Mr. Dale Nejmeldeen reports
Q1 2019: DYNACOR REPORTS ITS 32ND CONSECUTIVE QUARTER OF PROFIT WITH A NET INCOME OF US$ 1.2 M
Dynacor Gold Mines Inc. has released its unaudited condensed consolidated financial statements and the management's discussion and analysis (MD&A) for the three-month period ended March 31, 2019.
These documents have been filed electronically with SEDAR and will be available on the corporation's website.
All figures in this press release are in millions of U.S. dollars unless stated otherwise. Earnings per share and cash flow per share are in U.S. dollars.
For the three-month period ended March 31, 2019, Dynacor completed its 32nd consecutive quarter of profits with a net income of $1.2-million (three cents per share) compared with $1.6-million (four cents per share) for the same period of 2018.
Q1 2019 overview and highlights
With a similar volume processed (20,814 tonnes in Q1 2019 versus 21,035 tonnes in Q1 2018) the company's production is down by 16.1 per cent compared with Q1 2018 (16,000 ounces in Q1 2019 versus 19,072 ounces in Q1 2018). This decrease is mainly explained by a 13.1-per-cent decrease in the average grade of the available ore purchased and processed.
Volume of ore processed of 20,814 tonnes of ore (dry metric tonnes or DMT) compared with 21,035 DMT in Q1 2018;
Gold production of 16,000 ounces, a decrease of 16.1 per cent compared with Q1 2018 due to the reduced grades.
32nd consecutive quarter of profits;
Sales of $22.9-million in Q1 2019, a decrease of 13.9 per cent compared with Q1 2018;
Gross operating margin of $2.8-million (12.2 per cent) in Q1 2019, a decrease of 22.2 per cent compared with Q1 2018;
Net income of $1.2-million (three cents per share) in Q1 2019, a decrease of 25.0 per cent compared with Q1 2018;
EBITDA (earnings before interest, taxes, depreciation and amortization) of $2.5-million, a decrease of 16.7 per cent compared with Q1 2018;
Cash flow from operating activities before change in working capital items of $1.9-million and five cents per share, a decrease of 24.0 per cent compared with Q1 2018.
Cash return to shareholders
Quarterly dividend of one Canadian cent per share and totalling $300,000 paid in January, 2019;
Approval from the Toronto Stock Exchange (TSX) of the new normal course issuer bid (NCIB), under which Dynacor may purchase, for cancellation, up to 3,273,485 common shares or approximately 10 per cent of its public float as of April 17, 2019.
Jean Martineau, president and chief executive officer, commented: "A longer rainy season in Peru lasting from early January to mid-April, 2019, affected general gold production from artisanal miners in the country including areas of higher-grade procurement. The grade of available ore was also lower than usual. This had a direct impact on our Q1 production. Nevertheless, the first quarter production has historically been the lowest production quarter for the corporation. Therefore, we maintain our production forecast which we will monitor over the next months."
RESULTS FROM OPERATIONS
For the three-month periods ended March 31
(in thousands of dollars)
Sales $22,919 $26,590
Cost of sales (20,129) (22,966)
Gross operating margin 2,789 3,624
General and administrative expenses (956) (1,123)
Operating income 1,833 2,501
Income before income taxes 1,781 2,343
Net income and comprehensive income 1,180 1,601
Earnings per share
Basic $0.03 $0.04
Diluted $0.03 $0.04
Total sales amounted to $22.9-million compared with $26.6-million in Q1 2018. The $3.7-million decrease is explained by a lower gold price (down $400,000) combined with decreases in the number of ounces sold (down $3.3-million). The decrease in sales resulted in a decrease in gross operating margin and in net income.
Cash flow from operating, investing and financing activities, and liquidity
During Q1 2019, the cash flow from operating activities before change in working capital items amounted to $1.9-million (five cents per share), compared with $2.5-million (six cents per share) in Q1 2018.
During Q1 2019, net investments were not significant ($300,000 for the same period in 2018). Additions to exploration and evaluation assets during Q1 2019 and Q1 2018, amounted to $100,000.
A total of 313,900 shares were repurchased in Q1 2019 for a total cash consideration of $400,000. In Q1 2018, there were no shares repurchased as the repurchase program started in Q2 2018.
In January, 2019, the second quarterly dividend payment of one Canadian cent per share was disbursed for a total consideration of $300,000. A new dividend was declared in March, 2019, and was paid subsequent to period-end.
Other financing activities consisted in the repayment of lease liabilities for $200,000 ($100,000 in Q1 2018).
As at March 31, 2019, the corporation's working capital amounted to $20.4-million, including $14.4-million in cash ($19.7-million, including $13.9-million in cash at Dec. 31, 2018).
Given the expected increase in ore volume and with similar grades supplied to the plant in the last two years, the corporation expects to produce between 82,000 and 92,000 ounces of gold in 2019.
The corporation is waiting for its new permit from the Peruvian Ministry of Energy and Mines (MEM). Upon receipt of the permit, Dynacor will immediately start drilling the first phase of 12 holes totalling 4,200 metres. The two priority targets consist of:
Priority 1 targets to be 2,700 m (eight holes);
Priority 2 targets to be 1,500 m (four holes).
About Dynacor Gold Mines Inc.
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 small scale artisanal miners. At present, Dynacor produces and explores in Peru where its management team has decades of experience and expertise. In 2018, Dynacor produced 81,314 ounces of gold, a yearly best and 1.8-per-cent increase as compared with 2017 (79,897 ounces).
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