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 second quarter ended June 30, 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).
Impacted by the COVID-19 crisis, Dynacor,
following thirty six (36) consecutive quarters of profits, recorded
a net loss of (-$0.7 M) (-$0.02 per share) compared to a net profit
of $0.7 M ($0.02 per share) for the three-month period ended June
30, 2019 (“Q2-2019”).
During the quarter, the Corporation concentrated
its effort to monetize its inventory and receivables, reducing its
risks and solidifying its overall financial situation. The
Corporation increased its cash position by $4.5 M, from $16.1 M at
March 31, 2020 to $20.6 M at June 30, 2020 and resumed its
operations before the end of the period.
Due to the very good financial results of
Q1-2020, the net income for the six-month period ending June 30,
2020 is $1.7 M compared to $1.9 M for the same period of 2019.
Q2-2020 OVERVIEW AND
HIGHLIGHTS
In Q2-2020, due to the ongoing COVID-19
worldwide crisis and the state of emergency declared in Peru, the
Corporation had to stop its ore purchase activities and temporarily
shut-down its processing operations during almost three months.
This exceptional context obviously impacted the Corporation
quarterly financial and operational results. Considering its solid
financial situation and the gradual resumption of its activities,
the Corporation pursued its dividend policy and declared in June, a
0.015$ CA per share dividend which was paid in July.
Operational
- Volume of 3,244 tonnes processed compared to 22,737 tonnes in
Q2-2019;
- Gold production of 1,897 ounces compared to 18,095 ounces in
Q2-2019.
Financial
- Cash on hand of $20.6 M in Q2-2020 compared with $6.7 M at
year-end 2019;
- Sales of $8.0 M, compared to $22.7 M in Q2-2019;
- Expenses related to the safeguard of all our production and ore
purchase department employees in view of the resumption of
activities amounted to $0.5 M during the quarter;
- Net loss of (-$0.7 M) or (-$0.02 per share), compared
to a net profit of $0.7 M in Q2-2019;
- EBITDA (1) of (-$0.1 M), compared to $1.9 M in Q2-2019;
- Cash flow from operating activities before change in working
capital items of (-$0.03 M), compared to $1.6 M in Q2-2019.
Cash return to Shareholders
- Quarterly dividend of CA$0.015 per
share and totaling $0.4 M (CA$0.6 M) paid in July 2020.
(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.
RESULTS FROM OPERATIONS
Extract from Statement of net income and
comprehensive income (unaudited)
|
|
Three-month
periods ended June 30, |
|
|
Six-month
periods ended June 30, |
|
(in $'000) |
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Sales |
|
8,007 |
|
|
22,697 |
|
|
|
38,876 |
|
|
45,616 |
|
Cost of sales |
|
(7,975 |
) |
|
(20,139 |
) |
|
|
(33,895 |
) |
|
(40,268 |
) |
Gross operating margin |
|
32 |
|
|
2,558 |
|
|
|
4,981 |
|
|
5,348 |
|
General and administrative expenses |
|
(746 |
) |
|
(1,150 |
) |
|
|
(1,837 |
) |
|
(2,107 |
) |
Other projects |
|
(13 |
) |
|
- |
|
|
|
(141 |
) |
|
- |
|
Operating income |
|
(727 |
) |
|
1,408 |
|
|
|
3,003 |
|
|
3,241 |
|
Income before income taxes |
|
(755 |
) |
|
1,325 |
|
|
|
2,892 |
|
|
3,106 |
|
Net income and comprehensive income |
|
(685 |
) |
|
757 |
|
|
|
1,700 |
|
|
1,937 |
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
Basic |
|
(-$0.02 |
) |
$ |
0.02 |
|
|
$ |
0.04 |
|
$ |
0.05 |
|
Diluted |
|
(-$0.02 |
) |
$ |
0.02 |
|
|
$ |
0.04 |
|
$ |
0.05 |
|
Total sales amounted to $8.0 M compared to $22.7
M in Q2-2019. The $14.7 M decrease is explained by the decreases in
ounces sold (-$17.2 M) partially offset by higher selling prices
($2.5 M).
All expenses incurred during the quarter,
including fixed operation costs, were accounted as part of cost of
sales, which explains the low gross operating margin.
Reconciliation of non-IFRS
measures
(in $'000) |
|
Three-month
periods ended June 30, |
|
|
Six-month
periods ended June 30, |
|
|
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
Reconciliation of net income and comprehensive income
to EBITDA |
|
|
|
|
|
|
|
|
|
Net income and comprehensive income |
|
(685 |
) |
757 |
|
|
1,700 |
|
1,937 |
|
Income taxes |
|
(70 |
) |
568 |
|
|
1,192 |
|
1,169 |
|
Financial expenses |
|
31 |
|
25 |
|
|
49 |
|
65 |
|
Depreciation |
|
599 |
|
616 |
|
|
1,239 |
|
1,261 |
|
EBITDA |
|
(125 |
) |
1,966 |
|
|
4,180 |
|
4,432 |
|
CASH FLOW FROM OPERATING, INVESTING AND FINANCING
ACTIVITIES AND LIQUIDITY
Operating activities
During Q2-2020, the cash flow from operations,
before changes in working capital items, amounted to (-$0.03 M)
($3.2 M for the six-month period ending June 30, 2020), compared to
$1.6 M in Q2-2019 ($3.5 M for the six-month period ending June 30,
2019). This decrease between quarters is primarily explained by the
decrease in gross operating margin due to lower gold
production.
During Q2-2020, total cash from operating
activities amounted to $5.0 M ($18.1 M for the six-month period
ending June 30, 2020) compared to $0.4 M in Q2-2019 ($1.8 M for the
six-month period ending June 30, 2019). Changes in working capital
items amounted to ($5.0 M) ($14.9 M for the six-month period ending
June 30, 2020) compared to (-$1.2 M) in 2019 (-$1.6 M for the
six-month period ending June 30, 2019). The variance is mainly
attributable to the variance in inventories.
Financing activities
In 2020, two increased quarterly dividends of
CA$0.015 per share were disbursed for a quarterly consideration of
$0.4 M (CA$0.6 M). In 2019, two quarterly dividends of CA$0.01 per
share were disbursed for a quarterly consideration of $0.3 M
(CA$0.4 M).
In 2020 and 2019, the corporation made quarterly
repayments of lease liabilities for $0.2 M.
Liquidity
As at June 30, 2020, the Corporation’s working
capital amounted to $21.7 M, including $20.6 M in cash ($19.6 M,
including $6.7 M in cash at December 31, 2019).
STATEMENT OF FINANCIAL
POSITION
At June 30, 2020, total assets amounted to $70.2
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 June 30, |
As at December 31, |
|
2020 |
2019 |
|
|
|
Cash |
20.6 |
6.7 |
Inventories |
4.6 |
18.3 |
Property, plant and
equipment |
19.9 |
21.0 |
Exploration and evaluation
assets |
18.8 |
18.7 |
Other assets |
6.3 |
10.1 |
Total
assets |
70.2 |
74.8 |
|
|
|
Bank loan |
- |
3.0 |
ARO |
3.8 |
3.8 |
Other liabilities |
5.5 |
8.0 |
Shareholders' equity |
60.9 |
60.0 |
Total liabilities and
equity |
70.2 |
74.8 |
OUTLOOK
A health and safety protocol has been prepared
containing the measures to be taken to monitor the risk of exposure
to COVID-19 at the Corporation’s workplaces including production
unit, as well as establishing prevention and control standards to
prevent the appearance and/or spread of the virus and
safeguard the health of workers, suppliers,
customers and visitors.
The Corporation’s purchasing and processing
operations resumed in June without any issues. In July we processed
an average of more than 230 tonnes per day and aiming to reach full
capacity of 300 tonnes per day by the end of the third quarter.
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.
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
Shares outstanding: 38,799,756
PDF
available: http://ml.globenewswire.com/Resource/Download/f6128dba-ba29-4247-9e7a-a7744bb25301
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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