Dynacor Gold Mines Generates $1.3 million in Cash Flow from Operations in Q3-2010

MONTRÉAL, QUÉBEC–(Marketwire – Nov. 15, 2010) – Dynacor Gold Mines Inc. (TSX:DNG) released its financial results for the third quarter ended September 30, 2010. The financial statements along with the 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.

Dynacor generated $1.3 million in cash flow from operations in Q3-2010 compared to a use of $0.2 in Q3-2009. Cash flow from operations before non-cash working capital items amounted to $1.0 million, an increase of $2.2 million compared to Q3-2009. For the nine-month period ended September 30, 2010, Dynacor reported a cash flow from operations before non-cash working capital items of $1.8 million, an increase of $1.4 million year-over-year.

«Dynacor has surpassed significantly its objective of 7,000 to 9,000 ounces established for the third quarter with sales close to 10,000 ounces and a production above this level. At this pace, on an annual basis, Dynacor would produce more than 40,000 ounces. This coupled with the cash gross margin of $237 per ounce will allow us to invest to further increase the volume of gold and invest more into the exploration of Tumipampa. Dynacor’s financial position remains strong with a working capital of $3.0 million of which $2.2 million is cash and short-term investments.” commented Mr. Pierre Monet, Vice President and Chief Financial Officer of Dynacor Gold Mines Inc.

RECORD GOLD SALES

Dynacor achieved record gold sales of $13.1 million for the quarter, $9.4 million more than the same period last year. It sold 9,977 ounces of gold during the quarter compared to 3,321 ounces for the corresponding quarter of 2009 and produced 10,576 ounces of gold, an increase of 182% from the same period last year. The gross margin increased by $2.7 million compared to the same quarter last year. Cash gross margin per ounce grew to $237 from $101 a year ago.

For the third quarter of 2010, Dynacor generated an EBITDA⁽¹⁾ of $1.5 million compared to $1.0 million negative in Q3-2009. Dynacor continues to take the necessary steps to recover the sales tax receivable withheld, however, it has decided, for conservative purposes, to fully provide for the amount. Therefore, net loss amounted to $1.0 million in Q3-2010 compared to $1.5 million for the corresponding quarter of 2009.

“We are pleased with the third quarter performance as it continues to exceed expectations. We can expedite an aggressive exploration campaign focussed on our flagship Tumipampa property. There are great expectations considering the results obtained from surface samples collected (see press release dated August 11, 2009 and January 27, 2010). The property is located in a world class copper and gold skarn-porphyry area” added Mr. Jean Martineau, President and Chief Executive Officer of Dynacor Gold Mines Inc. 

(1) EBITDA is a non-GAAP measure. See the non-GAAP reconciliation in Dynacor’s MDA

Q3 2010 HIGHLIGHTS

• Production of gold for the quarter 10,576 ounces (3,756 ounces in Q3-2009)
• Gold sales of 9,977 ounces (3,321 ounces in 2009), an increase of 200%
• EBITDA⁽¹⁾ of $1.5M (negative EBITDA of $1.0M in Q3-2009)
• Cash flow generated from operating activities before change in non-cash working capital items, $1.0M compared to a use of $1.2M in Q3-2009
• Increase of $2.3M in operating income ($1.5M compared to a loss of $0.8M in Q3-2009)
• Gross margin before amortization of $237 per ounce compared to $101 per ounce in Q3-2009
• Peruvian sales tax receivable withheld was fully provisioned.

Key Financial Information(in $’000)	For the three-month periods ended on September 30,				For the nine-month periods ended on September 30,
	2010		2009		2010		2009
Sales	13,099		3,670		28,536		20,350
Cost of sales (excluding amortization)	10,657		3,299		23,524		16,433
Gross margin	2,345		(329	)	4,736		3,031
General and administrative expenses	540		420		1,463		1,214
Earnings (loss) before provision on the Peruvian sales taxes withheld and current income taxes	1,381		(1,066	)	2,861		1.107
Net loss	(911	)	(1,529	)	(90	)	(167	)
EBITDA(1)	1,516		(967	)	3,178		1,380
Cash flow from operating activities before non-cash working capital items	955		(1,250	)	(1,817	)	431
Cash flow from operating activities	1,276		(237	)	780		(361	)
Loss per share, basic and diluted	($0.03	)	($0.05	)	($0.00	)	($0.01	)

OUTLOOK

Dynacor’s focus is to continue using its cash resources from its custom milling operation to build long-term value for its shareholders through growth of its exploration properties.

In the short term, the Company estimates in the fourth quarter 2010 it will process between 10,000 and 11,000 ounces of gold. Dynacor is continuing geological surface work, followed by a diamond drilling campaign. The Company expects to issue shortly, an update on its drill campaign program nearing commencement at Tumipampa.

⁽¹⁾ EBITDA is a non-GAAP measure. See the non-GAAP reconciliation in Dynacor’s MDA

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. The Company’s 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.