Toronto Stock Exchange (TSX): DNG OTC (United States): DNGDF Shares outstanding: 38,866,254 PR-2020-11-16 DYNACOR RETURNS TO PROFIT IN Q3-2020; HIGHEST CASH GROSS OPERATING MARGIN PER OUNCE SINCE 2014 OF $304 PER OUNCE, A YEAR-OVER-YEA R INCREASE OF 34%; OPERATING
1
2020
Dynacor Gold Mines Inc. ( Dynacor )
Symbol:
Toronto Stock Exchange (TSX): DNG
OTC (United States): DNGDF
Shares outstanding: 38,866,254
PR-2020-11-16
DYNACOR RETURNS TO PROFIT IN Q3-2020; HIGHEST CASH GROSS OPERATING MARGIN PER
OUNCE SINCE 2014 OF $304 PER OUNCE, A YEAR-OVER-YEA R INCREASE OF 34%; OPERATING
AT FULL CAPACITY WITH NEAR-TERM PLANS TO EXPAND
Montreal, November 16 th, 2020 – Dynacor Gold Mines Inc. (TSX: DNG / OTC: D NGDF) (Dynacor or
the Corporation) has released its unaudited consolidated financial statements and the management's
discussion and analysis (MD&A) for the third quarter ended September 30, 2020.
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on
the Corporation's website www.dynacor.com .
(All figures in this press release are in Ms of US$ unless stated otherwise. Earnings per share and ca sh-flow per share are in US$. All variance %
are calculated from rounded figures. Some additions might be incorrect due to rounding).
After a three-month stoppage due to the Covid-19 crisis, which ended a streak of thirty-six (36) consecutive
profitable quarters, the Corporation successfully r esumed its ore purchase and processing activities,
immediately returning to profits. During Q3-2020, t he Corporation gradually increased ore purchases an d
generated sales of $ 24.1 million recording a net income of $ 1.2 million ($0.03 per share).
Q3-2020 OVERVIEW
The resumption of activities, together with the return of employees and suppliers, was very successful and
compliant with the Ministry of Health guidelines. O ur COVID-19 sanitary protocol contains measures to
monitor the risk of exposure to the COVID-19 at our workplaces, as well as establishing prevention and
control standards to avoid the appearance and/or th e spread of the virus and to ensure the health and
safety of our workers, suppliers, customers and visitors.
Phase two and three of the Peruvian government deco nfinement plan started in July and August
respectively and although small scale miners reinit iated activities at a slower pace, the Corporation was
able to attract available ore, to gradually increas e its volume throughput and reached by mid-Septembe r
its full production capacity rate of 300 tpd. This production level has been maintained since.
Considering its solid financial situation and the gradual resumption of its activities, the Corporation pursued
its dividend policy and declared in September, a 0.015$ CA per share dividend which was paid in October.
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HIGHLIGHTS FOR THE THIRD QUARTER OF 2020
(Variance %, are calculated based on rounded figures)
Operational and Strategic
• Return to strong volume processed following the Q2- 2020 temporary shut-down. Volume of
23,064 tonnes processed compared to 3,244 tonnes in the previous quarter (Q2-2020) and to
26,421 tonnes in Q3-2019, a decrease of 12.7% compared to 2019, due to the gradual resumption
of operations;
• Gold production comparable to Q1-2020 pre-COVID-19 crisis. Gold production of
13,421 ounces compared to 1,897 ounces in Q2-2020 a nd 22,230 ounces in Q3-2019 due to a
lower ore volume and lower grade of ore processed;
• Increasing ore inventory level . The Corporation’s readiness to restart operations allowed for
aggressive ore purchases helping increase inventory level and sustain production.
Financial
• Sales rapidly resumed after reopening. Sales amounted to $24.1 million in Q3-2020, compared
to $8.0 million in Q2-2020 and $33.7 million in Q3-2019;
• Strong gross operating margin. Gross operating margin of $3.3 million (13.5% of s ales)
compared to $0.0 million in Q2-2020 and $4.6 million in Q3-2019;
• Return to profit. Net income and comprehensive income of $1.2 millio n ($0.03 per share),
compared to a net loss of $0.7 million in Q2-2020 a nd a net income of $2.3 million in Q3-2019
($0.06 per share);
• Highest cash gross operating margin per ounce since 2014. Cash gross operating margin (1)
of $304 per ounce in Q3-2020, compared to $117 per ounce in Q2-2020 and $227 per ounce in
Q3-2019;
• Solid cash flow from operating activities. Cash flow from operating activities before change in
working capital items of $2.3 million ($0.06 per share) (2) , compared to $0.0 million in Q2-2020 and
to $3.0 million ($0.08 per share) in Q3-2019;
• Return to positive EBITDA. EBITDA (3) of $2.7 million, including a $0.3 million of write -off of
exploration and evaluation assets, compared to (-$0 .1 million in Q2-2020) and $4.1 million in
Q3-2019;
• Solid cash position. Cash on hand of $16.6 million in Q3-2020 compared with $6.7 million at year-
end 2019.
Cash Return to Shareholders
• Quarterly dividend. Quarterly dividend of CA$0.015 per share and total ing $0.4 million
(CA$0.6 million) paid in October 2020.
(1) Cash gross operating margin per equivalent ounce A u is calculated by subtracting the average cash cos t 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) 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 si milar measure of another corporation. This measure is calculated on p.14 of
this MD&A. See the “Non-IFRS Measures” section 15 of this MD&A. 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.
(3) 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 all ows investor to compare
the profitability of the Corporation with others by canceling effects of different assets bases, effec ts due to different tax structures
as well as the effects of different capital structures.
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RESULTS FROM OPERATIONS
Extract from Statement of net income and comprehens ive income (unaudited)
Total sales amounted to $24.1 million compared to $33.7 million in Q3-2019. The $9.6 million decrease is
explained by the decreases in ounces sold (-$15.3 million) due to lower grades of ore processed, partially
offset by higher selling prices ($5.7 million).
Our Q3-2020 operating margin beneficiated from the increase in average gold market price in July and
August before a slight decrease in September.
Importantly we achieved a cash gross operating margin of $304 per ounce in Q3-2020 which is 34% higher
than in Q3-2019 and the highest dollar cash gross operating margin per ounce since 2014.This significant
increase is due to the rising gold market price ove r the period and the overall higher gold price comp ared
to 2019.
Reconciliation of non-IFRS measures
Three-month periods
ended September 30,
Nine-month periods
ended September 30,
(in $'000) 2020 2019 2020 2019
Sales 24,089 33,667 62,965 79,283
Cost of sales (20,834) (29,053) (54,729) (69,321)
Gross operating margin 3,255 4,614 8,236 9,962
General and administrative expenses (915) (974) (2,752) (3,081)
Other projects (3) (99) (144) (99)
Operating income 2,337 3,541 5,340 6,782
Income before income taxes (2,023) 3,480 4,915 6,586
Net income and comprehensive income 1,249 2,301 2,949 4,237
Earnings per share
Basic $0.03 $0.06 $0.07 $0.11
Diluted $0.03 $0.06 $0.07 $0.11
(in $'000) Three-month periods
ended September 30, Nine-month periods
ended September 30,
2020 2019 2020 2019
Reconciliation of net income and
comprehensive income to EBITDA (1)
Net income and comprehensive income 1,249 2,300 2,949 4,237
Income taxes 774 1,180 1,966 2,349
Financial expenses (income) 31 (9) 80 56
Depreciation 633 638 1,872 1,899
EBITDA (1) 2,687 4,109 6,867 8,541
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CASH FLOW FROM OPERATING, INVESTING AND FINANCING A CTIVITIES AND LIQUIDITY
Operating activities
During Q3-2020, the cash flow from operations, befo re changes in working capital items, amounted to
$2.3 million ($5.5 million for the nine-month perio d ending September 30, 2020), compared to $0.0 mill ion
in the previous quarter (Q2-2020) and $3.0 million in Q3-2019 ($6.5 million for the nine-month period
ending September 30, 2019). The quarter to quarter increase of $2.3 million is explained by the gradua l
improvement of operations since its restart. The decrease of $0.7 million compared to Q3-2019 is primarily
explained by the decrease in gold production due to lower ore grade, partially compensated by favorabl e
gold market prices.
During Q3-2020, net cash from operating activities amounted to (-$3.3 million) ($14.7 million for the
nine-month period ending September 30, 2020) compared to (-$0.2 million) in Q3-2019 ($1.6 million for the
nine-month period ending September 30, 2019).
Changes in working capital items amounted to (-$5.6 million) and are mainly attributable to the varian ce in
accounts receivable ($9.3 million for the nine-month period ending September 30, 2020 and are attributable
to the variance in inventories). In 2019, these cha nges amounted to (-$3.2 million) and (-$4.9 million )
respectively.
Investing activities
During Q3-2020 and the nine-month period ending Sep tember 30, 2020, investments amounted to
$0,3 million and mainly comprised new vehicles and facilities at the plant in relation with the new he alth
and safety protocol consequence of the COVID-19 crisis.
Financing activities
In 2020, three quarterly dividends of CA$0.015 per share were disbursed for a quarterly consideration of
$0.4 million (CA$0.6 million) (nine month cumulativ e of $1.3 million (CA$ 1.7 million). In 2019, three
quarterly dividends of CA$0.01 per share were disbu rsed for a quarterly total consideration of $0.3 mi llion
(CA$0.4 million) (nine month cumulative of $0.9 million (CA$ 1.2 million).
During the period, the Corporation made repayments of lease liabilities of $0.2 million (cumulative of
$0.5 million in 2020) ($0.2 and $0.5 million in the respective 2019 periods).
Subsequent to September 30, 2020 quarter end, 149,1 85 shares were repurchased for a cash
consideration of $0.2 million (CA$ 0.3 million),
Working Capital and Liquidity
Dynacor continues to maintain a strong working capital position including increased ore and gold in process
inventories. As at September 30, 2020, the Corporat ion’s working capital amounted to $23.2 million,
including $16.6 million in cash ($19.6 million, including $6.7 million in cash at December 31, 2019).
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STATEMENT OF FINANCIAL POSITION
At September 30, 2020, total assets amounted to $73 .8 million ($74.8 million as at December 31, 2019).
Major variances since last year-end come from the s ignificant increase in the cash balance and decreas e
in inventories and bank loan.
(in million $) (unaudited)
As at
September 30,
As at
December 31,
2020 2019
Cash 16.6 6.7
Accounts receivable 6.7 4.7
Inventories 7.3 18.3
Property, plant and equipment 19.8 21.0
Exploration and evaluation assets 18.5 18.7
Other assets 4.9 5.4
Total assets 73.8 74.8
Trade payables and other liabilities 8.0 8.0
Bank loan - 3.0
Asset retirement obligations 3.8 3.8
Shareholders' equity 62.0 60.0
Total liabilities and equity 73.8 74.8
OUTLOOK
Ore processing
In Q3-2020, the Corporation returned to full operat ional capacity. As of mid-September, the Corporatio n is
processing on average 300 tonnes per day which corresponds to the full capacity of the Veta Dorada plant
in Chala. In Q4-2020, without any unforeseen events , the Corporation projects its yearly best quarterl y
production and sales, with a quarterly production of approximately 21,000 ounces of gold.
The Corporation is presently assessing its near-ter m plans to progressively expand the plant’s processing
capacity.
Exploration
The Corporation has planned a $2.4 million drilling program on the Tumipampa project. This program wil l
begin upon agreement with local communities.
Tumipampa is 500 km from Lima, Peru, in the Circa district, Province of Abancay, Department of Apurimac.
Tumipampa’s concessions cover 6,932 hectares and are located geographically on the eastern slopes of
the Andes Mountain Range between 4,200 and 4,800 me tres above sea level.
Major mining companies such as Southern Copper, MMG Limited, Buenaventura, Golden Ideal Gold Mining
(China), Super Strong Mining (China) and Bear Creek Mining own claims surrounding Tumipampa.
Senegal future processing plant
Based on the positive results of the due diligence phase’s, a new company to be created will move forward
on the construction of a new ore-processing pilot plant located in Senegal. Plans are for Dynacor to operate
the plant and own the majority of the new company with 51% ownership. KN Equipments Inc. and FONSIS
will hold the balance at 25% and 24%, respectively.
The Corporation will continue advancing its new Senegalese expansion project upon improvement of the
COVID-19 situation.
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ABOUT DYNACOR
Dynacor is a dividend-paying gold production corpor ation headquartered in Montreal, Canada. The corpor ation is engaged in
production through the processing of ore purchased from the ASM (artisanal and small-scale mining) ind ustry. At present, Dynacor
produces and explores in Peru, where its management team has decades of experience and expertise. In 2 019, Dynacor produced
80,677 ounces of gold.
Dynacor produces environmental and socially respons ible gold through its PX IMPACT® gold program. A gr owing number of
supportive firms from the fine luxury jewelry, watchmakers and investment sectors are paying 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 to our
small-scale artisanal miner’s communities.
Dynacor trades on the Toronto 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 , performance or achievements of Dynacor, or indust ry results, to be materially
different from any future result, performance or ac hievement expressed or implied by such forward-look ing statements. These
statements reflect management’s current expectations regarding future events and operating performance as of the date of this news
release.
Dynacor (TSX: DNG / OTC: DNGDF)
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
Shares outstanding: 38,866,254