Dynacor Reports Sales of $46.0 Million and a Quarterly Net Income of $0.8 Million IN Q3-2022 (US$0.02 OR CA$0.03 PER Share) with a Solid Cash IN Hand of $31.0 Million
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DYNACOR REPORTS SALES OF $46.0 MILLION AND A QUARTERLY NET INCOME OF
$0.8 MILLION IN Q3-2022 (US$0.02 OR CA$0.03 PER SHARE)
WITH A SOLID CASH IN HAND OF $31.0 MILLION
Montreal, November 14, 202 2 – Dynacor Group Inc. (TS X: DNG) (Dynacor or the Corporation)
released its unaudited condensed interim consolidated financial statements and the management's
discussion and analysis (MD&A) for the third quarter ended September 30, 2022.
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on
the Corporation's website www.dynacor.com.
(All figures in this press release are in M s of US$ 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).
Q3-2022 OVERVIEW AND HIGHLIGHTS
OVERVIEW
Dynacor completed the three- month period ended September 30, 2022 (“Q3- 2022”) with quarterly sales
of $46.0 million and a net income of $0.8 million (US$0.02 per share) compared to sales of $61.9 million
and a net income of $3.5 million (US$0.09 per share) for the third quarter of 2021 (“Q3-2021”). The 2022
third quarter financial results were below expectat ions due to lower ore grades delivered to the plant and
lower market gold prices during the quarter.
While the plant continued operating at its 430 tpd capacity, the ore volume processed increased by 3.1%
compared to Q3- 2021. The s ales decrease, compared to Q3- 2021, is mainly explained by a 16.0%
decrease in ore grades processed which affected our gold production and volume of gold sold. The Q3-
2021 gold production was by far the 2021 highest quarter , due to higher -than-average grade of ore
supplied.
Q3-2021 beneficiated as well from the $2.9 million sale of 1,600 ounces of gold which had been retained
in December 2019 and released, for export and sale, in September 2021.
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HIGHLIGHTS
Operational
• Higher volume processed. The plant processed a volume of 37,410 tonnes of ore (407 tpd average)
compared to 36,281 tonnes in Q3-2021 (394 tpd), a 3.1% increase;
• Reduced gold production. In Q3-2022, gold equivalent production amounted to 27,252 AuEq ounces
compared to 31,889 AuEq ounces in Q3-2021 a 14.5% decrease;
• Increase ore inventories d uring the quarter . At the end of Q3, ore inventories amounted to over
9,000 tons of ore representing over 20 days of production.
Financial
• Solid cash position. Cash on hand remained solid at $31.0 million at the end of Q3-2022 compared to
$27.1 million at year end 2021 due to the cash generated by operating activities;
• Decreased sales compared to Q3-2021. Due to lower volume produced and sold and lower average
gold market price, sales amounted to $46.0 million in Q3-2022 compared to $61.9 million in Q3-2021;
• Decreased in gross operating margin . Gross operating margin of $4.5 million (9.8% of sales) in
Q3-2022, compared to $7.9 million (12.7% of sales) in Q3 -2021 due to lower volume sold and
decreasing gold prices during the period compared to an increasing trend in the comparative period;
• Reduced operating income. Operating income of $3.2 million in Q3- 2022 compared to $6.6 million in
Q3-2021 due to the decrease in the gross margin;
• Earning per share affected by reduced gross margin and increased tax expense. Dynacor
recorded a net income of $0.8 million in Q3-2022 ($0.02 or CA$0.03 per share) compared to $3.5 million
($0.09 or CA$0.12 per share) in Q3-2021;
• Decreased cash gross operating margin per AuEq ounce. Cash gross operating margin of $197 per
AuEq ounce sold (1) compared to $242 in Q3-2021;
• Decreased EBITDA. EBITDA (2) of $3.8 million, compared to $7.2 million in Q3-2021;
• Decreased cash flows. Cash flows from operating activities before change in working capital items of
$2.0 million ($0.05 per share) (3) compared to $4.4 million ($0.11 per share) in Q3-2021.
Return to Shareholders
• Share buy-back. 213,655 common shares repurchased for $0.5 million (CA$0.6 million) in Q3- 2022,
compared to 59,914 common shares for $0.1 million (CA$0.2 million) in Q3-2021;
• Increased dividends. Continuation of monthly dividend payments which had been increased by 25%
at the start of 2022 to CA$0.10 per share per year which represent ed a 3.2% dividend yield based on
the beginning of 2022 share price or 3.9% based on the share price at the end of Q3-2022.
(1) Cash gross operating margin per AuEq ounce is in US$ 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 basis, 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 meas ure 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.
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RESULTS FROM OPERATIONS
Unaudited Consolidated Statement of net income and comprehensive income
Total sales amounted to $46.0 million compared to $61.9 million in Q3-2021. The $15.9 million decrease is
explained by lower quantities of gold ounces sold ( -23.3% or -$14.4 million) due to the 16.0% decrease in
ore grades compared to Q3- 2021 which had the highest 2021 quarterly average grade and to the lower
average gold price (-$1.5 million).
Cumulative nine-months sales increased by $4.4 million compared to last year with higher average prices
and quantities sold contributing respectively to a $2.4 and $2.0 million increase.
The Q3-2022 gross operating margin amounted to $4.5 million (9.8% of sales) compared to $7.9 million
(12.7% of sales) in Q3- 2021. The Q3- 2022 gross operating margin was negatively impacted by lower
grades affecting our unit cost of production and by the unfavorable trend in gold market prices during the
period compared to an opposite favorable trend in Q3-2021.
General and administrative expenses amounted to $1.2 million in Q3-2022 comparable to Q3-2021.
The Q3-2022 net income was also affected by the recording of a $2.3 million income tax expenses including
$0.3 million of withholding tax paid on dividends received from the subsidiary and a $0.3 million (non-cash)
deferred income tax expense. The deferred tax expense or recovery is mainly explained by the variance
throughout the period of the Peruvian Sol against the US$ which affect long term assets local tax basis.
Future fluctuations will affect positively or negatively the deferred tax at the end of each period.
Three-month periods
ended September 30,
Nine-month periods
ended September 30,
(in $'000) (unaudited) 2022 2021 2022 2021
Sales 45,998 61,941 150,022 145,627
Cost of sales (41,485) (54,075) (131,699) (125,941)
Gross operating margin 4,513 7,866 18,323 19,686
General and administrative expenses (1,229) (1,224) (4,382) (4,434)
Other project expenses (104) - (209) (16)
Operating income 3,180 6,642 13,732 15,236
Financial income and expenses 64 (77) (24) (185)
Foreign exchange loss (127) (80) (210) (371)
Income before income taxes 3,117 6,485 13,498 14,680
Current income tax expense (1,984) (2,695) (5,308) (6,084)
Deferred income tax (expense) recovery (332) (272) 313 (810)
Net income and comprehensive
income 801 3,518 8,503 7,786
Earnings per share
Basic $0.02 $0.09 $0.22 $0.20
Diluted $0.02 $0.09 $0.21 $0.20
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Reconciliation of non-IFRS measures
CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND
WORKING CAPITAL AND LIQUIDITY
Operating activities
During Q3-2022, the cash flow from operations, before changes in working capital items, amounted to
$2.0 million ($10.6 million for the nine-month period ending September 30, 2022), compared to $4.4 million
in Q3-2021 ($10.6 million for the nine-month period ending September 30, 2021).
During Q3-2022, total cash from operating activities amounted to -$0.05 million ($9.5 million for the nine-
month period ending September 30, 2022) compared to 5.7 million in Q3- 2021 ($10.4 million for the nine-
month period ending September 30, 2021). Changes in working capital items amounted to -$2.0 million
(-$1.1 million for the nine-month period ending September 30, 2022) compared to $1.3 million in Q3- 2021
(-$0.2 million for the nine-month period ending September 30, 2021). The variances are mainly attributable
to the variances in inventories and accounts receivable.
Investing activities
During the three- month period ended September 30, 2022, the Corporation invested $ 0.7 million
(cumulative nine-month 2022 of $2.5 million). These amounts are in line with last year and mainly include
investments at the plant and new vehicles . All investments are financed with internally generated cash-
flows.
Financing activities
In Q3-2022, monthly dividends totaling CA$0.025 per share were disbursed for a total consideration of
$0.7 million (CA$1.0 million) (cumulative nine-month of CA$0.075). In Q3-2021, monthly dividends totaling
CA$0.020 per share were disbursed for a total consideration of $0. 6 million (CA$0.8 million). Increases in
monthly dividend per share paid were attributed from June 2021 and then again from January 2022.
In Q3-2022, 213,655 common shares were repurchased under the Corporation normal course issuer bid
share buyback program for a total cash consideration of $0. 5 million (CA$0.6 million) (cumulative nine-
month of 589,851 shares) (59,914 shares for a total cash consideration of $0.1 million (CA$0.2 million) in
Q3-2021).
In Q3-2022, the Corporation issued 21,250 common shares following the exercise of purchase options for
a consideration of $0. 03 million (CA$0. 04 million) (cumulative nine-month of 515,930 shares)
(54,914 shares for $0.1 million or CA$0.2 million in Q3-2021).
Working capital and liquidity
(in $'000) (unaudited) Three-month periods
ended September 30, Nine-month periods
ended September 30,
2022 2021 2022 2021
Reconciliation of net income and
comprehensive income to EBITDA
Net income and comprehensive income 801 3,518 8,503 7,786
Income tax expenses (current and
deferred) 2,316 2,968 4,995 6,894
Financial expenses (64) 77 24 185
Depreciation 799 666 2,269 1,957
EBITDA 3,852 7,229 15,791 16,822
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As at September 30, 202 2, the Corporation’s working capital increased to $41.6 million, including
$31.0 million in cash ($36.4 million, including $27.1 million in cash at December 31, 2021).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at September 30, 2022, total assets amounted to $94.2 million ($91.4 million as at December 31, 2021).
Major variances since last year-end come from the increase in cash and variances in working capital items.
(in $'000) (unaudited)
As at
September 30,
As at
December 31,
2022 2021
Cash 31,039 27,099
Accounts receivable 9,396 8,407
Inventories 12,240 14,764
Property, plant and equipment 21,124 20,759
Right-of-use assets 253 341
Exploration and evaluation assets 18,538 18,516
Other assets 1,648 1,471
Total assets 94,238 91,357
Trade and other payables 11,218 11,680
Asset retirement obligations 3,494 3,553
Current tax liabilities 160 2,217
Deferred tax liabilities 1,242 1,555
Lease liabilities 240 343
Shareholders' equity 77,884 72,009
Total liabilities and equity 94,238 91,357
FOLLOW-UP OUTLOOK 2022
Ore processing
The decline in ore grades and recent gold prices impacted on the quarter sales.
For 2022, the Corporation maintains its forecasted sales in the range of $200- 220 million representing a
growth of 4-14% over 2021 sales which could have resulted in a net income in the range of $11- 13 million
($0.28-0.33 per share (CA$0.36-0.42 per share). Forecasted sales were based on an additional increased
capacity during 2022. T his investment is underway as a result of a higher level of ore inventory. T he
achievement of forecasted sales will depend on the ore grade supplied, gold price and the capacity increase
during the fourth quarter.
The Corporation is continuing to assess other opportunities of growth in Peru as well as in other
jurisdictions.
(1) Using opening 2022 market gold price of $1,800 per ounce
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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 (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).
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 mat erially
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.
Shares Outstanding: 38,572,507
Website: http://www.dynacor.com
Twitter: http://twitter.com/DynacorGold
CONTACT: For more information, please contact:
Director, Shareholder Relations
Dale Nejmeldeen
Dynacor Group Inc.
T: 514-393-9000 #230