Dynacor Gold Mines Inc.

3 YEAR PERFORMANCE REVIEW

TSX:DNG | US:DNGDF
APRIL 10, 2014

Presented by: Dale Nejmeldeen

Table of Contents
Quarterly Gold Production .................................................................................................................................................................. 3
Quarterly Silver Production ................................................................................................................................................................ 3
Average Gold Grade ................................................................................................................................................................................ 4
Gross Sales ................................................................................................................................................................................................. 4
Price To Sales Ratio ................................................................................................................................................................................ 5
Gross Margin ............................................................................................................................................................................................. 5
Gross Operating Margin ........................................................................................................................................................................ 6
Net Income Per Share ............................................................................................................................................................................ 6
Cash Flow .................................................................................................................................................................................................... 7
Cash Flow Per Share ............................................................................................................................................................................... 7
Price To Cash Flow Per Share ............................................................................................................................................................. 8
Shareholders Equity .............................................................................................................................................................................. 8
Book Value Per Share ............................................................................................................................................................................ 9
Average Weighted Shares Outstanding ........................................................................................................................................... 9
Average Stock Price ............................................................................................................................................................................. 10
Disclosure ............................................................................................................................................................................................... 11

April 10, 2014

3 Year Performance Review

Page | 2

3 Year Performance Review

The following report looks at a three year review of Dynacors quarterly performance in many different valuation
metrics. It includes such areas as fundamental financial valuations, stock price performance, peer comparison and
more.

Quarterly Gold Production (oz)

In view of the company receiving its construction permit, Dynacor will be adding a second mill to its production
portfolio by this time next year. Bringing the new mill on stream, at an initial capacity of 300 tpd positions Dynacor
in a position to significantly increase production. The strategic plan includes further increasing capacity to 600 tpd
via our new location.
Figure 1

Quarterly Silver Sales (oz)

Dynacors state-of-the-art method in processing gold from the ore it purchases also yields a growing amount of
silver by-product which is a commercially viable resource with positive economic impacts.
Figure 2

April 10, 2014

3 Year Performance Review

Page | 3

Average Gold Grade (oz/t)

As of June 2012, gold grades delivered to the mill have steadily increased which directly coincides with the mining
law changes in Peru.
The Peruvian government implemented a new policy cracking down on illegal gold ore processors both at the
artisanal and semi-industrial levels. Dynacor is one of the very few fully permitted gold processing companies in
Peru and is, as such, particularly well positioned in the market to benefit from this new window of opportunity. The
average gold grade in the fourth quarter, 2013 was under 1 ounce per ton, up from 0.88 ounces per ton a year ago.
The rising trend is notable as processing higher grade ore generates a direct benefit to the company.
Figure 3

Gross Sales ($)

Dynacors staff is doing a tremendous job of broadening our ore-purchasing network. Their hard work and expert
knowledge of the small scale mining community is critical in effectively serving the miners needs. Total sales during
the fourth quarter, 2013 amounted to $24.8M compared to $31.4 in 2012 a 21% decrease due to the lower average
gold price per ounce from $1,716 in Q4-2012 to $ 1,273 in Q4-2013.
Figure 4

April 10, 2014

3 Year Performance Review

Page | 4

Price to Sales Ratio (P/S)

Given the current metals mining industry has an average price to sales ratio (PS) of 1:14 one can presume over time
together with consistent quarterly profits reported from Dynacor that its (PS) ratio of 0.54 will steadily move back
up to the industry average. In other words, investors are currently buying a dollar of Dynacor sales for half a penny.
Data from: http://csimarket.com/Industry/industry_valuation_ttm.php?ps&ind=108
Figure 5

Gross Margin (%)

The company is not as leveraged to the price of gold as is a pure producer with fixed production costs. The
Companys ore purchase price is discounted to the spot price of gold. In the past 3 years, Dynacors average gross
margin is 17.1%.
Figure 6

April 10, 2014

3 Year Performance Review

Page | 5

Gross Operating Margin ($)

Dynacors ore-processing division is a profitable and stable business model which is apparent in the companys
impressive gross operating margin chart.
Figure 7

Net Income Per Share (EPS)

For eleven consecutive quarters, Dynacor has generated profits; this during a time in what is coined as the worst
junior resource bear market in history. In 2013 Dynacor reported $0.25 earnings per share.
Dynacor reiterates: it is producing gold through its low-risk ore-processing division. The company is not as
leveraged to the price of gold as is a pure producer with fixed production costs.
Figure 8

April 10, 2014

3 Year Performance Review

Page | 6

Cash Flow ($)

Quarter after quarter Dynacor continues to generate a positive cash flow.
Figure 9

Cash Flow Per Share (CFPS)

In 2011 Dynacor finished the year at $0.13 cash flow per share (CFPS) as compared to 2012 Dynacor reported $0.26
CFPS. So as not to break the positive trend in 2013, the company once again bested the previous year by generating
$0.29 CFPS.
Figure 10

April 10, 2014

3 Year Performance Review

Page | 7

Price to Cash Flow Per Share (P/CF)

Using a price to cash flow (P/CF) ratio is an alternative measurement than price to earnings ratio (P/E).
Today the junior resource market is in the grips of a 3 year long bear, but is showing signals of a bottom. Currently
Dynacor is trading at 6 (P/CF).
Dynacor has planned, via its ore-processing division, to increase its capacity up to 600 tonnes per day from 250 tpd.
Cash flow per share will accelerate irrespective of a bear market or a bull market
If we project a double in CFPS and assume a realistic market average multiple of 10 times, this would place Dynacor
at $5.80 a share.
Figure 11

BULL MARKET
CONDITIONS

Shareholders Equity (Book Value)

The companys resilient business model is one that is capable of generating cash internally. It should be obvious to
an investor that Dynacors higher return on equity compared to its peers is another advantage to our shareholders.
Dynacor has a net worth (shareholder's equity) of $31.2 million.
Figure 12

April 10, 2014

3 Year Performance Review

Page | 8

Book Value Per Share

Dynacors book value per share is increasing consistently as is seen in figure 13 from the twelve consecutive
quarters of growth.
Figure 13

Average Weighted Shares Outstanding (Basic)

Dynacor has one of the lowest share counts in the mining industry. A low share count gives every investor a slightly
larger proportionate stake in the company. As well with lower shares outstanding, key fundamental ratios such as
sales, earnings, cash flow and dividend payout amounts increase per share quicker than companies with higher
share counts.
Figure 15

April 10, 2014

3 Year Performance Review

Page | 9

Average Stock Price (TSX:DNG)

2013 was a tough time for the gold miners in general. The price of physical gold was down approximately 28% for
the year. During the fourth quarter, 2013 Dynacors stock price averaged $1.66 per share.
The Corporations stock price increased from $1.29 at the start of the year to $1.79 at year end a 38.8% value
increase and $18 M increase in market capitalization. It currently stands at CA$1.80 at the date of this report.
Figure 16

Figure 17
As the company stays on course of protecting against share dilution, growing the cash flow and earnings, it is not
hard to predict the direction of the stock price in the ensuing years

April 10, 2014

3 Year Performance Review

Page | 10

The 2013 audited consolidated financial statements together with managements discussion and analysis are
available on the corporation's website, and the documents have been filed electronically with SEDAR.

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 review.

Dynacor Gold Mines Inc. (TSX: DNG)

For further information, please contact:

Dale Nejmeldeen | Manager, Investor Relations
Dynacor Gold Mines Inc.
T: 604.492.0099 | M: 604.562.1348 | F: 604.608.9223
E: nejmeldeen@dynacor.com
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: http://facebook.com/DynacorGoldMines

April 10, 2014

3 Year Performance Review

Page | 11