Dynacor Gold Mines Reports an Adjusted EBITDA of $2.1M in Q2-2011

MONTREAL, QUEBEC–(Marketwire – Aug. 15, 2011) – Dynacor Gold Mines Inc. (“Dynacor” or the “Company”) (TSX:DNG) today reported its financial results for the second quarter of 2011 ended June 30, 2011. The unaudited interim 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.

Sales during the second quarter surged to $18.1 million compared to sales of $8.8 million in the second quarter of 2010, an increase of 106%. Dynacor sold 11,530 ounces of gold compared to 7,234 ounces in the second quarter of 2010, an increase of 59%.

Q2-2011 Highlights

• Gold production of 11,808 ounces for Q2-2011 compared to 7,291 ounces in Q2-2010, an increase of 62%.
• Cash gross margin of $269 per ounce in Q2-2011 compared to $214 per ounce for the same period last year.
• Operating income of $2 million, a 132% year over year increase.
• Generated net income of $2.6 million or $0.07 per share and an adjusted net income of $1.0 million.
• Adjusted EBITDA of $2.1 million or $0.06 per share.
• Operating cash flows before changes in working capital of $1.5 million or $0.04 per share.

During the quarter ended June 30, 2011, Dynacor generated a net income of $2.6 million or $0.07 per share, which represents a 340% increase from the second quarter 2010 ($0.6 million). The increase in net income for the quarter ended June 30, 2011 is a result of the increase in the sales volume of 59% in Q2-2011 compared to Q2-2010, an increase in the cash gross margin of $55 per ounce and the $1.6M gain on the revaluation of the warrants.

Operating cash flows before changes in working capital were a record $1.5 million during the second quarter of 2011, an increase of 120% compared to the second quarter of 2010 ($ 0.7 million).

Q2-2011 Financial Highlights

The average selling price of gold increased by 26% in Q2-2011 compared to Q2-2010 to $1,511 per ounce from $1,203 per ounce. This increase contributed to the 26% rise in cash gross margin.

Q2-2011 Operations Overview

Consolidated Results and Custom Milling Operations

Outlook

Dynacor has produced 21,734 ounces of gold at an average realized margin of $236 per ounce through the first six months of 2011. Management is pleased to reiterate its production guidance for 2011 with gold production 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 be above the guidance range of $230 per ounce.

Gold production from custom milling is expected to continue to increase in 2012 as a result of higher throughput at the mill.

The Company’s $5.5 million drilling campaign at its 100% owned Tumipampa property will continue to advance in the second half of 2011. Dynacor plans to drill a total of 16,700 meters of which 1,830 meters were completed as at June 30, 2011. The objective is to focus on the 4.1 by 1.2 km skarn ore deposit in order to determine the depth of mineralization and verify the high-grade gold and copper mineralization discovered in surface channel samples.

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.

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. Dynacor’s gold mill produces gold by custom milling. 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

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