Dynacor Reports Q2-2026 Results and Updates on Tax Contingencies

Dynacor Group Inc. (DNG) reported unaudited results for the second quarter of 2026, recording a record quarterly throughput of 48,300 tonnes, or 531 tonnes per day, and producing 31,907 AuEq oz. Sales for the period reached $144.4 million, an increase of approximately 81% year over year. However, gross margin was $5.6 million, or 3.9% of sales, compared to $7.1 million, or 9.0%, in the second quarter of 2025. EBITDA stood at $3.2 million, which included $0.3 million of non-recurring expenses, while net income was $1.1 million, down from $3.5 million in the prior-year quarter.

Cash gross operating margin fell to $206 per AuEq oz sold, compared to $578 in the first quarter of 2026. Operating cash flow before working capital changes was $1.5 million, but after $9.6 million of working capital investment, net cash from operations was -$8.1 million. Cash reserves declined to $14.8 million at June 30, 2026, from $33.5 million at year-end 2025. Management attributed the margin weakness to a decline in the gold price of approximately $700 per ounce during the quarter and higher-than-normal inventory held as a buffer ahead of Senegal’s presidential election.

Regarding tax matters, SUNAT tax exposure is quantified at $8.7 million for 2015 and approximately $16.1 million for 2016, 2017, and 2019, totaling about $24.8 million in aggregate. A Tax Court decision is expected shortly.

On the development front, the Senegal Galam plant achieved first ore feed and is more than 95% complete, with the first gold pour targeted for the third quarter of 2026. Meanwhile, the rehabilitation of the Ecuador Svetlana project is approximately 40% complete, with first ore remaining targeted for the fourth quarter of 2026.

Dynacor maintained its full-year 2026 guidance, projecting sales of $530 million to $580 million, net income of $22 million to $26 million, and production of 125,000 to 135,000 oz. Capital expenditure is now expected at the lower end of the $32.5 million to $39 million range.

Dynacor Group Inc. (DNG) reported mixed results for the second quarter, characterized by strong operational performance but a sharp deterioration in profitability and cash generation. Second-quarter net income fell 67.5% year over year and dropped 84.6% compared to the first quarter of 2026. Gross margin compressed to 3.9%, down from 11.3% in the first quarter of 2026 and 9.0% in the second quarter of 2025.

For the first half of the year, sales nearly doubled to $298.5 million from $159.7 million. However, first-half net income of $8.45 million was slightly below the $8.62 million reported in the first half of 2025.

The company also identified a newly quantified SUNAT tax exposure of approximately $24.8 million. This amount is material against $14.8 million in cash and the fiscal year 2025 net income of $21.3 million. An adverse ruling on the 2015 tax year may require payment before an appeal can be filed.

Despite the tax overhang and weak first-half profitability, there was no guidance cut, no covenant issue, and expansion remains on track.

Dynacor Group Inc. is a Canadian ore processing company focused on gold sourced from artisanal and small-scale miners. Its core operating asset is the Veta Dorada processing plant in Peru. The company also holds growth assets, including the Galam pilot plant in Senegal, which received its first ore at quarter-end with the first gold pour targeted for Q3-2026, and the Svetlana plant in Ecuador, acquired in 2025, with first ore expected in Q4-2026.

Following the June 19, 2026 AGM, Daniel Misiano was appointed President and CEO, and Réjean Gourde was appointed Chair. Prior releases state an ambition to generate more than $1 billion in sales by 2030.