Dynacor Gold Mines Inc. (Dynacor Symbol: DNG Toronto Stock Exchange (TSX)
2017
Dynacor Gold Mines Inc. (Dynacor
Symbol: DNG
Toronto Stock Exchange (TSX)
OTC: DNGDF
Shares outstanding: 38,812,594
PR-2017-11-17
Q3-2017: DYNACOR REPORTS
ADDITIONAL PARTIAL DEBT REPAYMENT OF $1.7M
Montreal, November 15, 2017 – Dynacor Gold Mines Inc. (TSX: DNG) (Dynacor
gold and silver ore processing operations and explo ration projects in Peru,
consolidated financial statements and
and nine-month periods ended September 30, 2017
These documents have been filed electronically with SEDAR at
Corporation's website www.dynacor.com
(All figures in this press release are in million s of US$ unless stated otherwise. Earnings per shar e and cash
except for net income, are calculated from rounded figures. Some additions might be
In Q3-2017 Dynacor completed its twenty
($0.03 per share) compared to $1.3 million ($0.03 p er share) in 2016 and a cash flow from operating ac tivities
before change in working capital items of $2.6 mill ion
and $0.15 per share) compared to $2.4 million and $ 0.06 per share in Q3
$0.14 per share in 2016).
Highlights for the third quarter of 2017
(Variance %, are calcul ated based on rounded figures)
• Cash on hand of $10.6 million at
• Additional partial debt prepayment of $1.7 M during the quarter;
• Gold production of 20,521
ounces in Q3-2016 (cumulative
increases of 7.3% and 6.4% compared to 2016;
• S ales of $26.8 million (cumulative nine
2016 (cumulative $69.3 million in 2016) a decrease of 1.8% between quarters and year to date
increase of 5.8% compared to 2016;
• Gross operating margin of $3.7 million (13.8%) in Q 3
(12.9%)) compared to $3.9 millio
(14.4%) in 2016) for respective
Dynacor )
DYNACOR REPORTS NET INCOME OF US $1.2 M and
ADDITIONAL PARTIAL DEBT REPAYMENT OF $1.7M
Dynacor Gold Mines Inc. (TSX: DNG) (Dynacor or the Corporation) a Corporation with
gold and silver ore processing operations and explo ration projects in Peru, has released its unaudited condensed
consolidated financial statements and the management's discussion and analysis (“MD&A”)
September 30, 2017 .
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on the
www.dynacor.com .
s of US$ unless stated otherwise. Earnings per shar e and cash -flow per share are in US$. All variance %
are calculated from rounded figures. Some additions might be incorrect due to rounding).
completed its twenty -sixth consecutive quarter of profits with net incom e of $1.2 million
($0.03 per share) compared to $1.3 million ($0.03 p er share) in 2016 and a cash flow from operating ac tivities
before change in working capital items of $2.6 mill ion and $0.07 per share in Q3- 2017 (cumulative $5.8 million
and $0.15 per share) compared to $2.4 million and $ 0.06 per share in Q3 -2016 (cumulative $5.4 million and
Highlights for the third quarter of 2017
ated based on rounded figures)
Cash on hand of $10.6 million at September 30, 2017 ( $6.2 million as at December 31, 2016
debt prepayment of $1.7 M during the quarter;
20,521 ounces (cumulative nine-month of 55,831 ounces
2016 (cumulative 2016 nine-month production of 52,462 ounces
and 6.4% compared to 2016;
ales of $26.8 million (cumulative nine -months of $73.3 million) compared to $27.3 mill
2016 (cumulative $69.3 million in 2016) a decrease of 1.8% between quarters and year to date
5.8% compared to 2016;
Gross operating margin of $3.7 million (13.8%) in Q 3 -2017 ( cumulative nine
$3.9 millio n (14.2%) in Q3-2016 ( cumulative nine
in 2016) for respective decrease of 5.1% and 5.0% compared to 2016
NET INCOME OF US $1.2 M and
or the Corporation) a Corporation with
has released its unaudited condensed
the management's discussion and analysis (“MD&A”) for the three-month
and will be available on the
flow per share are in US$. All variance % ,
sixth consecutive quarter of profits with net incom e of $1.2 million
($0.03 per share) compared to $1.3 million ($0.03 p er share) in 2016 and a cash flow from operating ac tivities
2017 (cumulative $5.8 million
2016 (cumulative $5.4 million and
$6.2 million as at December 31, 2016 );
ounces ) compared to 19,131
ounces ) for respective period
months of $73.3 million) compared to $27.3 mill ion in Q3-
2016 (cumulative $69.3 million in 2016) a decrease of 1.8% between quarters and year to date
cumulative nine -month of $9.5 million
cumulative nine -month of $10.0 million
decrease of 5.1% and 5.0% compared to 2016 ;
• Cash flow from operating activities before change in working capital items of $2.6 million and $0.07
per share (2) in Q3-2017 (cumulative nine-month of $5.8 million and $0.15 per share (2) compared to
$2.4 million and $0.06 per share (2) in Q3-2016 (cumulative $5.4 million and $0.14 per share (2) i in
2016;
• EBITDA (1) of $3.3 million in Q3-2017 (cumulative nine-month 2017 of $7.9 million), compared to $3.2
million in Q3-2016 (cumulative nine-month 2016 of $7.7 million);
Recent event
• Subsequent to the quarter end, the Corporation mad e an additional partial debt prepayment of $1.2
million on its outstanding term loan for a total am ount of repayment made in 2017 of $2,9 million,
reducing the outstanding principal to $3.4 million. The Corporation favors the prepayment of its debt.
Therefore, if possible, the Corporation will procee d with an additional debt prepayment before year-
end.
(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 meas ure could not be comparable with a similar measure of another Corporation. The
Corporation uses this non-IFRS measure as an indica tor of the cash generated by the operations and all ows 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 us es 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.
Overview
The Veta Dorada Plant was officially inaugurated on October 3, 2016. This plant is the stepping stone for the
future growth of our processing activities in Peru.
The first half of 2017, was affected by extremely h eavy rainfalls, occurring mostly in March and until mid-April,
which affected the overall miners’ production and t ransport conditions entering the second quarter of 2017. As
well in July, the southern part of Peru was struck by an important earthquake which damaged roads and bridges
interrupting access of major portion of ore supply to main road of transport.
Despite these challenges, the Corporation gross ope rating margin continued to improve as processing vo lume
increases, reaching 13.8% in Q3-2017 compared to 12 .4% in Q2-2017 and considerably better than the 9.5 %
margin obtained in Q4-2016 at the Veta Dorada plant which was its initial quarter of operations.
Following a slow start to the quarter, as expected, ore supply picked-up momentum from August on which
permitted to complete Q3-2017 on a strong note ( refer to October 16, 2017-Dynacor produces 20,521 o z of
gold in Q3-2017 press release ).
For the first nine-month of 2017, the Corporation p roduced 55,831 ounces of gold compared to 52,462 ou nces
of gold 2016, an increase of 6.4%.
Results from operations:
Total sales for the quarter amounted to $26.8 M (cu mulative nine month of $73.3 M) compared to $27.3 M for
Q3-2016 (cumulative nine-month of $69.3 M in 2016), a slight decrease of 1.8% between quarters (increa se of
5.8% over the nine-month period ended September 30, 2016). This increase is due to higher volume of go ld
sold as gold average market price were slightly lower than in Q3-2016.
The gross operating margin amounted to $3.7 M in Q3 -2017 (cumulative of $9.5 M for the nine-month peri od)
compared to $ 3.9 M and cumulative $ 10.0 M for the same periods in 2016. The gross operating margin
compared to 2016, was affected by lower average gol d selling price and as well by higher operation exp enses
due to the larger scale operation at the Veta Dorad a plant. Those expenses are to be reduced on a per unit
basis as production volume increases.
Net income was $1.2 M for the three-month period en ded September 30, 2017 ($2.5 M for the nine-month
period ended September 30, 2017), compared to $1.3 M (cumulative nine-months of $3.1 M) for the same
periods in 2016. The quarter decrease in net income compared to 2016 is explained by the $0.2 M decrea se in
the gross operating margin, the $0.5 M increase in transition and maintenance expenses relating to the Huanca
site, a $0.3 M decrease in foreign exchange loss as well as a $0.2 M decrease in income taxes.
Financial statement highlights
Three -month periods
ended September 30,
Nine -month periods
ended September 30,
(in $'000) 2017 2016 2017 2016
Sales 26,797 27,317 73,278 69,266
Cost of sales 23,111 23,449 63,795 59,295
Gross operating margin 3,685 3,868 9,483 9,971
General and administrative expenses 863 990 2,992 2,989
Operating income 2,339 2,707 5,619 6,190
Net income and comprehensive Income 1,239 1,310 2,460 3,077
EBITDA (1) 3,308 3,174 7,885 7,725
Net cash flow from operating activities before
change in working capital items 2,614 2,358
5,775 5,379
Cash flow from operating activities 3,436 2,049 7,928 3,075
Earnings per share
Basic 0.03 0.03 0.06 0.08
Diluted 0.03 0.03 0.06 0.08
Reconciliation of net comprehensive income
to EBITDA (1)
Net comprehensive income 1,239 1,310 2,460 3,077
Income taxes 701 850 2,088 2,137
Financial expenses 363 248 947 571
Depreciation 1,005 766 2,296 1,969
Write-off of exploration and evaluation assets - - 94 -
Gain on revaluation of financial instrument - - - (29)
EBITDA (1) 3,308 3,174 7,885 7,725
Reconciliation of net cash flow from
operating activities before change in
working capital items per share (2)
Net cash flow from operating activities before
change in working capital items (in $'000) 2,614 2,358 5,775 5,379
Basic weighted average number of common
shares outstanding (‘000) 38,765 38,400 38,730 37,798
Net cash flow from operating activities
before change in working capital items
per share (2)
0.07 0.06 0.15 0.14
Jean Martineau, Dynacor’s CEO and President commented, “Despite the worst rainy season in the last 20 years
in Peru which was then followed by the natural disa ster, we have achieved solid operational results so far in
2017. We have overcome our challenges, increased ou r gold production as well as our ore purchases
compared to 2016. We generated a solid cashflow whi ch permitted us to reduce our debt by an additional
$1.7M. We now continue working on achieving full capacity and improving our operation costs.”
Cash flow from operating, investing and financing a ctivities and working capital
Operating activities
During Q3-2017, the cash flow from operations, befo re changes in working capital items, amounted to $2 .6
million (cumulative nine-months of $5.8 million in 2017), compared to $2.4 million and cumulative $5.4 million
for the respective periods in 2016. This increase b etween quarters is primarily explained by the decre ase sales
expenses and increase in depreciation expenses, sli ghtly offset by the increase in interest expense of $0.1
million during the quarter.
During Q3-2017, total cash from operating activitie s amounted to $3.4 million compared to $2.0 million in Q3-
2016. Changes in working capital items amounted to $0.8 million compared to ($0.3 million) in 2016.
For the nine-month period ended September 30, 2017, total cash generated from operating activities amo unted
to $7.9 million, compared to $3.1 million in the co mparative period. Changes in working capital items amounted
to $2.2 million (($2.3 million)) in the comparative period, relating primarily to a decrease in invent ory of $2.1
million.
Investing activities
During Q3-2017, there were minor investment of $0.1 million (cumulative nine-month of $0.6 million) fo r the
acquisition of property, plant and equipment compar ed to $1.9 million and $ 8.3 million for the same p eriods in
2016 as we were completing construction of the Veta Dorada processing plant. Additions to exploration and
evaluation assets during Q3-2017, amounted to $0.1 million ($0.4 million for the nine-month period end ed
September 30, 2017) compared to $0.2 million and $1.0 million for the same periods in 2016.
Financing activities
During Q3-2017, the Corporation made partial prepay ments of principal in the amount of $1.7 million on its
long-term debt (cumulative of $1.7 million in 2017) . In 2016, there had been an increase in the loan b y $2.0
million during Q3-2016 (cumulative increase of $7.0 million in 2016). Interest expenses paid during th e period
amounted to $0.2 million ($0.1 million in 2016) and $0.5 million for the nine-month period ended Septe mber 30,
2017 ($0.3 million in 2016).
Working capital
As at September 30, 2017, the Corporation’s working capital amounted to $18.3 million, including $10.6 million
in cash ($15.8 million, including $6.2 million in cash at December 31, 2016).
Closure of the Huanca Metalex Plant
The Corporation has just taken the decision to definitively close it old Huanca Metalex Plant and initiate
immediate decommissioning and site restoration.
“Considering the current ore market conditions and the ability for Dynacor to increase processing cap acity at
our new Veta Dorada plant, there was no further nee d to retain the Huanca plant in care and maintenanc e. As
well, for security purposes, the decision to close down and restore the site was the best in the circu mstances”
commented Jean Martineau. The site restoration prog ram will be completed over a six-month period. The
Corporation has assessed the restoration program co sts and updated its provision. It does not anticipa te
incurring significant additional costs to this regard.
Outlook 2017
Ore processing
The objective for the remainder of 2017 is to contr ol and reduce production costs and ramp up producti on at the
Veta Dorada Plant to its current 300-tpd capacity. Approval for capacity increase to 360 tpd has been obtained.
As soon as the production level reaches 300 tpd on a consistent basis, the Corporation will proceed wi th the
capital investment to increase the plant capacity.
Following the major climate issues, the production target had been reviewed in August to between 78,00 0 and
80,000 ounces. As at September 30, 2017, total prod uction amounts to 55,831 ounces of gold and the
Corporation is confident it will meet its 2017 objectives.
ABOUT DYNACOR GOLD MINES INC.
Dynacor Gold Mines Inc. is a gold production corpor ation headquartered in Montreal, Canada. The Corpor ation is engaged in production
through its government approved ore processing oper ations. At present, Dynacor produces and explores i n Peru where its management
team has decades of experience and expertise. In 20 16, Dynacor produced 73,476 ounces of gold, a 9% in crease as compared with 2015
(67,603 ounces in 2015). Dynacor trades on the Toro nto Stock Exchange (DNG) and the OTC in the United States under the symbol
(DNGDF).
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, pe rformance or achievements of Dynacor, or industry r esults, to be materially different from
any future result, performance or achievement expre ssed or implied by such forward-looking 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
Director, Investor Relations
Dynacor Gold Mines Inc.
T: 604.492.0099 | M: 604.562.1348