Dynacor Group Inc. (TSX: DNG) (Dynacor or the Corporation) released its unaudited condensed interim consolidated financial statements and the management's discussion and analysis (MD&A) for the second quarter ended June 30, 2023.
Sales in million US$ - 2022 and 2023 (Graphic: Business Wire)
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on the Corporation's website www.dynacor.com.
Q2-2023 OVERVIEW AND HIGHLIGHTS
OVERVIEW
Dynacor completed the three-month period ended June 30, 2023 ('Q2-2023') with a record production of 32,693 AuEq ounces, quarterly sales of $64.5 million and a net income of $4.5 million (US$0.12 per share) compared to sales of $53.9 million (a 19.7% increase) and a net income of $2.6 million (US$0.07 per share) for the second quarter of 2022 ('Q2-2022') (a net income increase of 73.1% compared to Q2-2022).
Following its 16% increase capacity to 500 tpd at the end of 2022, Dynacor's ore procurement team was able to increase the tonnage of ore supplied in order to operate the plant at its full capacity during the quarter. The level of ore inventory at the plant continued to rise, reaching 9,600 tonnes at the end of Q2-2023 which represents more than 19 days of production.
Contrary to Q1-2023 which has seen a positive trend in gold market price, Q2-2022 and the strong Q2-2023 financial results were affected by the declining trend in the gold market price.
At the end of Q2-2023 our total assets is exceeding $100 million for the first time.
HIGHLIGHTS
Operational
Highest ore volume supplied. Total ore volume supplied reached an historical high of 45,730 tonnes in Q2-2023 compared to 32,415 tonnes for the same period of last year;
Higher volume processed. The Veta Dorada plant processed a volume of 40,747 tonnes of ore (448 tpd average) compared to 35,822 tonnes in Q2-2022 (394 tpd), a 13.7% increase;
Higher gold production. In Q2-2023, gold equivalent production amounted to 32,693 AuEq ounces compared to 27,875 AuEq ounces in Q2-2022 a 17.3% increase. The Q2-2023 production was positively affected by higher volumes and grades of ore processed.
Financial
High gold price and full 500 tpd capacity production drive Q2-2023 financial performance.
Solid cash position. Cash on hand of $30.1 million at the end of Q2-2023 compared to $25.6 million at year end 2022; Increase of 19.7% in Sales. With greater quantities and a higher average gold market price, sales amounted to $64.5 million in Q2-2023 compared to $53.9 million in Q2-2022; Increase in gross operating margin. Gross operating margin of $7.7 million (11.9% of sales) in Q2-2023, compared to $6.3 million (11.7% of sales) in Q2-2022; Increased operating income. Operating income of $5.6 million in Q2-2023 compared to $4.5 million in Q2-2022, a 24.4% increase; Net income increase of 73.1%. Dynacor recorded a net income of $4.5 million in Q2-2023 (US$0.12 or CA$0.16 per share) compared to $2.6 million (US$0.07 or CA$0.09 per share) in Q2-2022; Cash gross operating margin exceeding $250 per AuEq ounce. Cash gross operating margin of $256 per AuEq ounce sold (1) compared to $242 in Q2-2022; Increased EBITDA. EBITDA (2) of $6.6 million, compared to $5.2 million in Q2-2022, a 26.9% increase; Strong cash flows. Cash flows from operating activities before change in working capital items of $5.2 million ($0.14 per share) (3) compared to $3.4 million ($0.09 per share) in Q2-2022.
Return to Shareholders
Share buy-back. 40,300 common shares repurchased for $0.1 million (CA$0.1 million) in Q2-2023, compared to 90,360 common shares for $0.2 million (CA$0.3 million) in Q2-2022;
Increased dividends. A $0.01 CA per share monthly dividend paid during the quarter. On an annual basis, the 2023 dividend will represent CA$0.12 per share or 4.0% dividend yield based on the current share price.
Cash gross operating margin per AuEq ounce is in US$ 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. It is therefore possible that this measure could not be comparable with a similar measure of another company.
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 basis, effects due to different tax structures as well as the effects of different capital structures.
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.
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.
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 GROUP INC. 
