kiniki
10 years ago
Financial Post article on Dynacor gold - DNG
Dynacor: Back to Front
Resources Wire | Jay Currie | October 18, 2015 7:39 PM ET
More from Resources Wire | Jay Currie
Dynacor Huanca ore-processing mill with a current max capacity of 250 tonnes per day
Dynacor Gold MinesDynacor Huanca ore-processing mill with a current max capacity of 250 tonnes per day
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Dynacor: Back to Front
Conventionally a junior explorer finds a property, raises money, drills, raises more money and if things look promising, builds a mine and a mill.
Dynacor (T.DNG) is doing things in reverse.
Jean Martineau, Dynacor’s President and CEO came to junior mining exploration from the brokerage world, “I was a broker in the 1980’s.” said Martineau, “I was amazed at all the dilution I saw. And I was really frustrated. We needed a way to finance other than dilution.”
The creative solution to this problem was to build a small mill to process the ore mined by Peruvian artisanal miners. “We wanted to use the mill to finance our exploration.”
In 1996 Dynacor commenced construction of its custom gold ore-processing plant in southern Peru. It poured its first gold in 1998.
The mill started at a modest 50 tons per day but has been expanded to handle 250 tons per day. “We have established a reputation in Peru.” said Martineau, “We buy the ore from the small miners. We have achieved a 95% recovery rate which is the highest in Peru. We are looking for a gross margin of 17% and the mill generates between 7 and 10 million dollars a year in cash.”
Dynacor wanted the cash to finance exploration. It acquired its flagship property, Tumipampa, in 2000. The property was acquired because Dynacor found high grade gold veins at surface. Currently all of the land around Tumipampa is claimed by major mining companies such as Southern Copper, Buenaventura, Barrick, Yamana, IAMGold, Fresnillo and the Junefield Group from China.
Over the years the company has explored the property and discovered additional veins – and mantos – have been discovered with gold grades ranging from 6 grams per ton on up to 30 grams per ton.
Dynacor has conducted surface drilling programs to delineate the geology of the property. However, in 2012, Dynacor began to excavate a crosscut which allowed the exploration of the property to be conducted underground. “There is more information underground.” explained Martineau, “We have excavated a 2.5 by 3 meter cross-cut tunnel right through mantos and veins.”
Running off this main cross-cutt are drifts and chimneys which can be drilled or excavated to determine grade. In its October 8th 2015 press release, Dynacor was able to report channel sampling in a raise within the Manto Dorado which exposed a massive (35 meters) high-grade gold-bearing band of copper sulphides. The raise showed an average gold grade of 27.3 grams per ton and copper running an average of 2.19% with an average width of 1.2 meters.
October 15, 2015, Dynacor put out another press release outlining the results of further underground exploration. In this release Alonso Sanchez, Dynacor’s Chief Geologist commented “Our exploration results have clearly demonstrated the presence of high grade gold and copper mineralization in the SW and the NE extensions of the Manto Dorado.”
As the exploration work proceeds Dynacor is preparing a bulk sample of 1500 tons of material. “We’ll mill it ourselves.” said Martineau, “We can test our own ore in our own mill.”
The crosscut adit is being excavated by a local mine contractor and Martineau describes the rock coming out of the ground as mineralized material. It will be the rock used for the bulk sample. “Unlike the situation with many mines we don’t have to sink an expensive shaft before we can reach the mineralized zones. We are basically using local contractors to dig through to the target structures.”
“We hope to have a 43-101 ready by spring 2016.” said Martineau. “The objective of this first reserves/resources report is to apply for a mining permit and prepare a first production.“ As Dynacor is actually building a brand new 300 t/d mill in Chala, which is expected to be in operation in the second quarter of 2016, the actual Metalex mill could be available to be used as a pilot plant and, eventually to process ore coming out of Tumipampa in a first step. This will give the company time and money to finance the development of Tumipampa and build a larger new mill on the property.
“With more than 20 mineralized mantos and veins identified today, we are confident that this part of the property could host and important deposit.” Which would, in itself, make a very interesting mining prospect. However, the Tumipampa property also includes a large skarn and porphyry formation bearing copper and gold. “We are surrounded by gold and copper.” said Martineau, “It is disseminated mineralization. Very similar to the Constancia property being developed nearby by Hudbay Minerals. We’re exploring this structure and we will look in the future at all options available to develop this project if it appears viable.”
Having the cash coming in from its milling operations gives Dynacor a tremendous advantage. “We’ve looked at going to the market to raise funds; but, for example we looked in 2011 and the market was down so we decided not to. We’ve spent between 10 and 15 million dollars on the property so far. This year we’ll spend about 4 million. But we want to avoid dilution.”
With only 36.5 million shares outstanding and a market cap of $68.6 million, Dynacor doesn’t need to go to the market to finance advancing its project. Dynacor’s management and Board hold between 11 and 13% of the shares on a fully diluted basis and several institutions hold positions ranging from 3-7%.
“We don’t have any obligation to finance to survive. We make money from our mill.” said Martineau. In the current market it is an enviable position for a junior exploration company to be in.
kiniki
10 years ago
Dynacor Gold Mines Inc. high grade gold discovery
TSX : DNG
OTC PINK : DNGDF
Dynacor Gold Mines Inc.
October 08, 2015 10:15 ET
Dynacor-Tumipampa: A Raise in the Manto Dorado Returns 27.26 g/t (0.88 oz/t) Gold and 2.19% Copper Over 35 Meters
MONTREAL, QUEBEC--(Marketwired - Oct. 8, 2015) -
Note to editors: Three graphs and an image are included with this press release on Marketwired's website.
Dynacor Gold Mines Inc. (TSX:DNG) (OTC:DNGDF) (Dynacor or the Corporation) is pleased to announce sampling results of a raise excavated in the Manto Dorado on the Tumipampa project, Peru.
Channel sampling in a raise within the Manto Dorado has exposed a massive (35 meters) high-grade gold-bearing band of copper sulphides. A further 60 meters of excavation of this highly mineralized raise is underway in order to reach the surface. To date, 35 meters have been excavated and the raise (#215) has an average gold grade of 27.3 g/t (0.88 oz/t) and 2.19% copper and an average width of 1.2 meters. The results include twelve (12) channel samples with uncut gold assays between 31.1 g/t (1 oz/t) and 76.2 g/t (2.45 oz/t) and including fifteen (15) channel samples with uncut copper assays between 2% and 8.7%. (see Figures 1 and 2).
Jean Martineau, Dynacor's President and CEO has stated "We are very happy to see the assays demonstrate the rich grades of gold and copper in this latest set of results from the Manto Dorado. Additional underground exploration results are pending and will be published as soon as they are ready. Thereafter, we are planning to test run at the Huanca-Metalex plant a large bulk sample of approximately 1,500 metric tonnes of mineralized material from Tumipampa."
Results
Raise-215 was excavated from the 27.5-meter mark along a 45-meter drift (Drift-190NE) orientated N45°E that was excavated in the Manto Dorado structure. The first 26.0 m of the Drift-190E returned high gold grades of 27.8 g/t Au and 1.69% Cu over a width of 1.5 m. Raise-215 was excavated in two steps. Six (6) meters in 2013 which returned an average grade of 21.6 g/t Au, and 2.14% Cu over an average width of 1.01 m (see press release dated December 19, 2013) and was recently extended a further twenty-nine (29) meters in 2015 adding up to a total of 35 meters (see Figure 3).
All told thirty-seven channel samples were analysed along Raise-215 and the detailed results are given in Table 1. Raise-215 has an average gold grade of 27.3 g/t (0.88 oz/t) and 2.19% copper over 35 meters with an average width of 1.2 meters. Certain channel samples had very high grades of up to 76.2 g/t Au (2.45 oz/t) and 8.7% copper (see Photo 1, below). Two graphs showing the gold and copper grades along the entire 35-meter raise are given in Figure 1 and 2 above.
Sample Analysis and QA/QC procedures
The samples are sent to the internationally certified laboratory Certimin S.A. for analysis. Standards, blanks and duplicates are used in the sampling process as part of the QA/QC that is implemented and followed by Alonso Sanchez, Chief Geologist for Dynacor Gold Mines, B.Eng.
This Press Release has been read and approved by Alonso Sanchez, P. Eng. and Chief Geologist for Dynacor Gold Mines. He acts as the qualified person ("QP") for the Company and is a geologist affiliated to the American Institute of Professional Geologists (AIPG).
Table 1. Channel samples from Raise-215 with data from 2013 and 2015
Distance along
Raise-215 (m) Width (m) Au (g/t) Au (oz/t) Cu (%)
Data published in December 2013
0.75 1.40 6.40 0.21 0.37
1.50 0.70 15.72 0.51 2.21
2.25 1.30 12.97 0.42 0.67
3.00 0.45 28.94 0.93 8.66
3.75 0.90 43.51 1.40 7.54
4.50 1.60 22.08 0.71 1.11
5.25 0.80 36.95 1.19 1.35
6.00 0.90 22.59 0.73 0.84
Weighted Average 6 m
segment 2013 data 1.01 21.64 0.69 2.14
2015 Width (m) Au (g/t) Au (oz/t) Cu (%)
7 1.6 42.2 1.36 3.52
8 1.6 22.2 0.71 2.28
9 1.7 20.2 0.65 0.29
10 1.3 7.6 0.24 1.30
11 1.3 11.4 0.37 1.77
12 1.1 25.6 0.82 4.98
13 1.2 47.8 1.54 3.23
14 1.3 39.8 1.28 2.68
15 1.0 23.1 0.74 6.73
16 1.3 23.2 0.75 2.54
17 1.3 24.0 0.77 3.26
18 1.2 12.1 0.39 1.29
19 1.2 8.9 0.29 0.64
20 1.3 59.0 1.90 1.87
21 1.3 3.1 0.10 0.39
22 1.2 43.6 1.40 3.22
23 1.2 36.0 1.16 1.21
24 1.3 53.6 1.72 4.43
25 1.2 51.8 1.66 1.25
26 1.1 8.7 0.28 1.53
27 1.2 66.4 2.14 4.86
28 1.1 76.2 2.45 3.28
29 1.1 29.0 0.93 2.29
30 1.1 31.6 1.01 2.64
31 1.2 3.4 0.11 0.78
32 1.2 31.2 1.00 0.72
33 1.1 4.1 0.13 0.87
34 1.1 9.8 0.32 0.12
35 1.3 11.8 0.38 1.13
Weighted Average 29 m
segment 2015 data 1.24 28.52 0.92 2.20
Weighted Average total 35m Raise-215 1.19 27.26 0.88 2.19
ABOUT DYNACOR GOLD MINES INC.
Dynacor is a gold ore-processing and exploration Corporation active in Peru since 1996. The Corporation differentiates itself from pure exploration companies as it generates income from its wholly owned ore-processing plant. Dynacor's basic share count at 36.5 million outstanding is in the lowest quartile of the resource sector. The Corporation's assets include three exploration properties, including the advanced high-grade gold Tumipampa property and an operating 85,000 TPA gold and silver ore processing mill at Metalex-Huanca. The Corporation obtained its permit to construct a brand new 300 tpd mill in Chala Peru. This represents an important milestone for the Corporation's future growth. The Corporation's strength and competitive advantage comes with the experience and knowledge it has developed while working in Peru. Its pride remains in maintaining respect and positive work ethics toward its employees, partners and local communities.
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)
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: http://www.facebook.com/pages/Dynacor-Gold-Mines-Inc/222350787793085
Shares outstanding: 36 516 736
To view the images accompanying this press release, please visit the following links:
Figure 1: http://file.marketwire.com/release/fig1_en.jpg
Figure 2: http://file.marketwire.com/release/fig2_en.jpg
Figure 3: http://file.marketwire.com/release/fig3_en.jpg
Photo 1 High grade mineralization in Raise-215, Tumipampa September 2015 : http://file.marketwire.com/release/Photo%201%20High%20grade%20mineralization%20in%20Raise-215%20Tumipampa%20September%202015.JPG
CONTACT INFORMATION
Jean Martineau
President and CEO
Dynacor Gold Mines Inc.
514-393-9000 Ext. 228
Dale Nejmeldeen
Investor Relations
Dynacor Gold Mines Inc.
604.492.0099 / M: 604.562.1348
604.608.9223 (FAX)
nejmeldeen@dynacor.com
investor15
11 years ago
Dynacor Gold - The Numbers Don't Lie And A Re-Rating Will Follow Soon
Jun. 3, 2014
The Investment Doctor
SeekingAlpha.com
Disclosure: I am long DNGDF. (More...)
Summary
* Dynacor Gold should be seen as a services provider and not as a mining company.
* Dynacor expects to expand its operation base by 160% before the end of this year, and by 300% within the next 36 months.
* Using a conservative starting point, the NPV8% of Dynacor's toll milling business is $3.78/share.
* Additionally, Dynacor has a net cash position of almost $20M which increases daily.
Introduction
In this article I'll have a closer look at Dynacor Gold (OTC:DNGDF) which is quite a special company. Instead of mining gold, the company is actually a services provider as it does not operate its own mine, but allows smaller miners to use Dynacor's mill to process their ore. I will explain why this company should be valued as a services provider and not as an exploration company.
The volume on the US exchange isn't too bad with 11,000 shares per day, but I'd still recommend to trade in shares of Dynacor Gold through the facilities of the Toronto Stock exchange where the company is listed with DNG as its ticker symbol. The average daily dollar volume there is approximately $60,000.
As always, all images in this article were directly taken from the company's website, press releases, technical reports and presentations. As Dynacor is a Canadian company I have - where applicable - recalculated all amounts from CAD into USD using an USD/CAD exchange rate of 1.08.
What is toll milling and what are the advantages and risks?
Alright, let's start by explaining what toll milling actually is. A toll milling company is a company which owns a mill and processes mineralized ore from third parties which don't have their own processing facility and thus need to rely on third-party operated mills like Dynacor's mill. Dynacor purchases the mineralized ore and processes it to end up with gold and silver as end-product, which the company then sells.
So who are Dynacor's suppliers of ore? Those are usually artisanal miners which produce a limited amount of tonnes per day and don't have their own processing facilities as it wouldn't be efficient to have a mill with a throughput of just a few tonnes per day. And when I say 'artisanal miners,' I really mean those are 'mom and pop' type of operations where a father and his sons are recovering ore.
Why are these people selling to toll mill operators? There's a straightforward answer (actually there are several reasons) to this question as well. First of all, artisanal miners don't have their own processing facilities and it wouldn't make sense for them to build one, because their output is so low. Would it be a good idea to 'pool together' with a few fellow miners? Probably, yes. But don't forget most of these people aren't too keen on taking the responsibility of operating a mill (and I don't mean this in a negative way. Miners are miners and can't always be familiar with (legal and administrative) procedures inherent to owning and operating a mill). Additionally, if the paperwork of the mill hasn't been filed correctly, the facility will be destroyed and the owners/operators could be sentenced to 20 years in jail. That's not really a risk those artisanal miners are willing to take.
Secondly, a professionally managed processing facility should obtain higher recovery rates than small-scale plants. This is confirmed by seeing Dynacor Gold's recovery rate which is consistently around 95%. This means that Dynacor's plant is very efficient, and it definitely makes sense for the artisanal miners to use an efficient plant with a recovery rate of 95% instead of trying it themselves, reaching a recovery rate of 60% and facing 20 years in jail.
I have now highlighted the advantages for the artisanal miners, but what's Dynacor's main advantage? Well first of all, it isn't really subject to the price of gold. Should the gold price go down to $1000/oz, its margins will obviously be lower, but the company won't go out of business. Additionally, by operating just a mill, it doesn't get involved in the (very) capital-intensive mining business and as such doesn't have huge operational risks. These three reasons make it very attractive to have a closer look at a toll milling company to capture benefits from the mining sector.
Are there risks? Of course there are. As said, should the gold price go down, Dynacor's margins will be lower. Should the gold price go up, Dynacor shareholders won't benefit as much from a price rise compared to gold miners. Additionally, there's always a legislative risk even though the company has been toll milling in Peru for several years now. As you can see, Dynacor's business isn't very exciting, the company mainly is just a boring 'services provider.'
Another key factor Dynacor will have to take into consideration is that it will have to make sure it continues to purchase the ore from legal miners, as acquiring ore from illegal mines would result in an immediate shutdown of the mill. And a shutdown is actually an understatement, because as you can see later in this article, the Peruvian army is using illegal mills to practice with explosive devices, so Dynacor would be pretty stupid to risk everything it has by buying illegal ore.
The fact that the company is doing everything legally can be found in the statement the company is allowed to export the gold from Peru again after a thorough check from the government where the ore was sourced from, which would not have been the case if the gold was derived from 'suspicious' ore. As Dynacor has now also promised to buy the ore from a list of miners/mining companies approved by the government, I dare to say the risk of Dynacor 'accidentally' buying illegal ore is reduced to practically zero as it will be able to prove it bought the ore from operations which were undeniably approved by the government.
How does Dynacor Gold make its money?
Okay, let's now see how Dynacor generates its cash flow. First of all, it purchases mineralized ore from the artisanal miners. Milling doesn't happen for free, and Dynacor charges a fee per processed tonne of ore, and probably also charges extra for the use of chemicals et cetera. Through grade control, Dynacor is able to effectively estimate the gold and silver content in the ore, and pays a percentage of the face value after deducting an allowance based on the expected recovery rate.
By paying a discounted value of the ore (which is a common business practice), Dynacor is actively taking steps to mitigate the gold price risk, in order to be covered against short-term price volatility.
The recent crackdown on illegal mining in Peru - good news for Dynacor Gold, but what's Peru's end game?
The reason why the toll milling business in Peru is receiving more attention than before is caused by the fact the Peruvian government is coming down hard on illegal mining activities in the country. And as actions speak louder than words do, the Peruvian army regularly raids illegal mining and milling activities, and destroys the illegal operating plants.
This means that the legal Peruvian miners have less possibilities to process the ore at illegal plants, so the government is actually helping the legal milling companies to strengthen its position in the country. Unfortunately this also had a negative impact on Dynacor, as it had to cease production for about a month until some details were clarified. This was an unfortunate event, but I think it will be a non-recurring event, given the situation was resolved quite fast.
So what's Peru's long-term plan? As the government seems to be very serious about formalizing the mining activities in the country and end the illegal mining and milling activities, that there are plans for a bigger end game. As a lot of these artisanal miners don't pay (enough) taxes, I think we are evolving to a scenario whereby the toll mill will already levy an 'anticipative' tax on the artisanal miners. This would create a quadruple win-situation; official milling companies get the support from the government, illegal mining will be stopped, the artisanal miners can now 'come clean,' and the government receives the taxes it's owed.
So if this is a fantastic business model, why aren't there more companies entering the scene?
I don't want to be a party-pooper, but recently at least two other small Canadian companies have entered Peru and are aiming to start up their own toll milling businesses, meaning Dynacor will face some competition in the near future.
But I'm not really scared, because the Peruvian pie is large enough to share with several others. On top of that, Dynacor has been working in Peru for quite a while and probably has the necessary relationships to attract more ore for its new facilities. So whilst at first sight it might look like the competition will destroy Dynacor's first mover advantage, I'm not worried at all, because after all, most of these milling facilities will remain limited to just a few hundred tonnes a day, which is peanuts. Additionally, as I explained in the previous paragraph, a lot of currently operating mills were destroyed by the government during raids against illegal milling. This means that there will most definitely be a demand for new (legal!) milling capacity, so I personally expect new entrants in this space just to replace old (illegal) processing facilities so that there won't be a change in the supply/demand equilibrium. The Peruvian small-scale mining sector is huge, and there's room for a lot of additional capacity without disturbing the pricing mechanism.
This all sounds nice, but what's the value of Dynacor's toll milling business?
As the company should be seen as a services provider and not as a mining company, you can't really determine its fair value by calculating an NPV on a pre-determined mine life, which is the case with 'real' mining companies.
A first question you'd have to ask yourselves is 'is its revenue model perpetual?' The answer to this question actually isn't that simple. Whilst one would be quick to say 'yes, it's perpetual as it's a service providing company,' one has to look at the underlying type of business, and mines (even the artisanal ones) have per definition a finite mine life. Does this mean Dynacor's revenue model also has an end date? Yes, but as I expect the smaller mines to be up and running for the next few decades, I will assume Dynacor's business model has an infinite (well, 'quasi-infinite' would be a better description) life expectancy, so I can use the formula (net cash flow / discount rate) to determine the fair value.
Let's dig in the company's financial statements. In 2013, Dynacor generated an operating cash flow of $10.3M and will have spent approximately $1M in sustaining capital expenditures (note: I don't add expansion capex to the equation as that wouldn't be fair, considering expansion capex usually are non-recurring and one-time events). Allow me to be conservative and apply an additional 20% discount to this number (to take a gold price fluctuation and possible higher taxes into consideration). This results in an after tax net cashflow of roughly $7M per year in a very conservative scenario.
As you all know, the formula to calculate the NPV of a perpetual revenue model is (net cash flow / discount rate). If I'd use a discount rate of 8% (because it's a proven business model which has been operating in the past few years without any issues), the fair value for the current toll mill operation would be $88M.
However, that's just the current situation. The company was producing at a rate of 230 tonnes per day, and expects to increase this throughput to 300 tonnes per day (+25%) and to achieve a run rate of 600 tonnes per day at its new facility in Chala (which should be up and running at 300 tonnes per day within a year).
So the production rate should increase by an astonishing 160% later this year which will obviously have a huge impact on the operating cash flow as well. Even if I'd be very conservative and let the cash flow increase by just 100% (to err on the safe side), Dynacor should have a net operating cash flow of roughly $15M by the end of this year. If I'd once again try to determine the fair value by using a discount rate of 8%, both the Chala and Huanca mill will have an NPV8% of $188M, based on a production rate of 600 tonnes per day. Keep in mind this production rate will very likely be increased further down the road but I'm not taking that into consideration right now.
If I'd now use a ratio of 50/50 for both scenario's (again, to be on the conservative side, as there's no doubt the company should be at a run rate of 600 tonnes per day by the end of this year), the toll milling business should be valued at $138M.
Source: financial statements
If this already sounds exciting (again, my assumptions are quite conservative!), don't forget to add the net cash value to the equation, as the company had a net cash position (here: current assets + deferred tax assets - total liabilities) of $17.6M (and a net working capital position of $17.8M, see previous image), resulting in a total fair value of $155M for Dynacor Gold.
And oh, I didn't even take the Tumipampa exploration asset into account, where a maiden NI43-compliant resource estimate is expected later this year.
Investment thesis
Dynacor Gold should see its processing capacity increase by 160% by the end of this year, and this will have huge consequences for the free cash flow of the company and should result in a re-valuation of the share price by the market.
I have established a fair value of $155M for Dynacor Gold, which results in a fair value of $4.24/share, which is 173% higher compared to the last closing price of $1.55. Even though the share price has tripled in 18 months time, it's not too late to get in, as you're investing in a company with a proven business model and management team, backed by $0.49/share in positive working capital. Throw in an expected 160% production increase by the end of this year and a 300% increase within the next 2-3 years, and this company might very well be one of the best growth-stories in the mining sector. Additionally, you get the exploration upside from Tumipampa thrown in for free.
Even though the company isn't paying a dividend right now, income investors should also put Dynacor on their radar, as the company wants to become a dividend payer down the road. If Dynacor would pay out just 1/3rd of its net annual cash flow at 600 tonnes per day, the annual dividend would be $0.12/year for a yield of 8.4%.
Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
http://seekingalpha.com/article/2250173-dynacor-gold-the-numbers-dont-lie-and-a-re-rating-will-follow-soon
investor15
12 years ago
Dynacor: My Top Overall Stock Pick For 2014
Nov 24 2013
Steve Nicastro
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTC:DNGDF over the next 72 hours. (More...)
Dynacor Gold (OTC:DNGDF) remains one of the most undervalued, unknown companies in the gold sector, but I think investors are slowly starting to catch on to the story.
I first wrote about Dynacor in an article on Sept. 5 when the shares traded at $1.42. Since then, Dynacor reported outstanding Q4 earnings results and the shares have rocketed higher to $1.68 a share, outperforming nearly every other gold stock on the market.
Still, Dynacor remains an incredible value and several key catalysts await which could send shares even higher. Dynacor is my top pick among the gold sector in 2014 and I will try to convince investors below.
Company Information
Dynacor has 36,316,111 shares outstanding. With a current share price of $1.62, the company has a market cap of $58.69 million. The company had cash on hand of $10.3 million at the end of the quarter and virtually no debt, so Dynacor has a current enterprise value of about $48 million.
The 52-week range for the share price is $.82 - $1.67. Average trading volume on the OTC markets is 8,575, which means the stock is very thinly traded. On the TSX, the stock trades under DNG.TO, and volume is higher at 42,650.
Dynacor is Outperforming the Market; Technicals Remain Bullish
You will see in this chart below that shares of Dynacor are up 30 percent on the year. Meanwhile the (GDX) Gold Miners Index is down 50 percent and the (GLDX) Gold Explorers Index is down around 70 percent.
(click to enlarge)
However, I expect even greater things in 2014.
Dynacor: Why Is It Outperforming?
It is difficult to call Dynacor a gold stock because the company isn't a miner or pure explorer - one part of their business is exploring for gold, while the core of the business is ore processing.
Dynacor owns and operates a successful gold ore processing plant in Peru. The company receives ore from local miners and gets to choose which ore to process, allowing the company to pick the highest grade ore they can find.
Higher gold prices generally lead to higher margins in the ore processing business for Dynacor. However, while lower gold prices means lower margins, the company remains profitable, even at $1,250 gold as we saw in the most recent quarter.
Here are a few reasons why Dynacor is outperforming the market:
#1 Positive Quarterly Results, But Bigger Things to Come
Dynacor reported some pretty impressive results for the last quarter:
- The company announced operating income of $4.6 million and net income of $3.0 million ($.08 a share) for the quarter.
- The company recorded record quarterly gold sales of 20,598 ounces.
- Cash gross operating margin per ounce of gold sold was $285 ($1,320 per ounce selling price), which proves that the business model works in any gold environment. The margin sold in Q3 2012 was $331 per ounce, as higher gold prices leads to a higher margin.
- Cash on hand of $10.3 M at quarter end compared to $3.3 M at December 31, 2012.
(click to enlarge)
Update on New Mill
The company is currently producing around 20,000 of gold per quarter at its ore processing division in Huanca. However, the company is currently constructing a new mill at Chala, Peru, which will have an initial capacity of 300 tpd and be readily expandable to 600 tpd.
The new mill will cost approximately $10 million to construct and it is very likely that the company will fund the remaining construction of the new mill with cash on hand.
This new mill should allow the company to process 25,000 ounces per quarter; with an expansion to 600 tpd, they could be producing as much as 32,500 ounces per quarter. However, the company should also be producing the gold at lower costs due to brand new equipment and a decrease in electricity costs as the company will be connected to the power grid in Chala.
Construction is underway and the only permit that the company still needs is a permit for the actual mill itself. However, the company expects to receive this permit sometime in the next few months and since they have received permits for construction, the building of the new plant is already well underway. The company is still aiming to test the new plant in Q2 2014, with the new plant commissioned and in operation by mid-2014.
An upgrade to 450 TPD will take place shortly after. At 450 TPD, the company expects to produce 25,000 ounces of gold per quarter. With a gross margin of $300 per ounce, which should be attainable even at current gold prices, the company would record cash flow of $5-7 million per quarter; with a plant upgrade to 600 TPD, the profits could be even greater.
Of course, if the price of gold were to go higher, margins would also increase. In 2012, full year margins were $317 an ounce, up from this previous quarter's $280 an ounce. With the new mill's efficiency, margins should be even greater. If Dynacor were to record a gross margin of $350 an ounce and produce more than 100,000 ounces of gold from Chala, the results could be phenomenal.
#2 Non-Dilutive Company
Dynacor prides itself on being a non-dilutive gold company. The company has only 36 million shares outstanding and this share count has remained steady over the years.
Dilution has been a huge problem for many junior gold mining companies in this market. Many junior gold miners developing a project or trying to get into production have had to deal with cost overruns and other issues, with many having to take on debt or issue millions of shares at depressed share prices.
Next, many exploration companies simply have to issue equity to continue exploration. This is simply the nature of their business model.
However, Dynacor does not have this problem as they are self-financed with their profitable ore-processing business. This is a huge plus for shareholders, especially since the company will most likely not have to take on debt or issue equity to finish construction at the new mill.
#3 Big Upside Remains at Tumipampa With Drill Results Coming
Dynacor has a $2.8 million drilling and exploration program underway on its flagship copper and gold exploration property, Tumipampa, located on the Andahualas-Yauri Belt in Peru. This gold belt hosts a number of gold-silver-copper skarn deposits such as Las Bambas, Los Chancas, Constancia, etc.
Tumipampa is surrounded by 6 senior mining companies who have invested over $8 billion in mine development in this region as you'll see below.
(click to enlarge)
Again, this exploration drilling is auto-financed through the company's ore processing division. It is a huge plus that Dynacor does not have to go to the market to issue shares to explore the property.
Some investors might argue that Dynacor should focus solely on their ore processing business. After all, exploration does cost money.
However, the Tumipampa property has the type of home-run potential that can't be ignored by investors and I believe the company is making the right choice by actively exploring the property.
The company reported positive drill results in a Sept. 27 news release:
"During the months of July and August, six (6) holes were drilled HDD7- HDD12. Drill hole HDD8 intercepted the Avelia Ines vein and returned 4.767 g/t Au and 0.2% Cu over 1.1m and drill holes HDD9 and HDD10 revealed close to the surface disseminated gold mineralization with 0.457 g/t Au over 12.4 m and 0.151 g/t Au over 12.2 m."
"This new discovery demonstrates that gold mineralization is very widespread on the Tumipampa property and can be found: (A) associated to polymetallic ores in the skarn, (B) in high grade gold vein structures such as the Manto Dorado, and (C) as low grade disseminated gold in pyritic ore associated to brecciated quartz. As shown by drill holes HDD9 and HDD10 disseminated gold ore is found very close to the surface from depths of 20.0 and 14.8m, respectively."
Meanwhile, underground drilling from within the cross-cut began in August and drill results should be coming in soon. An initial resource estimate is to be expected early 2014. I think that the most likely long-term outcome for Tumipampa is Dynacor finding a partner for the property to get it through to production.
The company could also sell the property completely or try to get it into production itself, and perhaps use its own mill to process the gold.
Dividend Discussion is on the Table
I recently brought up the idea of a dividend to Dale Nejmeldeen, Investor Relations at Dynacor. I argued that this could be a great way to get the shares trading somewhere near a reasonable price. He replied shortly after and said that a dividend will definitely be on the table.
If you do the math, it would not take much money for Dynacor to pay a very decent sized dividend, since the company only has 36 million shares outstanding and is producing robust amounts of cash flow.
For example, in the most recent quarter, Dynacor reported cash flow from operating activities before change in working capital items of $3.5 million, or $14 million on an annual basis. If the company can increase this to $5 million a quarter, which I feel is attainable with the new mill, we are looking at $20 million cash flow annually.
If the company paid out just 30 percent of its cash flow in dividends, it would amount to $6 million in dividends paid for the year. This would amount to dividends paid per share of $.166.
At the current share price of $1.68, this would amount to a dividend yield of 9.9 percent.
Even if the company decided to pay just $2 million per year in dividends or .055 per share, this would still result in a dividend yield of 3.3 percent! At the same time, I believe the company would still have enough money to explore its property at Tumipampa, even under both scenarios.
This is one huge benefit to investing in a non-dilutive, profitable company like Dynacor. I would not be shocked to see Dynacor start paying a small dividend in late 2014 or early 2015 as the company expands its new mill to 600 TPD and actively explores its Tumipampa property.
Bottom Line? My Top Overall Stock Pick for 2014
Dynacor is not only my top gold stock for 2014, but it's my top overall pick. To summarize:
VALUE: Dynacor has a current enterprise value of $48.39 million; meanwhile, the company is generating positive cash flow of $3 million per quarter at their current operations, or $12 million annually. This gives the company an EV/cash flow ratio of just 4.1.
The company also boasts a return on equity of 49 percent, among the highest in the industry. With the new plant online in 2014, profits should only increase. Even if the new plant were to somehow not work out, the company is still running a very profitable operation at Huanca.
LOWER-RISK: Dynacor is one of the lowest-risk microcap stocks I've ever seen. The company has made a name for itself as an honest and reliable business partner in Peru. The company has a very solid balance sheet with very little debt and $10 million in cash, with working capital of $14 million.
KEY CATALYSTS IN 2014: The company has begun construction at its new mill at Chala, which will start at 300 TPD but upgrade to 600 TPD with lower operating costs. Construction is ongoing and the only permit that remains outstanding is the permit for the actual mill. The company says the permit should be coming in very shortly and there is no reason for the delay; the fact that they have begun construction without this final permit tells me that they believe they will receive it without any problem.
Meanwhile, the company's exploration property has a ton of upside potential and can be seen as a "bonus" for investors. I want to emphasis again that the Tumipampa project is surrounded by 6 senior mining companies who have invested over $8 billion in mine development in this region. It should be very interesting to see the upcoming drill results.
However, even without this exploration property which holds big upside in my view, and even without the new mill at Chala, Dynacor is still a solid buy.
The exploration property holds a tremendous amount of upside potential and the company has several options for the property going forward. The company will continue to drill and come out with the first resource estimate; several drill results are pending and should be released to the market shortly.
Dynacor has risen more than 20 percent since my first article but still remains very undervalued. The company has a number of key catalysts coming, which is why I've ranked the stock my top overall pick for 2014.
http://seekingalpha.com/article/1859931-dynacor-my-top-overall-stock-pick-for-2014?source=email_rt_article_readmore
investor15
12 years ago
Dynacor: An Undervalued, Profitable Niche Company With Big Upside
Sep 5 2013, 07:32
Steve Nicastro
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DNGDF.PK over the next 72 hours. (More...)
It is hard to find a stock that has gone as unnoticed or is as misunderstood as Dynacor Gold (DNGDF.PK). This company is truly a diamond in the rough. While many gold (GLD) and silver stocks (SIL) hold strong multi-bagger potential, I think Dynacor could have the best chance for at least a double or triple in price. Believe it or not, this is a micro-cap stock that has a relatively low-risk business model, plus an exploration project with tremendous potential.
Dynacor is a hybrid gold company that explores for gold in Peru, but also runs a profitable ore-processing business at the same time. This is not your average gold stock because they are not a mining company or a pure explorer. Dynacor generates a substantial amount of cash flow from its wholly owned ore processing plant in Peru. They produce gold from the processing of ore, purchased from artisan miners. Dynacor pays the miners at a discount to the spot price and based on the gold content. They then process the ore and sell it at spot price. They can selectively choose which ore to purchase, opting for the highest grade which leads to more profits.
The higher gold goes, the higher margins they should achieve. While a lower gold price hurts their margins, they still make a good amount of money, as we saw in the latest quarterly earnings report.
Before I get more into detail on the company's operations and business model, here is a financial overview of the company:
(click to enlarge)
Credit: StockCharts.com
*Overview
Symbol: DNGDF.PK, DNG on the TSX
Share Price: $1.42
Shares Outstanding: 36.3 million
Market Cap: $51.55 million
*Financials
Cash Balance: $10 million (Working capital of $15.2 million)
Debt: $0 in debt, following the reimbursement of the $1.2 million outstanding debt in the previous quarter.
Q2 2013 Results:
- "During the period ended June 30, 2013, the Company processed 18,785 dry metric tonnes (DMT) of ore (cumulative of 37,462 DMT for the six-month period) compared to 16,086 DMT in Q2-2012 (cumulative 33,644 DMT) a 16.8% increase over Q2-2012. The plant operated at its full 220 tpd capacity during Q2 2013. This 18,785 DMT ore throughput represents the largest quarterly tonnage processed in the history of the plant (News Release).
- Revenue of $25.9 million, 26 percent increase year-over-year.
- Net income of $900K or .03 EPS, compared to $1.2 million or .03 EPS in the previous year.
- Gross operating margin of $3.8 M compared to $3.0 M in Q2-2012, a 27% increase.
- Cash flow from operating activities before change in working capital items of $1.5 M ($0.04 per share) (1) in Q2-2013 compared with $1.4 M in Q2-2012($0.04 per share).
Dynacor - A Great Value
- In 2012, the company recorded full-year EPS of .22. At current price that gives them a P/E ratio of 6.36.
- So far this year, they have recorded cash flow per share of .30. This gives them a current price/cash flow ratio of just 4.6 and around 4 for the full year!
(click to enlarge)Credit: Dynacor Gold
- While a fall in the price of gold does affect their profitability, it affects them much less than it would for a mining company: "During the quarter, two sudden gold price declines affected the Company's gross operating margin (as accumulated ore inventory had been purchased at costs based on higher gold prices), however, the gross operating margin for the period amounted to $3.8 M (14.5%) compared to $ 3.0 M (14.8%) an increase of 26.7% compared to Q2-2012."
(click to enlarge)
Credit: Dynacor Gold
- The company has a current enterprise value of $41.5 million. They are trading at roughly 2 times EV/Cash flow.
The Process Plant Potential and Cost Reduction Efforts
- The company is working towards expanding their ore processing plant to as much as 600 TPD, from the current 220 TPD. This would increase yearly production to 130,000 ounces, compared to the 2013 estimate of 71,000 ounces. The company says that the construction of the new ore-processing plant is to be financed directly from auto-generated operational cash flow and debt.
- Besides the increase in production, the company is focused on reducing costs. The company anticipates profits per ounce to rise with the new mill as several measures will be taken. They include the conversion to natural power, receiving larger haul shipments, and improving operating efficiency with brand new equipment and machines.
- The company has achieved a number of important steps so far in the plant upgrade. Most notably, the Environmental Impact Assessment permit was received in December of 2012.
- Construction of phase 1 begins immediately upon receipt of the construction permit, which is expected shortly. Construction of the tailings pond will also begin at that time.
- 2014 should be a huge year for Dynacor, with the new plant expected to be commissioned and in operation by the first quarter.
Management Expertise and Experience
- The company is very well respected in the area as they've been active in Peru since 1996. They have a ton of experience and knowledge of the area.
- The President and CEO is Jean Martineau, who has 20 years experience in the industry. He is a former director of Wesdome Gold Mines from 1999 to 2007.
- The Vice President and CFO is Leonard Teoli, who has 20 years experience in accounting and as a finance executive.
- Alonso Sanchex is the Chief Geologist. He has 15 years experience as a mine and exploration geologist and is an expert of Peruvian Geology.
By the Way... Dynacor Has an Exploration Project
I haven't even mentioned a project which perhaps holds the most potential for this company: Tumipampa, a multi-mineralized gold deposit located in the Apurimac copper-gold skarn belt.
If you were a gold exploration company that could choose where you would want your project located, this would have to be the location. The company is surrounded by six senior mining companies, such as Southern Copper and Xstrata. Over $6 billion in mine development is underway in this region. Some of the deposits hold a multi-million ounce gold resource with copper and silver as the by-product.
(click to enlarge)Credit: Dynacor Gold
The belt is host to the following projects:
- Las Bambas (Xstrata Copper) ($4.2B mine development approved)
- Los Chancas (Southern Copper Corp)
- Haquira (Antares Minerals) (Received $460M from First Quantum) in 2011
- Constancia (Norsemont)
The Tumipampa project is also located in a gold-silver rich belt of epithermal veins which host the following resources:
- Orocopampa (2M Au ounce)
- Pierina (770K Au ounce)
- Ares (1.2MM Au ounce)
- Arcata (163K Au ounce)
- Caylloma (600K Au ounce)
- Shi-Paula (653K Au ounce)
- Selene-Pallancanta (300K Au ounce)
- Antapite (220K Au ounce)
- To date, the Company has completed three exploratory drilling campaigns on Tumipampa and collected 1449 surface samples.
- 15 gold veins have been discovered to date.
Here are the most recent drill results, with the company striking high-grade gold:
- Cross Cut Intercepts high grade gold mineralization over 4.85 m assaying 36.48 g/t Au, 1.49 oz/t Ag and 0.43% Cu including 0.75 m with 111.5 g/t Au, 5.14 oz/t Ag and 1.13% Cu.
- The roof sampling returned an average grade of 36.48 g/t Au, 1.49 oz/t Ag, 0.43% Cu, 0.08% Pb and 0.12% Zn over 4.85 m true width (uncut grades) with one sample returning a maximum gold value of 111.5 g/t Au with 5.14 oz/t Ag, 1.13% Cu, 0.26% Pb, and 0.23% Zn over 0.75 m true width.
- The north wall sampling returned an average grade of 15.58 g/t Au, 0.80 oz/t Ag, 0.020% Cu, 0.09% Pb, and 0.20% Zn over 7.40 m true width (uncut grades) and this includes an intersection of 4.90 m (true width) grading 22.35 g/t Au.
- The south wall sampling returned an average grade of 14.35 g/t Au, 0.37 oz/t Ag, 0.03% Cu, 0.03% Pb and 0.06% Zn over 7.40 m true width (uncut grades) and this includes an intersection of 4.75 m (true width) grading 21.26 g/t Au. (Source: July 16 News Release)
These were quite impressive drill results, to say the least.
Conclusion: This Is a Buy, Plain and Simple
- Dynacor has a profitable "niche" business that has the potential to grow profits substantially over the next few years.
- To the naked eye, Dynacor Gold may just look like another gold exploration company. I believe a big reason the company has flown under the radar and is undervalued is because of the "gold" label. The truth is that Dynacor is profitable at any gold price.
- To make things even sweeter, I believe the Tumipampa deposit holds the potential to be a 1+ million ounce gold resource.
- The company is shareholder friendly and will continue to fund exploration through cash flow, unlike most other exploration companies which must issue equity.
I think the company has a couple of different options going forward. First, they could opt to find a partner to drill Tumipampa and focus more on their ore processing business, which I believe holds a bit more potential. Or, the company could continue drilling themselves and hope they strike something big.
Either way, I believe shares of Dynacor Gold possess great value and I think the stock could easily return 200+ percent over the next few years. I am in this stock for the long-term, not quick profits, and will be looking to add shares over the next couple of days and weeks.
Additional disclosure: This article discusses a micro-cap stock.
http://seekingalpha.com/article/1674682-dynacor-an-undervalued-profitable-niche-company-with-big-upside
investor15
12 years ago
A Must-Have In Your Gold Portfolio
Derek Blain
Seeking Alpha
Dec 10 2012
Disclosure: I am long DNGDF.PK. I am long DNG.TO, listed on the Toronto Stock Exchange. (More...)
If you are looking for that perfect sweet spot between value, growth, technicals and a unique business model within the precious metals sector, there is one company that should immediately catch your eye.
This small junior explorer has a one-of-a-kind business model that provides excellent value for shareholders when compared with almost any other exploration company out there. It is self-financing. It has a strong foothold in the ore processing industry in Peru, where tens of thousands of artisan miners sell their ore on small scale. This unique gold junior is Dynacor Gold Mines - DNG.TO on the Toronto Stock Exchange, and DNGDF.PK on the OTC.
Dynacor's pricing model for ore refining is linked to ore grades and metals prices; essentially, it is insured against even up to a 50% drop in the price of gold (see the latest updated Fact Sheet for margin information), while increasing margin as gold prices increase. Furthermore, as a refiner dealing with many different small miners, it is able to pick and choose which ore it wants to process, meaning it can select the highest grades with the highest yields at its own discretion. It also has an excellent relationship with the Peruvian government and local communities, with a facility in Peru for the last 15 years. A further boon to the ore processing model is the recent crackdown on gray-market mining and processing facilities by the Peruvian government, facilities that use older, harsher and environmentally damaging methods of processing ore. This has left the door open for Dynacor to process even more ore. As a result, it has been processing ore at maximum capacity over the past several months, continuously breaking previously-set records for monthly gold production.
As an ore processor alone, Dynacor is a great value play. It is currently trading at less than 0.5x sales, with a ROE of 36.01%, a current P/E of 6.67, and trade roughly at the net market value right now. This translates into a very efficient use of current assets that generate a return far superior to many other avenues in which a retail investor can invest. It's also a growth story - Dynacor has increased its daily ore processing capabilities to 220t of ore per day, and is self-financing the expansion of another processing facility. That translates into at least 50,000 ounces of gold processed for 2012 (revised up to 58,000 this month), with the new facility increasing expected production up to 100,000 ounces of gold for 2014. Its latest month saw over 6,000 ounces of gold and 14,000 ounces of silver processed, for sales of over $10 million. If monthly production is maintained or increased, Dynacor is trading at a mere 0.3x sales and an annual net profit closer to $0.28/share with four quarters at current operations, leaving Dynacor trading at a forward P/E of roughly 4.3. In other words, dirt cheap.
Dynacor's recent ore processing and sales history, from Dynacor's website:
(click to enlarge)
(click to enlarge)
There is even more to the story of Dynacor than this incredible growth. Dynacor is also an exploration company, and this is where it sets itself apart from your run-of-the-mill junior. Because of its profitable (and growing) ore processing operations, it is able to run with virtually no debt, and completely self-finance exploration operations. As of its most recent reporting quarter (September 30, 2012), Dynacor has just under $19 million in current assets against $7 million in total liabilities. What this boils down to as a shareholder is that Dynacor does not have to take on significant debts (and therefore future cash-flow-eating debt service), or issue new shares and dilute existing holders in order to explore its properties.
Furthermore, Dynacor has landed itself a real gem in its Tumipampa project in Peru. Peru is one of the major precious metals producers (6th in gold, 2nd in silver) on the globe. Tumipampa is smack in the middle of some of the richest gold and copper skarn deposits on earth, property that currently has a high level of exploration and development under way. Dynacor is a tiny player in the middle of some very big names in the mining industry - Southern Copper (SCCO), Xtrata, Hudbay Minerals (HBM), and two large Chinese gold miners, which are collectively investing over $6 Billion in infrastructure (see Dynacor's latest Corporate Presentation). This will offer Dynacor the opportunity to piggyback its Tumipampa project onto the existing infrastructure with a far lower capex. In my opinion, Dynacor will likely seek to partner with a large producer to fund development, and may even end up selling off the actual mining rights for a large cash payment + royalties and processing rights. If Dynacor's project turns up being sizable enough, it also makes it a prime buyout target at its current size. Even if Dynacor only partners for funding and decides to handle the development side, it will still be able to process much of its own ore internally using its higher capacity processing expansions (430tpd total production, from 220tpd, coming on-line 2013 - See Corporate Presentation), leading to even higher net margins and therefore more cash flow for shareholders.
I encourage every interested investor to take a look at its frequently-updated Corporate Presentation, the NI 43-101 report, and review the ore-processing operations for yourself, on its website. This is a great value story with the upside of impressive growth over the next few years, and an exploration project that could move Dynacor from junior to small-cap without compromising shareholder value at all.
On a technical basis, Dynacor looks to be lining up to make another move to the upside. It is just about finished a contracting triangle, taking it over to the right side of the channel formed off the July 2012 lows. This consolidation has provided ample opportunities for an internal technical "reset" on its overbought condition.
(click to enlarge)
Dynacor is one of those pristine gold plays tucked off into a corner, with little coverage or mention. It's not a "big story" stock, because the CEO of the company, Jean Martineau, has built it slowly and organically since taking over operations in 2006. Dynacor has chosen an executive team with a proven record within the industry, who have a history of continually adding Dynacor stock to their personal holdings, and make decisions that offer long-term value to shareholders.
Regardless of the near-term gyrations in the precious metals and miners markets, Dynacor is a deep value play (professional advisors have valued it at $2.50/share [p.8], a premium of over 100% from current levels) that I highly recommend any precious metals investor add to their portfolio. It should generate superior returns and strong growth for years to come.
http://seekingalpha.com/article/1054921-a-must-have-in-your-gold-portfolio
investor15
12 years ago
PRESS RELEASE August 30, 2013, 9:43 a.m. ET
Dynacor Increases Its 2013 Gold Production Guidance to 71,000 oz.
Dynacor Increases Its 2013 Gold Production Guidance to 71,000 oz.
MONTREAL, QUEBEC--(Marketwired - Aug. 30, 2013) - Dynacor Gold Mines Inc. (TSX:DNG) (Dynacor or the Company), a company with gold and silver ore processing operations and exploration projects in Peru, is pleased to announce that it has increased its 2013 gold production guidance to 71,000 ounces up from 66,000 ounces an increase of 7.5%.
July Production
During July 2013, gold production at Dynacor's Huanca ore-processing plant reached 6,460 ounces of gold an increase of 13.3% as compared to July 2012 (5,701 oz.). Also in July, the plant produced 12,526 ounces of silver. As of July 31, 2013 Dynacor has produced 44,381 ounces of gold compared to 31,203 oz as of July 31, 2012, an increase of 42.2%.
Process Optimization
During Q2-2013, Dynacor's process engineers have been working on the Huanca mill and have implemented a series of changes that have led to further process optimization. These measures that required a minimal investment have allowed the Company to increase its ore processing rate by 5% to 230 tpd and the plant is currently running at this capacity.
From January to June 2013, Dynacor has been able to purchase and process exceptionally high grade ores which averaged over 1.07 oz/t well above the forecasted 2013 ore grade of 0.88 oz/t. In July 2013, the Company processed 6,778 DMT of high grade ore with an average grade of 1.01 oz/t and despite a lower price of gold on the world market there was no decrease in the availability of ore. Therefore, considering the first seven months of gold production and the increase in the plant's milling capacity, the Company has increased its 2013 production guidance to 71,000 ounces of gold. This new conservative target assumes that for the rest of 2013 purchased ore grades will probably revert to the forecasted ore grade of 0.88 oz/t Au.
Jean Martineau, President and CEO of Dynacor stated "Despite the difficult overall operating environment for gold companies worldwide, our gold and silver processing division continues to exceed our targets and has allowed us to increase our gold production guidance for 2013 from 66,000 oz. to 71,000 oz. I would like to acknowledge the dedication and expertise of our employees in Peru who have made this possible.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is an ore processing and a gold exploration and mining company active in Peru through its subsidiaries since 1996. The Company differentiates itself from pure exploration companies as it also generates income and cash flow from its wholly owned ore processing plant in Peru. The Company's assets include five exploration properties, including the Tumipampa property, as well as its 230 tpd gold and silver ore processing mill at Huanca. Dynacor's mill produces gold from the processing of ore purchased from many different ore suppliers. Dynacor's strength and competitive advantage comes with the experience and knowledge the Company has developed while working in Peru. Its pride remains in maintaining respect and positive work ethics toward its employees, partners and local communities.
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)
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: http://www.facebook.com/DynacorGoldMines
Shares outstanding: 36,316,111
Dynacor Gold Mines Inc.
Jean Martineau
President and CEO
514-393-9000 ext. 228
Dynacor Gold Mines Inc.
Dale Nejmeldeen
Investor Relations
604.492.0099 / M: 604.562.1348
nejmeldeen@dynacor.com
www.dynacorgold.com
http://online.wsj.com/article/PR-CO-20130830-907867.html
investor15
12 years ago
Where to Buy Gold in Difficult Times: Jay Taylor
Source: Sally Lowder of The Gold Report
2/20/13
The Gold Report
Section of article;
JT: That is a tough call. The mining industry is so capital intensive. On the other hand, companies realize that they need to get their share prices up to a reasonable level. There is a real push and a pull.
"You can make a good case that China and other underdeveloped countries are just getting started. Ultimately, that is bullish for gold and silver."
There is no question that companies that can provide a dividend will do much better in the market. For my newsletter, I am looking for companies that are cash-flow positive, companies that do not have to raise capital. If a mining company has to raise capital to drill highly speculative holes in the ground, the market will not support that today.
TGR: Of course, many of the companies that have sufficient cash are invisible to investors because they do not need—or get—the attention of investment banks and analysts. Can you tell us about any of these diamonds in the rough—companies that are producing, have healthy treasuries and balance sheets and are able to reward their shareholders with increased production and share price profiles?
JT: One is Dynacor Gold Mines Inc. (DNG:TSX). There are lots of small, family-owned, high-grade mining projects in Peru, too small to warrant building a mill. Dynacor provides that processing service, using environmentally accepted practices. The company has been able to get higher recoveries than other operations that were not working within environmental and other regulations. Basically, Dynacor can now select the grades it wants; as a result, its earnings are growing rapidly. It just got permitted to build a second mill. Within two years, I expect annual production will be near 100,000 ounces (100 Koz).
It does not pay a dividend, but its earnings are growing nicely. Production at its processing plant in Peru is increasing and it also has an exploration project with blue-sky potential. The property is in the middle of major copper-gold pour-free targets. Dynacor does not issue shares; it is growing organically. Its shares are selling at two or three times cash flow right now.
TGR: And Dynacor does not have to get the gold out of the ground.
JT: It does not. Other people bring the gold to Dynacor.
The company does have its own non-NI 43-101 resource of more than 600 Koz or 800 Koz in a high-grade, underground vein system at a project called Tumipampa. It is a pour-free skarn gold-and-silver target, in the middle of some major deposits. Dynacor has some very good surface showings. The company expects to mine Tumipampa itself.
TGR: Dynacor has gone from $0.60 to $1.33/share in the last six months. Only a handful of mining companies could boast that.
JT: Yes, and it did it in a horrible market environment.
Continued below:
http://www.theaureport.com/pub/na/where-to-buy-gold-in-difficult-times-jay-taylor
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