01:45:59 EDT Wed 15 Jul 2020
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Dynacor Gold Mines Inc
Symbol DNG
Shares Issued 39,158,989
Close 2019-06-11 C$ 1.70
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Dynacor signs LOI to form JV company in Senegal

2019-06-11 11:48 ET - News Release

Mr. Jean Martineau reports


Dynacor Gold Mines Inc. has signed a letter of intent (LOI) with KN Equipments Inc. and Fonds Souverain d'Investissements Strategiques of Senegal (FONSIS). The corporation is setting in motion to strategically expand its business globally by forming a jointly owned company to operate in Senegal. The new company would start by building an ore processing plant that can be upgraded in Senegal. The initial plan is for a 100-to-150-tonne-per-day facility with the design to double capacity to 300 tonnes per day.

Dynacor is to operate the plant and own the majority of the company with 51-per-cent ownership. KN Equipments and FONSIS will own the balance at 25 per cent and 24 per cent, respectively.

Subject to a seven-month due diligence period, which is to complete before the end of 2019, the terms of the LOI anticipate Dynacor will provide the technical and legal teams. The teams are to conduct a complete accounting of potential production sites, the total number of ASM (artisanal and small-scale miners) and all other pertinent data concerning the feasibility of this project. The final decision to move ahead on the project will be on or before Dec. 31, 2019.


In November, 2017, the corporation paid a first visit to meet with the Senegalese government. The encouraging meetings prompted Dynacor to follow up with a second visit in February, 2018. A technical team from Dynacor was sent to Senegal to evaluate the gold potential and ASM situation. During the site visit, the collection of many grab samples from several ASM operating in the area was an essential step the technical team completed. The local ASM community was welcoming to the team members and quite eager to start realizing the financial and environmental benefits in utilizing the Dynacor value-added ore purchasing and processing advantage. As the new company would be the sole professional ore processing facility in Senegal, the corporation sees strong demand for its reputable and knowledgeable service. Independent analysis of the samples from the Bureau Veritas assay lab located in Abidjan, Ivory Coast, has confirmed the corporation's positive results at its Veta Dorada facility in Peru. The promising grades and metallurgical recovery rates, together with the supporting Senegalese government and enthusiasm of the local ASM community, convinced Dynacor to move forward on the LOI and the full due diligence program.

Financial terms

The new company would initially build a 100-to-150-tonne-per-day ore processing facility, with an expandable design to 300 tonnes per day. The budget to build the 100-to-150-tonne-per-day plant is approximately $10-million (U.S.). The new company is to invest $4-million (U.S.), of which Dynacor's total share would amount to 51 per cent, or $2.04-million (U.S.), together with KN Equipments and FONSIS investing an additional$1.96-million (U.S.). The balance of the $10-million (U.S.) is to be financed by local Senegalese banks.

Jean Martineau, president and chief executive officer of Dynacor, commented: "The new company would bring a logical combination of Dynacor's ore processing leadership and 20-plus-year experience together with: KN Equipment's presence in Senegal; a long-standing history of manufacturing milling processing equipment; and the financial strength of the Senegalese sovereign fund FONSIS.

"As part of Dynacor's strategic plan to become an internationally recognized ore processing company servicing the ASM industry worldwide, we believe this new low-risk project affords us the opportunity to significantly enhance Dynacor's growth and leadership role on a global basis."

Mamadou Mbaye, executive vice-president of FONSIS, commented: "FONSIS plays an important role, as it backs the strategy of the Ministry of Mines and Geology. This project will help formalize gold mining activities for small- and medium-size legal mines."

Robert Nieminen, president of KN Equipments, commented: "We look forward to partnering with Dynacor and FONSIS to expertly enhance the Senegal ASM industry by offering top-end service and superior value to Senegalese miners and their communities. As we have more than three years of providing manufacturing and mining maintenance service in Senegal, our company is quite well versed in the country's ASM space and its demand for the new company and the value it will deliver. The new company, including Dynacor, the world's undisputed ASM ore processing leader with a sterling track record, FONSIS, a sovereign fund with financial backing from the Republic of Senegal, combined with our 60 years of experience in design and manufacturing of mill processing equipment, will enable a smooth, speedy development path to opening the highly anticipated plant."

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, compared with 2017 (79,897 ounces).

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