Dynacor Gold Mines Inc. (TSX: DNG / OTC: DNGDF) (Dynacor or
the Corporation) has released its unaudited consolidated
financial statements and the management's discussion and analysis
(MD&A) for the first quarter ended March 31, 2020.
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. Earnings per share and cash-flow per
share are in US$. All variance % are calculated from rounded
figures. Some additions might be incorrect due to rounding).
In Q1-2020 Dynacor completed its thirty sixth
(36th) consecutive quarter of profits with a net income of $2.4 M
(US $0.06 per share) compared to $1.2 M (US $0.03 per share) for
the three-month period ended March 31, 2019 (“Q1-2019”).
Following the state of the emergency decree in
Peru, which was declared on March 16, 2020, the Corporation
temporarily stopped its ore purchases activities and orderly
shut-down its processing operations. However, it was able to pursue
exporting its remaining gold production into
Q2-2020.
Q-1 2020 OVERVIEW AND
HIGHLIGHTS
During Q1-2020, the Corporations’ financial
situation benefited from the postponement till 2020, of the export
of the majority of its December gold production, following the
retention by the Peruvian authorities, of our 2,650 ounces gold
shipment as well as from the increase in gold market price.
Consequently, this contributed to higher sales in the period and a
$9.4 M increase in its cash balance since last year-end.
Due to the high level of ore inventory at the
end of 2019 and despite the temporarily shut-down since the third
week of March, our plant was able to process 22,901 tonnes of ore
in Q1-2020.
Operational
- Volume of 22,901 tonnes processed compared to 20,814 tonnes in
Q1-2019 an increase of 10.0%;
- Sales of 19,475 ounces of gold compared to 17,671 in Q1-2019 an
increase of 10.2%;
- Gold production of 13,324 ounces, compared to 16,000 in
Q1-2019, a decrease of (16.7%) due to a lower grade of ore
processed.
Financial
- 36th consecutive quarter of profits;
- Sales of $30.9 M, an increase of 34.9% compared to
Q1-2019;
- Gross operating margin of $4.9 M, an increase of 75.0% compared
to Q1-2019;
- Net income and comprehensive income of $2.4 M ($0.06 per
share), two times the net income of Q1-2019;
- Cash flow from operating activities before change in working
capital items of $3.2 M ($0.08 per share) (1), an increase of 68.4%
compared to Q1-2019;
- EBITDA (2) of $4.3 M, an increase of 72.0% compared to
Q1-2019;
- Cash on hand of $16.1 M at March 31, 2020 compared with $6.7 M
at year-end 2019.
Cash return to Shareholders
- Quarterly dividend of CA$0.015 per share and totaling $0.4 M
(CA$0.6 M) paid in April 2020;
- The Toronto Stock Exchange (TSX) has approved the new
Corporation's normal course issuer bid (NCIB), under which Dynacor
may purchase, for cancellation, up to 3,725,828 common shares or
approximately 10% of its public float as of April 20, 2020.
(1) 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.
(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 bases, effects due
to different tax structures as well as the effects of different
capital structures.
RESULTS FROM OPERATIONS
Extract from Statement of net income and comprehensive
income (unaudited)
|
For the periods ended March
31, |
|
(in $'000) |
|
2020 |
|
|
2019 |
|
|
|
|
Sales |
|
30,869 |
|
|
22,919 |
|
Cost of sales |
|
(25,920 |
) |
|
(20,129 |
) |
Gross operating
margin |
|
4,949 |
|
|
2,790 |
|
General and administrative
expenses |
|
(1,091 |
) |
|
(957 |
) |
Other projects |
|
(128 |
) |
|
- |
|
Operating
income |
|
3,730 |
|
|
1,833 |
|
Income before income
taxes |
|
3,647 |
|
|
1,781 |
|
Net income and
comprehensive income |
|
2,385 |
|
|
1,180 |
|
|
|
|
Earnings per
share |
|
|
Basic |
$ |
0.06 |
|
$ |
0.03 |
|
Diluted |
$ |
0.06 |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
Total sales amounted to $30.9 M compared to
$22.9 M in Q1-2019. The $8.0 M increase is explained by a higher
gold sales price ($5.2 M) combined with the higher number of ounces
sold ($2.8 M) explained by the decision to delay the shipment of
our December production into 2020. Those postponed shipments
represented sales of approximately $8.7 M.
The gross operating margin amounted to $4.9 M in
Q1-2020 compared to $2.8 M in Q1-2019. The variance compared to
2019 is attributable to higher sales combined with a favorable
trend of gold market prices.
Reconciliation of non-IFRS
measures
|
For the periods ended March
31, |
|
(in
$'000) |
2020 |
|
2019 |
|
Reconciliation of net income
and comprehensive income to EBITDA (2) |
|
|
|
|
Net income and comprehensive income |
2,385 |
|
1,180 |
|
Income taxes |
1,262 |
|
601 |
|
Financial expenses |
18 |
|
40 |
|
Depreciation |
640 |
|
645 |
|
EBITDA (2) |
4,305 |
|
2,466 |
|
|
|
|
|
|
CASH FLOW FROM OPERATING, INVESTING AND FINANCING
ACTIVITIES AND LIQUIDITY
Operating activities
During Q1-2020, the cash flow from operations,
before changes in working capital items, amounted to $3.2 M,
compared to $1.9 M in Q1-2019. This increase between quarters is
primarily explained by the increase in cash gross operating
margin.
During Q1-2020, total cash from operating
activities amounted to $13.1 M compared to $1.4 M in Q1-2019.
Changes in working capital items amounted to $9.8 M compared to
(-$0.5 M) in 2019. The variance is mainly attributable to the
variance in inventories.
Financing activities
In December 2019, the Corporation entered into a
bank loan agreement with a local Peruvian bank in the amount of
$3.0 M to support its working capital needs following the retention
of its shipment and as its ore purchases were reaching record
level. The bank loan was fully reimbursed at maturity in February
2020.
A total of 313,900 shares were repurchased in
Q1-2019 for a total cash consideration of $0.4 M (CA$0.5 M). In
Q1-2020, no shares were repurchased.
In January 2020, the first increased quarterly
dividend of CA$0.015 per share was disbursed for a total
consideration of $0.4 M (CA$0.6 M). In January 2019, a quarterly
dividend of CA$0.01 per share was disbursed for a total
consideration of $0.3 M (CA$0.4 M).
Liquidity
As at March 31, 2020, the Corporation’s working
capital amounted to $22.2 M, including $16.1 M in cash ($19.6 M,
including $6.7 M in cash at December 31, 2019).
STATEMENT OF FINANCIAL
POSITION
At March 31, 2020, total assets amounted to
$71.5 M ($74.8 M as at December 31, 2019). Major variances since
last year-end come from the significant increase in the cash
balance and decrease in inventories and bank loan.
(in M $) |
As at March 31, |
|
As at December 31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
Cash |
16.1 |
|
6.7 |
|
Inventories |
8.4 |
|
18.3 |
|
Property, plant and
equipment |
20.4 |
|
21.0 |
|
Exploration and evaluation
assets |
18.8 |
|
18.7 |
|
Other assets |
7.8 |
|
10.1 |
|
Total
assets |
71.5 |
|
74.8 |
|
|
|
|
|
|
Bank loan |
- |
|
3.0 |
|
ARO |
3.8 |
|
3.8 |
|
Other liabilities |
5.8 |
|
8.0 |
|
Shareholders' equity |
61.9 |
|
60.0 |
|
Total liabilities and
equity |
71.5 |
|
74.8 |
|
|
|
|
|
|
OUTLOOK
Since March 16, 2020, the Corporation
temporarily stopped its operations in Peru following the state of
emergency declared by the Peruvian authorities in response to the
COVID-19 worldwide crisis.
The Peruvian authorities just presented a plan
to progressively reopen economic activities from late May. This
initial plan contains four (4) monthly phases and is subject to
changes. The first phase has been officialized and will include the
large mining industry. Our activities are not included in this
first phase.
We are ready to restart our operations in a safe
environment for our employees and suppliers as soon as official
government measures will permit.
At the date of this report the Corporation has a
solid financial situation and continues to monitor the overall
situation and apply its liquidity control plan.
ABOUT DYNACOR
Dynacor is a dividend-paying gold production
corporation headquartered in Montreal, Canada. The corporation is
engaged in production through the processing of ore purchased from
the ASM (artisanal and small-scale mining) industry. At present,
Dynacor produces and explores in Peru, where its management team
has decades of experience and expertise. In 2019, Dynacor produced
80,677 ounces of gold, in line with 2018 (81,314 ounces).
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 are paying 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 to our small-scale artisanal miner’s communities.
Dynacor trades on the Toronto Stock Exchange
(DNG) and the OTC in the United States under the symbol
(DNGDF).
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.
Dynacor (TSX: DNG / OTC: DNGDF) Website:
http://www.dynacor.com Twitter: http://twitter.com/DynacorGold
PDF
available: http://ml.globenewswire.com/Resource/Download/150a8d87-85b3-48eb-b913-0352f270e2ee
For more information, please contact:
Dynacor Gold Mines Inc.
Director, Shareholder Relations
Dale Nejmeldeen
T: (514) 393-9000 (extension 230)
E: investors@dynacor.com
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