Due to robust third-quarter earnings results, Montreal, Canada-based Dynacor Group Inc.'s (DNG:TSX; D.N.G.D.F.:OTCMKTS) board of directors has recently approved a 16% increase in its monthly dividend, increasing the monthly dividend to 1.166667 Canadian cents, and increasing the annual dividend to CA$0.14 from CA$0.12 per share. The increase will take effect in January 2024.
This is the first time the company raised its dividends to shareholders in five years. The decision to increase was due to its strong third-quarter financials, with net income jumping by 212.5% and sales improving by 37.8%.
Dynacor also reported record gold production, north of 34,000 gold equivalent ounces. The company said it has robust cash from operating activities, which gave it the flexibility to give back value to shareholders.
The company said it is committed to rewarding shareholders through consistent increases in dividends and stock buybacks as the company continues its growth.
Dynacor is a gold producer involved in artisanal and small-scale mining through the Tumipampa property in the Apurimac region in Peru. The company also owns copper-silver exploration prospects in the province of Lucanas, Ayacucho region in the south of Peru.
The Catalyst: Four-Year Growth Strategy
Dynacor, which is listed on the Toronto Stock Exchange, reported in its September investor presentation that it aims to grow its sales to CA$550 million in four years' time. This plan involves increasing the company's ore processing plants and capacities from one to four.
Dynacor currently has a Veta Dorada plant in south Peru that processes 300 tonnes of gold per day or 102,000 tonnes yearly. By adding more processing lines and ball mills, the plant can expand production up to 600 tonnes per day or 204,000 tonnes per year.
Through the four-year plan, the company expects around CA$225 million in sales from the Veta Dorada plant.
Upcoming plants include the Veta Norte crushing station in the north of Peru, which is currently under construction, a pilot plant in West Africa, to be operational by the end of 2023 to 2024, and an acquired processing plant in South America.
Investors Flee To Gold Amid Weak Dollar
Technical analyst Gary Wagner of Kitco recently said gold steadily moves up in price due to the continued decline of the dollar. This meant that investors were opting to put their cash on gold. As of writing, gold is trading at US$2,090 levels.
Wagner attributed the continued drop in the U.S. dollar to the hawkish comments by voting members of the U.S. Federal Reserve.
"Inflation rates are moving along pretty much as I thought . . . I am increasingly confident that policy is currently well-positioned to slow the economy and get inflation back to 2%," Christopher Waller, a voting member of the Fed and a board Governor, said, as quoted by Wagner.
If inflation continues to decline "for several months," the Fed could start lowering inflation rates by then, the Fed member was quoted.
Why Dynacor? Strong Balance Sheet and Financials.
Jefferson Research tagged Dynacor's shares as "Buy" due to the strong quality of its balance sheet, earnings, cash flow, operating efficiency, and valuation.
Streetwise Ownership Overview*
Dynacor Group Inc. (DNG:TSX;DNGDF:OTCMKTS)
"Even though the balance sheet rating improved during the quarter on strengthening receivable and inventory positions, this was offset by weakness in the operating efficiency rating due to return concerns. Combined, the changes were insufficient to lower the overall rating from a Buy," Jefferson Research stated in its note.
PriceTarget Research, in its Intelligence Monitor, listed Dynacor Group as one of the leaders among gold miners and producers, forecasting that its stock price can have the potential to hit a target of jumping to CA$7 per share from the current price ranging from CA$2 to CA$3 per stock.
Ownership and Share Structure
According to Reuters, management and insiders own 8.68% of Dynacor's stock.
Director Philippe Chave has 4.05%, with 1.55 million shares. President, CEO, and Director Jean Martineau has 2.59%, with 0.99 million.
9.48% is with institutional investors. Red Oak Partners LLC has 7.59%, with 2.91 million shares, and Advisory Invest GmbH has 1.18%, with 0.45 million.
The rest is in retail.
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