Dynacor Generates $3.1 M in Cash Flow from Operations in Fiscal 2010 and Names New CFO
MONTREAL, QUEBEC–(Marketwire – March 31, 2011) – Dynacor Gold Mines Inc. (TSX:DNG) released its audited financial statements for th e year-ended December 31, 2010. The Co mpany is pleased to report that in 2010, it gen erated $3.1 million in cash flow from operating activities before non-cash working capital items up from $0.5 million in fiscal 2009. T he audited financial statements along with th e management’s discussion and analysis are available on the Company’s website ww w.dynacorgold.com, and the documents have been filed electronically with SEDAR at www.sedar.com.
EBITDA of $3.7M ($1.8M in 2009) resulting in an increase of 106 %.
Production of gold for the year was 33,525 ounces (23,409 ounces in 2009) an increase of 43%.
Closed debt financing of $1.5M in order to improve the working capital position of the Company.
Received gross proceeds of $4.5M with the issuance of 4.3M units from a private placement.
Completed a successful surface sampling campaign of 993 channel samples with grades up to 14.9 g/t of gold and 5.65% of copper. In January 2011 a 16,700 meter drilling campaign was initiated.
Excluding the provision on the Peruvian sales taxes withheld and the impairment of the deferred development and exploration costs, the Company generated earnings of $2.7M for the year. However, as a result of this provision for Peruvian sale s taxes withheld of $1.6M and the impairment of $3.9M, Dynacor generated a net loss for the year of $2.8M ($6.5M in 2009), a decrease of $3.7M as compared to 2009.
Sales for 2010 amounted to $43.7M, an increase of 65% compared to 2009. The sales tax withholding by the Peruvian authorities caused the Company to operate below the installed capacity for the first three quarters. Though, the $1.5M in debentures concluded in June and October allowed the Company to increase its procurement of ore which contributed to the increase in the production output and sales which generated additional liquidities enabling the Company to operate at close to full capacity at year- end.
The Company generated a sales volume of 33,037 ounces in the current year representing a 42% increase from 2009 (23,286 ounces). The average selling price of gold increased by 30% in 2010 compared to 2009 from US$958 per ounce to US$1,250 per ounce. This increase contributed to the 31% rise in cash gross margin. The Company generated a gross margin of $8.2M for the year ($4.6M in 2009).
The following table provides a summary of Dynacor’s financial performance in 2010 in comparison with 2009:
|Gold production (in ounces)||33,525||23,409||+43||%|
|Gold sales (in ounces)||33,037||23,286||+42||%|
|Sales ($ millions)||43.7||26.5||+65||%|
|Gross margin (US$ per ounce)||236||180||+31||%|
|Gross margin ($ millions)||8.2||4.6||+78||%|
|Net loss ($ millions)||(2.8||)||(6.5||)||n/a|
|Cash flow ($ millions)||3.1||0.5||+520||%|
CASH FLOW, FINANCING ACTIVITIES AND WORKING CAPITAL
During the year, the cash flow from operations before changes in non-cash working capital items was $3.1M compared to $0.5M in 2009. During the year, the Company received proceeds of $1.5M from the issuance of two debentures and in December 2010, the Company completed a private placement of 4.3M units at a price of $1.05 per unit for a cash consideration of $4.5M. In December 2010, the Company reimbursed the $2.6M promissory note payable to Malaga Inc.
As at December 31, 2010, the working capital was $4.8M compared to $0.4M in 2009, an improvement of $4.4M.
Mr. Jean Martineau, President and Chief Executive Officer of Dynacor Gold Mines Inc. commenting on the Company’s 2010 performance and stated “We are pleased with our exceptional 2010 results as they continue to exceed our beginning of year projections. Thanks to our strong financial position, we can now expedite an aggressive exploration campaign focussed on our flagship Tumipampa property. There are great expectations considering the results obtained from surface samples collected (see press release dated August 11, 2009, January 27, 2010, March 7, 2011 ) and our initial drilling results (see Press release dated March 22, 2011). The property is located in a world class copper and gold skarn-porphyry area. We are looking forward to further drilling results as our drilling campaign unfolds.”
Dynacor’s focus is to continue using its cash resources generated from its custom milling operation to build long-term value for its shareholders through growth of its exploration properties. In the short term, the Company estimates that in 2011 it will process approximately 45,000 ounces of gold and thus finance its aggressive drilling campaign on its Tumipampa property in the amount of $5.5M.
APPOINTMENT OF A NEW VICE-PRESIDENT AND CFO
The Board of Directors is pleased to announce the appointment of Joey Trombino as Vice- President and Chief Financial Officer. The Board also wishes to thank Pierre Monet for his exceptional services to the company since 2007. Pierre Monet resigned from his position as Dynacor Gold’s Vice-President and CFO in order to focus his career as the newly appointed President of Malaga Inc. He will however continue to serve the Company as a Special Advisor to Jean Martineau, President and CEO.
Joey Trombino is an experienced financial executive who joined Dynacor Gold in February 2009 as Director of Finance. Prior to this, Mr. Trombino was Vice-President and Chief Financial Officer of Positron Technologies and had worked in several private and public companies in senior positions. He started his career at KPMG and has been a member of the Canadian Institute of Chartered Accountants since 1990.
Jean Martineau commenting on the nomination stated “I am very pleased to have Joey on board as our new Vice-President and CFO since he has acquired a solid knowledge of Dynacor over the past two years. I would also like to specially thank Pierre Monet for his work with us over the past 4 years. He has contributed enormously to the development of the Company and I wish him all the best and lots of success in all of his future endeavours”.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is a gold exploration and mining company active in Peru through its subsidiaries since 1996. The Company’s assets include the Acari, Casaden and Tumipampa exploration properties. Dynacor’s gold mill produces gold by custom milling. 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 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.
President & CEO
Dynacor Gold Mines Inc.
514-288-3224 / 418-614-3467
Dynacor Gold Mines Inc.