Dynacor Q1-2017 Net Income Increases 33.8%

MONTREAL, QUEBEC--(May 12, 2017) -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 period ended March 31, 2017. 

 

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 %, except for net income, are calculated from rounded figures. Some additions might be incorrect due to rounding).

Dynacor recorded its 24th consecutive profitable quarter in the three-month period ended March 31, 2017 ("Q1-2017") which saw its net income increase by 33.8% over 2016, as it earned a net income of $0.94 M or $0.02 per share, compared to $0.70 M or $0.02 per share for the three-month period ended March 31, 2016 ("Q1-2016").

 

Highlights for the first quarter of 2017

 

Gold production of 17,125 ounces in Q1-2017, compared to 15,807 ounces in Q1-2016, an increase of 8.3%;

Sales of $24.7 M in Q1-2017, compared to $20.4 M in Q1-2016, an increase of 21.1%;

Gross operating margin of $3.1 M (12.5%) in Q1-2017, compared to $3.0 M (14.6%) in Q1-2016, an increase in dollars of 3.3%;

EBITDA (1) of $2.5 M in Q1-2017, compared to $2.3 M in Q1-2016, an increase of 8.7%;

Cash flow from operating activities before change in working capital items of $1.8 M ($0.05 per share) (2) in Q1-2017, compared to $1.5 M ($0.04 per share) (2) in Q1-2016, an increase of 20.0%;

Cash on hand of $8.7 M at March 31, 2017, compared to $6.2 M as at December 31, 2016.

Overview

 

The Veta Dorada Plant was officially inaugurated on October 3, 2016. This plant is the stepping stone for the future growth of our processing activities in Peru.

 

The first quarter of 2017, was highlighted by extremely heavy rainfalls, occurring mostly in March, that caused extensive flooding and loss of lives in the northern regions of Peru. El Nino like conditions that deployed near Peru's coast affected the overall miners' production and transport conditions during the later stages of Q1 and into the second quarter of 2017.

 

Despite these challenges, the gross operating margin obtained at the Veta Dorada Plant in Q1-2017 (its second quarter of operations) increased to 12.5%, compared to 9.5% during its initial quarter of operations (Q4-2016).

 

Overall, Dynacor's gold production and sales improved compared to Q1-2016 and are in line with expected production for the period. The Corporation expects that the Veta Dorada Plant's location and design will lead to operating cost savings in the following areas: energy, transport, tailing management and lower overall per unit costs due to a higher ore throughput.

 

Results from operations:

 

Overall, we averaged a daily ore throughput rate of 200 tpd compared to 159 tpd in Q1-2016, a 25.8% increase. The Corporation processed 16,796 dry metric tonnes ("DMT") of ore compared to 13,543 DMT in Q1-2016, an increase of 24.0%, and produced 17,125 ounces of gold in Q1-2017, as compared to 15,807 ounces of gold in Q1-2016 an increase of 8,3%.

 

Total sales amounted to $24.7 M in Q1-2017, compared to $20.4 M in Q1-2016, an increase of 21.1%. The decrease from the Q1-2016 gross operating margin (as a percentage of sales) is attributable to the ramp-up of the Veta Dorada Plant. Net income was $0.94 M in Q1-2017, compared to $0.70 M in Q1-2016, an increase of 33.8% between quarters. Overall, this increase is due to the higher gross operating margin of $0.1 M, the decrease in selling expenses of $0.3 M, and the decrease in the foreign exchange loss of $0.2 M, mostly offset by the increase in general and administration expenses of $0.2 M, the increase in transition, maintenance and other expenses of $0.2 M and the increase in financial expenses of $0.1 M.

 

Jean Martineau, Dynacor's CEO and President commented, "Despite the worst rainy season in the last 20 years in Peru, we have achieved solid operational results. We have managed to increase not only our gold production but also our ore purchases by 15% and ore processing by 24%. This clearly shows the impact of our new plant and sustained efforts on the ground".