Dynacor Gold Mines Inc. (TSX:DNG) (Dynacor or the Company) a
company with gold ore processing operations and exploration
projects in Peru, has released its unaudited condensed interim
consolidated financial statements for the three and six-month
periods ended June 30, 2013. The Company is pleased to report that
for Q2-2013, it recorded an operating income of $2.3M (cumulative
six months of $6.6M ) compared to $1.8M ( and cumulative six-months
of $4.4 M) in 2012, and net income of $0.9 M ($0.03 per share)
(cumulative six-months of $3.9M ($0.11 per share)) compared to $1.2
M ($0.03 per share) and cumulative six-months of $2.9 M in
2012.
The unaudited condensed interim consolidated financial
statements along with the management's discussion and analysis
"MD&A" are available on the Company's website www.dynacor.com
and the documents have been filed electronically with SEDAR at
www.sedar.com.
All figures in this press release are in millions of US$ except
where noted. Earnings per share and gross operating margin per
ounce are in US$. All variance % are calculated with rounded
figures.
Even though the price of gold declined significantly during the
second quarter of 2013, the Company's operations remained
profitable: gross operating margin and operating income increased
as compared to Q2-2012. However, cash gross operating margin per
ounce of gold sold decreased to $216 as compared to $ 246 in
Q2-2012.
Q2-2013 HIGHLIGHTS
-- Dynacor strikes high gold grades at Tumipampa;
-- Cross Cut Intercepts high grade gold mineralization over 4.85 m assaying
36.48 g/t Au, 1.49 oz/t Ag and 0.43% Cu including 0.75 m with 111.5 g/t
Au, 5.14 oz/t Ag and 1.13% Cu ;
-- Cash on hand of $10 M at quarter end compared to $3.3 at December 31,
2012;
-- Ore processing activities generated gold and silver sales of $25.9M in
Q2-2013 compared to $20.6M in Q2-2012 a 26 % increase over Q2-2012;
-- Net income of $0.9M in Q2-2013 ($0.03 per share) compared to $1.2M
($0.03 per share) in Q2-2012;
-- EBITDA of $2.4M compared to $2.2M in Q2-2012;
-- Gross operating margin of $3.8 M compared to $3.0 M in Q2-2012 a 27%
increase;
-- Cash gross operating margin per ounce(2) of gold sold of $216 compared
to $246 in Q2-2012;
-- Operating income of $2.3M compared to $1.8M in Q2-2012 a 28 % increase
over Q2-2012;
-- Cash flow from operating activities before change in working capital
items of $1.5 M ($0.04 per share)(1) in Q2-2013 compared with $1.4 M in
Q2-2012($0.04 per share)(1) ;
-- 18,785 DMT (dry metric tonne) processed (16,086 DMT in Q2-2012) a 17%
increase over Q2-2012;
-- Production of 17,893 ounces of gold (12,392 ounces in Q2-2012) a 44 %
increase over Q2-2012;
-- Debt free Company, following the reimbursement of the CA$ 1.2 M
outstanding debt:
(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
company. See the 'Non-IFRS Measures' section of this MDA. The Company
uses this non-GAAP measure which can also be helpful to investors as it
provides a result which can be compared with the Company market share
price.
(2) Cash gross operating margin per ounce is calculated by dividing the
Company's cash gross operating margin by the number of gold ounces sold
during the period and 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
company. The Company uses this non-GAAP measure which can also be
helpful to investors as it provides a result on a production unit
basis.
Results from operations:
During the period ended June 30, 2013, the Company processed
18,785 dry metric tonnes (DMT) of ore (cumulative of 37,462 DMT for
the six-month period) compared to 16,086 DMT in Q2-2012 (cumulative
33,644 DMT) a 16.8% increase over Q2-2012. The plant operated at
its full 220 tpd capacity during Q2 2013. This 18,785 DMT ore
throughput represents the largest quarterly tonnage processed in
the history of the plant.
In Q2-2013 the Company produced 17,893 ounces of gold
(cumulative six-months of 37,920) compared to 12,392 (cumulative
six-months of 25,503) for the same period in 2012 a 44.4% increase.
In Q1-2013 gold production attained an all-time quarterly record of
20,027 ounces of gold. The increase in gold production as compared
to 2012 is explained by a higher tonnage of ore processed and
higher gold grades in the ore purchased. During the quarter the
grades of ore processed averaged 1.01 oz/DMT (31.42 g/t Au)
compared 0.82 oz/DMT (25.51 g/t Au) in 2012.
Total sales for the period amounted to $25.9M (cumulative
six-months $59.2 M) compared to $20.6M (cumulative $44.2 M) for the
same periods in 2012 an increase of $5.3M and 25,7% over Q2-2012.
This increase is explained by an increase in gold production which
compensated the decrease in the average selling price of gold
(Q2-2013 at $1,420 per ounce as compared to $1,607 in Q2-2012).
During the quarter, two sudden gold price declines affected the
Company's gross operating margin (as accumulated ore inventory had
been purchased at costs based on higher gold prices), however, the
gross operating margin for the period amounted to $3.8 M (14.5%)
compared to $ 3.0 M (14.8%) an increase of 26.7% compared to
Q2-2012.
The gold cash gross operating margin per ounce was at $216 in
Q2-2013 compared to $246 in Q2-2012 a 12,2% decrease compared to
2012 mainly due to the decrease in the price of gold during the
period.
During Q2-2013, the Company recorded a net income of $0.9M
($0.03 per share) compared to $1.2M ($0.03 per share) in
Q2-2012.
General and administrative expenses amounted to $1.0M compared
to $0.9M in Q2-2012 explained by increased salaries, professional
fees and office expenses.
During the period, the Company suffered a foreign exchange loss
of $0.3 M on monetary items such as cash and receivables maintained
in Peruvian soles which contributed to the reduction of the period
net income compared to 2012. Also the provision for income tax for
the period amounted to $1.1M compared to $0.8 M in 2012 due to the
greater profitability of the Peruvian ore processing operations
during the period and to a local foreign exchange gain affecting
Peruvian tax over monetary items held in US dollars such as cash
and receivables as US dollar gain over 7% on the Peruvian soles
during the period.
Selling expenses are directly related to sales which therefore
explains the increase of $0.2M over 2012. Financial expenses were
consistent with last year period. Since the warrants were
extinguished in December of 2012, there were no gains or losses
during the quarter compared to a gain of $0.1 in 2012.
FINANCIAL HIGHLIGHTS
For the three-month For the six-month
periods ended June 30, periods ended June 30,
(in $'000) 2013 2012 2013 2012
------------------------------------------------
------------------------------------------------
Sales 25,870 20,579 59,212 44,223
Cost of sales 22,113 17,537 49,814 37,448
Gross operating margin 3,757 3,042 9,399 6,775
General and administrative
expenses 1,002 902 1,832 1,638
Operating income 2,291 1,832 6,577 4,438
Net income and comprehensive
income 941 1,182 3,919 2,915
EBITDA(1) 2,382 2,186 6,998 5,072
Net Cash flow from operating
activities before changes
in working capital items 1,477 1,445 4,613 3,458
Cash flow from operating
activities 6,881 641 10,721 1,712
Earnings per share
Basic $0.03 $0.03 $0.11 $0.08
Diluted $0.02 $0.03 $0.10 $0.08
Reconciliation of Net
comprehensive income to
EBITDA(1)
Net comprehensive income 941 1,182 3,919 2,915
Income taxes 1,058 806 2,263 1,711
Financial expenses 42 64 134 131
Depreciation 341 271 682 528
Revaluation of warrants - (137) - (213)
------------------------------------------------
EBITDA 2,382 2,186 6,998 5,072
------------------------------------------------
------------------------------------------------
(1) EBITDA: "Earnings before interest, taxes, depreciation and
amortization, revaluation of warrants and impairment" 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 company. The Company uses this non-
GAAP measure as an indicator of the cash generated by the operations
and allows investor to compare the profitability of the company with
others by canceling effects of different assets bases, effects due to
different tax structures as well as the effects of different capital
structures. See the 'Non-GAAP Measures' section of this MDA.
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND
WORKING CAPITAL
Operating Activities
During the quarter the cash flow from operations before changes
in working capital items amounted to $1.5 M ($0.04 per share)
(cumulative of $4.6 M for the six-month period ($0.13 per share))
compared to $1.4M ($0.04 per share) (cumulative of $$3.5 M($0.10
per share)) in 2012. Total cash generated from operating activities
amounted to $6.9 M (cumulative six-month of $10.7 M) compared to
$0.6 M (cumulative six-month of $1.7 M) in 2012.
Investing Activities
During the period, the Company invested $1.0M ($0.6M in Q2-2012)
for the acquisition of property, plant and equipment to be used at
the current plant, including $0.3 M for the extension of the
tailing pond at Huanca and for the preparation of the construction
at Chala.
Additions to exploration and evaluation assets amounted to $0.8
M in Q2-2013 ($0.1 M in Q2-2012) as the Company continued the
exploration program at Tumipampa which includes the surface
drilling in the skarn section and the cross-cut in the gold
veins.
Financing activities
During Q2-2013, the Company did not complete any share issue
financing. The Company became debt free after it paid its quarterly
interest and reimbursed in June the outstanding long term debt
which came to maturity.
During the period, 106,944 stock options were exercised for
gross proceeds of $0.1M.
Liquidity
As at June 30, 2013, the Company's working capital amounted to
$15.2M including $10.0M in cash ($13.3M including $3.3M in cash at
December 31, 2012).
Outlook
The Company's guidance for 2013 is to process 75,000 DMT of ore
and produce 66,000 ounces of gold at its 220 tpd ore processing
plant at Huanca (Acari).
For the first six month of 2013, the Company processed 37,462
DMT of ore and produced 37,920 ounces of gold including an
historical quarterly best of 20,027 ounces of gold during Q1-2013
as the Company purchased from suppliers, ore with higher than
expected gold grades.
As at June 30, 2013, the production in terms of tons processed
is right on target and total ounces produced exceeds 2013 year to
date guidance. The Company is confident that it will meet 2013 gold
production guidance of 66,000 ounces.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is an ore processing and a gold exploration and mining
company active in Peru through its subsidiaries since 1996. The
Company differentiates itself from pure exploration companies as it
also generates income and cash flow from its wholly owned ore
processing plant in Peru. The Company's assets include five
exploration properties, including the Tumipampa property, as well
as its 220 tpd gold and silver ore processing mill at Huanca.
Dynacor's mill produces gold from the processing of ore purchased
from many different ore suppliers. 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.
Dynacor Gold Mines Inc. (TSX:DNG)
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: facebook.com/DynacorGoldMines
Shares outstanding: 36,316,111
Contacts: Jean Martineau President and CEO Dynacor Gold Mines
Inc. 514-288-3224 ext. 228 Dale Nejmeldeen Investor Relations
Dynacor Gold Mines Inc. 604.492.0099 / M:
604.562.1348nejmeldeen@dynacor.com
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