compared to Q1-2019.

Operational and Strategic
•In Q2-2019, the Veta Dorada plant processed a total of 22,737 tonnes of ore compared to 23,172 tonnes in Q2-2018;
•Gold production of 18,095 ounces in Q2-2019 compared to 20,610 ounces in Q2-2018, a decrease of 12.2% due to the lower average grade of ore processed;
•Sales of 17,402 ounces of gold compared to 21,524 ounces in Q2-2018 a decrease of 19.2% due to the variation of gold in process inventories in Q2-2019 compared to Q2-2018;
•Tumipampa: Dynacor signed a mining and mineral purchase agreement with artisanal miners to begin extraction of materialized material from high-grade veins. The first deliveries occurred in June 2019;
•Dynacor signed a letter of intent to globally expand its ore-purchasing and processing business in Senegal (ref. Press release dated June 11, 2019).

•33rd consecutive quarter of profits;
•Sales of $22.7 M in Q2-2019, a decrease of 18.9% compared to Q2-2018;
•Gross operating margin of $2.6 M (11.3%) in Q2-2019, a decrease of 25.7% compared to Q2-2018;
•Net income of $0.8 M in Q2-2019 ($0.02 per share), a decrease of 38.5% compared to Q2-2018;
•EBITDA (1) of $2.0 M in Q2-2019, a decrease of 25.9% compared to Q2-2018;
•Cash flow from operating activities before change in working capital items of $1.6 M and $0.04 per share (2) in Q2-2019, a decrease of 27.3% compared to Q2-2018;
•Cash on hand of $13.2 M in Q2-2019 compared with $13.9 M at year-end 2018 mainly due to the increase in other working capital items.

Cash Return to Shareholders
•Quarterly dividend of CA$0.01 per share and totaling $0.3 M (CA$0.4 M) paid in April 2019;
•247,224 shares repurchased during the quarter for $0.3 M (CA$0.4 M CAD).

(1) EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS financial performance measure with no standard definition under IFRS. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure as an indicator of the cash generated by the operations and allows investor to compare the profitability of the Corporation with others by canceling effects of different assets bases, effects due to different tax structures as well as the effects of different capital structures.

(2) Cash-flow per share is a non-IFRS financial performance measure with no standard definition under IFRS. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.

Extract from Statement of net income and comprehensive income

Three-month periods ended June 30, Six-month periods ended June 30,
(in $’000) 2019 2018 2019 2018

Sales 22,697 27,955 45,616 54,545
Cost of sales (20,139) (24,440) (40,268) (47,406)
Gross operating margin 2,558 3,515 5,348 7,139
General and administrative expenses (1,150) (1,333) (2,107) (2,456)
Operating income 1,408 2,182 3,241 4,683
Income before income taxes 1,325 2,053 3,106 4,396
Net income and comprehensive income 757 1,251 1,937 2,852

Earnings per share
Basic $0.02 $0.03 $0.05 $0.07
Diluted $0.02 $0.03 $0.05 $0.07

Total sales amounted to $22.7 M compared to $28.0 M in Q2-2018. The $5.3 M decrease is mainly explained by the decreases in gold production and the number of ounces sold (-$5.4 M).

The gross operating margin amounted to $2.6 M in Q2-2019 compared to $3.5 M in Q2-2018. The variance compared with 2018 is attributable to lower gold production and sales combined with consistent fixed costs.

General and administrative expenses amounted to $1.2 M and were similar to 2018.

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