Dynacor Announces Record Sales of US$29.3 M and Net Income of US $2.8 M ($0.08 per Share) in Q3-2012
MONTREAL, QUEBEC -- (Marketwire) -- 11/09/12 -- Dynacor Gold Mines Inc. (TSX: DNG) (Dynacor or the Company), a company with exploration projects and gold and silver ore processing operations in Peru, is pleased to report that it just completed a record breaking financial quarter in terms of production, sales and net income. For the three-month period ended September 30, 2012, Dynacor recorded a net income of $2.8 M ($0.08 per share) (cumulative of $5.7 M ($0.16 per share) for the nine-month period ended September 30, 2012) compared to a net income of $1.8 M ($0.05 per share) and cumulative $3.0 M ($0.08 per share) for the same periods in 2011. The unaudited condensed interim consolidated financial statements along with the management discussion and analysis are available on the Company's website www.dynacorgold.com and the documents have been filed electronically with SEDAR at www.sedar.com.
All figures in this press release are in rounded millions of US$ except where noted. Earnings per share and gross operating margin per ounce are in US$. Variances in % are calculated with the rounded figures.
Q3-2012 HIGHLIGHTS
-- Sales of $29.3 M compared to $20.0 M in Q3-2011 a 46.5 % increase;
-- Net income of $2.8M ($0.08 per share), compared to $1.8 M ($0.05 per
share) in Q3-2011, an increase of $ $1.0 M (55.6%);
-- Adjusted EBITDA of $4.8 M compared to $2.4 M in Q3-2011;
-- Operating income of $4.3 M compared to $2.0 M in Q3-2011;
-- Gross operating cash margin per equivalent Au ounce of $317 compared to
$254 in Q3- 2011;
-- Cash flow from operating activities before changes in working capital
items of $3.5 M ($0.10 per share) compared to $1.5 M ($0.04 per share)
in Q3-2011 an increase of $2.0M (134%);
-- 19,629 DMT (dry metric tons) processed (16,575 DMT in Q3-2011) a 18.4 %
increase over Q3-2011;
-- 17,168 ounces of gold produced during the quarter (11,134 ounces in Q3-
2011) a 54.2% increase over Q3- 2011;
-- New monthly record production of 5,757 ounces in September 2012;
Operating Results
During the three-month period ended September 30, 2012 the Company recorded a net income of $2.8 M ($0.08 per share) (cumulative net income of $5.7 M ($0.16 per share) for the nine-month period ended September 30, 2012) compared to a net income of $1.8 M in Q3-2012 ($0.05 per share) and cumulative of $3.0 M ($0.08 per share) for the respective periods in 2011.
Dynacor has achieved its best ever financial and operational quarterly results. This is due to the Company's ore-processing division operating at optimal production levels, processing higher ore grades and a consistent rising gold price throughout the period.
During the third quarter of 2012, the Company processed 19,629 DMT of ore (16,575 in Q3-2011) an 18.4 % increase, at an average grade of 0.93 Oz Au/ DMT (29.1 g/t Au) compared to an average grade of 0.73 Oz Au/DMT (22.6 g/t Au) in Q3-2011.
Third quarter production was 17,168 ounces of gold (cumulative of 42,671 ounces for the nine- month period ended September 30, 2012) compared to 11,134 ounces in Q3-2011 (cumulative of 32,868 ounces for the nine-month period in 2011) a respective increase of 54.2% and 29.8% over the same periods in 2011.
This gold production is higher than the 2012 quarterly projections of approximately 12,500 ounces per quarter and above the previous quarter's production as the Company was the beneficiary of higher grade ore supply currently available due to the vigorous regulations implemented by the Peruvian authorities which is affecting the competition and therefore yielding additional high grade quality ore supply.
Total sales for the period amounted to $ 29.3 M (cumulative nine-months of $ 73.6 M in 2012) compared to $20.0 M in Q3-2011 (cumulative nine-months of $52.8 M in 2011) an increase of $9.3 M (46.5%) over Q3-2011 (cumulative increase of $20.8 M (39.4%) compared to 2011). The quarter sales increase compared to 2011 is explained by increased gold production. The average gold selling price per ounce was at $1,664 in Q3-2012 compared to $1,712 in Q3-2011.
The gross operating margin for the quarter amounted to $5.6 M (19.0%) compared to $3.0 M (14.8%) in Q3-2011. The gross operating cash margin(1) per equivalent Au ounce sold was at $317 in Q3-2012 compared to $254 in Q3-2011 a 24.8% increase over 2011. This increase in the gross operating margin and cash margin per ounce is primarily attributable to the higher production, higher ore grade processed compared to 2011 and a steady increasing market gold price during the period.
(1) Cash operating gross margin is calculated by subtracting the average cash cost of sale from the average selling price 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. It is used by management as an indicative measure of margin per unit in an environment not involving capital investment.
Gold production and sales figures:
Three months Nine months
September 30, September 30,
2012 2011 2012 2011
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Gold Production (Au ounces) 17,168 11,134 42,671 32,868
Gold sales (Au ounces) 16,949 11,121 42,375 32,733
Gold sales (equivalent Au ounces) 17,628 11,699 44,416 33,665
Financial Highlights:
For the three-month For the nine-month
periods ended periods ended
September 30, September 30,
(in $'000) 2012 2011 2012 2011
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Sales 29,341 20,015 73,565 52,800
Cost of sales 23,752 17,042 61,201 44,364
Gross operating margin 5,589 2,973 12,364 8,436
General and administrative
expenses 739 682 2,402 2,404
Operating income 4,335 1,958 8,748 5,148
Net income 2,784 1,750 5,699 2,987
Adjusted Net income(1) 2,798 1,349 5,501 2,692
Adjusted EBITDA(2) 4,802 2,362 9,849 5,555
Net Cash flow from operating
activities before changes in
working capital items 3,469 1,547 6,927 3,604
Cash flow from operating
activities 1,472 1,759 3,184 907
Earnings per share
Basic $0.08 $0.05 $0.16 $0.08
Diluted $0.07 $0.05 $0.15 $0.08
Reconciliation of Net income to
Adjusted net income(1)
Net income 2,784 1,750 5,699 2,987
Revaluation of warrants 14 (401) (198) (295)
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Adjusted net income 2,798 1,349 5,501 2,692
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Reconciliation of Net income
to Adjusted EBITDA(2)
Net income 2,784 1,750 5,699 2,987
Income taxes 1,388 664 3,099 2,043
Financial expenses 123 118 228 341
Depreciation 493 231 1,021 479
Revaluation of warrants 14 (401) (198) (295)
-------------------------------------------
Adjusted EBITDA 4,802 2,362 9,849 5,555
-------------------------------------------
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(1) Adjusted net income: 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. The
Company uses this non-IFRS measure to compare the results without
considering the non-cash effect generated by the change in value of the
warrants which can vary from a period to another due to its nature.
(2) Adjusted EBITDA: "Adjusted Earnings before interest, taxes, depreciation
and amortization, revaluation of warrants" 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. The Company uses this 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.
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND WORKING CAPITAL
Operating Activities
Cash flows generated by operating activities before changes in working capital items amounted to $3.5 M during the third quarter of 2012 ($0.10 per share) (cumulative of $6.9 M for the nine-month period and $0.19 per share) compared to $1.5 M ($0.04 per share) and cumulative $3.6 M ($0.10 per share) in 2011. This increase is due to the plant capacity increase realized in Q3 and Q4 of 2011 and higher ore grade processed during the quarter.
Changes in working capital items during the quarter amounted to ($2.0 M) (cumulative ($3.7 M) for the nine-month period) ($0.2 M in Q3-2011 and cumulative ($2.7M) in 2011) and were composed of increased inventories of ore and gold in process ($3.2 M) due to higher volume and higher grade, increased income taxes payable of $0.4 M, an increase in accounts payable and accrued liabilities of $0.6 M and the reduction of current income tax asset of $0.1 M.
Investing Activities
During the period the Company invested $0.2 M (cumulative $1.2 M for the nine-month period ended September 30, 2012) ($0.1 M and cumulative $1.0 M in 2011) for the acquisition of small equipment for the plant and laboratory.
Liquidity and Working Capital
As at September 30, 2012, the Company's working capital amounted to $12.1 M including $3.6 M in cash as compared to $7.9 M, including $2.1 M in cash as at December 31, 2011.
2012 OUTLOOK
Ore processing
The Company objectives for 2012 were established and published as follows:
-- Operate its processing plant at its full capacity of 220 tpd during most
of 2012. This would represent a total plant throughput of approximately
75,000 tons of ore;
-- Using a grade of 0.71 ounce per DMT and an average price of $1,650 per
ounce for 2012, this throughput would produce over 49,000 ounces of gold
and sales of gold and silver of approximately $85 M;
Due to the excellent third quarter results, the overall actual results of the processing activities for the nine month period ended September 30, 2012, are exceeding the year to date 2012 forecasts as follows;
-- Total of 42,670 ounces of gold produced is 14.9 % above the year to date
forecast due to higher grade ore processed during the third quarter;
-- Sales of $73.6 M representing 87% of the yearly estimated forecasts;
Without unforeseen circumstances, the Company is confident it will surpass its annual production guidance of approximately 50,000 ounces of gold in 2012.
New mill in Chala
The situation regarding the construction of the new 300 tpd mill is unchanged since our last financial report. The Company has filed applications for the environment and construction permits, which it expects to obtain before the end of 2012. Construction of the new mill, which should be funded through a combination of debt and working capital, will begin upon reception of the necessary permits and the Company expects it to be in operation in 2013.
Exploration
The planned 2012 program is temporarily delayed. The Company obtained at the end of September, its environmental permit which is the most important part of the permitting process and is still waiting, from the Peruvian authorities, the final exploration permit which will enable the start of the Company's' drilling program on Zone 4 of its Tumipampa project.
Management has been expecting the release of this permit during the last few weeks. The Company continues to monitor the situation closely and hopes to receive the permit shortly to finally enable the start of the drilling program.
Contractors have mobilized their equipment on site and are ready to work.
The original exploration program for 2012 on the Tumipampa exploration property was planned as a two part program as follows;
-- In zone 4, in the skarn, a drilling program of 4,100 meters - 9 holes to
be drilled;
-- A first 300 meter long cross cut through the Manto Dorado toward the
Rosa Vein to be excavated in order to prepare an underground drilling
program of 2,000 meters with the objective to obtain a NI 43-101
Resource estimation in 2013;
Since all access roads and drilling pads are completed, the upcoming drilling program should run as a continuous operation even throughout the rainy season.
The program is budgeted at $2.3 M and management currently expects to finance 100% of the exploration campaign using auto-generated cash flow from its ore processing operations.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is a gold mining exploration 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 six exploration properties, including the Tumipampa property, along with its recently upgraded 220 tpd ore processing mill at Acari. Dynacor's mill produces gold from the processing of ore purchased from local producers. 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, suppliers 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.
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: http://www.facebook.com/pages/Dynacor-Gold-Mines-Inc/222350787793085
Shares outstanding: 35,820,167
Contacts:
Jean Martineau
President and CEO
514-288-3224 ext. 228
Dale Nejmeldeen
Investor Relations
Dynacor Gold Mines Inc.
604-492-0099
M: 604-562-1348
nejmeldeen@dynacorgold.com