Dynasty Reports Financial Results for the Year Ended December 31, 2012
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/29/13 -- Dynasty Metals & Mining Inc. ("Dynasty" or the "Company") (TSX: DMM)(OTCQX: DMMIF) announces that it has released its audited consolidated financial statements for the years ended December 31, 2012 and 2011. The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the Company's audited consolidated financial statements as at and for the year ended December 31, 2012 and the related notes thereto and the Company's management's discussion and analysis, which are available on the Company's website (www.dynastymining.com) and on SEDAR (www.sedar.com).
All dollar amounts in United States dollars unless otherwise stated.
The following tables show selected comparative consolidated financial information as at and for the year ended December 31, 2012 and 2011.
Consolidated Statements of Financial Position, as at:
December 31 December 31
2012 2011
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ASSETS
Current assets
Cash and cash equivalents $ 433,364 $ 6,238,514
Receivables 54,021 53,479
Prepaid expenses 805,202 394,450
Inventory 3,064,284 4,575,976
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4,356,871 11,262,419
Advances and deposits 86,764 76,688
Mine properties, plant and equipment 55,564,745 52,109,644
Exploration and evaluation properties 12,836,750 11,993,371
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$ 72,845,130 $ 75,442,122
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 6,453,4096 $ 4,870,324
Short term loan 600,000 0
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7,053,096 4,870,324
Provision for closure and restoration 1,676,998 1,270,746
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8,730,094 6,141,070
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Shareholders' equity
Capital stock 89,059,365 89,059,365
Contributed surplus 13,483,319 12,848,842
Deficit (38,427,648) (32,607,155)
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64,115,036 69,301,052
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$ 72,845,130 $ 75,442,122
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Consolidated Statements of Loss and Comprehensive Loss:
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For the Year For the Year
Ended Ended
December 31 December 31
2012 2011
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EXPENSES
Administrative salaries and benefits $ 955,417 $ 827,574
Amortization and accretion 528,971 592,977
Bank interest and fees 85,794 89,302
Insurance 212,466 193,708
Management fees 429,877 245,794
Office and general 1,087,764 741,033
Professional fees 1,141,511 1,110,965
Rent, utilities and maintenance 327,861 244,792
Shareholder communication 74,244 272,939
Stock-based compensation 634,477 2,946,608
Transfer agent and filing fees 47,824 58,957
Travel and entertainment 294,287 332,440
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(5,820,493) (7,657,089)
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Loss and comprehensive loss for the period (5,820,493) (7,657,089)
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Troy ounces of gold sold 16,470(a) 20,572
Troy ounces of silver sold 33,703(a) 64,660
Total Sales(b) $ 28,401,178 $ 34,185,254
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(a) - Excludes approximately 1,300 ounces of gold and 4,000 ounces of silver
stolen from the Zaruma plant on July 23, 2012 for which insurance proceeds
of approximately $2.2 million have been recovered.
(b) - Since operations at the Company's Zaruma Gold Project are in the pre-
commercial phase, the proceeds from the sale of precious metals, net of
production expenses and taxes, are credited to mine development costs and
not recorded in the Company's consolidated statements of operations as
permitted under International Financial Reporting Standards.
Production and Sales
For the year ended December 31, 2012, the Company received proceeds of $28.4 million from the sale of 16,470 ounces of processed gold and 33,703 ounces of processed silver derived from intermittent operations at its processing plant in Zaruma while continuing testing and making improvements to the facility. In addition, the company received insurance proceeds of approximately $2.2 million relating to approximately 1,300 ounces of gold and 4,000 ounces of silver that was stolen from the Zaruma plant during an armed robbery on July 23, 2012.
The decrease in production for the year ended December 31, 2012 as compared to the year ended December 31, 2011 was the result of the disruption to mining operations while the Company was dewatering the lower levels of the main mine "Cabo de Hornos" (see further discussion below).
The most significant improvement made to the processing plant during the year was the installation and commissioning of the gravity concentration circuit. The gravity concentration circuit, which includes the Falcon concentrator and a large high intensity leaching circuit, increases the efficiency and recovery and allows the Company to process dore from concentrate on site rather than having to ship concentrate to a third party to be processed. The benefit of this circuit is expected to become increasingly important as the "Cabo de Hornos" mine gains access to higher grade material for mining (see discussion below).
Mining
The Company is developing three separate mines, of which one mine, Cabo de Hornos, currently supplies the majority of material to the plant for processing. A significant proportion of material processed to date has been excavated during mine development and is not part of the Company's estimated mineral resource set out in its Technical Reports, as dated August 21, 2006 and available for viewing at www.sedar.com, for the Zaruma Gold Project.
During the second quarter of 2012, as the declines at "Cabo de Hornos" progressed to further depths to access the higher grade resource material, it became necessary to dewater the lower levels of the Company's mine as well as the adjacent area. The primary cause of the accumulation in the water is believed to be the existence of the old abandoned mine workings in close proximity at the level. The water had accumulated in the old abandoned workings over several decades and was entering the Company's declines, which in turn made the lower levels of the Cabo de Hornos mine inaccessible. This disruption to mining operations resulted in a decrease in the tonnage and grade the Company was able to mine during the second half of 2012.
The Company has recently successfully dewatered the declines at "Cabo de Hornos" to the current level and has been able to recommence the decline development in this area. The Company expects to be required to continue dewatering as the decline progress downwards, however the volume of water is expected to be less as the Company moves beneath the abandoned mine workings.
The advance of the declines in the current year has allowed the Company to start accessing and mining higher grade areas contained in the Company's mineral resource estimate, particularly the Matalanga vein. Recently this has resulted in an increase in the average grade of the material mined and delivered to the plant compared to the second half of last year. The Company expects to gain access to additional higher grade veins, contained in the mineral resource estimate, as the declines continue to be developed during the current year, which is expected to result in increased mine production. This out'look is based on current operations, mine plans and exploration results, which are subject to change and as such cannot be assured (see "Critical Risk Factors" of the Company's Management's, Discussion and Analysis, dated March 27, 2013, which is available at www.sedar.com).
Liquidity
As at December 31, 2012, the Company had cash resources of $0.4 million and negative working capital (consisting of cash, receivables, prepaid and inventory less accounts payable and short term loans) of $2.7 million compared to cash resources of $6.2 million and a positive working capital balance of $6.4 million as at December 31, 2011.
The reduction in working capital for the year ended December 31, 2012 was primarily a result of decreased production of gold and silver during the period in which the Company could not access higher grade material as a result of the dewatering of the main declines (see earlier discussion) during the second half of 2012. To offset the decrease in cash inflows from reduced production the Company reduced its cash balance and extended acceptable payment terms with trade creditors, which resulted in no material effect on the supply of goods or operations.
Subsequent to December 31, 2012 and up to the date of this report, the Company's liquidity position has been positively impacted by the following:
-- the Company exported and sold approximately 5,000 ounces of gold and
16,000 ounces of silver with an aggregate approximate value of $8.5
million;
-- the Company reached agreement whereby the Ecuadorian Government has
agreed to allow the Company to defer the NSR royalty owed of
approximately $0.4 million and the 2013 concession fee payments of
approximately $1.2 million. The Company is paying these in six monthly
installments which commenced in March 2013. The Company is grateful for
the ongoing support of the government in reaching this agreement;
-- the grade of material mined and production at the Zaruma Gold Project
has increased (see "Mining" section earlier in this news release).
Small Mining Licenses
During the year ended December 31, 2012 the Company was granted small scale mining licenses for five concessions at its Zaruma Gold Project.
These five concessions are the focus of the Company's current mine development plans at Zaruma. Under the current Mining Law of Ecuador such licenses permit the Company to mine up to 300 tonnes per day from each concession at a royalty of 3%, payable to the Ecuador government, and no windfall tax on the extraction and sale of precious metals. Other corporate taxes are unaffected.
About Dynasty Metals & Mining
Dynasty Metals & Mining Inc. is a Canadian based mining company involved in the exploration and development of mineral properties in Ecuador.
The Company has the intermittent production at its developing Zaruma Gold Project, the advanced-stage Jerusalem Project, and a highly prospective exploration project, the Dynasty Copper-Gold Belt, which includes the advanced-stage Dynasty Goldfield.
For further information regarding the Company's Zaruma project readers should refer to the Company's Independent Technical Report entitled "Independent Preliminary Assessment - Zaruma Project - El Oro Province" dated August 21, 2006, available on SEDAR at www.sedar.com.
Luis Bravo, a member of AUSIMM (Australian Institute of Mining and Metallurgy) and a "qualified person" within the definition of that term in the National Instrument 43-101, has supervised the preparation of the technical information contained in this news release.
For further information please visit the Company's website at www.dynastymining.com.
Forward-Looking Information
This news release contains statements which are, or may be deemed to be, "forward-looking information" which are prospective in nature, including, without limitation, statements regarding Dynasty's future plans,, the expected benefits derived from the utilization of new equipment, and expectations relating to the Cabo de Hornos mine including accessing higher grades of precious metals as the Company advances through declines. Forward-looking information are not based on historical facts, but rather on then current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates, including assumptions relating to the Company's ability to continue progress through its declines with minimal or no interruption, that the Company will be able to continue its progress in respect of its mines as planned, that new equipment will perform as described, that the Company will continue to sell processed gold and silver at levels that allow it to fund the continued development of its mining projects, that the Company will have access to capital if required, that all necessary approvals and arrangements will be obtained and/or finalized in a satisfactory manner in order to continue developing the Company's projects, and that the Company's equipment will operate at expected levels. Often, but not always, forward-looking information can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "projects", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause Dynasty's actual results, revenues, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important risks that could cause Dynasty's actual results, revenues, performance or achievements to differ materially from Dynasty's expectations include, among other things: (i) risks related to prior mining activity at our mines and declines, (ii) uncertainties relating to our mineral resource estimates (iii) risks related to availability of capital on satisfactory terms, (iv) risks related to being an early stage producer; (ii) risks related to Dynasty's lack of history in producing metals from Dynasty's mineral exploration properties and its ability to successfully establish mining operations or profitably produce precious metals; (v) that Dynasty will be unable to successfully negotiate agreements with the holders of surface rights on areas covered by Dynasty's project concessions; (vi) changes in the market prices of gold, silver, and other minerals, which, in the past, have fluctuated widely and which could affect the profitability of Dynasty's operations and financial condition; (vii) risks related to governmental regulations, including taxation statutes; (viii) risks related to Dynasty's primary properties being located in Ecuador, including political, economic, and regulatory instability; and (ix) uncertainty in Dynasty's ability to obtain and maintain certain permits necessary to the Company's current and anticipated operations. A further description of these and other risks can be found in Dynasty's Annual Information Form for the year ended December 31, 2012, which is available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. Other than in accordance with its legal or regulatory obligations, Dynasty is not under any obligation and Dynasty expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts:
Dynasty Metals & Mining Inc.
Murray Oliver
(604) 687-7810 or North American Toll Free: 1 888-735-3881
info@dynastymining.com
www.dynastymining.com
Brisco Capital Partners Corp.
Scott Koyich
(403) 262-9888
Scott@briscocapital.com
