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 first quarter ended March 31,
2023.
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the full release here:
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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).
Q1-2023 OVERVIEW AND HIGHLIGHTS
OVERVIEW
Thanks to its high level of ore inventory at the opening of the
year and the increasing volume of ore supplied, the mill has been
able to process a record high of more than 41,500 tonnes throughout
the quarter with an average of 462 tpd.
Dynacor completed the three-month period ended March 31, 2023
(“Q1-2023”) with quarterly sales of $56.7 million and a net income
of $4.5 million (US$0.11 per share) compared to sales of $50.1
million and a net income of $5.1 million (US$0.13 per share) for
the first quarter of 2022 (“Q1-2022”).
From mid-January 2023, due to political unrest mostly in
southern Peru, the Corporation had decided to postpone exports for
safety measures. Those exports were completed in February (Refer to
February 21, 2023, Press release-DYNACOR REPORTS SALES FOR JANUARY
2023 AND THE RELEASE OF ITS DECEMBER 2019 RETAINED GOLD BARS). This
explains the monthly sales variances in Q1-2023.
Q1-2023 beneficiated as well from the sale of the latest portion
of the shipment that had been retained in December 2019 for control
procedures and released in February 2023 (sale of 1,029 ounces for
$1.5 million).
HIGHLIGHTS
Operational
- Higher ore volume supplied. Total ore volume supplied
exceeded 36,000 tonnes during the quarter, a 5,000 tonnes increase
compared to Q1-2022;
- Highest volume processed. Thanks to the Q4-2022 increase
in plant processing capacity, to the level of ore inventory at the
beginning of the period and to the volume of ore supplied, the Veta
Dorada plant processed a record volume of 41,566 tonnes of ore (462
tpd average) compared to 36,696 tonnes in Q1-2022 (408 tpd), a
13.3% increase;
- Second highest gold production. In Q1-2023, gold
equivalent production amounted to 29,299 AuEq ounces compared to
27,691 AuEq ounces in Q1-2022 a 5.8% increase.
Financial
- Solid cash position. Cash on hand of $30.7 million at
the end of Q1-2023 compared to $25.6 million at year end 2022;
- Increase of 13.2% in sales. Sales amounted to $56.7
million compared to $50.1 million in Q1-2022;
- Increased gross operating margin. Gross operating margin
amounted to $7.8 million (13.8% of sales), compared to $7.5 million
(15.0% of sales) in Q1-2022;
- Stable operating income of $6.1 million in both Q1-2023
and Q1-2022;
- Cash gross operating margin of $283 per AuEq ounce sold
(1) compared to $306 in Q1-2022;
- Increased EBITDA. EBITDA (2) of $6.9 million, compared
to $6.8 million in Q1-2022;
- Strong cash-flow. Cash-flows from operating activities
before change in working capital items of $5.0 million ($0.13 per
share) (3) compared to $5.2 million ($0.13 per share) in
Q1-2022;
- Net income of $4.5 million in Q1-2023 ($0.11 or CA$0.15
per share), a quarter-to-quarter increase of $1.0 million, and a
decrease of $0.6 million compared to the $5.1 million net income
($0.13 or CA$0.16 per share) in Q1-2022.
Return to Shareholders
- Share buy-back. 29,080 common shares repurchased for
$0.1 million (CA$0.1 million) in Q1-2023, compared to 285,836
common shares for $0.7 million (CA$0.9 million) in Q1-2022;
- Increased dividends. A 20% monthly
dividend increase is paid since January 2023. On an annual basis,
the 2023 dividend will represent CA$0.12 per share or 3.9% dividend
yield based on the current share price.
(1) Cash gross operating margin
per AuEq ounce is in US$ 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
Consolidated Statement of net income
and comprehensive income
For the three-months periods
ended March 31,
(in $'000) (unaudited)
2023
2022
Sales
56,733
50,080
Cost of sales
(48,904)
(42,555)
Gross operating margin
7,829
7,525
General and administrative expenses
(1,553)
(1,397)
Other projects expenses
(224)
(41)
Operating income
6,052
6,087
Financial income (expenses)
153
(56)
Foreign exchange gain (loss)
50
(18)
Income before income taxes
6,255
6,013
Current income tax expense
(1,979)
(1,515)
Deferred income tax (expense) recovery
191
628
Net income and comprehensive
income
4,467
5,126
Earnings per share
Basic
$0.11
$0.13
Diluted
$0.11
$0.13
Total sales amounted to $56.7 million compared to $50.1 million
in Q1-2022. The $6.6 million increase is mainly explained by higher
quantities sold.
The Q1-2023 gross operating margin amounted to $7.8 million
(13.8% of sales) compared to $7.5 million (15.0% of sales) in
Q1-2022. The Q1-2023 gross operating margin was impacted by lower
grades, the global inflation affecting our unit cost of production
and by the overall trend in gold market prices compared to
Q1-2022.
General and administrative expenses amounted to $1.5 million
compared to $ 1.4 million in Q1-2022.
As budgeted, other projects represent the expenses incurred by
the Corporation to duplicate its unique business model in other
jurisdictions.
The Q1-2023 net income was also affected by the recording of a
$1.8 million income tax expense including -$0.2 million (non-cash)
deferred income tax recovery (-$ 0.6 million in Q1-2022). 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.
Reconciliation of non-IFRS measures
(in $'000) (unaudited)
For the three-months periods
ended March 31,
2023
2022
Reconciliation of net income and
comprehensive income to EBITDA
Net income and comprehensive income
4,467
5,126
Income taxes expense (current and
deferred)
1,788
887
Financial (income) expenses
(153)
56
Depreciation
784
683
EBITDA
6,886
6,752
CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND
FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY
Operating activities
For the three-month period ended March 31,
2023, the cash flow from operations, before changes in working
capital items, amounted to $5.0 million compared to $5.2 million
for the three-month period ended March 31, 2022. Net cash from
operating activities amounted to $9.7 million compared to $0.5
million for the three-month period ended March 31, 2022. Changes in
working capital items amounted to $4.7 million compared to (-$4.7
million) for the three-month period ended March 31, 2022.
Investing activities
During the three-month period ended March 31,
2023, the Corporation invested $3.7 million ($0.6 million for the
three-month period ended March 31, 2022). This amount mainly
includes the purchase of an office in Lima, investments at the
plant and new vehicles. All investments have been financed with
internally generated cash-flows.
Financing activities
In Q1-2023, monthly dividends totaling CA$0.030 per share were
disbursed for a total consideration of $0.9 million (CA$ 1.2
million) compared to CA$0.025 per share for a total consideration
of $0.8 million (CA$ 1.0 million) in Q1-2022.
In Q1-2023, 29,080 common shares were repurchased under the
Corporation normal course issuer bid share buyback program for a
total cash consideration of $0.1 million (CA$ 0.1 million) (285,836
shares for a total cash consideration of $0.7 million (CA$0.9
million) in Q1-2022).
In Q1-2022, the Corporation issued 172,500 common shares
following the exercise of purchase options for a consideration of
$0.3 million (CA$ 0.4 million).
Working capital and liquidity
As at March 31, 2023, the Corporation’s working capital
increased to $45.5 million, including $30.7 million in cash ($43.7
million, including $25.6 million in cash at December 31, 2022).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at March 31, 2023, total assets amounted to $99.7 million
($96.9 million as at December 31, 2022). Major variances since last
year-end come from the significant increase in cash, property plant
and equipment with the purchase of an office in Lima and variances
in working capital items.
(in $'000) (unaudited)
As at March 31,
As at December
31,
2023
2022
Cash
30,729
25,595
Accounts receivable
10,951
12,298
Inventories
13,245
16,447
Prepaid
727
223
Current tax assets
514
371
Property, plant and equipment
24,356
21,392
Right-of-use assets
679
701
Exploration and evaluation assets
18,543
18,543
Other non-current assets
-
1,332
Total assets
99,744
96,902
Trade and other payables
10,637
11,168
Asset retirement obligations
3,663
3,642
Deferred tax liabilities
919
1,110
Lease liabilities
688
701
Shareholders' equity
83,837
80,281
Total liabilities and equity
99,744
96,902
OUTLOOK 2023
Ore processing
For 2023, the Corporation forecasted sales (1) in the range of
$210-235 million representing a growth of 6.5-20.0% over 2022
sales. This would result in a net income in the range of $8.5-11.5
million ($0.22-0.30 per share) (CA$0.30-0.41 per share). So far in
2023, the Corporation is in line with its financial forecast.
(1) Using a market gold price ranging between $1,800 and $1,900
per ounce
Capex
Dynacor’s 2023 capital budget is set between $7.0 and $10.0
million and includes investments at the Veta Dorada plant for new
efficiency improvement equipment’s, an increasing tailing pound
capacity, additional vehicles for our ore purchase team and
administrative and ore purchasing buildings.
Other project expenses
The Corporation has also budgeted approximately $1.0 million to
advance other projects in other jurisdictions.
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: 38,428,048
Website: http://www.dynacor.com Twitter:
http://twitter.com/DynacorGold
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For more information, please contact: (514) 393 9000 Ext: 230
investors@dynacor.com
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