Dynacor Group Inc. (TSX: DNG) (Dynacor or the
Corporation) released its audited annual consolidated financial
statements and the management's discussion and analysis (MD&A)
for the year ended December 31, 2023.
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These documents have been filed electronically with SEDAR+ at
www.sedarplus.com and will be available on the Corporation's
website www.dynacor.com.
(All figures in this press release are in Ms of US$ unless
stated otherwise. All amounts per share are in US$. All variance %
are calculated from rounded figures. Some additions might be
incorrect due to rounding).
2023 OVERVIEW AND HIGHLIGHTS
OVERVIEW
Dynacor completed 2023 with both production and financial
historical high performances generating its thirteenth (13th)
consecutive year of profit. The Corporation achieved a production
record of 130,001 AuEq ounces powering total sales to $250.2
million (CA$337.6 million), an increase of +26.7% compared to 2022
and a net income of $15.1 million (US$0.39 or CA$0.53 per share),
an increase of +25.8% compared to 2022.
2023 was the first full year of operation at a processing
capacity of 500 tonnes per day. Thanks to its high level of ore
inventory at the opening of the year and the high volume of ore
supplied and purchased, the mill has been able to operate at full
capacity throughout the year averaging a new daily record
processing rate of 468 tpd.
HIGHLIGHTS
Operational
- Historical high ore volume supplied. Total ore volume
supplied reached an all time high of 182,500 tonnes in 2023
(147,500 tonnes in 2022). Year-end ore inventory was over 21,000
tonnes representing more than 40 days of production
throughput;
- Highest yearly volume processed. In 2023, the Veta
Dorada plant processed a historical high volume of 170,668 tonnes
of ore (468 tpd average) compared to 150,819 tonnes in 2022 (413) a
+13.2% increase;
- Record high yearly gold production. In 2023, the gold
equivalent production amounted to 130,001 AuEq ounces compared to
110,359 AuEq ounces in 2022 a +17.8% increase.
Financial
- Increasing trend in gold prices, favorable FX effect and
high operational performance impacted the 2023 financial
performance. The gold price has increased from 1,840 $/oz in
January 2023 to 2,060 $/oz in December as well with the higher
tonnage processed positively impacted the production figures.
- Solid cash position. Despite the significant increase in
the level of ore inventory, cash on hand remained solid at $22.5
million at year-end 2023 compared to $25.6 million at year end
2022;
- Historical high sales. Sales amounted to $250.2 million
in 2023 compared to $197.5 million in 2022, a +26.7% increase;
- Increased in gross operating margin in $. Gross
operating margin amounted to $30.2 million (12.1% of sales) in
2023, compared to $24.4 million (12.4% of sales) in 2022;
- Increased operating income. Operating income of $22.1
million in 2023 compared to $18.1 million in 2022, a +22.1%
increase;
- Cash gross operating margin of $257 per AuEq ounce
sold(1) compared to $249 in 2022;
- Increased EBITDA. EBITDA (2) of $25.5 million, compared
to $21.2 million in 2022, a +20.3% increase;
- Increased cash-flows. Cash flows from operating
activities before change in working capital items of $18.6 million
($0.49 per share) (3) compared to $14.9 million ($0.38 per share)
in 2022.
- Historical high net income. Dynacor recorded an
historical high net income of $15.1 million in 2023 (US$0.39 or
CA$0.53 per share) compared to $12.0 million (US$0.31 or CA$0.40
per share) in 2022.
Return to Shareholders
- Share buy-back. 1,127,397 common shares repurchased for
$2.9 million (CA$3.9 million) in 2023, compared to 819,416 common
shares for $1.9 million (CA$2.4 million) in 2022;
- Increased dividends. Continuation of monthly dividend
payments which had been increased by +20% at the beginning of 2023
to CA$0.12 per share per year for a total of $3.4 million. This was
recently followed by a new increase to CA$0.14 per year from
January 2024
(1) Cash gross operating margin per AuEq ounce is in US$ and is
calculated by subtracting the average cash cost of sale per
equivalent ounces of Au from the average selling price per
equivalent ounces of Au and is a non-IFRS financial performance
measure with no standard definition under IFRS Accounting
Standards. It is therefore possible that this measure could not be
comparable with a similar measure of another company.
(2) EBITDA: “Earnings before interest, taxes and depreciation”
is a non-IFRS financial performance measure with no standard
definition under IFRS Accounting Standards. 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 basis, effects
due to different tax structures as well as the effects of different
capital structures.
(3) Cash-flow per share is a non-IFRS financial performance
measure with no standard definition under IFRS Accounting
Standards. 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
Consolidated Statement of net income and comprehensive
income
For the years ended
December 31,
(in $'000)
2023
2022
Sales
250,189
197,545
Cost of sales
(219,989)
(173,120)
Gross operating margin
30,200
24,425
General and administrative expenses
(7,096)
(5,970)
Other projects expenses
(1,005)
(318)
Operating income
22,099
18,137
Financial income net of expenses
750
85
Foreign exchange gain (loss)
98
(105)
Income before income taxes
22,947
18,117
Current income tax expense
(8,311)
(6,548)
Deferred income tax recovery
432
445
Net income and comprehensive
income
15,068
12,014
Earnings per share
Basic
$0.39
$0.31
Diluted
$0.39
$0.30
Total sales amounted to $250.2 million compared to $197.5
million in 2022. The $52.7 million increase is explained by
quantities sold and higher average selling prices contributing to
respectively a +$35.1 million and a +$17.6 million increase.
The 2023 gross operating margin amounted to $30.2 million (12.1%
of sales) compared to $24.4 million (12.4% of sales) in 2022. The
2023 gross operating margin in dollar was positively impacted by
higher sales and by the overall positive trend in gold market
prices compared to 2022.
General and administrative expenses amounted to $7.1 million in
2023 compared $6.0 million in 2022. The increase is mainly
explained by increases in salaries and share-based expenses.
Other projects represent the expenses incurred by the
Corporation to duplicate its unique business model in the same or
other jurisdictions.
A $7.9 million income tax expense was also recorded in 2023.
This expense includes $0.5 million of withholding tax paid on
dividends received from the subsidiary and a -$0.5 million
(non-cash) deferred income tax recovery. The deferred tax expense
or recovery is mainly explained by the variance throughout the
period of the Peruvian Sol against the US$ which affect long term
assets local tax basis. Future fluctuations will affect positively
or negatively the deferred tax at the end of each period.
Reconciliation of non-IFRS measures
(in $'000)
For the years ended
December 31,
2023
2022
Reconciliation of net income and
comprehensive income to EBITDA
Net income and comprehensive income
15,068
12,014
Income taxes expense (current and
deferred)
7,879
6,103
Financial income net of expenses
(757)
(85)
Depreciation
3,349
3,205
EBITDA
25,539
21,237
CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND
FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY
Operating activities
For the year ended December 31, 2023, the cash
flow from operations, before changes in working capital items,
amounted to $18.6 million compared to $14.9 million for the year
ended December 31, 2022. Net cash from operating activities
amounted to $9.6 million compared to $6.2 million for the year
ended December 31, 2022. Changes in working capital items amounted
to (-$9.0 million) compared to (-$8.7 million) for the year ended
December 31, 2022.
Investing activities
In 2023, Dynacor invested $6.5 million in capital expenditure
including $3.0 million for the purchase of an office in Lima. Other
investments comprised of additions to the plant and purchases of
rolling stocks. All investments have been financed with internally
generated cash-flows.
Financing activities
In 2023, monthly dividends of CA$0.01 representing an annual
total of CA$0.12 per share were disbursed for a total consideration
of $3.4 million (CA$4.6 million). In 2022, monthly dividends of
CA$0.0083 representing a total of CA$0.10 per share were disbursed
for a total consideration of $3.0 million (CA$3.9 million).
In 2023, 1,127,397 common shares were repurchased under the
Corporation normal course issuer bid share buyback program for a
total cash consideration of $2.9 million (CA$ 3.9 million) (819,416
shares for a total cash consideration of $1.9 million (CA$ 2.4
million) in 2022).
Subsequent to December 31, 2023, the Corporation has repurchased
926,800 common shares for a total cash consideration of $2,751,499
(CA$ 3,705,613), an average repurchase cost of $2.97 (CA$4.00) per
share.
Working capital and liquidity
As at December 31, 2023, the Corporation’s working capital
amounted to $50.8 million, including $22.5 million in cash ($43.7
million, including $25.6 million in cash at December 31, 2022).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2023, total assets amounted to $111.8 million
($96.9 million as at December 31, 2022). Major variances since last
year-end come from the significant increase in inventories and the
variance in the trade and other payables.
(in $'000)
As at
December 31,
As at
December 31,
2023
2022
Cash
22,481
25,595
Accounts receivable
13,328
12,298
Inventories
31,925
16,447
Prepaid
277
223
Current tax assets
-
371
Property, plant and equipment
24,590
21,392
Right-of-use assets
613
701
Exploration and evaluation assets
18,566
18,543
Other non-current assets
-
1,332
Total assets
111,780
96,902
Trade and other payables
15,357
11,168
Asset retirement obligations
3,724
3,642
Current tax liabilities
1,799
-
Deferred tax liabilities
677
1,110
Lease liabilities
636
701
Shareholders' equity
89,587
80,281
Total liabilities and equity
111,780
96,902
OUTLOOK 2024
Ore processing
For 2024, the Corporation forecasted sales (1) ranging between
$265-285 million representing a growth of 6-14% over 2023 sales.
Net income is forecasted ranging between $12-15 million ($0.33-0.41
per share) (CA$0.45-0.56 per share) and include expenses of $2.7
million to advance other projects in other jurisdictions.
Dynacor Group plans to invest up to US$13 million in capital
expenditures in 2024. This investment will be used at our Veta
Dorada plant for new equipment to improve efficiency, increase
tailing pond capacity, vehicles to support the security of our
purchasers working in remote areas and will include, upon
favourable conditions, up to $4 million to pursue the due diligence
process and development of new projects in other jurisdictions.
(1) Using a market gold price ranging between $2,000 and $2,050
per ounce
ABOUT DYNACOR
Dynacor is a dividend-paying industrial gold ore processor
headquartered in Montreal, Canada. The corporation is engaged in
gold production through the processing of ore purchased from the
ASM (artisanal and small-scale mining) industry. At present,
Dynacor operates in Peru, where its management and processing teams
have decades of experience working with ASM miners. It also owns a
gold exploration property (Tumipampa) in the Apurimac
department.
The corporation intends to expand its processing operations in
other jurisdictions as well.
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 pay 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 for our artisanal and
small-scale miner’s communities.
Dynacor is listed on the Toronto Stock Exchange (DNG).
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.
Shares Outstanding: 36,523,356
Website: http://www.dynacor.com Twitter:
http://twitter.com/DynacorGold
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version on businesswire.com: https://www.businesswire.com/news/home/20240327580901/en/
For more information, please contact: Director, Shareholder
Relations Dale Nejmeldeen Dynacor Group Inc. T: 514-393-9000 #230
E: investors@dynacor.com
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