Dynacor Gold Mines 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, 2022.
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).
Q1-2022 OVERVIEW AND
HIGHLIGHTS
OVERVIEW
Dynacor completed the three-month period ended
March 31, 2022 (“Q1-2022”) with quarterly sales of $50.1 million
and a record net income of $5.1 million (US$0.13 per share)
compared to sales of $40.9 million and a net income of $2.1 million
(US$0.05 per share) for the first quarter of 2021 (“Q1-2021”).
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/9cb09329-0b1b-4031-ac29-1d29e61ed9b7
Due to an increase of 25.1% in tonnage processed
combined with a 5.1% higher gold market price the Corporation sales
increased by 22.5% compared to Q1-2021.
Following a +10.1% gain over the Peruvian Sol in
2021, the US dollar has lost 6.5% against the Peruvian Sol in
Q1-2022. This reversal impacted favorably and significantly the
Q1-2022 current and deferred tax expenses and accordingly the
Corporation’s Q1-2022 net income.
HIGHLIGHTS
Operational
- Higher volume
processed. Thanks to the 2021 increase in plant processing
capacity, to the level of ore inventory at the beginning of the
period and to the volume of ore supplied in Q1-2022, the Veta
Dorada plant processed a volume of 36,696 tonnes of ore (408 tpd
average) compared to 29,327 tonnes in Q1-2021 (326 tpd), a 25.1%
increase;
- Higher gold
production. In Q1-2022, gold equivalent production
amounted to 27,691 AuEq ounces compared to 21,975 AuEq ounces in
Q1-2021 a 26.0% increase.
Financial
- Solid cash
position. Cash on hand of $25.7 million at the end of
Q1-2022 compared to $27.1 million at year end 2021 due to the
variance in working capital items;
- Higher gold production,
gold market price and trend and favorable exchange rate (Peruvian
sol against US$) boost overall financial performance.
Significant increases in all financial aspects;
- Earning per share in line
with financial guidance (considering the non-cash deferred tax
recovery). Dynacor recorded a net income of $5.1 million
in Q1-2022 ($0.13 or CA$0.16 per share) compared to $2.1 million
($0.05 or CA$0.06 per share) in Q1-2021;
- Increase of 22.5% in
Sales. With greater quantities and a higher gold market
price, sales amounted to $50.1 million in Q1-2022 compared to $40.9
million in Q1-2021;
- Increased gross operating
margin. Gross operating margin of $7.5 million (15.0% of
sales) in Q1-2022, compared to $5.3 million (13.0% of sales) in
Q1-2021;
- Increased operating
income. Operating income of $6.1 million compared to $4.1
million in Q1-2021;
- Strong cash gross operating
margin. Cash gross operating margin of $306 per AuEq ounce
sold (1) compared to $257 in Q1-2021;
- Increased EBITDA.
EBITDA (2) of $6.8 million, compared to $4.6
million in Q1-2021;
- Robust cash flows.
Cash flows from operating activities before change in working
capital items of $5.2 million ($0.13 per share)
(3) compared to $3.1 million ($0.08 per share) in
Q1-2021.
Return to Shareholders
- Share
buy-back. 285,836 common shares
repurchased for $0.7 million (CA$ 0.9 million);
- Increased
dividends. A 25% monthly dividend increase is paid since
January 2022. On an annual basis, the 2022 dividend will represent
CA$0.10 per share or more than 3% dividend yield based on the
beginning of 2022 share price.
(1) Cash gross operating margin
per AuEq ounce is in US$ 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
Extract from the unaudited Consolidated Statement of net
income and comprehensive income
|
For the three-months periods ended March 31, |
(in $'000) (unaudited) |
|
2022 |
|
|
2021 |
|
|
|
|
Sales |
|
50,080 |
|
|
40,909 |
|
Cost of sales |
|
(42,555) |
|
|
(35,606) |
|
Gross operating
margin |
|
7,525 |
|
|
5,303 |
|
General and administrative
expenses |
|
(1,397) |
|
|
(1,208) |
|
Other project expenses |
|
(41) |
|
|
(16) |
|
Operating
income |
|
6,087 |
|
|
4,079 |
|
Financial income and
expenses |
|
(56) |
|
|
(51) |
|
Foreign exchange loss |
|
(18) |
|
|
(100) |
|
Income before income
taxes |
|
6,013 |
|
|
3,928 |
|
Current income tax
expense |
|
(1,515) |
|
|
(1,554) |
|
Deferred income tax
expense |
|
628 |
|
|
(268) |
|
Net income and
comprehensive income |
|
5,126 |
|
|
2,106 |
|
|
|
|
Earnings per
share |
|
|
Basic |
$0.13 |
|
$0.05 |
|
Diluted |
$0.13 |
|
$0.05 |
|
|
|
|
|
|
|
|
The $9.2 million sales increase compared with
Q1-2021 is explained by the increased number of gold ounces sold
(+$6.8 million) and by higher selling prices (+2.4 million).
The Q1-2022 gross operating margin amounted to
$7.5 million (15.0% of sales) compared to $5.3 million (13.0 % of
sales) in Q1-2021 and beneficiated from the increase in selling
prices and the favorable trend of gold market prices during the
period.
General and administrative expenses amounted to
$1.4 million in Q1-2022. The $0.2 million increase compared to
Q1-2021 is mainly due to increases in salary expenses, and in
promotion and investor relation expenses.
The Q1-2022 current tax provision was positively
affected by the variance of the Peruvian Sol against the US$
generating a $0.5 million favorable variance compared to
Q1-2021.
The Q1-2022 net income was also favorably
affected by the recording of a $0.6 million deferred income tax
recovery (non-cash) resulting from the increasing value throughout
the period of the Peruvian Sol against the US$ and consequently FX
variances applied on long term assets local tax basis. This
recovery is generating a $0.9 million favorable variance compared
to Q1-2021. Future fluctuations will affect positively or
negatively the deferred tax at the end of each period.
Reconciliation of non-IFRS
measures
(in $'000)
(unaudited) |
For the three-month periods ended March 31, |
|
2022 |
2021 |
Reconciliation of net income
and comprehensive income to EBITDA |
|
|
Net income and comprehensive
income |
5,126 |
2,106 |
Income taxes expense (current
and deferred) |
887 |
1,821 |
Financial expenses |
56 |
51 |
Depreciation |
683 |
643 |
EBITDA |
6,752 |
4,621 |
|
|
|
CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND
FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY
Operating activities
For the three-month period ended March 31, 2022,
the cash flow from operations, before changes in working capital
items, amounted to $5.2 million compared to $3.1 million for the
three-month period ended March 31, 2021. Net cash from operating
activities amounted to $0.5 million compared to $6.8 million for
the three-month period ended March 31, 2021. Changes in working
capital items amounted to (-$4.7 million) compared to $3.8 million
for the three-month period ended March 31, 2021.
Investing activities
During the three-month period ended March 31,
2022, the Corporation invested $0.6 million ($0.5 million for the
three-month period ended March 31, 2021). This amount mainly
includes investments at the plant and new vehicles. All investments
have been financed with internally generated cash-flows.
Financing activities
In Q1-2022, monthly dividends totaling CA$0.025
per share were disbursed for a total consideration of
$0.8 million (CA$ 1.0 million). In Q1-2021, a quarterly dividend
and two monthly dividends totaling CA$0.025 per share were
disbursed for a total consideration of $0.8 million (CA$ 1.0
million)
In Q1-2022, 285,836 common shares were
repurchased under the Corporation normal course issuer bid share
buyback program for a total cash consideration of $0.7 million (CA$
0.9 million) (51,225 shares for a total cash consideration of $0.1
million (CA$0.1 million) in Q1-2021).
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, 2022, the Corporation’s working
capital increased to $39.8 million, including $25.7 million in cash
($36.4 million, including $27.1 million in cash at December 31,
2021).
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at March 31, 2022, total assets amounted to
$94.7 million ($91.4 million as at December 31, 2021). Major
variances since last year-end come from the increase in accounts
receivable due to quarter end sales collected early in Q2-2022.
(in $'000) (unaudited) |
As at March 31, |
As at December 31, |
|
2022 |
2021 |
Cash |
25,723 |
27,099 |
Accounts receivable |
12,361 |
8,407 |
Inventories |
15,101 |
14,764 |
Property, plant and
equipment |
20,744 |
20,759 |
Right-of-use assets |
302 |
341 |
Exploration and evaluation
assets |
18,516 |
18,516 |
Other assets |
1,917 |
1,471 |
Total
assets |
94,664 |
91,357 |
|
|
|
Trade and other payables |
11,926 |
11,680 |
Asset retirement
obligations |
3,492 |
3,553 |
Current tax liabilities |
1,994 |
2,217 |
Deferred tax liabilities |
927 |
1,555 |
Lease liabilities |
314 |
343 |
Shareholders' equity |
76,011 |
72,009 |
Total liabilities and
equity |
94,664 |
91,357 |
|
|
|
FOLLOW-UP 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 could 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). So far in 2022, the Corporation is in
line with its financial forecast.
For 2022, Dynacor should incur capital
expenditures ranging between $5 to 8 million at the Chala Plant
including the plan to increase capacity later during the 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
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: 38,751,747
Website: http://www.dynacor.comTwitter:
http://twitter.com/DynacorGold
PDF
available: http://ml.globenewswire.com/Resource/Download/d8e38a25-8aa7-479b-b4f2-af1217450a81
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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