MONTREAL, QUEBEC--(Marketwired - Nov. 14, 2016) - 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 unaudited condensed consolidated financial statements and the management's discussion and analysis ("MD&A") for the three-month and nine-month periods ended September 30, 2016.
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).
Dynacor recorded its 22nd consecutive profitable quarter in the three-month period ended September 30, 2016 ("Q3-2016") as it doubled its Q3-2015 net income as it earned a net income of $1.3 M or $0.03 per share in Q3-2016, compared to $0.7 M or $0.02 per share in the three-month period ended September 30, 2015 ("Q3-2015"). For the nine-month period ended September 30, 2016 ("Ytd-2016"), the Corporation earned a net income of $3.1 M or $0.08 per share, compared to $2.8 M or $0.08 per share in the nine-month period ended September 30, 2015 ("Ytd-2015").
Highlights for the third quarter of 2016
- Gold production of 19,131 ounces in Q3-2016 (52,462 ounces in Ytd-2016), compared to 15,607 ounces for Q3-2015 (47,760 ounces in Ytd-2015) a 22.6% increase over Q3-2015 (increase of 9.8% over Ytd-2015);
- Sales of $27.3 M in Q3-2016 ($69.3 M in Ytd-2016), compared to $18.5 M in Q3-2015 ($57.4 M in Ytd-2015), an increase of 47.6% between quarters (increase of 20.7% over Ytd-2015);
- Gross operating margin of $3.9 M (14.3%) in Q3-2016 ($10.0 M and 14.4% in Ytd-2016), compared to $2.5 M (13.6%) in Q3-2015 ($9.4 M and 16.4% in Ytd-2015);
- EBITDA 1 of $3.2 M in Q3-2016 ($7.7 M for Ytd-2016), compared to $1.7 M in Q3-2015 ($6.3 M for Ytd-2015), an increase of 85.4% between quarters (increase of 22.1% over Ytd-2015);
- Cash flow from operating activities before change in working capital items of $2.4 M or $0.06 per share 2 in Q3-2016 ($5.4 M or $0.14 per share 2 for Ytd-2016), compared to $1.3 M or $0.03 per share 2 in Q3-2015 ($4.6 M or $0.13 per share 2 for Ytd-2015);
- Cash on hand of $7.0 M at September 30, 2016, compared to $6.1 M as at December 31, 2015;
- On September 2, 2016, the Corporation received its operating permit for the Veta Dorada Plant from the Ministry of Energy and Mines of Peru ("MEM") and commenced its production activities on September 25, 2016.
Overview
During the period, Dynacor completed the commissioning of its new ore processing facility, the Veta Dorada Plant, located in Chala, in the heart of one of the most productive gold mining regions of Peru. On July 28, 2016, the Corporation announced that the Peruvian Water Authority approved the water usage permit for the Veta Dorada Plant and on September 1, 2016, the operating permit was received from the MEM. The Company started up its processing activities at the end of September 2016 and poured its first gold bar at the Veta Dorada Plant on October 12, 2016.
The Veta Dorada Plant will initiate production at a 300-tpd capacity (102,000 t/y) and management is planning to increase its ore processing capacity to 360-tpd as soon as possible thereafter, as it continues to grow its ore inventory. This plant is designed to be readily expandable to 450-tpd (153,000 t/y) and then to 600-tpd (204,000 t/y) by adding additional processing lines and ball mills.
Results from operations:
Overall, the Huanca Metalex Plant processed 18,418 dry metric tonnes ("DMT") of ore in Q3-2016 (48,809 DMT for Ytd-2016) compared to 17,134 DMT in Q3-2015 (51,506 DMT for Ytd-2015), an increase of 7.5% between quarters (a decrease of 5.2% over Ytd-2015), and it produced 19,131 ounces of gold in Q3-2016 (52,462 ounces for Ytd-2016), as compared to 15,607 ounces of gold in Q3-2015 (47,760 ounces for Ytd-2015). Ore head grade for Q3-2016 increased by 14.4% over Q3-2015 (increase of 16.3% over Ytd-2015), which had a positive impact on the Corporation's production.
Total gold and silver sales in Q3-2016 amounted to $27.3 M ($69.3 M for Ytd-2016), compared to $18.5 M in Q3-2015 ($57.4 M for Ytd-2015), an increase of $8.8 M or 47.6% over Q3-2015 (an increase of $11.9 M or 20.7% over Ytd 2015). Net income was $1.3 M in Q3-2016, compared to $0.7 M in the comparative period of 2015, an increase of 95.5% due to the increase in ounces produced and an increase in the market price of gold.
The gross operating margin for the Q3-2016 amounted to $3.9 M (14.3%) compared to $2.5 M (13.6%), a $1.4 M (56.0%) increase compared to Q3-2015. The gross operating margin of 14.3% for Q3-2016, was affected by the increase in non-cash depreciation which negatively affected the gross margin for the period. Depreciation has increased primarily due to a reduced amortization period for the Huanca Metalex Plant assets, including tailing and asset retirement obligation. Overall, the gross operating margin attained continues to reflect the ability of Dynacor's business model to generate cash flow from operations despite a volatile market price of gold.
Financial statement highlights
| Three-month periods ended September 30, | Nine-month periods ended September 30, | ||||||
| (in $'000) | 2016 | 2015 | 2016 | 2015 | |||
| Sales | 27,317 | 18,471 | 69,266 | 57,440 | |||
| Cost of sales | 23,449 | 15,951 | 59,295 | 47,990 | |||
| Gross operating margin | 3,868 | 2,520 | 9,971 | 9,449 | |||
| General and administrative expenses | 990 | 794 | 2,989 | 2,906 | |||
| Operating income | 2,707 | 1,406 | 6,190 | 5,566 | |||
| Net income and comprehensive income | 1,310 | 670 | 3,077 | 2,792 | |||
| EBITDA 1 | 3,174 | 1,708 | 7,725 | 6,328 | |||
| Net cash flow from operating activities before change in working capital items | 2,358 | 1,259 | 5,379 | 4,608 | |||
| Cash flow from operating activities | 2,049 | 1,659 | 3,075 | 5,852 | |||
| Earnings per share | |||||||
| Basic | $0.03 | $0.02 | $0.08 | $0.08 | |||
| Diluted | $0.03 | $0.02 | $0.08 | $0.07 | |||
| Reconciliation of net comprehensive income to EBITDA 1 | |||||||
| Net comprehensive income | 1,310 | 670 | 3,077 | 2,792 | |||
| Income taxes | 850 | 535 | 2,137 | 2,128 | |||
| Financial expenses | 248 | 38 | 571 | 98 | |||
| Depreciation | 766 | 465 | 1,969 | 1,310 | |||
| Gain on revaluation of financial instrument | - | - | (29 | ) | - | ||
| EBITDA 1 | 3,174 | 1,708 | 7,725 | 6,328 | |||
| Calculation 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 | 2,358 | 1,259 | 5,379 | 4,608 | |||
| Basic weighted average number of common shares outstanding ('000) | 38,400 | 36,500 | 37,798 | 36,370 | |||
| Net cash flow from operating activities before change in working capital items per share 2 | $0.06 | $0.03 | $0.14 | $0.13 | |||
(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 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 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.
Cash flow from operating, investing and financing activities and working capital
Operating Activities
During Q3-2016, the cash flow from operations, before changes in working capital items, amounted to $2.4 M or $0.06 per share ($5.4 M or $0.14 per share for Ytd-2016), compared to $1.3 M or $0.03 per share in Q3-2015 ($4.6 M or $0.13 per share for Ytd-2015). These variations are primarily related to the changes in net income of ($0.7 M increase in Q3-2016, increase of $0.3 M for Ytd-2016) and depreciation ($0.3 M increase in Q3-2016, increase of $0.7 M for Ytd-2016) between the comparative periods.
Investing Activities
During Q3-2016, the Corporation invested $1.9 M ($8.3 M for Ytd-2016) for the acquisition of property, plant and equipment, mainly relating to the commissioning and start-up of the Veta Dorada Plant. Accumulated construction commissioning and start-up costs amount to $17.8 M at September 30, 2016.
Additions to exploration and evaluation assets during Q3-2016, amounted to $0.2 M ($1.0 M for Ytd-2016).
Financing activities
During the quarter, the Corporation pulled an additional $2.0 M on its term loan. Cumulative as at September 30, 2016, the Corporation had drawn $7.0 M on the term loan, made repayments of $0.7 M and paid $0.6 M in transaction and interest costs.
Liquidity
As at September 30, 2016, the Corporation's working capital amounted to $16.2 M, including $7.0 M in cash ($13.0 M, including $6.1 M in cash at December 31, 2015).
2016- Ore processing outlook
The completion of the Veta Dorada Plant was an important and strategic milestone for the Corporation. Now that production has commenced, the focus for the remainder of the year, will be set on increasing its ore inventory at the Veta Dorada Plant, where the Corporation expects to take advantage of a much better milling site location (along the Pan American highway) and better process and cost efficiency to improve its operating results and ramp-up production in the near future.
The Corporation is currently running the Veta Dorada Plant at approximately 250-tpd and is working towards its initial ore processing capacity of 300-tpd. With minor incremental cost, the Corporation plans to expand this capacity to 360-tpd by Q2-2017.
Management is currently evaluating different scenarios pertaining to the Huanca Metalex Plant, which is currently on care and maintenance. This will become clearer once the Veta Dorada Plant reaches its processing capacity and mineralized material volumes are known.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is a gold ore-processing and exploration Corporation active in Peru since 1996. The Corporation differentiates itself from pure exploration companies as it generates income from gold ore-processing. Dynacor's basic share count at 38.7 million outstanding is in the lowest quartile of the resource sector. The Corporation's assets include three exploration properties, including the advanced high-grade gold Tumipampa property, a 85,000-tpy gold and silver ore processing mill on care and maintenance at Huanca and the newly operating Veta Dorada 300-tpd (102,000-tpy) ore processing plant located in Chala (Southern Peru). The Corporation's strength and competitive advantage comes with the experience and knowledge it has developed while working in Peru. Its pride remains in maintaining respect and positive work ethics toward its employees, partners and local communities.
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 Gold Mines Inc. (TSX:DNG)
Website: http://www.dynacor.com
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