Mr. Dale Nejmeldeen reports

DYNACOR GROUP REPORTS A RECORD ANNUAL PRODUCTION OF 130,001 AUEQ OUNCES GENERATING A RECORD NET INCOME OF US$15.1 MILLION (US$0.39 OR C$0.53 PER SHARE), AND ITS 13TH CONSECUTIVE ANNUAL PROFIT IN 2023

Dynacor Group Inc. has released its audited annual consolidated financial statements, and the management's discussion and analysis (MD&A) for the year ended Dec. 31, 2023.

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 United States dollars, unless stated otherwise. All amounts per share are in United States dollars. All variance per cents are calculated from rounded figures. Some additions might be incorrect due to rounding.

Two thousand twenty-three overview and highlights

Overview

Dynacor completed 2023 with both production and financial historical high performances generating its 13th consecutive year of profit. The corporation achieved a production record of 130,001 gold equivalent (AuEq) ounces powering total sales to $250.2-million ($337.6-million (Canadian)), an increase of 26.7 per cent compared with 2022, and a net income of $15.1-million (39 cents or 53 Canadian cents per share), an increase of 25.8 per cent compared with 2022.

Two thousand twenty-three was the first full year of operation at a processing capacity of 500 tonnes per day (tpd). Thanks to its high level of ore inventory at the opening of the year, and the high volume of ore supplied and purchased, the mill has been able to operate at full capacity throughout the year, averaging a new daily record processing rate of 468 tpd.

Highlights

Operational:

• Historical high ore volume supplied. Total ore volume supplied reached an all time high of 182,500 tonnes in 2023 (147,500 tonnes in 2022). Year-end ore inventory was over 21,000 tonnes, representing more than 40 days of production throughput.
• Highest yearly volume processed. In 2023, the Veta Dorada plant processed a historical high volume of 170,668 tonnes of ore (468 tpd average) compared with 150,819 tonnes in 2022 (413), a 13.2-per-cent increase.
• Record high yearly gold production. In 2023, the gold equivalent production amounted to 130,001 AuEq ounces compared with 110,359 AuEq ounces in 2022, a 17.8-per-cent increase.

Financial:

• Increasing trend in gold prices, favourable FX (foreign exchange) effect and high operational performance impacted the 2023 financial performance. The gold price has increased from $1,840/ounce in January, 2023, to $2,060/oz in December, as well with the higher tonnage processed positively impacted the production figures.
• Solid cash position. Despite the significant increase in the level of ore inventory, cash on hand remained solid at $22.5-million at year-end 2023 compared with $25.6-million at year-end 2022.
• Historical high sales. Sales amounted to $250.2-million in 2023 compared with $197.5-million in 2022, a 26.7-per-cent increase.
• Increase in gross operating margin in dollars. Gross operating margin amounted to $30.2-million (12.1 per cent of sales) in 2023, compared with $24.4-million (12.4 per cent of sales) in 2022.
• Increased operating income. Operating income of $22.1-million in 2023 compared with $18.1-million in 2022, a 22.1-per-cent increase.
• Cash gross operating margin of $257 per AuEq ounce sold compared with $249 in 2022.
• Increased EBITDA (earnings before interest, taxes, depreciation and amortization). EBITDA of $25.5-million, compared with $21.2-million in 2022, a 20.3-per-cent increase.
• Increased cash flows. Cash flows from operating activities before change in working capital items of $18.6-million (49 cents per share) compared with $14.9-million (38 cents per share) in 2022.
• Historical high net income. Dynacor recorded an historical high net income of $15.1-million in 2023 (39 cents or 53 Canadian cents per share) compared with $12-million (31 cents or 40 Canadian cents per share) in 2022.

Return to shareholders:

• Share buy back -- 1,127,397 common shares repurchased for $2.9-million ($3.9-million (Canadian)) in 2023, compared with 819,416 common shares for $1.9-million ($2.4-million (Canadian)) in 2022.
• Increased dividends. Continuation of monthly dividend payments which had been increased by 20 per cent at the beginning of 2023 to 12 Canadian cents per share per year for a total of $3.4-million. This was recently followed by a new increase to 14 Canadian cents per year from January, 2024.

Results from operations

Total sales amounted to $250.2-million compared with $197.5-million in 2022. The $52.7-million increase is explained by quantities sold and higher average selling prices contributing to respectively a plus $35.1-million and a plus $17.6-million increase.

The 2023 gross operating margin amounted to $30.2-million (12.1 per cent of sales) compared with $24.4-million (12.4 per cent of sales) in 2022. The 2023 gross operating margin was positively impacted by higher sales and by the overall positive trend in gold market prices compared with 2022.

General and administrative expenses amounted to $7.1-million in 2023 compared $6-million in 2022. The increase is mainly explained by increases in salaries and share-based expenses.

Other projects represent the expenses incurred by the corporation to duplicate its unique business model in the same or other jurisdictions.

A $7.9-million income tax expense was also recorded in 2023. This expense includes $500,000 of withholding tax paid on dividends received from the subsidiary and a negative $500,000 (non-cash) deferred income tax recovery. The deferred tax expense or recovery is mainly explained by the variance throughout the period of the Peruvian sol against the U.S. dollar, which affect long-term assets local tax basis. 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

For the year ended Dec. 31, 2023, the cash flow from operations, before changes in working capital items, amounted to $18.6-million compared with $14.9-million for the year ended Dec. 31, 2022. Net cash from operating activities amounted to $9.6-million compared with $6.2-million for the year ended Dec. 31, 2022. Changes in working capital items amounted to negative $9-million compared with negative $8.7-million for the year ended Dec. 31, 2022.

Investing activities

In 2023, Dynacor invested $6.5-million in capital expenditure, including $3-million for the purchase of an office in Lima. Other investments comprised additions to the plant and purchases of rolling stocks. All investments have been financed with internally generated cash flows.

Financing activities

In 2023, monthly dividends of one Canadian cent, representing an annual total of 12 Canadian cents per share, were disbursed for a total consideration of $3.4-million ($4.6-million (Canadian)). In 2022, monthly dividends of 0.83 Canadian cent, representing a total of 10 Canadian cents per share were disbursed for a total consideration of $3-million ($3.9-million (Canadian)).

In 2023, 1,127,397 common shares were repurchased under the corporation's normal course issuer bid (NCIB) share buyback program for a total cash consideration of $2.9-million ($3.9-million (Canadian)) (819,416 shares for a total cash consideration of $1.9-million ($2.4-million (Canadian)) in 2022).

Subsequent to Dec. 31, 2023, the corporation has repurchased 926,800 common shares for a total cash consideration of $2,751,499 ($3,705,613 (Canadian)), an average repurchase cost of $2.97 ($4 (Canadian)) per share.

Working capital and liquidity

As at Dec. 31, 2023, the corporation's working capital amounted to $50.8-million, including $22.5-million in cash ($43.7-million, including $25.6-million in cash at Dec. 31, 2022).

Consolidated statement of financial position

As at Dec. 31, 2023, total assets amounted to $111.8-million ($96.9-million as at Dec. 31, 2022). Major variances since last year-end come from the significant increase in inventories, and the variance in the trade and other payables.

Outlook 2024

Ore processing

For 2024, the corporation forecasted sales (using a market gold price ranging between $2,000 and $2,500 per ounce) ranging between $265-million and $285-million, representing a growth of 6 per cent to 14 per cent over 2023 sales. Net income is forecasted ranging between $12-million and $15-million (33 cents to 41 cents per share (45 Canadian cents to 56 Canadian cents per share)) and include expenses of $2.7-million to advance other projects in other jurisdictions.

Dynacor Group plans to invest up to $13-million in capital expenditures in 2024. This investment will be used at our Veta Dorada plant for new equipment to improve efficiency, increase tailing pond capacity, vehicles to support the security of the company's purchasers working in remote areas, and will include, upon favourable conditions, up to $4-million to pursue the due diligence process and development of new projects in other jurisdictions.

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 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 gold program. A growing number of supportive firms from the fine luxury jewellery, watchmakers and investment sectors pay a small premium to Dynacor's customer and strategic partner for this PX Impact gold. The premium provides direct investment to develop health and education projects for the company's artisanal and small-scale miner's communities.

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

We seek Safe Harbor.