Dynacor Conference Call (Part 3 of 5)

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Two new 150 tpd ball mills at Veta Dorada 

Stakeholder: How long will the price war last?

Dynacor: We have been through these pricing situations many times before. We would expect this not to last long given our clear-cut advantages. If the price war occurs, it could possibly stretch out to a couple months.

Our expectations are that by the second quarter of operation at Veta Dorada any pricing and operational transfer matters will be behind us. Therefore production together with margins should noticeably increase in the second quarter of Chala’s operation.

Stakeholder: Is there a long learning curve in operating the new Veta Dorada mill?

Dynacor: No. The new mill is the exact same process as the old mill. In fact while waiting for our final permit, we are taking advantage of the time by working out any start up issues. We have already started the pre commissioning phase and will shortly release a series of videos displaying the process testing. We have had a team of operators over the last month checking everything over. Firstly, the mill runs without any rock. Secondly, this week we will check the operating process with rock and water. Upon receipt of the final operating permit, which we expect this summer, the new mill will have been thoroughly tested many times and fully operational. This will enable us to have a very smooth start up.

Stakeholder: Can we expect to see profit margins increase immediately?

Dynacor: Not quite immediate as the plan is to start initially running ore through at a rate of 200 and 225 tpd while closely monitoring everything before moving beyond to full capacity. Due to this start up process, we should not expect to see the new and higher profit margins until the end of the first quarter of Veta Dorada’s operation.

Stakeholder: What about silver sales and especially the drop in the last quarter?

Dynacor: Due to the addition of our new buyer from Europe, there was a delay in the silver transactions during the first quarter. Much of what was produced during the quarter was sold in April and therefore will be part of the second quarter sales. The lower silver sales in the first quarter also lowered our profit by a bit. Still, the silver we receive is a by-product meaning we do not have any control over the amount of silver production. It is an extra bonus that comes with each delivery. We purchase the ore for its gold content. However, when our production and net profits increase, silver will start to play a larger role in our bottom line.

Stakeholder: What are the next steps?
Stay tuned for part 4 of 5…

 

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