Dynacor Gold Mines Inc.
TSX : DNG

Dynacor Gold Mines Inc.

November 14, 2011 07:00 ET

Dynacor Gold Mines Reports Q3-2011 Results: Adjusted EBITDA of $2.4 M, Earnings per Share of $0.05 and Appoints New CFO

MONTREAL, QUEBEC--(Marketwire - Nov. 14, 2011) - Dynacor Gold Mines Inc. ("Dynacor" or the "Company") (TSX:DNG) today reported its financial results for the third quarter ended September 30, 2011. The unaudited condensed interim consolidated financial statements along with management's discussion and analysis are available on the Company's website www.dynacorgold.com. The documents have been filed electronically with SEDAR at www.sedar.com. All amounts are in U.S. dollars unless otherwise indicated.

The Company's ore processing activities in Peru continue to offer a strong performance. During the third quarter, sales amounted to $20.0 million for cumulative total sales of $52.8 million for the nine-month period ended September 30, 2011 compared to $12.6 million and cumulative sales of $27.5 million for the same periods in 2010, an increase of 58.7% and 92.0% respectively over 2010.

During the quarter, Dynacor sold 11,121 ounces of gold compared to 9,977 ounces in the third quarter of 2010, an increase of 11.5%.

Q3-2011 Highlights

  • Total sales of $20.0M during the quarter ($12.6M in Q3-2010);
  • Net earnings of 0.05 per share (Net loss of $0.03 per share in Q3-2010)
  • Adjusted EBITDA of $2.4M (loss of $0.1M in Q3-2010);
  • 16,575 MT (metric tonne) processed (33% increase over the 12,464 MT in Q3-2010);
  • 11,134 ounces of gold produced during the quarter for a cumulative of 32,868 ounces in 2011 (10,576 ounces in Q3-2010 and cumulative of 23,047 ounces in 2010);
  • Gross margin before depreciation of $256 per ounce ($228 per once in Q3-2010);
  • Operating income of $2.0M (cumulative of $5.1M in 2011) ($1.5M in Q3-2010 and cumulative $2.7M);
  • Adjusted net income of $1.3.M in Q3-2011 compared to an adjusted net loss of $0.8M in Q3-2010.

During the quarter ended September 30, 2011, Dynacor generated a net income of $1.8 million or $0.05 per share, compared to a loss of ($0.8 million) ($0.03 per share) in Q3-2010. The increase in net income for the quarter ended September 30, 2011 is a result of the increase of its gross operating margins explained by higher gold sales price and increased production. The net income also includes a non-cash gain on revaluation of warrants of $0.4 million. In 2010, the Company had recorded a $1.6 million provision on Peruvian sales receivable withheld which had contributed to the Q3-2010 loss.

Q3 FINANCIAL HIGHLIGHTS

For the three-month periods ended
September 30,
For the nine-month periods ended
September 30,
(in $'000) 2011 2010 2011 2010
Sales 20,015 12,618 52,801 27,540
Cost of sales 17,042 10,326 44,364 22,813
Gross operating margin 2,973 2,292 8,437 4,727
General and administrative expenses 682 546 2,404 1,537
Operating income 1,958 1,519 5,148 2,697
Net income (loss) 1,750 (779 ) 2,987 (45 )
Adjusted Net income (1) 1,349 (779 ) 2,692 (45 )
Adjusted EBITDA(2) 2,362 (55 ) 5,555 1,473
Cash flow from operating activities before non-cash working capital items 1,500 990 3,496 1,794
Cash flow from operating activities 1,712 1,298 798 803
Earnings per share
Basic $0.05 ($0.03 ) $0.08 ($0.00 )
Diluted $0.05 ($0.02 ) $0.08 ($0.00 )
Reconciliation of Net comprehensive income to Adjusted net income (1)
Net comprehensive income 1,750 (779 ) 2,987 (45 )
Revaluation of warrants (401 ) - (295 ) -
Adjusted net comprehensive income 1,349 (779 ) 2,692 (45 )
Reconciliation of Net comprehensive income to Adjusted EBITDA (2)
Net comprehensive income 1,750 (779 ) 2,987 (45 )
Income taxes 664 610 2,043 1,247
Financial expenses 118 48 341 77
Depreciation 231 66 479 194
Revaluation of warrants (401 ) - (295 ) -
Adjusted EBITDA 2,362 (55 ) 5,555 1,473
(1) Adjusted net income: is a non-GAAP financial performance measure with no standard definition under IFRS and Canadian GAAP. See the 'Non-GAAP Measures' section of the MDA.
(2) Adjusted EBITDA: "Adjusted Earnings before interest, taxes, depreciation and amortization" is a non-GAAP financial performance measure with no standard definition under IFRS and Canadian GAAP. See the 'Non-GAAP Measures' section of the MDA.

Q3-2011 Operations Overview

Consolidated Results and Ore Processing Operations

Sales, Production and Average Gross Margin

Three months ended September 30 Nine-months ended September 30
2011 2010 2011 2010
Gold Production (ounces) 11,134 10,576 32,868 23,047
Gold Sales (ounces) 11,121 9,977 32,733 22,553
Average selling price
(per ounce)
$1,712 $1,235 $1,542 $1,195
Average gross margin
(per ounce)
$256 $228 $244 $208
Gross operating margin
($ '000)
$2,973 $2,292 $8,437 $4,727

Outlook

During the first nine months of 2011, Dynacor produced 32,868 ounces of gold at an average realized margin of $244 per ounce nearly surpassing its annual 2010 total production of 33,526 ounces. Although the 2011 average grade ore supplied is lower compared to 2010, the production is still in line with the Company's 2011 objectives of 45,000 ounces. The combination of the Company's expansion plans in the first two quarters, the operational execution of our milling crew and the continued strength of gold prices have allowed the year-to-date average gross margin per ounce to exceed the guidance range of $230 per ounce.

With the recent increase capacity at our Acari plant, gold production from processing of purchased ore is expected to continue to increase in 2012 as a result of higher throughput at the mill. Accordingly, management expects that, bearing the seasonally strong gold and silver price, production and financial results for the fourth quarter of 2011 should continue to improve.

The analysis performed by the Company's exploration team, suggest several different interesting options which are still currently being evaluated in terms of specific budget and appropriate timing in order to establish the working calendar program. Those options include additional drilling of the skarn beginning with Zone IV as a priority target, the drilling of newly identified targets and of the gold vein rich areas to the south as well as, further advance exploration of this area which could include the excavation of an adit followed by access development to prepare for an underground cross-cut through the veins in order to lead to an eventual bulk sampling.

On January 1, 2011, International Financial Reporting Standards ("IFRS") became Canadian GAAP for publicly-accountable enterprises. DNG's interim and annual financial statements are therefore prepared in accordance with IFRS as of January 1, 2011 and comparable figures for 2010 have been restated accordingly. DNG has also therefore adopted the US dollar as its functional and reporting currency.

APPOINTMENT OF NEW VICE-PRESIDENT AND CFO

The Board of Directors is pleased to announce the appointment of Leonard Teoli as Vice-President Finance and Chief Financial Officer. The Board also wishes to thank Joey Trombino for his exceptional services to the Company since February 2009. Joey Trombino resigned from his position as Dynacor Gold's Vice-President and CFO in order to focus his career as the full time Vice President and Chief Financial Officer of Malaga Inc.

Leonard Teoli joined Dynacor on September 1st. He started his career with Price Waterhouse, in 1987, where he served clients in the mining industry until 1996. He has more than 20 years of experience as an accounting and finance executive with several Canadian junior mining companies involved in exploration projects worldwide. From 2003 to 2008 he was CFO of Diabras Exploration where he participated in the start-up in 2006 of a pilot mining operation in Mexico. Since then he acted as consultant and CFO for a couple of exploration companies with projects in Canada and as CFO of Maya Gold and Silver Inc an exploration company involved in projects in Morocco. He has been a member of the Canadian Institute of Chartered Accountants since 1990.

Jean Martineau commenting on the nomination stated "I am very pleased to have Leonard on board as our new Vice-President and CFO since he has worked for many years in the mining sector internationally and has a special expertise in problem solving and finding viable solutions in the international arena. I would also like to specially thank Joey Trombino who over the past two and half years smoothly managed the company's transition to the international financial reporting standards (IFRS) which was a daunting task and I wish him all the best and lots of success in his career. "

ABOUT DYNACOR GOLD MINES INC.

Dynacor is a gold exploration and mining company active in Peru through its subsidiaries since 1996. The Company's assets include the Acari, Casaden and Tumipampa exploration properties along with a 200 tpd ore processing mill. Dynacor's gold mill produces gold from the processing of ore purchased from local producers. Dynacor's strength and competitive advantage comes with the experience and knowledge the Company 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.

Website: http://www.dynacorgold.com

Twitter: http://twitter.com/DynacorGold

Facebook: http://www.facebook.com/pages/Dynacor-Gold-Mines-Inc/222350787793085

Contact Information

  • Dynacor Gold Mines Inc.
    Jean Martineau
    President and CEO
    514-288-3224 ext. 228

    Dale Nejmeldeen
    Investor Relations
    Dynacor Gold Mines Inc.
    778.574.2806 or M: 604.562.1348
    604.608.9223 (FAX)
    nejmeldeen@dynacorgold.com