Over the last ten years, Dynacor Gold Mines Inc. (TSX: DNG) has generated an annual return of +32% compared to -38% coming from its peers trading in the S&P TSX Global Gold Index. Analysts covering Dynacor such as Ryan Irvine, president of Keystone Financial with a $3.10 BUY on the stock says, “While we tread very lightly in commodity-based businesses, the stock appears to offer good speculative value at present and offers a unique exposure to gold without the typical significant deposit specific risk seen with traditional junior gold producers.”
The company’s business model offers investors a proven and more consistent path to participate in the gold market. Dynacor’s core business is built on providing ore processing service to hundreds of miners which is a more stable and less risky business than operating a mine.
Miners in the country look to Dynacor as their fair, trustworthy and reliable provider as well as the leader in this specialized niche of the mining space. It poured its first gold bar in Peru more than twenty years ago. Dynacor mitigates the risks of mining given its resources come from a country rich with thousands of high-grade gold producers, hereby diversifying the risk of supply coming from a single mine source.
There is also no risk from potential nationalization, royalty increases or labor disruptions as the ore does not come from foreign mining companies, but rather solely from Peru’s small-scale miners. Over the years of cultivating relationships, building trust and growing its network, Dynacor has perfected the complex business of processing from various types of ore.
A short time ago, the company from its old mill location, Huanca was buying ore from 250 different miners. Step forward to today and the new plant at its new location, Chala and you will see the company has successfully grown its portfolio of miners by more than 60% in the last year to over 400 high-grade gold miners.
Looking ahead in 2018, Dynacor is in the enviable position of starting the year at a record level of throughput. In the first quarter of last year, the company averaged 200 TPD (tonnes per day) well below expected throughput levels for the first quarter, 2018. The company will generate more production than last year, with lower costs.