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Peru has helped Dynacor allocate its capacity toward higher grade, more profitable ore for production. The companys highly efficient milling facilities have provided higher recovery rates than its competitors and that has afforded Dynacor a competitive advantage in attracting higher grade ores. So a very important part of Dynacors success is its integration into Peruvian society.
With margins remaining stable and throughput increasing, profit margins have been rising as illustrated by the chart on the left. But not only have operating profits grown, more importantly from my perspective as a shareholder, earnings per share have been on the rise as the chart to your left illustrates. While operating performance is well documented, management has insisted in growing the company organically such that it does not dilute shareholders interest. For eight consecutive quarters, Dynacor has generated rising profits; this during a time in what is coined as the worst junior resource bear market in history. Earnings per share for Dynacor totaled $0.22 in 2012 compared to $0.09 in 2011. And it is off to a good start in 2013 with first quarter profits of $0.08 per share. Almost any metric you care to use whether earnings per share, cash flow per share, book value per share or net worth to share have been on a steady rise. The only metric that has not been on a steady rise, in large part because of the pressure the entire gold
TAYLOR HARD MONEY ADVISORS, INC. PO Box 780555, Maspeth, NY 11378 (718) 457-1426 Copyright @ 2012 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED May 17, 2013
share market has faced over the past few years, is the companys share price. In March 31, 2011, Dynacor reported $0.10 cash flow per share from its 2010 year-end financials. In Q1-2011, the junior resource market was considered bullish and at that time, the stock price was trading at a $1.02 to $2.13 a share, or Price/Cash Flow (P/CF) up to 21. Today the junior resource market is in the grips of a 26month long bear. Currently Dynacor is trading at P/CF of 3. Dynacor is on the way, via its oreprocessing division, to almost triple its capacity to 600 tonnes per day from 220 tonnes per day. Cash flow per share will accelerate irrespective of a bear market or a bull market. If we get more normal multiples it is not unreasonable to think we could enjoy a ride upward towards $10 if the company continues to under promise and over perform. I have not even mentioned of course that the company has its Tumipampa skarn target that has the potential to host a major gold-copper deposit. Unlike most other junior companies, Dynacor is able to fund exploration of that project without diluting shareholders interest. And one more positive that needs to be mentioned is that Jean Martineau, the companys president, tends to under promise and over deliver. Thus I have grown more confident over time that management will do what it says it will do. There is always the possibility that some unanticipated event could break that streak of outperforming projections. But history is on this management teams side. With the company selling at a mere 3 times cash flow now, and with growth of upward to 3 times current levels of production, I think you can see why this is my number one pick for the time being in my own IRA.
J Taylors Gold, Energy & Tech Stocks (JTGETS), is published monthly as a copyright publication of Taylor Hard Money Advisors, Inc. (THMA), Tel.: (718) 457-1426. Website: www.miningstocks.com. THMA provides investment ideas solely on a paid subscription basis. Companies are selected for presentation in JTGTS strictly on their merits as perceived by THMA. No fee is charged to the company for inclusion. The currency used in this publication is the U.S. dollar unless otherwise noted. The material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. The information contained herein is based on sources, which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available information. Any opinions expressed are subject to change without notice. The editor, his family and associates and THMA are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the company mentioned above. Under copyright law, and upon their request companies mentioned in JTGETS, from time to time pay THMA a fee of $500 per page for the right to reprint articles that are otherwise restricted solely for the benefit of paid subscribers to JTGETS.
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TAYLOR HARD MONEY ADVISORS, INC. PO Box 780555, Maspeth, NY 11378 (718) 457-1426 Copyright @ 2012 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED