Dynacor Gold Mines 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, 2021.
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 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).
2021 OVERVIEW AND
HIGHLIGHTS
OVERVIEW
Dynacor completed 2021 with both production and
financial historical high performances on its way to its eleventh
(11th) consecutive year of profit. The Corporation achieved
production record of 106,862 AuEq ounces powering total sales to
$196 million a significant 93% increase compared to 2020, and a net
income of $11.8 million.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/b031b589-3be1-4325-a07d-9ec805f4f57c
In mid-2021, the Corporation completed the
expansion of its Veta Dorada plant reaching 430 tpd (+25%
throughput compared to the previous 345 tpd). Thanks to its year
opening high level of ore inventory and increasing volume of ore
supplied, the mill has been able to operate at full capacity
throughout the year averaging a 368 tpd processing rate.
The year 2020 was marked by the Covid-19
pandemic who led to a mandatory three-month shut-down of its Veta
Dorada plant operations.
HIGHLIGHTS
Operational
- Increasing ore volume supplied. With a new record volume of ore
supplied (more than 140,000 tonnes in 2021) and even though the
mill ran at full capacity, the Corporation increased its year-end
ore inventory level to over 14,000 tonnes which represents more
than one month of production supply;
- Increased plant capacity. In Q2-2021, the plant capacity was
increased by 25%;
- Highest volume processed. In 2021, the Veta Dorada plant
processed a historical high volume of 134,269 tonnes of ore (368
tpd average) compared to 77,978 tonnes in 2020 (274 tpd excluding
the impact of the temporary shut-down due to the Covid-19
pandemic), a 34% increase;
- Increased grade of ore processed. The average grade of ore
processed in 2021 increased by 20% compared to 2020;
- Historical high gold production. In 2021, gold equivalent
production amounted to 106,862 AuEq ounces compared to 51,369 AuEq
ounces in 2020 a significant 108% increase.
Financial
- Solid cash position. Cash on hand of $27.1 million at year-end
2021 compared to $11.9 million in 2020;
- Higher gold production boost overall financial performance.
Significant increases in all financial aspects;
- Surpassed revised earning per share guidance by 20%. Dynacor
recorded an historical high net income of $11.8 million in 2021
($0.30 or CA$0.38 per share) compared to $4.3 million ($0.11 or
CA$0.15 per share) in 2020;
- Sales surged to almost $200 million. Thanks to an historical
production of 106,862 AuEq ounces, sales of 109,303 AuEq ounces
amounted to $195.9 million in 2021 compared with $101.5 million in
2020 a 93% increase;
- Increased gross operating margin. Gross operating margin of
$27.1 million in 2021, compared to $13.6 million in 2020;
- Increased operating income. Operating income of $21.2 million
compared to $9.5 million in 2020;
- Strong cash gross operating margin. Cash gross operating margin
of $269 per AuEq ounce sold (1) compared to $276 in 2020;
- EBITDA surged to a record high. EBITDA (2) of $23.5 million,
compared to $11.7 million in 2020;
- Robust cash flows. Cash flows from operating activities before
change in working capital items of $15.1 million ($0.39 per share)
(3) compared to $8.6 million ($0.22 per share) in 2020.
Return to Shareholders
- Monthly dividend policy. Since February 2021, a monthly
dividend replacing a quarterly dividend is paid. Dividends totaling
$2.5 million (CA$3.2 million) were paid in 2021;
- Share buy-back. 441,340 common shares repurchased for $0.9
million (CA$ 1.2 million);
- Increased dividends. A 33% increase in monthly dividends paid
from June 2021, followed by an additional 25% increase from January
2022. On an annual basis, the 2022 dividend will represent CA$0.10
per share or more than 3% dividend yield based on the year-end 2021
share price;
- Increased share price. On December 31, 2021, the market value
of our share was CA$3.16 vs. CA$1.79 on December 31, 2020.
(1) Cash gross operating margin per AuEq ounce
is in US$ 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. 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. 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. 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 the Consolidated Statement
of net income and comprehensive income
|
For the years ended December 31, |
(in $'000) |
2021 |
2020 |
|
|
|
Sales |
195,906 |
101,533 |
Cost of sales |
(168,850) |
(87,928) |
Gross operating
margin |
27,056 |
13,605 |
General and administrative
expenses |
(5,808) |
(3,944) |
Other projects |
(34) |
(145) |
Operating
income |
21,214 |
9,516 |
Income before income
taxes |
20,639 |
8,958 |
Current income tax
expense |
(8,339) |
(3,427) |
Deferred income tax
expense |
(519) |
(1,196) |
Net income and
comprehensive income |
11,781 |
4,335 |
|
|
|
Earnings per
share |
|
|
Basic |
$0.30 |
$0.11 |
Diluted |
$0.30 |
$0.11 |
Total sales for the year 2021 were almost twice
the sales of 2020. The increase is mostly explained by the
increased number of gold ounces sold (+$92.0 million).
The gross operating margin beneficiating from
the significant increase in sales amounted to $27.1 million in 2021
(13.8% of sales) compared to $13.6 million in 2020 (13.4% of
sales).
General and administrative expenses amounted to
$5.8 million in 2021. The 47.3% increase compared to 2020 is mainly
due to increases in salaries expenses (ref. increase in level of
activity), professional fees and in profit sharing.
The 2021 net income was again affected by the
recording of a $0.7 million deferred income tax expense (non-cash)
resulting from the declining value throughout the period of the
Peruvian Sol against the US$ and consequently FX variances applied
on long term assets local tax basis.
Reconciliation of non-IFRS
measures
(in $'000) |
For the years ended December 31, |
|
2021 |
2020 |
Reconciliation of net income and comprehensive income to
EBITDA |
|
|
Net income and comprehensive income |
11,781 |
4,335 |
Income taxes expense (current and deferred) |
8,858 |
4,624 |
Financial expenses |
229 |
178 |
Depreciation |
2,639 |
2,514 |
EBITDA |
23,507 |
11,651 |
CASH FLOW FROM OPERATING, INVESTING AND
FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY
Operating activities
For the year ended December 31, 2021, the cash
flow from operations, before changes in working capital items,
amounted to $15.1 million compared to $8.6 million for the year
ended December 31, 2020. Net cash from operating activities
amounted to $21.9 million compared to $11.2 million for the year
ended December 31, 2020. Changes in working capital items amounted
to $6.8 million compared to $2.7 million for the year ended
December 31, 2020.
Investing activities
During the year ended December 31, 2021, the
Corporation invested a net amount of $3.2 million ($0.7 million for
the year ended December 31, 2020). This amount includes investments
at the plant notably in relation to its capacity increase (+25%
throughput level), improvements in production processes and new
vehicles. All investments have been financed with internally
generated cash-flows.
Additions to exploration and evaluation assets
were limited to the maintaining and safekeeping of assets in 2021
and 2020.
Financing activities
In 2021, due to the changes in the dividend
policy, a quarterly dividend and eleven monthly dividends totaling
CA$0.082 per share were disbursed for a total consideration of $2.5
million (CA$ 3.2 million). In 2020, four quarterly dividends
totaling CA$0.060 per share were disbursed for a total
consideration of $1.7 million (CA$ 2.3 million).
In 2021, 441,340 common shares were repurchased
under the Corporation normal course issuer bid share buyback
program for a total cash consideration of $0.9 million (CA$ 1.2
million) (149,185 shares for a total cash consideration of $0.2
million (CA$0.3 million in 2020)).
In 2021, the Corporation received $0.4 million
(CA$ 0.5 million) mainly from some of its Directors for the
exercise of purchase options ($0.2 million in 2020 (CA$ 0.3
million)).
In 2021, the Corporation made repayments of
lease liabilities and assets retirement obligations for $0.2
million ($0.6 million in 2020).
Working capital and
liquidity
As at December 31, 2021, the Corporation’s
working capital amounted to $36.4 million, including $27.1 million
in cash ($25.4 million, including $11.9 million in cash at December
31, 2020).
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at December 31, 2021, total assets amounted
to $91.4 million ($76.3 million as at December 31, 2020). Major
variances since last year-end come from the significant increase in
cash and in trade and other payables and the impact of the
additional tax liability (current and deferred) recorded 2021.
(in $'000) |
As at December 31, |
As at December 31, |
|
2021 |
2020 |
Cash |
27,099 |
11,868 |
Accounts receivable |
8,407 |
8,434 |
Inventories |
14,764 |
13,401 |
Property, plant and
equipment |
20,759 |
19,677 |
Right-of-use assets |
341 |
834 |
Exploration and evaluation
assets |
18,516 |
18,510 |
Other assets |
1,471 |
3,572 |
Total
assets |
91,357 |
76,296 |
|
|
|
Trade and other payables |
11,680 |
7,082 |
Asset retirement
obligations |
3,553 |
3,604 |
Current tax liabilities |
2,217 |
1,124 |
Deferred tax liabilities |
1,555 |
1,036 |
Lease liabilities |
343 |
706 |
Shareholders' equity |
72,009 |
62,744 |
Total liabilities and
equity |
91,357 |
76,296 |
OUTLOOK 2022
Ore processing
For 2022, the Corporation forecasted sales (1)
in the range of $200-220 million representing growth of 4-14% over
2021 final production sales. This would result in a net income in
the range of $11-13 million ($0.28-0.33 per share) (CA$0.36-0.42
per share).
Dynacor’s 2022 capital budget ranging between
$5-8 million includes sustainable capital at the Veta Dorada plant.
The Corporation intends to increase the mill capacity later this
year.
The Corporation is continuing to assess other
opportunities of growth in Peru as well as in other
jurisdictions.
(1) Using opening 2022 market gold
price
Exploration
The Corporation has planned for 2022, a $1.0
million 2,735-meter 8-hole drilling program on the Tumipampa
project. This program is subject to the Corporation reaching a work
agreement with local communities.
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: 38,643,747
Website: http://www.dynacor.comTwitter:
http://twitter.com/DynacorGold
PDF
available: http://ml.globenewswire.com/Resource/Download/887ed177-3eb6-43ab-aacc-3674649df4e3
CONTACT: For more information, please contact:
Director, Shareholder Relations
Dale Nejmeldeen
Dynacor Gold Mines Inc.
T: 514-393-9000 #230
E: investors@dynacor.com
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