Dynacor Reports a New Record Quarter with Sales of $42.8 Million and a Net Income of $2.2 Million (US$0.06 PER Share) (CA$0.07) IN Q2-2021 Ahead of Annual Guidance
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DYNACOR REPORTS A NEW RECORD QUARTER WITH SALES OF $42.8 MILLION
AND A NET INCOME OF $2.2 MILLION (US$0.06 PER SHARE) (CA$0.07) IN Q2-2021
AHEAD OF ANNUAL GUIDANCE
Montreal, August 16, 2021 – Dynacor Gold Mines Inc. (TSX: DNG / OTC: DNGDF) (Dynacor or the
Corporation) released its unaudited consolidated financial statements and the management's discussion
and analysis (MD&A) for the second quarter ended June 30, 2021.
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on
the Corporation's website www.dynacor.com.
(All figures in this press release are in Ms of US$ unless stated otherwise . All amounts per share are in US$. All variance % are
calculated from rounded figures. Some additions might be incorrect due to rounding).
Q2-2021 OVERVIEW AND HIGHLIGHTS
OVERVIEW
Dynacor completed the three -month period ended June 30, 2021 (“Q2-2021”) reporting a new quarterly
sales record with $42.8 million in sales and a net income of $2.2 million (US$ 0.06 per share), still ahead
of its annual guidance, compared to sales of $8.0 million and a net loss of ( -$0.7 million) (-US$0.02 per
share) in the second quarter of 2020 (“Q2-2020”). Without mitigating the very solid Q2-2021 performance,
the Q2-2020 comparative figures had been significantly impacted by the Covid-19 crisis with the temporary
shut-down of the Veta Dorada plant resulting in the only quarterly loss recorded by the Corporation since
2010.
The Corporation ore purchasing, and processing activities continued to be very strong with 31,280 tonnes
of ore purchased and 30,374 tonnes processed.
With growing volumes of gold sold, the Corporation was able to increase its quarterly sales for the fourth
consecutive quarter.
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Considering the fast growth of its ore purchase volume, the Corporation decided to move ahead with the
construction on the plant expansion which was originally planned for the third quarter. The expansion work
has been completed in June well ahead of time and under budget.
The plant was fully commissioned and successfully ran at 400 tonnes per day (“tpd”) during 11 days in
June. Subsequent to the quarter end, the daily throughput was increased to the maximum capacity of
430 tpd. The mill has been operating at full capacity for the last five weeks.
HIGHLIGHTS
Operational
• Ore inventory covering one month of production . With a new record quarter of ore purchase d
(31,280 tonnes in Q2-2021) and despite the increase in volume processed, the Corporation maintained
a level of inventory exceeding 11,000 tonnes. This represents a 41.5% increase vs. the end of 2020.
• Highest quarterly volume processed. In Q2-2021, despite down-time periods due to maintenance or
plant expansion activities, the Veta Dorada plant processed a historical high volume of 30,374 tonnes
of ore (334 tpd average) compared to 29,327 in Q1 -2021 (326 tpd) and 3,244 tonnes (136 tpd) in
Q2-2020. (Considering 91 days in Q2-2021, 90 days in Q1-2021 and 24 potential working days due to Covid -19 restrictions
plant shut-down in Q2-2020);
• Another quarter -to-quarter production increase. During Q2 -2021, gold equivalent production
amounted to 25,172 AuEq ounces compared to 21,975 AuEq in Q1 -2021 (14.5% increase) and
1,935 AuEq ounces in Q2-2020.
Financial
• Record quarterly sales. With slightly higher average selling prices (+1.8%) and higher quantities sold
(+2.7%), compared to the last record quarter (Q1 -2021), sales amounted to $42.8 million in Q2 -2021
compared to $40.9 million in Q1-2021 and $8.0 million in Q2-2020;
• Increased gross operating margin. Gross operating margin of $6.5 million (15.2% of sales) in
Q2-2021, compared to $5.3 million (13.0% of sales) in Q1-2021 and nil in Q2-2020;
• Strong net income. Net income and comprehensive income of $2.2 million (US$0.06 per share) similar
to Q1-2021 ($2.1 million) and compared to a net loss of (-$0.7 million) in Q2-2020;
• Record cash gross operating margin. The Q2-2021 cash gross operating margin in surpassing $300
per AuEq ounce sold (1) compared to $257 in Q1-2021 and $117 in Q2-2020;
• Quarter to quarter i ncrease in EBITDA(2). $5.0 million compared to $4. 6 million in Q1-2021 (a 8.7%
increase) and nil in Q2-2020;
• Stable cash-flow from operating activities before change in working capital items. Cash flow from
operating activities before change in working capital items of $3.2 million (US$0.08 per share) (3), stable
for the third consecutive quarter and compared to nil in Q2-2020;
• Solid cash position. Cash on hand of $13.4 million at June 30, 2021 compared to $11.9 million at year-
end 2020.
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Cash Return to Shareholders
• 33% increase in monthly d ividend from June 2021. During Q2-2021, dividends totaling $0.5 million
(CA$0.6 million) were paid including a CA$0.0067 monthly dividend in June 2021.
(1) Cash gross operating margin per AuEq ounce is in US$ and is calculated by subtracting the average cash cost of sale per equivalent
ounces of Au from the average selling price per equivalent ounces of Au and 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
company.
(2) 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.
(3) 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 simi lar 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.
RESULTS FROM OPERATIONS
Extract from Consolidated Statement of net income and comprehensive income
Total sales amounted to $42.8 million compared to $8.0 million in Q2 -2020. The significant $34.8 million
increase is explained by record ore processing level, increased volumes sold, high gold prices and
obviously by the Covid -19 crisis which forced the clo sing of operations in Q2 -2020. Compared to the
previous quarter (Q1-2021) sales increased by $1.9 million due to higher gold production combined with
higher gold market prices.
The Q2-2021 gross operating margin reached $6.5 million which represents 15.2% of sales.
General and administrative expenses amounted to $2.0 million in Q2 -2021 compared to $0.7 million in
Q2-2020 when these expenses had been significantly reduced due to the Covid crisis. The increase
compared to Q2-2020 is also due to non -recurring fees of $0.5 million including those engaged to obtain
the release of the gold bars retained since December 2019 (see press release dated July 22, 2021).
General and administrative expenses are expected to decrease significantly in Q3 -2021.
Three-month periods
ended June 30,
Six-month periods
ended June 30,
(in $'000) 2021 2020 2021 2020
Sales 42,777 8,007 83,686 38,876
Cost of sales (36,260) (7,975) (71,866) (33,895)
Gross operating margin 6,517 32 11,820 4,981
General and administrative expenses (2,002) (746) (3,210) (1,837)
Other projects - (13) (16) (141)
Operating income 4,515 (727) 8,594 3,003
Income before income taxes 4,267 (755) 8,195 2,892
Current income tax expense (1,835) 85 (3,389) (1,137)
Deferred tax expense (270) (15) (538) (55)
Net income and comprehensive
income 2,162 (685) 4,268 1,700
Earnings per share
Basic $0.06 (-$0.02) $0.11 $0.04
Diluted $0.06 (-$0.02) $0.11 $0.04
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The Q2-2021 net income was again affected by the recording of a $0.3 million deferred income tax expense
(cumulative 2021 of $0.6 million) resulting from FX variances between the US $ and the Peruvian Sol
applying on long term assets local tax basis.
Reconciliation of non-IFRS measures
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND
WORKING CAPITAL AND LIQUIDITY
Operating activities
During Q2 -2021, the cash flow from operations, before changes in working capital items, amounted to
$3.2 million ($6.3 million for the six -month period ending June 30, 2021), compared to ( -$0.03 million) in
Q2-2020 ($3.2 million for t he six-month period ending June 30, 2020). This increase between quarters is
primarily explained by the increase in gross operating margin due to higher gold production.
During Q2-2021, total cash from operating activities amounted to ( -$2.0 million) ($4 .8 million for the six -
month period ending June 30, 2021) compared to $5.0 million in Q2 -2020 ($18.0 million for the six -month
period ending June 30, 2020). Changes in working capital items amounted to ( -$5.3 million) (-$1.6 million
for the six -month period ending June 30, 2021) compared to $5.0 million) in 2020 ($14.9 million for the
six-month period ending June 30, 2020). The variance is mainly attributable to the variance in inventories.
Investing activities
During the three-month period ended June 30, 2021, the Corporation invested $1.1 million (cumulative six-
month 2021 of $1.6 million). This amount is comprised of investments at the plant notably in relation to the
increase in capacity (+25% throughput leve l) completed during the second quarter, improvements in
production processes and to new vehicles. All investments are financed with internally generated cash -
flows.
Financing activities
In Q2-2021, three monthly dividends totaling CA$0.0167 per share were disbursed for a total consideration
of $0.5 million (CA$0.6 million). In Q2 -2020, a quarterly dividend was disbursed for a total consideration
of $0.4 million (CA$0.6 million).
During the period, 129,107 common shares (cumulative 180,332 common shares in 2021) were
repurchased under the Corporation’s normal course issuer bid share buyback program for a total cash
consideration of $0.2 million or CA$0.3 million (none in the first half of 2020).
In Q2-2021, 167,500 common shares were issued following the exercise by directors of the Corporation
of 167,500 purchase options for a total consideration of $0.2 million (CA$0.3 million).
In 2021, the corporation made quarterly repayments of lease liabilities for $ 0.06 million ($0.15 million per
quarter in 2020).
(in $'000) Three-month periods
ended June 30, Six-month periods
ended June 30,
2021 2020 2021 2020
Reconciliation of net income and
comprehensive income to EBITDA
Net income and comprehensive
income 2,162 (685) 4,268 1,700
Income taxes 2,105 (70) 3,926 1,192
Financial expenses 57 31 108 49
Depreciation 648 599 1,291 1,239
EBITDA 4,972 (125) 9,593 4,180
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Working capital and liquidity
As at June 30, 2021, the Corporation’s working capital amounted to $28.9 million, including $13.4 million in
cash ($25.4 million, including $11.9 million in cash at December 31, 2020).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at June 30, 2021, total assets amounted to $83.4 million ($76.3 million as at December 31, 2020). Major
variances since last year-end come from the significant increase in cash and in inventories and the impact
of the additional deferred tax liability recorded 2021.
(in $'000) (unaudited)
As at
June 30,
As at
December 31,
2021 2020
Cash 13,446 11,868
Accounts receivable 8,858 8,434
Inventories 17,127 13,401
Property, plant and equipment 20,238 19,677
Right-of-use assets 1,143 834
Exploration and evaluation assets 18,526 18,510
Other assets 4,027 3,572
Total assets 83,365 76,296
Trade and other payables 9,721 7,082
Asset retirement obligations 3,585 3,604
Current tax liabilities 1,275 1,124
Deferred tax liabilities 1,574 1,036
Lease liabilities 1,122 706
Shareholders' equity 66,088 62,744
Total liabilities and equity 83,365 76,296
OUTLOOK 2021
Ore processing
The Corporation continues to achieve strong levels of ore purchase which permitted the processing of high
tonnage of ore during the period.
The Corporation recently announced the completion of the expansion project of its Veta Dorada processing
plant which has enabled the increase of the throughput level from 345 tpd to 430 tpd, an increase of 25%.
For 2021, the Corporation issued financial and capital expenditure guidance (1), forecasting $150 million in
sales and a net income of $6.9 million (US$0.18 per share). With sales of $83.7 million as at
June 30, 2021 (82.5% of 2020 total sales) and a cumulative net i ncome of $4.3 million or US$0.11 per
share (similar to 2020 total numbers), the Corporation is still ahead of its 2021 financial guidance and in a
good position to surpass it.
(1) Assumptions
i) average CA/US exchange rate of 1.273:1
ii) 2021 financial guidance is based on an average gold price of US$ 1,850 per ounce (Year-end 2020 rate).
ABOUT DYNACOR
Dynacor is a dividend-paying industrial gold ore processor headquartered in Montreal, Canada. The
corporation is engaged in gold production through the processing of ore purchased from the ASM
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(artisanal and small-scale mining) industry. At present, Dynacor operates in Peru, where its management
and processing teams have decades of experience working with ASM miners. It also owns a gold
exploration property (Tumipampa) in the Apurimac department.
The corporation intends to expand its processing operations in other jurisdictions as well.
Dynacor produces environmental and socially responsible gold through its PX IMPACT® gold program. A
growing number of supportive firms from the fine luxury jewelry, watchmakers and investment sectors pay
a small premium to our customer and strategic
partner for this PX IMPACT® gold. The premium provides direct investment to develop health and
education projects for our artisanal and small-scale miner’s communities.
Dynacor is listed on the Toronto Stock Exchange (DNG) and the OTC in the United States under the symbol
(DNGDF).
FORWARD-LOOKING INFORMATION
Certain statements in the preceding 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, performance
or achievement expressed 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.
Toronto Stock Exchange (TSX): DNG OTC
(United States): DNGDF
Shares Outstanding: 38 916 797
Website: http://www.dynacor.com Twitter:
http://twitter.com/DynacorGold
CONTACT: For more information, please contact:
Director, Shareholder Relations
Dale Nejmeldeen
Dynacor Gold Mines Inc.
T: 514-393-9000 #230