Toronto Stock Exchange (TSX): DNG OTC (United States): DNGDF Shares outstanding: 39,211,077 PR-2019-04-05 DYNACOR REPORTS NET INCOME OF US$ 4.8 M IN 2018; A 26% INCREASE
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2019
Dynacor Gold Mines Inc. (Dynacor)
Symbol:
Toronto Stock Exchange (TSX): DNG
OTC (United States): DNGDF
Shares outstanding: 39,211,077
PR-2019-04-05
DYNACOR REPORTS NET INCOME OF US$ 4.8 M IN 2018; A 26% INCREASE
Montreal, April 1st, 201 9 – Dynacor Gold Mines Inc. (TSX: DNG / OTC: DNGDF) (Dynacor or the
Corporation) a Corporation with gold and silver ore processing operations and exploration projects in Peru,
has released its audited consolidated financial statements and the management's discussion and analysis
(MD&A) for the year ended December 31, 2018.
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 millions of US$ unless stated otherwise. Earnings per share and cash-flow per share are in US$. All variance
% are calculated from rounded figures. Some additions might be incorrect due to rounding).
The financial results for 2018 reflect Dynacor’s eighth consecutive year of profits as the Corporation
recorded a net income of $4.8 M ($0.12 per share), an increase of 26.3% compared to 2017.
2018 Highlights
Operational
• In 2018, the Corporation achieved a new production record of 81,314 ounces of gold, an increase
of 1.8% compared to 2017 (79,897 ounces);
• For 2018, the Veta Dorada plant processed a total of 91,512 tonnes of ore compared to
76,918 tonnes in 2017 a significant increase of 19.0%.
Financial
• Sales of $104.7 M in 2018 an increase of 2.9% compared to 2017;
• Gross operating margin of $13.2 M (12.6%) in 2018, a 1.5% decrease compared to 2017;
• Net income and comprehensive income of $4.8 M in 2018 ($0.12 per share), an increase of 26.3%
compared to 2017;
• EBITDA (1) of $10.5 M, a decrease of 6.2% compared to 2017;
• Cash flow from operating activities before change in working capital items of $8.4 M ($0.21 per
share) (2), a decrease of 3.4% compared to 2017.
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• In Q2-2018, the Corporation implemented a normal course issuer bid share buyback program and
in Q3-2018 it initiated the first quarterly cash dividend payment to its shareholders.
(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 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 the investor to compare the profitability of th e
Corporation with others by canceling effects of different assets bases, effects due to different tax structures as well as th e 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 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.
2018 OVERVIEW
Overall 2018 was a solid year for Dynacor, as it continued to strengthen its financial position mostly due to
the achievement of a new record production level.
The 2018 gold production was nevertheless under yearly expectative which ranged between 90,000 and
94,000 ounces and which had been reviewed to 82,000 at the beginning of the fourth quarter of 2018. The
decrease was mainly due to lower average grade ore supplied during the year.
RESULTS FROM OPERATIONS
Extract from Statement of net income and comprehensive income
For the years ended
December 31,
(in $'000) 2018 2017
Sales 104,650 101,695
Cost of sales (91,484) (88,282)
Gross operating margin 13,166 13,413
General and administrative expenses (4,718) (3,867)
Transition, maintenance and other expenses - (1,118)
Operating income 8,448 8,428
Income before income taxes 7,935 6,763
Net income and comprehensive income 4,821 3,841
Earnings per share
Basic $0.12 $0.10
Diluted $0.12 $0.10
Total sales amounted to $104.7 M in 2018 compared to $101.7 M in 2017. The $3.0 M increase is explained
by increases in gold price ($1.1 M) combined with increases in the number of ounces sold ($1.9 M).
In 2018, general and administrative expenses comprised specific operational items including a non- cash
provision for impairment of accounts receivable of $0.3M.
The 2017 transition, maintenance and other expenses were related to the closure of the Huanca Metalex
Plant and mainly comprised the depreciation charge.
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Reconciliation of non-IFRS measures
For the years ended
December 31,
2018 2017
Reconciliation of net income and comprehensive income to
EBITDA (1)
Net income and comprehensive income 4,821 3,841
Income taxes 3,113 2,922
Financial expenses 196 1,330
Depreciation 2,410 2,866
Write-off of exploration and evaluation assets 7 270
EBITDA (1) 10,547 11,229
Fourth quarter results
During the fourth quarter ended December 31, 2018, the Corporation recorded a net income of $1.3 M
($0.03 per share) compared to $1.4 M ($0.04 per share) in the comparative period of 2017.
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND LIQUIDITY
Operating activities
For the year ended December 31, 2018, total cash generated from operating activities amounted
to $12.7 M ($0.32 per share), compared to $7.4 M ($0.19 per share) in 2017. The cash flow from operating
activities before change in working capital items amounted to $8.4 M ($0.21 per share), compared to
$8.7 M ($0.22 per share) in 2017.
Investing activities
During the year ended December 31, 2018, the Corporation invested $1.4 M ($0.7 M for the year ended
December 31, 2017) for the acquisition of property, plant and equipment, relating to the additions to the
Chala plant and rolling stock. Additions to exploration and evaluation assets during the year, amounted to
$1.0 M ($0.6 M in 2017) and consisted in the completion of the geophysics program, results in analysis and
definition of drilling targets on the Tumipampa project in view of the awaiting surface drilling campaign.
Financing activities
During the year, the Corporation announced its first quarterly dividend payment of CA$0,01 per share which
was disbursed in October for a total consideration of $0.3 M (CA$0.4 M). A second dividend was declared
in November of 2018 and was paid subsequent to year end.
In 2018, the Corporation initiated a share buyback program. A total of 446,367 shares were repurchased in
2018 for a total cash consideration of $0.6 M (CA$0.7 M).
As well during the year , a total of 1,143,750 stock options were exercised for total proceeds of $0.5 M
(CA$0.7 M).
Payments on asset retirement obligations amounted to $0.6 M in both 2018 and 2017. They related to the
dismantling of the Huanca plant and the site restoration completed in 2018.
Other financing activities consisted in the repayment of finance lease obligation for $0.3M.
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Liquidity
As at December 31, 2018, the Corporation’s working capital amounted to $19.7 M, including $13.9 M in
cash ($16.0 M, including $4.8 M in cash at December 31, 2017).
2019 OUTLOOK
Ore processing
Dynacor’s production outlook in 2019 reflects stable production with an increase in target ranging between
82,000 and 92,000 ounces (based on the previous two years average ore grade supplied to our plant) from
2018’s production of 81,314 ounces. In Q4- 2018, the Veta Dorada plant in Peru operated at 94% of its
capacity (88% in 2018). Steady production levels and continuous plant improvements in cost optimization
should positively impact cash flows from operations.
Exploration
Planned drilling
Recent regulation changes have caused delays for exploration project s in Peru. The Corporation is still
waiting for the release of its new exploration permit applied for in the first quarter of 2018. Upon obtaining
the permit, we will be able the start of Dynacor’s planned drilling campaign in the disseminated section of
the Tumipampa property.
The drilling campaign will consist of:
● The first phase of twelve (12) holes totaling 4,200 meters:
o Priority 1 targets to be 2,700 m (8 holes)
o Priority 2 targets to be 1,500 m (4 holes)
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ABOUT DYNACOR
Dynacor is a dividend paying gold production corporation headquartered in Montreal, Canada. The
corporation is engaged in production through the processing of ore purchased from small scale artisanal
miners. At present, Dynacor produces and explores in Peru where its management team has decades of
experience and expertise. In 2018, Dynacor produced 81,314 ounces of gold, a yearly best and 1.8%
increase as compared with 2017 (79,897 ounces).
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 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 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.
Dynacor (TSX: DNG / OTC: DNGDF)
Website: http://www.dynacor.com
Twitter: http://twitter.com/DynacorGold
For more information, please contact: Dynacor
Dale Nejmeldeen
Director, Shareholder Relations
Dynacor
T: 604.492.0099 | M: 604.562.1348