Dynacor Gold Mines: Closes $4.5 Million Private Placement and Redeems Convertible Note

MONTREAL, QUEBEC–(Marketwire – Dec. 20, 2010) – Dynacor Gold Mines Inc. (“Dynacor” or “the Company”) (TSX:DNG) is pleased to announce it has closed a private placement with investors from Canada, United States and Europe for an amount of $4.5 million. The private placement consists of an aggregate 4,285,383 units at a price of $1.05 per unit. Each unit is comprised of one common share and one-half of a warrant. A full warrant entitles the holder to purchase one additional common share at a price of $1.50 until December 20, 2012. The expiry date may be accelerated in the event the weighted volume average trading price of Dynacor’s shares is above $2.00 per share for a period of 20 consecutive trading days. Insiders have subscribed for an aggregate of 1,691,311 units; of which Directors and senior management have invested 235,000 units.

The proceeds allowed Dynacor to repay in full the $2.6 million outstanding convertible note due to Malaga Inc. (TSX: MLG). Dynacor had the option to pay down the note in cash or have it converted at $0.40 per share which would have created a dilution of 6.5 million shares. After payment of the convertible note in cash, the fully diluted shares outstanding is reduced slightly from 39,515,320 to 39 ,477,360. Hence, for similar dilution, Dynacor has been able to improve its cash position by $1.9 million before fees and expenses which will provide financial flexibility for the coming fiscal year.

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 Acari 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.