Dynacor Records Net Income of US$ 1.8 Million or US$0.05 Per Share in Q3-2014 and Improves its Working Capital Which Includes US$14.3 Million in Cash
MONTREAL, QUEBEC–(Marketwired – Nov. 13, 2014) – Dynacor Gold Mines Inc. (TSX: DNG)(OTC:DNGDF) (Dynacor or the Corporation) a Corporation with gold and silver ore processing operations and exploration projects in Peru, has released its unaudited condensed consolidated financial statements and the management’s discussion and analysis “MD&A” for the third quarter ended September 30, 2014.
The unaudited condensed interim consolidated financial statements along with the MD&A are available on the Corporation’s website www.dynacor.com and the documents have been filed electronically with SEDAR at www.sedar.com.
(All figures in this press release are in millions of US$ unless stated otherwise. Earnings per share and cash-flow per share are in US$. All variance % are calculated from rounded figures. Some additions might be incorrect due to rounding).
Despite the constant weakening of gold market price which affected the mining industry, the Corporation’s overall performance during the third quarter of 2014 continued to remain profitable and even improved as compared to the first and second quarter of 2014, as the Corporation increased its ore throughput and gold production.
During the three-month period ended September 30, 2014, Dynacor recorded sales of $24.0M (cumulative nine-months of $63.1 M) compared to $28.1M (cumulative nine-months of $87.3 M) for the same period in 2013, a decrease of $4.1 M or 14.6%, and a net income of $1.8 M or $0.05 per share (cumulative nine-months of $4.7 M or $0.13 per share) compared to $ 3.0 M or $0.08 per share in Q3-2013, a 40.0% decrease (cumulative nine-months of $7.0 M or $0.19 per share).
Jean Martineau Dynacor’s President and CEO stated “The Corporation has delivered a solid performance in Q3 despite challenging market conditions. The experience, our corporate reputation and the in-depth knowledge of our ore purchasing team which has been gradually built up over the past 16 years is the pillar of this success. During Q3 we have hired more personnel for our ore purchasing team and have thus reinforced our presence on the ground throughout Peru. Dynacor realized an operating income of $3.2 million in Q3 despite a significant drop in the price of gold which clearly shows that Dynacor is not as leveraged to the price of gold as gold mine operators. Our Q3-2014 financial results have continued to strengthen our overall financial situation with a cash position of over $14 million and a working capital close to $21 million.”
- Cash on hand of $14.3M at September 30, 2014 compared to $8.5M at December 31, 2013;
- Sales of $24.0 M compared to $28.1M in Q3-2013 a decrease of 14.6%;
- Gold production of 19,217 oz compared to 19,741 oz in Q3-2013 a decrease of 2.7%;
- Net income of $1.8M in Q3-2014 or $0.05 per share, compared to $ 3.0M or $0.08 per share in Q3-2013 a decrease of 40.0%;
- EBITDA of $ 3.4M compared to $ 4.7M in Q3-2013 a decrease of $1.3M or 27.0%;
- Cash flow from operating activities before change in working capital items of $ 2.5 M or $0.07 per share (1) compared to $3.5M or $0.10 per share (1) a 28.6% decrease compared to Q3-2013;
(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 Corporation uses this non-GAAP measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.
Results from operations:
Total sales for the period amounted to $24.0 M (cumulative nine-months of $63.1 M) compared to $28.1M (cumulative nine-months sales of $87.3 M) for the same period in 2013 a decrease of $4.1M and 14.6% attributable to lesser ounces Au equivalent sold, 18,665 ounces sold in Q3-2014 compared to 21,227 ounces in Q3-2013, a decrease of 12.1% explained by higher gold dore finished goods in inventory in Q2-2013 compared to Q2-2014, and the decline of market gold price during the period. Average sales price per ounce was down 2.8 % compared to Q3-2013 ($1,287/ oz compared to $1,324/ oz in 2013).
During the third quarter, the Huanca plant processed 20,587 dry metric tons “DMT” of ore, compared to 20,652 DMT in Q3-2013 a slight decrease of 0.3%. However production increased by 22.3 % over the previous quarter (Q2-2014 – 16,830 DMT) when, as described in our August 11, 2014 DYNACOR: Q2-2014 results press release, activities had been affected by vigorous measures taken by the Peruvian government regarding gold exports.
Total gold production during the period was 19,217 ounces compared to 19,741 ounces in Q3-2013 a 2.6% decrease due to a small decrease of ore grade processed (0.99 oz/ DMT compared to 1.02 oz/ DMT in Q3-2013 a decrease of 4.7% over Q3-2013) (17,608 ounces produced in Q2-2014). Silver production which is a by-product of the ore processed was 39,531 ounces in Q3-2014 compared to 40,148 in Q3-2013.
The gross operating margin for the period amounted to $4.6 M or 19.2% (cumulative of $11.8 M and 18.7% in 2014) compared to $6.0 M or 21.4% in Q3-2013 (cumulative of $15.4 M or 17.6% in 2013).
|For the three-month
|For the nine-month
|Cost of sales||19,388||22,100||51,290||71,913|
|Gross operating margin||4,630||6,000||11,813||15,399|
|General and administrative expenses||1,049||993||2,861||2,825|
|Net income and comprehensive income||1,824||3,045||4,734||6,964|
|Net Cash flow from operating activities before changes in working capital items||2,470||3,478||6,152||8,090|
|Cash flow from operating activities||3,400||1,597||8,449||12,317|
|Earnings per share|
|Reconciliation of Net comprehensive income to EBITDA (1)|
|Net comprehensive income||1,824||3,045||4,734||6,964|
(1)EBITDA: “Earnings before interest, taxes and depreciation” 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
During the quarter the cash flow from operations before changes in working capital items amounted to $2.5 M ($0.07 per share) (cumulative nine-month of $6.2 M ($0.17 per share)) compared to $3.5 M ($0.10 per share) (cumulative of $8.1 M for the nine-month period ($0.21 per share)) in 2013. This decrease is due to decreased sales volume and gold price compared to Q3-2013.
Total cash generated from operating activities amounted to $3.4 M (cumulative nine-month of $8.4 M) compared to $1.6 M (cumulative nine-month of $12.3 M) in 2013.
Changes in working capital items during the quarter amounted to $0.9M and included decreased Trades and other receivables of $1.6 M, increase in cost invested in inventory of ore, finished goods and gold in process mostly in finished goods -gold dore ($0.5M) and reducement of trade and accounts payables of ($0.2 M).
During the period, the Corporation invested $0.4M in property, plant and equipment, ($1.0M in Q3-2013) mainly for additions for the Huanca processing plant and its tailing ponds and the Nasca office building. (In Q3-2013 costs were for additions for the preparation of the construction at Chala).
Additions to exploration and evaluation assets amounted to $0.4 M in Q3-2014 ($0.3 M in Q3-2013) and consisted in final improvement work of the Tumipampa 26 km access road, the preparation of enhance camp facilities on site, sampling and analysis, advance to suppliers, exploration salaries and other exploration expenses at Tumipampa to mobilize crew to resume program. In Q3-2013 the expenses related to the exploration program which was then underway and included surface drilling and the beginning of the cross-cut in the gold veins.
During Q3-2014, the Company did not complete any equity financing (nil in Q3-2013). During the period, 221,424 options were exercised for proceeds of $0.1 M (cumulative of 278,900 options exercised for proceeds of $0.2 M in 2014). In Q3-2013, 35,000 stock options were exercised for gross proceeds of $0.05M (cumulative nine-month of 345,944 options exercised and proceeds of $0.1 M in 2013).
As at September 30, 2014, the Corporation’s working capital amounted to $20.8M including $14.3M in cash ($17.4 M including $8.5 M in cash at December 31, 2013).
2014- Ore processing outlook and update
The Corporation has set the following production guidance for 2014:
- To process 75,000 DMT of gold ore;
- To produce 70,000 ounces of gold.
Total gold production as of September 30 is as follows:
- Total of 51,420 DMT of gold ore processed (68.5 % of yearly guidance);
- Total of 49,000 ounces of gold produced ( 70.0% of yearly guidance);
As at September 30, 2014, due to unsettled supply market conditions which prevented our mill to operate at a constant 250 tpd full capacity the Corporation is running under its 2014 year to date guidance and management anticipates it may fall just short of its annual guidance of 70,000 ounces.
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 three 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, knowledge and the procurement network expertise 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)
Shares outstanding: 36,491,811
President and CEO
#1105, 625 René-Lévesque Blvd.
Montreal, Quebec H3B 1R2
514-393-9000 ext. 228
Dynacor Gold Mines Inc.
T: 604.492.0099 | M: 604.562.1348