2014 Dynacor Gold Mines Inc. (Dynacor Symbol: DNG Toronto Stock Exchange (TSX) OTC: DNGDF Shares outstanding: 36,429,4
DYNACOR ANNOUNCES
AND
Montreal, August 11, 2014 – Dynacor Gold Mines Inc. (TSX Corporation with gold and silver unaudited condensed consolidated financial statements “MD&A” for the second quarter ended The unaudited condensed interim the Company's website www.dynacorgold.com SEDAR at www.sedar.com .
(All figures in this press release are in millions o f US$ All variance % are calculated from rounded figures Q2-2014 Overview Following a first quarter where the Corporation had to due to new vigorous measures taken by with the production of 17,608 ounces and the the production of 17,893 and the include sales of gold dore which were produced in Q1 circumstances that prevailed in Peru During the three- month period ended $25.9M for the same period in 2013 an increase of $ 0.9 M and 3.5 per share compared to $0.9M or As indicated in our June 13 press release 6,810 OUNCES OF GOLD IN MAY” April 2014, production increased to 6,810 ounces in May as plant initiated production at 250 tpd. our production was down to 5,525 ounces in June as the plant had 7.5 off days due ore deliveries.
Overall during the quarter, the Huanca gold ore pro cessing plant ran at its full 250 tpd capacity duri ng 44 days in the months of May and June, as ore inventor y was still being rebuilt was 1,870 DMT of ore in inve ntory
ynacor ) Toronto Stock Exchange (TSX) DYNACOR ANNOUNCES SALES OF US $26.8 M AND NET INCOME OF US$ 2.1 MILLION or US$0.06 per share in Q2- 2014
Dynacor Gold Mines Inc. (TSX : DNG) ( Dynacor or the Corporation and silver ore processing operations and exploration projects consolidated financial statements and the management's discussion and analysis ended June 30, 2014.
condensed interim consolidated financial statements along with the www.dynacorgold.com and the documents have been filed electronically wi th All figures in this press release are in millions o f US$ unless stated otherwise. Earnings per share and cash rounded figures . Some additions might be incorrect due to rounding).
Following a first quarter where the Corporation had to temporarily stop its ore purchase due to new vigorous measures taken by Peruvian Government over illegal gold exports, production of 17,608 ounces and the sales of 20,521 ounces of gold during and the sales of 17,808 ounces of gold in Q2-2013. The second quarter sales gold dore which were produced in Q1 but only exported in Q2 in Peru .
month period ended June 30, 2014, Dynacor recorded sales of $25.9M for the same period in 2013 an increase of $ 0.9 M and 3.5 %, and a net income of $2.1M or compared to $0.9M or $0.03 per share in Q2-2013.
As indicated in our June 13 press release “DYNACOR: HUANCA GOLD ORE PROCESSING PLANT PRODUCED 6,810 OUNCES OF GOLD IN MAY” , after operating at a rate of 150 tpd and producing 5,272 ounces of gold in April 2014, production increased to 6,810 ounces in May as plant initiated production at 250 tpd. our production was down to 5,525 ounces in June as the plant had 7.5 off days due mainly Overall during the quarter, the Huanca gold ore pro cessing plant ran at its full 250 tpd capacity duri ng 44 days in the months of May and June, as ore inventor y was still being rebuilt . At the end of the quarter, there ntory representing 7.5 production days.
Dynacor or the Corporation ) a in Peru, has released its the management's discussion and analysis with the MD&A are available on and the documents have been filed electronically wi th cash -flow per share are in US$.
temporarily stop its ore purchase s and gold exports, gold exports, Dynacor rebounded of gold during Q2-2014 compared to The second quarter sales in Q2 -2014 due to the of $26.8M compared to a net income of $2.1M or $0.06 DYNACOR: HUANCA GOLD ORE PROCESSING PLANT PRODUCED producing 5,272 ounces of gold in April 2014, production increased to 6,810 ounces in May as plant initiated production at 250 tpd. However, mainly to some delays in Overall during the quarter, the Huanca gold ore pro cessing plant ran at its full 250 tpd capacity duri ng 44. At the end of the quarter, there
Jean Martineau Dynacor’s President and CEO stated “ Overall Q2-2014 performance is a little short of ou r expectations due to uncontrollable circumstances th at prevailed in Peru and which also affected our or e suppliers. We are still building our ore inventory and so far into the third quarter, the ore provided to us, is of very good quality and in sufficient quantity. Our p roduction should continue to improve in the ongoing quarters. Our Q2-2014 financial results continued however to strengthen our overall financial situatio n.” Q2-2014 Highlights
- Cash on hand of $11.7M at June 30, 2014 compared to $8.5M at December 31, 2013;
- Gold and silver sales of $26.8M compared to $25.9M in Q2-2013 an increase of 3.5%;
- Gold production of 17,608 oz compared to 17,893 oz in Q2-2013 a decrease of 1.6%;
- Net income of $2.1M in Q2-2014 or $0.06 per share compared to $ 0.9M or $0.03 per share in Q2-2013;
- EBITDA of $ 3.5M compared to $ 2.4M in Q2-2013 an increase of $1.1 M or 45.8%;
- Cash flow from operating activities before change in working capital items of $ 2.4M or $0.06 per share (1) compared to $1.5M or $0.04 per share (1) a 60% increase over Q2-2013;
- (1) Cash-flow per share is a non-GAAP financial perfor mance measure with no standard definition under IFR S. It is therefore possible that this measure could not be comparable with a similar measure of another Corporation. The Corporation uses this non-GAAP measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.
Results from operations:
During the three-month period ended June 30, 2014, the Corporation increased its net shareholder equit y by
6.4% from $32.8 M at March 31, 2014 to $ 34.9 M at June 30, 2014.
In Q2-2014, the Huanca plant processed 16,830 DMT o f ore compared to 18,785 DMT in Q2-2013 a decrease of 10.4%. Despite this reduced throughput, Dynacor managed to produce a similar volume of gold, with a production of 17,608 ounces compared t o 17,893 ounces in Q2-2013, a slight decrease of 1. 6% mitigated by the increase grade of ore processed.
The average gold grade for Q2-2014 was 1.10 oz/ DMT compared to 1.01 oz/ DMT in Q2-2013 an increase of 8.9% over Q2-2013.
A total of 20,521 ounces of gold was sold during Q2 -2014, compared to 17,808 ounces of gold in Q2-2013 an increase of 15.2%. This increase is attributable to the sales of gold dore which had been produced during Q1-2014 but were only exported in Q2-2014 due to the situation prevailing at the time in Peru.
Total sales in Q2-2014 amounted to $26.8 M includin g $0.3 M in silver sales (cumulative six-months of $39.1 M including $0.8 M in silver sales) compared to $25.9 M including $0.6 M in silver sales in Q2-2 013 (cumulative six-months of $59.2 M and $1.5 M in sil ver sales in 2013) an increase of 3.5% compared to Q2- 2013.
During the quarter, average sales price per equival ent ounce Au was $1,289/ oz compared to $1,420/ oz in Q2-2013, a 9.2% decrease.
The gross operating margin for the period amounted to $4.6 M or 17.3% compared to $3.8 M or 14.5% in Q2-2013. In Q2-2013 gold price had faced two sudden important declines which had impacted the Corporation sales and gross margin figure.
Silver production which is a by-product of the ore processed was 17,990 ounces in Q2-2014 compared to 25,694 in Q2-2013 explained by lower volume of ore processed and lower silver content.
FINANCIAL HIGHLIGHTS
For the three-month periods ended June 30, For the six-month periods ended June 30,
(in $'000) 2014 2013 2014 2013
Sales
26,781
25,870 39,085
59,212
Cost of sales 22,153 22,113 31,901 49,814
Gross operating margin 4,628 3,757 7,184 9,399
General and administrative expenses 1,000 1,002 1,812 1,832
Operating income 3,170 2,291 4,723 6,577
Net income and comprehensive income 2,051 941 2,910 3,919
EBITDA (1) 3,521 2,382 5,354 6,998
Net Cash flow from operating activities
before changes in working capital items 2,430 1,477 3,683 4,613
Cash flow from operating activities 3,796 6,881 5,049 10,721
Earnings per share
Basic $0.06 $0.03 $0.08 $0.11
Diluted $0.05 $0.02 $0.07 $0.10
Reconciliation of Net comprehensive income to EBITDA (1)
Net comprehensive income 2,051 941 2,910 3,919
Income taxes 1,041 1,058 1,645 2,263
Financial expenses 27 42 55 134
Depreciation 402 341 744 682
EBITDA 3,521 2,382 5,354 6,998
- (1) EBITDA: “Earnings before interest, taxes and depreciation” is a non-GAAP 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-GAAP 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.
CASH FLOW FROM OPERATING, INVESTING AND FINANCING A CTIVITIES AND WORKING CAPITAL
Operating Activities
During the quarter the cash flow from operations be fore changes in working capital items amounted to $2.4 M or $0.06 per share (cumulative six-month of $3.7 M or $0.09 per share) compared to $1.5 M or $0 .04 per share (cumulative six-month of $4.6 M or $0.13 per share) in 2013. This increase is due to the 15. 2% gold volume sales increase compared to Q2-2013. Als o in 2013, operating activities were affected by th e important declined of 25% in the price of gold which impacted on the Corporation gross operating margi n.
Total cash generated from operating activities amou nted to $3.8 M (cumulative six-month of $5.0 M) compared to $6.9 M (cumulative six-month of $10.7 M) in 2013.
Investing Activities
During the period, the Corporation invested $0.5M ( $1.0M in Q2-2013) mainly additions for the Huanca processing plant and its tailing ponds and the Nasc a office building. (In Q2-2013 costs were for addi tions for the preparation of the construction at Chala).
Additions to exploration and evaluation assets amou nted to $0.5 M in Q2-2014 ($0.8 M in Q2-2013) and consisted in the start of the improvement work of t he Tumipampa 26 km access road, building of enhance camp facilities on site, geophysical study, samplin g and analysis, advance to suppliers, exploration s alaries and other exploration expenses at Tumipampa. In Q2- 2013 the expenses related to the exploration progra m which was then underway and included surface drilling and the beginning of the cross-cut in the gold veins.
Liquidity
As at June 30, 2014, the Corporation’s working capi tal amounted to $19.2M including $11.7M in cash compared to $17.4M including $8.5M in cash at Decem ber 31, 2013.
2014- Ore processing outlook and update
Ore processing operations
The Corporation has set the following production gu idance for 2014:
- To process 75,000 DMT of gold ore;
- To produce 70,000 ounces of gold.
Total gold production as of June 30 is as follows:
- Total of 30,832 DMT of gold ore processed (41.1 % of yearly guidance);
- Total of 29,783 ounces of gold produced ( 42.5% o f yearly guidance);
As at June 30, 2014, despite occasional delays in o re deliveries that prevented our mill to operate at a constant full capacity and due to little higher ore grades than expected, total tons processed are jus t below and total ounces produced are just on line with the 2014 year to date guidance. So far into the third quarter of 2014, our mill is being provided with high grade ore and sufficient volume to operate at its full c apacity, which will contribute to increase production and sh ould allow the Corporation to be on line with its 2 014 yearly guidance.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is a gold and silver ore processing and a g old exploration and mining Corporation active in Pe ru through its subsidiaries since 1996. The Corporatio n differentiates itself from pure exploration compa nies as it also generates income and cash flow from its who lly owned gold ore processing plant in Peru. The Corporation's assets include three exploration prop erties, including the Tumipampa property, as well a s its now 250 tpd gold and silver ore processing mill at Huanca. Dynacor's mill produces gold from the proce ssing of ore purchased from many registered miners. Dynac or's strength and competitive advantage comes with the experience, knowledge and the procurement netwo rk expertise the Corporation has developed while working in Peru. Its pride remains in maintaining r espect and positive work ethics toward its employee s, partners and local communities.
FORWARD LOOKING INFORMATION
Certain statements in the foregoing may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Dynacor, or industry results, to be materially different from any future result, perfo rmance or achievement expressed or implied by such forward-lo oking statements. These statements reflect management's current expectations regarding future events and operating performance as of the date of this news release.
Dynacor Gold Mines Inc. (TSX: DNG) Website: http://www.dynacor.com Twitter: http://twitter.com/DynacorGold Facebook: facebook.com/DynacorGoldMines For more information, please contact: Dynacor Gold Mines Inc.
Jean Martineau
President and CEO #1105, 625 René-Lévesque Blvd.
Dynacor Gold Mines Inc.
Montreal, Quebec H3B 1R2 T: 514-393-9000 ext. 228 Dale Nejmeldeen Investor Relations Dynacor Gold Mines Inc.
T: 604.492.0099 | M: 604.562.1348