Welcome!

News Feed Item

Dynacor Announces Net Income of US$ 0.9 Million ($0.02 Per Share) in Q1- 2014

MONTREAL, QUEBEC -- (Marketwired) -- 05/14/14 -- 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 for the three-month period ended March 31, 2014.

The unaudited condensed interim consolidated financial statements along with the management's discussion and analysis "MD&A" are available on the Company's website www.dynacor.com and the documents have been filed electronically with SEDAR at www.sedar.com.

(All figures in this press release are in millions of US$ unless stated otherwise. Earnings per share and gross operating margin per ounce are in US$. All variance % are calculated with rounded figures).

Q1-Overview

In January 2014, the Peruvian Government and its Customs and Excise Agency (Sunat) implemented a series of new vigorous measures to crack-down on illegal gold mining and illegal gold exports. This led to long and unpredictable delays for the sale and export of Dynacor's gold production and consequently impacted the Corporation's cash liquidity and its ability to purchase ore. Because of the uncertainties the Corporation was faced with, management decided to temporarily and voluntarily suspend its ore purchases and slow down its ore processing activities. At one point during Q1-2014, the Corporation had accumulated in excess of 170 kg of unsold finished gold dore bars valued at that time at $7.5 M.

Dynacor was able to resume its gold sales and exports in early March 2014. Nevertheless, as of March 31, 2014 the Corporation still had approximately 121 kg of produced and unsold gold dore bars. Since then this gold inventory has been exported and sold.

The unexpected delays and their impact on the Corporation's operations have temporally affected Dynacor's Q1-2014 financial results. Dynacor is currently re-building its ore inventory and as of late April is operating its Huanca plant close to its maximum ore processing capacity.

During the three-month period ended March 31, 2014, Dynacor recorded a net income of $0.9 M ($0.02 per share) compared to $3.0M ($0.08 per share) in Q1-2013; and a cash flow from operating activities before changes in working capital items of $1.3M ($0.03 per share) (1) in Q1-2014 compared to $3.1M ($0.09 per share) (1) a 58.1% decrease over Q1-2013.

Jean Martineau Dynacor's President and CEO recently stated that "Under the circumstances and although we had to suspend our ore purchases and reduce production during the first quarter, I am very pleased with our Q1-2014 results and with the way the Corporation handled this difficult business environment in order to maintain a solid financial situation. Our Q1 results demonstrate the strength of our business model and despite all the difficulties we were able to record a net income."

Finally, during the month of March, 2014, the association of independent miners triggered a strike with the objective to get the Peruvian government to negotiate and clarify the ongoing formalization process in Peru. On March 25, 2014, the associations of small miners and the Peruvian authorities came to an agreement whereby the formalization process for the independent miners already registered with the Government will be extended for a period of two years. Accordingly, since the Corporation solely purchases ore from Government registered miners, it does not foresee any further issues with respect to our ore purchasing operations.

Q1-2014 HIGHLIGHTS


--  In January 2014, strong measures were taken by the Peruvian authorities
    to combat illegal gold mining and illegal gold exports from Peru (see
    overview above); 
--  Dynacor temporary stopped its ore purchases and gold exports for one
    month. Ore processing operations resumed in early March 2014; 
--  Cash on hand of $8.9 M at March 31, 2014 compared to $8.5 M at December
    31, 2013; 
--  Gold and silver sales of $12.3 M compared to $33.3 M in Q1-2013 a
    decrease of 63.1 %; 
--  Gold production of 12,175 oz compared to 20,027 oz in Q1-2013 a decrease
    of 39.2 %; 
--  Net income of $0.9M in Q1-2014 ($0.02 per share) compared to $3.0M
    ($0.08 per share) in Q1-2013; 
--  EBITDA of $1.8 M in Q1-2014 compared to $4.6M in Q1-2013; 
--  Cash flow from operating activities before change in working capital
    items of $1.3M ($0.03 per share) (1) in Q1-2014 compared to $3.1M ($0.09
    per share) (1) a 58.1% decrease over Q1-2013;

(1) Cash-flow per share is a non-GAAP 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 Company uses this non-GAAP measure which can also be helpful to investors as it provides a result which can be compared with the Company market share price.

Results from operations:

During the three-month period ended March 31, 2014, the Corporation increased its net shareholder equity by 3.1% from $31.8 M at year-end 2013 to $32.8 M at March 31, 2014.

During the period, due to the circumstances described above, the Huanca processing plant operated at a reduced pace processing overall 14,002 DMT of ore compared to 18,677 in Q1-2013 a decrease of 25.0% and produced 12,175 ounces of gold compared to 20,027 in Q1-2013 a decrease of 39.2%.

Total sales amounted to $12.3 M including $0.4 M in silver sales compared to $33.3 M including $0.9 M in silver, a total decrease of 63.1% compared to Q1-2013 due to reduced production and ore grades, reduced average sale price per ounce and accumulation of unsold gold dore produced during the quarter.

The average gold grade for Q1-2014 was 0.92 oz/ DMT compared to 1.14 oz/DMT in Q1-2013 a decrease of 19.3% in the ore grade processed as Q1-2013 provided exceptionally unexpected high grade ore.

During the period, the Corporation completed its 2013 exploration program at Tumipampa and worked on the preparation of the next phase to be initiated in Q2-2014.

At March 31, 2014 the Company's working capital amounted to $17.8M compared to $17.4M at December 31, 2013, an increase of 2.3%.

FINANCIAL HIGHLIGHTS


                                               For three-months period ended
                                                                   March 31,
(in $'000)                                             2014             2013
                                          ----------------------------------
                                          ----------------------------------
                                                                            
Sales                                                12,304           33,342
Cost of sales                                         9,748           27,700
Gross operating margin                                2,556            5,642
General and administrative expenses                     812              830
Operating income                                      1,553            4,286
Net income and comprehensive income                     859            2,978
EBITDA(1)                                             1,834            4,617
                                                                            
Net Cash flow from operating activities                                     
 before changes in working capital items              1,253            3,135
Cash flow from operating activities                   1,253            3,840
                                                                            
Earnings per share                                                          
Basic                                                 $0.02            $0.08
Diluted                                               $0.02            $0.08
                                                                            
Reconciliation of Net comprehensive income                                  
 to EBITDA (1)                                                              
                                                                            
Net comprehensive income                                859            2,978
Income taxes                                            604            1,205
Financial expenses                                       29               93
Depreciation                                            342              341
                                          ----------------------------------
EBITDA                                                1,834            4,617
                                          ----------------------------------
                                          ----------------------------------

(1)EBITDA: "Earnings before interest, taxes, depreciation and amortization, revaluation of warrants and impairment" is a non-GAAP 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-GAAP 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.

CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND

WORKING CAPITAL

Operating Activities

During Q1-2014, the Company recorded a net income of $0.9M ($0.02 per share) compared to $3.0M ($0.08 per share) in 2013 a decrease of $2.1M and 70% compared to Q1-2013.

As explained, the decrease in net income is due the decrease of $3.0M (54.6%) in the gross operating margin due to reduced processing operations during the period ($2.6M in Q1-2014 compared to $5.6M in Q1-2013).

The important decrease in gold production and gold sales compared with last year, explains the decrease in cash flow from operations before changes in working capital items which amounted to $1.3M for Q1-2014 compared to $3.1M for Q1-2013.

Total cash generated from operating activities amounted to $1.3 M compared to $3.8 M in 2013. At March 31, 2014 ore inventory were of three days of production as the Corporation was resuming purchasing ore to rebuild its ore inventory. Trades and other receivables decreased by $4.2 M over year-end 2013 figure as the Company recovered Peruvian sales tax related to Q3 and Q4 of 2013.

Investing Activities

During the period, the Company invested $0.6M ($0.3M in Q1-2013) to increase the gold recovery rate at 250 tpd and build a new tailing pond at Huanca.

Additions to exploration and evaluation assets amounted to $0.2 M in Q1-2014 ($0.5 M in Q1-2013). The Q1-2014 costs related to the final process of the 2013 exploration campaign and the preparation of an environmental impact assessment at Tumipampa.

Liquidity and working capital

As at March 31, 2014, the Company's working capital amounted to $17.8M including $8.9M in cash compared to $17.4M including $8.5M in cash at December 31, 2013.

As at March 31, 2014, the Company had no financial commitment beside those disclosed in the section Long Term Liabilities and Contractual Obligations and has no restrictions in transferring funds from Peruvian subsidiaries to the parent Company.

2014- Ore processing outlook

Ore processing operations

Due to the uncertainties that prevailed during Q1-2014 in Peru, the Corporation was not in a position to publish any production guidance for 2014.

The outlook for the next three quarters is now clearer and the Corporation can now confidently set a processing target of 75,000 DMT and a production target of 70,000 ounces of gold for 2014.

Total gold production in 2013, which was uninterrupted, was 76,883 ounces (78,681 DMT of ore processed). Production exceeded the initial 2013 guidance of 66,000 ounces of gold, since throughout the year overall grades of purchased ore continued to exceed forecasts. In 2013, the plant capacity was increased from 220 tpd at the beginning of 2013 to 230 and then 240 tpd during the third and fourth quarter of 2013.

2014- Exploration outlook

Following the high gold grade results obtained in 2013 from the cross cut and underground drilling of the Manto Dorado and the three other high grade veins Dynacor is planning to intensify its exploration of Tumipampa in 2014 and 2015. Further data is required in order to be able to publish a National Instrument 43-101 resource report.

The 2014 exploration campaign will begin immediately after the rainy season in Q2-2014 and will initially entail improving and hardening the 20-km access road to the property, building a safe storage area for sterile cross cut excavation rock as well as the construction of a new Tumipampa exploration camp with better facilities.

Exploration activities for 2014-2015 will include the following:


--  Geochemical and geological surface mapping of the disseminated gold area
    (120 ha); 
--  Geophysical studies of the disseminated gold area (120 ha): 
--  Excavation of a 420-meter extension of the cross cut towards the Rosa,
    A, Tumi veins; 
--  Underground drilling from the extended cross cut (12 drill holes  
    2000m) 
--  Surface drilling targeting the disseminated gold mineralization (6 drill
    holes   1800m)

Exploration expenditure for 2014 is budgeted at $3.0M within an overall program to continue into 2015 estimated at $4.5 M.

Chala Mill

With the current situation prevailing in Peru, the Corporation is facing additional delays in the obtaining of its construction permit at Chala. The Corporation will inform of any development as they occur.

ABOUT DYNACOR GOLD MINES INC.

Dynacor is a gold and silver ore processing and a gold exploration and mining Corporation active in Peru through its subsidiaries since 1996. The Corporation differentiates itself from pure exploration companies as it also generates income and cash flow from its wholly owned gold ore processing plant in Peru. The Corporation's assets include five exploration properties, including the Tumipampa property, as well as its now 250 tpd gold and silver ore processing mill at Huanca. Dynacor's mill produces gold from the processing of ore purchased from many registered miners. Dynacor's strength and competitive advantage comes with the experience and knowledge the Corporation 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.dynacorgold.com

Twitter: http://twitter.com/DynacorGold

Facebook: facebook.com/DynacorGoldMines

Shares outstanding: 36,373,587

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera M...
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
IoT is fundamentally transforming the auto industry, turning the vehicle into a hub for connected services, including safety, infotainment and usage-based insurance. Auto manufacturers – and businesses across all verticals – have built an entire ecosystem around the Connected Car, creating new customer touch points and revenue streams. In his session at @ThingsExpo, Macario Namie, Head of IoT Strategy at Cisco Jasper, will share real-world examples of how IoT transforms the car from a static p...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
From wearable activity trackers to fantasy e-sports, data and technology are transforming the way athletes train for the game and fans engage with their teams. In his session at @ThingsExpo, will present key data findings from leading sports organizations San Francisco 49ers, Orlando Magic NBA team. By utilizing data analytics these sports orgs have recognized new revenue streams, doubled its fan base and streamlined costs at its stadiums. John Paul is the CEO and Founder of VenueNext. Prior ...
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
The many IoT deployments around the world are busy integrating smart devices and sensors into their enterprise IT infrastructures. Yet all of this technology – and there are an amazing number of choices – is of no use without the software to gather, communicate, and analyze the new data flows. Without software, there is no IT. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the protocols that communicate data and the emerging data analy...