Q3-2018: Dynacor Reports Sales of US $24.4 M and Net Income of US $0.7 M
MONTREAL, Nov. 12, 2018 (GLOBE NEWSWIRE) -- Dynacor Gold Mines Inc. (TSX: DNG / OTC: DNGDF) (Dynacor or the Corporation) a Corporation with gold and silver ore processing operations and exploration projects in Peru, has released its unaudited condensed consolidated financial statements and the management's discussion and analysis (“MD&A”) for the three-month and nine-month periods ended September 30, 2018.
These documents have been filed electronically with SEDAR at www.sedar.com and will be available on the Corporation's website www.dynacor.com.
(All figures in this press release are in millions of US$ 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).
For the three-month period ended September 30, 2018, Dynacor recorded its 30th consecutive quarter of profits, with a net income $0.7 M ($0.02 per share) compared to $1.2 M ($0.03 per share) for the three-month period ended September 30, 2017 (“Q3-2017”).
For the nine-month period ended September 30, 2018, the net income amounts to $3.5 M ($0.09 per share) compared to $2.5 M ($0.06 per share) for the same period in 2017.
Highlights for the third quarter of 2018
(Variance %, are calculated based on rounded figures)
Operational
- Processing of 22,615 tonnes, an increase of 12.9% compared to Q3-2017;
- Gold production of 19,982 ounces, compared to 20,521 ounces in Q3-2017 due to lower grade partially offset by higher tonnage processed;
- IP Geophysics on the disseminated mineralization on the Quartzites and on the Sumac Brecciated Quartzite zone of the Tumipampa project and interpretation of results have been completed which will enable to determine definitive drilling targets.
Financial
- 30th consecutive quarter of profits;
- Sales of $24.4 M in Q3-2018, compared to $26.8 M in Q3-2017;
- Gross operating margin of $2.6 M (10.7%) in Q3-2018, compared to $3.7 M (13.8%) in Q3-2017;
- Net income and comprehensive income of $0.7 M in Q3-2018 ($0.02 per share), compared to $1.2 M in Q3-2017 ($0.03 per share);
- EBITDA (1) of $2.0 M in Q3-2018, compared to $3.3 M in Q3-2017;
- Cash flow from operating activities before change in working capital items of $1.6 M and $0.04 per share (2) in Q3-2018, compared to $2.6 M in Q3-2017;
- Cash on hand of $11.1 M at end of Q3-2018 compared with $4.8 M at year-end 2017.
Strategic
- In August 2018, Dynacor announced the initiation of the first quarterly cash dividend to its shareholders which was paid in October 2018;
- Dynacor appointed Jorge-Luis Cardenas as Vice President Operations.
(1) 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.
(2) 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.
Overview Q3-2018
During the quarter the market gold price continued its down trend falling promptly in July from approximately $1,300 to $1,200 per ounce and then remained stable in August and September at approximately $1,200 per ounce. This context negatively impacted our quarter sales and gross margin.
The Corporation continued increasing its ore purchased level compared to the previous quarter (Q2-2018) at a monthly average exceeding 7,700 tonnes with the objective to achieve 8,500 tonnes in the next quarter.
Total tonnage processed during the quarter was 22,615 tonnes (average of 258 tpd) compared to 20,026 tonnes (average of 229 tpd) in Q3-2017 an increase of 12.9%.
Gold production was 19,982 ounces in Q3-2018 compared to 20,521 in Q3-2017. This slight decrease is explained by lower grade partially offset by higher tonnage processed.
Total sales amounted to $24.4 M compared to $26.8 M in Q3-2017. This $2.4 M decrease is explained by the decrease in gold price ($1.4 M) and the decrease in the number of ounces sold ($1.0 M).
Results from operations
Financial statement highlights
| Three-month periods ended September 30, | Nine-month periods ended September 30, | ||||
| (in $'000) | 2018 | 2017 | 2018 | 2017 | |
| Sales | 24,439 | 26,797 | 78,984 | 73,278 | |
| Cost of sales | (21,819) | (23,112) | (69,225) | (63,795) | |
| Gross operating margin | 2,620 | 3,685 | 9,759 | 9,483 | |
| General and administrative expenses | (1,182) | (863) | (3,634) | (2,992) | |
| Transition, maintenance and other expenses | - | (479) | - | (863) | |
| Selling expenses | - | (4) | (4) | (9) | |
| Operating income | 1,438 | 2,339 | 6,121 | 5,619 | |
| Income before income taxes | 1,316 | 1,940 | 5,712 | 4,548 | |
| Net income and comprehensive Income | 694 | 1,239 | 3,546 | 2,460 | |
| Earnings per share | |||||
| Basic | $0.02 | $0.03 | $0.09 | $0.06 | |
| Diluted | $0.02 | $0.03 | $0.09 | $0.06 | |
The gross operating margin amounted to $2.6 M in Q3-2018 compared to $3.7 M for the same period in 2017. This decrease is mainly attributable to lower sales due to:
- The decrease in gold production explained by lower grade partially offset by higher tonnage processed;
- The decline in gold price.
Net income was $0.7 M for the three-month period ended September 30, 2018, compared to $1.3 M for the same period in 2017. The quarter decrease in net income compared to 2017 is explained by the:
- $1.1 M decrease in gross operating margin;
- $0.3 M increase in general administrative expenses amounted explained by non-recurrent expenses;
- Absence of transition costs in Q3-2018 (0.5 M in Q3-2017);
- Reduced financial expenses ($0.3 M) following the debt reimbursement in late 2017.
| Three-month periods ended September 30, | Nine-month periods ended September 30, | ||||
| (in $'000) | 2018 | 2017 | 2018 | 2017 | |
| Reconciliation of net income and comprehensive income to EBITDA (1) | |||||
| Net income and comprehensive income | 694 | 1,239 | 3,546 | 2,460 | |
| Income taxes | 622 | 701 | 2,166 | 2,088 | |
| Financial expenses | 75 | 363 | 207 | 947 | |
| Depreciation | 614 | 1,005 | 1,755 | 2,296 | |
| Write-off of exploration assets | - | - | 7 | 94 | |
| EBITDA (1) | 2,005 | 3,308 | 7,681 | 7,885 | |
Cash flow from operating, investing and financing activities and working capital/liquidity
Operating activities
During Q3-2018, the cash flow from operations, before changes in working capital items, amounted to $1.6 M ($6.3 M for the nine-month period ending September 30, 2018), compared to $2.6 M in Q3-2017 ($5.9 M for the nine-month period ending September 30, 2017). This decrease between quarters is primarily explained by the decrease in cash gross operating margin.
During Q3-2018, total cash from operating activities amounted to $1.1 M ($8.7 M for the nine-month period ending September 30, 2018) compared to $3.4 M in Q3-2017 ($7.9 M for the nine-month period ending September 30, 2017). Changes in working capital items amounted to ($0.5) M ($2.4 M or the nine-month period ending September 30, 2018) compared to $0.8 M and $2.0 M for the same periods in 2017.
Investing Activities
During Q3-2018, there were net investment of $0.2 M ($1.2 M for the nine-month period ending September 30, 2018) for the acquisition of property, plant and equipment ($0.1 M and $0.5 M for the same periods in 2017) mainly relating to additions to the Chala plant and to the expansion of the tailing pond. Additions to exploration and evaluation assets during Q3-2018, amounted to $0.3 M ($0.7 M for the nine-month period ending September 30, 2018) compared to respectively $0.1 M and $0.4 M in 2017).
Financing Activities
For the nine-month period ending September 30, 2018, 1,028,250 share purchase options (91,000 in 2017) were exercised for a cash consideration of $0.5 M (non-significant in Q3-2018).
For the nine-month period ending September 30, 2018, $0.6 M was incurred ($0.2 M in 2017) for closure of facilities (non-significant in Q3-2018).
No repayments of long-term debt or interests were paid in 2018 (respectively $1.7 M and $0.2 M in Q3-2017).
Working capital and liquidity
As at September 30, 2018, the Corporation’s working capital amounted to $18.9 M, including $11.1 M in cash ($16.0 M, including $4.8 M in cash at December 31, 2017).
Outlook 2018
Ore processing
The Corporation’s gold production for the year ended December 31, 2017, amounted to 79,897 ounces, an increase of 8.7%, as compared to 2016. In view of the first nine months of gold production, Dynacor expects to reach approximately 82,000 ounces in 2018, which would represent a 2.6% year over year increase and be the highest production in the Company’s history.
Exploration
In November, IP Geophysics and interpretation of results have been completed which will enable to determine definitive drilling targets. Surface drilling will begin shortly afterwards upon reception of final approval and in consideration of rainy season.
ABOUT DYNACOR GOLD MINES INC.
Dynacor Gold Mines Inc. is a gold production corporation headquartered in Montreal, Canada. The corporation is engaged in production through its government approved ore processing operations. At present, Dynacor produces and explores in Peru where its management team has decades of experience and expertise. In 2017, Dynacor produced 79,897 ounces of gold, a 9% increase as compared with 2016 (73,477 ounces). 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 Gold Mines Inc. (TSX: DNG / OTC: DNGDF)
Website: http://www.dynacor.com
Twitter: http://twitter.com/DynacorGold
Facebook: facebook.com/DynacorGoldMines
Shares outstanding: 39,441,077
For more information, please contact: Dynacor Gold Mines Inc.
| Jean Martineau President and CEO #1105, 625 René-Lévesque Blvd. Dynacor Gold Mines Inc. Montreal, Quebec H3B 1R2 T: 514-393-9000 ext. 228 | Dale Nejmeldeen Director, Investor Relations Dynacor Gold Mines Inc. T: 604.492.0099 | M: 604.562.1348 E: nejmeldeen@dynacor.com |
