It's Time to Set Things Right at Dynacor and Ensure the Viability and Success of the Company

On May 25, 2026, Dynacor’s largest shareholder, iolite Partners Ltd., launched a full‑scale proxy contest ahead of the June 19 AGM. It urges shareholders to WITHHOLD votes from all five incumbent directors – including Chairman Pierre Lépine (who has already stepped down) and President & CEO Jean Martineau (who is set to retire after the meeting) – and to vote AGAINST the proposed 650,000‑share option replenishment. The campaign also asks shareholders to replace the default proxyholder (Jean Martineau) with their own nominee.

iolite’s letter details a series of severe, previously undisclosed issues: - Management upheaval: Replacement of more than half of Veta Dorada’s 550‑person Peruvian workforce and the removal of designated incoming CEO Daniel Misiano from the director ballot without explanation. - Regulatory crisis: Every export shipment from Veta Dorada was subjected to the most stringent “red‑channel” customs scrutiny by Peru’s SUNAT from January 10 through May 14, 2026 – a major operational risk that was never disclosed to the market. - Inventory losses: Two separate incidents of missing gold totalling approximately 10 kg (~$1 million) that were never reported. - Asset sales: Sale of the Northern Peru crusher and ore assay laboratory without disclosure, and redirection of capital‑raise proceeds toward an Ecuador acquisition without clear strategic justification. - African expansion risks: Original JV partners in Senegal (KN Equipments and FONSIS) have disappeared from recent disclosures; security threats from the JNIM armed group near the pilot plant have increased. In Côte d’Ivoire, the previously named General Manager is no longer with the company. - Financial impact: iolite estimates at least $5 million in foregone profits due to management failures during a period of record gold prices, plus the $1 million inventory loss.

The activist calls for a boardroom clean‑out to restore transparency, governance, and operational performance.

This is the most significant negative development in Dynacor’s recent history. The allegations are not general governance grumbles; they are concrete, specific, and – if true – point to material undisclosed risks:

• Red‑channel customs for four months is a serious operational bottleneck. Every shipment being flagged by SUNAT implies systematic compliance issues or potential investigations. The failure to disclose this while repeatedly touting guidance and expansion is a major governance red flag.
• Undisclosed inventory losses directly contradict the company’s narrative of operational excellence. Even if the losses are immaterial in dollar terms, the lack of transparency destroys credibility.
• Workforce churn and management chaos at Veta Dorada – the sole revenue‑generating asset – directly explain why throughput has been inconsistent and margins have underperformed. The activist’s previous letters (Nov 2025, Sep 2025, Jun 2025) have now been corroborated by on‑the‑ground details.
• The removal of the designated CEO from the ballot suggests a board in disarray, with a succession plan that may be contested internally.

The upcoming AGM will force a public vote. Even if the incumbent directors survive, the revelations have already damaged the company’s reputation and will likely attract regulatory attention. The market will now price in higher governance risk, potential operational disruptions, and the cost of a drawn‑out proxy fight.

Materiality: The news is genuinely new, unexpected, and market‑moving. It reveals hidden operational and governance failures that materially increase the risk profile of the stock. Therefore the rating is Material – Negative.

Dynacor Group Inc. is a Montreal‑based gold‑processor that buys ore from artisanal and small‑scale miners (ASGM) and processes it into doré bars. Its primary operation is the Veta Dorada plant in Peru, which has historically produced over 100,000 AuEq ounces per year. The company is executing an ambitious international expansion:

• Senegal: A 50‑tpd pilot plant in Kédougou, 85% complete, with first ore expected in Q2 2026.
• Ecuador: Acquired the Svetlana CIP plant (Portovelo) in July 2025 for $9.75 million, currently being refurbished with first production targeted Q4 2026. Initial capacity 300 tpd, eventually scaling to 500 tpd.
• Ghana: MOU signed with Ansong Askew Ltd. for a potential JV, though no binding agreement yet.
• The company publicly targets >$1 billion in cumulative sales by 2030.

Flagship project: Veta Dorada remains the sole revenue generator, and its operational stability is therefore critical. All other projects are pre‑revenue.