Mr. Dale Nejmeldeen reports

Q3 2023: DYNACOR REPORTS SALES INCREASE OF 37.8%, NET INCOME INCREASE OF 212.5% (US$0.07 OR CA$0.09 PER SHARE) AND RECORD PRODUCTION EXCEEDING 34,000 AUEQ OUNCES

Dynacor Group Inc. has released its unaudited condensed interim consolidated financial statements and the management discussion and analysis (MD&A) for the third quarter ended Sept. 30, 2023.

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. All amounts per share are in US$. All variance per cent are calculated from rounded figures. Some additions might be incorrect due to rounding).

Q3 2023 OVERVIEW AND HIGHLIGHTS

OVERVIEW

• Dynacor completed the three-month period ended Sept. 30, 2023 ("Q3 2023") with a record production of 34,103 AuEq ounces, quarterly sales increase of 37.8 per cent at $63.4 million and a net income increase of 212.5 per cent at $2.5 million (US$0.07 per share) compared with sales of $46.0 million and a net income of $0.8 million (US$0.02 per share) for the third quarter of 2022 ("Q3 2022").
• At the end of 2022 the plant capacity was increased by 16 per cent to 500 tpd. With the high level of ore supplied, Dynacor was able to both operate the plant at its full capacity all over 2023 and to increase the level of ore inventory to 10,200 tonnes at the end of Q3 2023. This inventory level represents more than 20 days of production.
• The Q3 2023 production of 34,103 AuEq ounces is the third consecutive quarter-to-quarter increase in gold production.
• Although the Q3 2023 gold market price was higher than Q3 2022, financial results were both affected by the declining trend in the gold market price.

HIGHLIGHTS

Operational

• High ore volume supplied. Total ore volume supplied reached 45,244 tonnes in Q3 2023, the second-best quarter ever, compared with 41,646 tonnes for the same period of last year a 8.6 per cent increase;
• Record high volume processed. The Veta Dorada plant processed a volume of 44,519 tonnes of ore (484 tpd average) compared with 37,410 tonnes in Q3 2022 (407 tpd), a 19.0 per cent increase;
• Highest gold production. In Q3 2023, gold equivalent production amounted to 34,103 AuEq ounces compared with 27,252 AuEq ounces in Q3 2022 a 25.1 per cent increase.

Financial

• Full 500 tpd processed capacity accounted for the solid Q3 2023 financial operating performance.
• Solid cash position. Cash on hand of $33.0 million at the end of Q3 2023 compared with $25.6 million at year end 2022;
• Increase of 37.8 per cent in Sales. With greater quantities and a higher average gold market price, sales amounted to $63.4 million in Q3 2023 compared with $46.0 million in Q3 2022;
• Increase in gross operating margin. Gross operating margin of $7.0 million (11.0 per cent of sales) in Q3 2023, compared with $4.5 million (9.8 per cent of sales) in Q3 2022;
• Increased operating income. Operating income of $5.1 million in Q3 2023 compared with $3.2 million in Q3 2022, a 59.4 per cent increase;
• Net income increase of 212.5 per cent. Dynacor recorded a net income of $2.5 million in Q3 2023 (US$0.07 or CA$0.09 per share) compared with $0.8 million (US$0.02 or CA$0.03 per share) in Q3 2022;
• Increased cash gross operating. Cash gross operating margin of $235 per AuEq ounce sold (1) compared with $197 in Q3 2022;
• Increased EBITDA. EBITDA (2) of $5.8 million, compared with $3.8 million in Q3 2022, a 52.6 per cent increase;
• Strong cash flows. Cash flows from operating activities before change in working capital items of $3.9 million ($0.10 per share) (3) compared with $2.0 million ($0.05 per share) in Q3 2022.
• Return to Shareholders
• Share buy-back. 137,700 common shares repurchased for $0.3 million (CA$0.4 million) in Q3 2023, compared with 213,655 common shares for $0.5 million (CA$0.6 million) in Q3 2022;
• Dividends. A $0.01 CA per share monthly dividend paid during the quarter. On an annual basis, the 2023 dividend will represent CA$0.12 per share or 3.6 per cent dividend yield based on the current share price.

RESULTS FROM OPERATIONS

Total sales amounted to $63.4 million compared with $46.0 million in Q3 2022. The $17.4 million increase is explained by higher quantities of gold ounces sold (+23.7 per cent or +$10.9 million) and a higher average gold price (+$6.5 million).

Cumulative sales increased by $34.6 million compared with last year with higher quantities of gold ounces sold (+$25.0 million) and a higher average gold price (+$9.6 million). Since the 16 per cent increase capacity in Q4 2022, the Chala plant has been running at its maximum 500 tpd throughput.

The Q3 2023 gross operating margin amounted to $7.0 million (11.0 per cent of sales) compared with $4.5 million (9.8 per cent of sales) in Q3 2022 and were both affected by the unfavorable trend in gold market prices during the periods.

General and administrative expenses amounted to $1.6 million compared with $1.2 million in Q3 2022. The increase is mainly due to employee related expenses (increase in headcounts, salaries, profit sharing and share based remunerations). Quarter-to-quarter expenses decreased however by $0.2 million.

The Q3 2023 net income includes a $2.7 million income tax expense including a $0.3 million (non-cash) deferred income tax expense ($2.3 million including a $0.3 million deferred tax expense in Q3 2022). The tax expense is also affected by the variance throughout the period of the Peruvian Sol against the US$. Future fluctuations will affect positively or negatively the deferred tax at the end of each period.

CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY

Operating activities

During Q3 2023, the cash flow from operations, before changes in working capital items, amounted to $3.9 million ($14.2 million for the nine-month period ending Sept. 30, 2023), compared with $2.0 million in Q3 2022 ($10.6 million for the nine-month period ending Sept. 30, 2022).

During Q3 2023, total cash from operating activities amounted to $5.0 million ($16.2 million for the nine-month period ending Sept. 30, 2023) compared with -$0.05 million in Q3 2022 ($9.5 million for the nine-month period ending Sept. 30, 2022). Changes in working capital items amounted to $1.1 million ($2.0 million for the nine-month period ending Sept. 30, 2023) compared with -$2.0 million in Q3 2022 (-$1.1 million for the nine-month period ending Sept. 30, 2022). The variances are mainly attributable to the increase in inventories.

Investing activities

During the three-month period ended Sept. 30, 2023, the Corporation invested $0.9 million (cumulative nine-month 2023 of $5.7 million). These amounts mainly include the purchase of an office in Lima, investments at the plant and new vehicles. All investments have been financed with internally generated cash-flows.

Financing activities

In Q3 2023, monthly dividends totaling CA$0.03 per share were disbursed for a total consideration of $0.9 million (CA$1.2 million) (cumulative nine-month of CA$0.09). In Q3 2022, monthly dividends totaling CA$0.025 per share were disbursed for a total consideration of $0.7 million (CA$1.0 million). Increases in monthly dividend were disbursed from January 2022 and then from January 2023.

In Q3 2023, 137,700 common shares were repurchased under the Corporation normal course issuer bid share buyback program for a total cash consideration of $0.3 million (CA$0.4 million) (cumulative nine-month of 207,080 shares) (213,655 shares for a total cash consideration of $0.5 million (CA$0.6 million) in Q3 2022).

Working capital and liquidity

As at Sept. 30, 2023, the Corporation's working capital increased to $50.3 million, including $33.0 million in cash ($43.7 million, including $25.6 million in cash at December 31, 2022).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at Sept. 30, 2023, total assets amounted to $106.6 million ($96.9 million as at December 31, 2022). Major variances since last year-end come from the significant increase in cash and property plant and equipment.

FOLLOW-UP OUTLOOK 2023

Ore processing

For 2023, the Corporation forecasted sales (1) in the range of $210-235 million representing a growth of 6.5-20.0 per cent over 2022 sales. This would result in a net income in the range of $8.5-11.5 million ($0.22-0.30 per share) (CA$0.30-0.41 per share). At the current rate, total 2023 sales should reach $245 million, a 4.3 per cent increase compared with the high range yearly projection and the net income will surpass the yearly projections.

(1) Using a market gold price ranging between $1,800 and $1,900 per ounce

Capex

The board of directors approved a capital budget up to $10.0 million which includes investments at the Veta Dorada plant for new efficiency improvement equipment's, an increasing tailing pound capacity, additional vehicles for our ore purchase team and administrative and ore purchasing buildings. Depending on certain circumstances, management believes 2023 investments should reach $7.0 million.

Other project expenses

The Corporation has also budgeted approximately $1.0 million to advance other projects in other jurisdictions and has spent $0.6 million so far in 2023.

ABOUT DYNACOR

Dynacor is a dividend-paying industrial gold ore processor headquartered in Montreal, Canada. The corporation is engaged in gold production through the processing of ore purchased from the ASM (artisanal and small-scale mining) industry. At present, Dynacor operates in Peru, where its management and processing teams have decades of experience working with ASM miners. It also owns a gold exploration property (Tumipampa) in the Apurimac department.

The corporation intends to expand its processing operations in other jurisdictions as well.

Dynacor produces environmental and socially responsible gold through its PX IMPACT(TM) gold program. A growing number of supportive firms from the fine luxury jewelry, watchmakers and investment sectors pay a small premium to our customer and strategic partner for this PX IMPACT(TM) gold. The premium provides direct investment to develop health and education projects for our artisanal and small-scale miner's communities.

Dynacor is listed on the Toronto Stock Exchange (DNG).

We seek Safe Harbor.