Q1-2019: Dynacor Reports its 32nd Consecutive Quarter of Profit With a Net Income of US$ 1.2 M
MONTREAL, May 13, 2019 (GLOBE NEWSWIRE) — 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 three-month period ended March 31, 2019.
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on the Corporation’s website www.dynacor.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).
For the three-month period ended March 31, 2019, Dynacor completed its thirty second (32nd) consecutive quarter of profits with a net income of $1.2 M ($0.03 per share), compared to $1.6 M ($0.04 per share) for the same period of 2018.
Q1-2019 OVERVIEW AND HIGHLIGHTS
With a similar volume processed (20,814 tonnes in Q1-2019 vs. 21,035 tonnes in Q1-2018) our production is down by 16.1% compared to Q1-2018 (16,000 ounces in Q1-2019 vs. 19,072 ounces in Q1-2018). This decrease is mainly explained by a 13.1% decrease in the average grade of the available ore purchased and processed.
Operational
- Volume of ore processed of 20,814 tonnes of ore ‘’DMT’’ compared to 21,035 DMT in Q1-2018;
- Gold production of 16,000 ounces, a decrease of 16.1% compared to Q1-2018 due to the reduced grades.
Financial
- 32nd consecutive quarter of profits;
- Sales of $22.9 M in Q1-2019, a decrease of 13.9% compared to Q1-2018;
- Gross operating margin of $2.8 M (12.2%) in Q1-2019, a decrease of 22.2% compared to Q1-2018;
- Net income of $1.2 M ($0.03 per share) in Q1-2019, a decrease of 25.0% compared to Q1-2018;
- EBITDA (1) of $2.5 M, a decrease of 16.7% compared to Q1-2018;
- Cash flow from operating activities before change in working capital items of $1.9 M and $0.05 per share (2) a decrease of 24.0% compared to Q1-2018.
Cash Return to Shareholders
- Quarterly dividend of CA$0.01 per share and totaling $0.3 M paid in January 2019;
- Approval from the Toronto Stock Exchange (TSX) of the new normal course issuer bid (NCIB), under which Dynacor may purchase, for cancellation, up to 3,273,485 common shares or approximately 10% of its public float as of April 17, 2019.
Jean Martineau President and CEO commented: “A longer rainy season in Peru lasting from early January to mid April 2019 affected general gold production from artisanal miners in the country including areas of higher-grade procurement. The grade of available ore was also lower than usual. This had a direct impact on our Q1 production. Nevertheless, the first quarter production has historically been the lowest production quarter for the Corporation. Therefore, we maintain our production forecast which we will monitor over the next months’’.
(1) EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS 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-IFRS 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.
(2) Cash-flow per share is a non-IFRS 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-IFRS 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
Extract from Statement of net income and comprehensive income
| For the three-month periods ended March 31, |
||
| (in $’000) | 2019 | 2018 |
| Sales | 22,919 | 26,590 |
| Cost of sales | (20,129) | (22,966) |
| Gross operating margin | 2,789 | 3,624 |
| General and administrative expenses | (956) | (1,123) |
| Operating income | 1,833 | 2,501 |
| Income before income taxes | 1,781 | 2,343 |
| Net income and comprehensive income | 1,180 | 1,601 |
| Earnings per share | ||
| Basic | $0.03 | $0.04 |
| Diluted | $0.03 | $0.04 |
Total sales amounted to $22.9 M compared to $26.6 M in Q1-2018. The $3.7 M decrease is explained by a lower gold price (-$0.4 M) combined with decreases in the number of ounces sold (-$3.3 M). The decrease in sales resulted in a decrease in gross operating margin and in net income.
Reconciliation of non-IFRS measures
| (in $’000) | For the three-month periods ended March 31, | |
| 2019 | 2018 | |
| Reconciliation of net income and comprehensive income to EBITDA (1) | ||
| Net income and comprehensive income | 1,180 | 1,601 |
| Income taxes | 601 | 742 |
| Financial expenses | 40 | 69 |
| Depreciation | 645 | 558 |
| EBITDA (1) | 2,466 | 2,970 |
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND LIQUIDITY
Operating activities
During Q1-2019, the cash flow from operating activities before change in working capital items amounted to $1.9 M ($0.05 per share), compared to $2.5 M ($0.06 per share) in Q1-2018.
Investing activities
During Q1-2019, net investments were not significant ($0.3 M for the same period in 2018). Additions to exploration and evaluation assets during Q1-2019 and Q1-2018, amounted to $0.1 M.
Financing activities
A total of 313,900 shares were repurchased in Q1-2019 for a total cash consideration of $0.4 M. In Q1-2018, there were no shares repurchased as the repurchase program started in Q2-2018.
In January 2019, the second quarterly dividend payment of CA$0,01 per share was disbursed for a total consideration of $0.3 M. A new dividend was declared in March 2019 and was paid subsequent to period end.
Other financing activities consisted in the repayment of lease liabilities for $0.2 M ($0.1 M in Q1-2018).
Liquidity
As at March 31, 2019, the Corporation’s working capital amounted to $20.4 M, including $14.4 M in cash ($19.7 M, including $13.9 M in cash at December 31, 2018).
2019 OUTLOOK
Ore processing
Given the expected increase in ore volume and with similar grades supplied to the plant in the last two years, the Corporation expects to produce between 82,000 and 92,000 ounces of gold in 2019.
Exploration
The Corporation is waiting for its new permit from the Peruvian Ministry of Energy and Mines (MEM). Upon receipt of the permit, Dynacor will immediately start drilling the first phase of twelve (12) holes totaling 4,200 meters. The two priority targets consist of:
- Priority 1 targets to be 2,700 m (8 holes)
- Priority 2 targets to be 1,500 m (4 holes)
ABOUT DYNACOR
Dynacor is a dividend paying gold production corporation headquartered in Montreal, Canada. The corporation is engaged in production through the processing of ore purchased from small scale artisanal miners. At present, Dynacor produces and explores in Peru where its management team has decades of experience and expertise. In 2018, Dynacor produced 81,314 ounces of gold, a yearly best and 1.8% increase as compared with 2017 (79,897 ounces).
Dynacor produces environmental and socially responsible gold through its ‘’PX Impact’’ gold program. A growing number of supportive firms from the fine luxury jewelry, watchmakers and investment sectors are paying a small premium to our customer and strategic partner for this PX Impact gold. The premium provides direct investment to develop health and education projects to our small-scale artisanal miner’s communities.
Dynacor trades on the Toronto Stock Exchange (DNG) and the OTC in the United States under the symbol (DNGDF).
FORWARD-LOOKING INFORMATION
Certain statements in the preceding 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 (TSX: DNG / OTC: DNGDF)
Website: http://www.dynacor.com
Twitter: http://twitter.com/DynacorGold
Shares outstanding: 39,158,989
For more information, please contact: Dynacor
Dale Nejmeldeen
Director, Shareholder Relations
Dynacor
T: (604) 492-0099 | M: (604) 562-1348
E: nejmeldeen@dynacor.com