TSX-listed artisanal ore processor Dynacor has recorded a second consecutive quarter of its Veta Dorada processing plant, Peru, operating above design capacity, processing its highest quarterly throughput on record of 48 300 t, or 531 t a day.

The company produced 31 907 gold-equivalent ounces in the second quarter, which is among the highest historical levels.

Dynacor posted its second-highest quarterly sales on record of $144-million in the quarter despite gold prices having declined by $700/oz on average throughout the period.

Earnings before interest, taxes, depreciation and amortisation amounted to $3.2-million, while net income came to $1.1-million. Dynacor has a cash gross operating margin of $206/oz sold.

In the same quarter last year, Dynacor produced 24 955 gold-equivalent-ounces, reported sales of $79-million and net income of $3.4-million.

On a year-to-date, or first half of the year basis, Dynacor produced 64 698 gold-equivalent ounces, reported sales of $298-million and net income of of $8.4-million.

CEO and president Daniel Misiano comments the second quarter results reflect strong execution and a transformative step forward in achieving the company's near-term expansion strategy.

"This third consecutive quarter of strong operational performance showcases the results of our optimisation projects and positions us strongly to achieve 2026 production guidance. Our operational strength translated into robust gold sales despite a double-digit dip in the gold market.

"The combination of gold’s sustained decline and our inventory build-up led to a longer inventory turnover, which impacted our financial performance in the quarter. We are unwinding inventory levels in the third quarter and expect margins to normalize in the second half of 2026," he states.

Dynacor is on track to meet its sales guidance for the full year at between $530-million and $580-million and net income of between $22-million and $26-million. Its production target for the year remains unchanged at bteween 125 000 and 135 000 gold-equivalent ounces.

The company anticipates that its total capital expenditure for the year will be at the lower end of its guidance around $32.5-million owing to the completion of certain planned investments only in 2027.

Meanwhile, the company continues with hot commissioning of its Galam pilot plant, in Senegal, which is near full completion. In Ecuador, Dynacor is undertaking rehabilitation of its Svetlana plant, which is about 40% complete and on track to process first ore during the fourth quarter.

TAX ISSUE

Dynacor's Peruvian subsidiary in June challenged tax assessments made by the Peruvian Tax Administration for the 2015 financial year at a hearing before the Peruvian Tax Court, which is expected to issue a decision on the matter soon.

The assessment mainly relates to the validity of ore purchased from certain suppliers which Dynacor considered legitimate transactions and therefore tax-deductible expenses.

The maximum amount of Dynacor's exposure for the 2015 financial year including additional penalties and interest is $8.7-million.

However, if the company disagrees with the Tax Court's decision, it can file an appeal before the Judicial Court but still has to pay the tax assessment, penalties and default interest before submitted an appeal - which routinely takes years.

The company further advises that tax assessments made by the Peruvian Tax Administration for the 2016, 2027 and 2019 financial years are also being challenged by Dynacor, with the 2015 financial year Tax Court decision likely to influence the other assessments as they involve similar matters.

The maximum amount that Dynacor is exposed to in respect of the other financial yearas is $16.1-million.