On March 27, 2025, Atrium Research analysts Ben Pirie and Nicholas Cortellucci maintained a Buy rating and CA$7.50 target price on Dynacor Group Inc. (DNG:TSX; DNGDF:OTCMKTS), citing the company's consistent long-term growth trajectory and its positioning for accelerated expansion despite mixed Q4 2024 results.
Dynacor reported Q4 2024 financial results that included revenue of US$73.1 million (+11% year-over-year), exceeding analyst expectations of US$60.0 million due to higher gold prices, despite lower production volumes. Operating cash flow before working capital was US$2.8 million (4% of revenue), below the analyst estimate of US$4.3 million. The weaker-than-expected performance was attributed to annual maintenance at the company's facility and lower grades of processed ore.
For the full year 2024, Dynacor reported sales of US$284.4 million (+14% year-over-year), exceeding both analyst estimates of US$271.3 million and management's guidance of US$265-285 million. Production for 2024 totaled 117.6 thousand ounces of gold equivalent (-10% year-over-year) on 175.9 thousand tonnes of processed ore (+3% year-over-year). Operating cash flow for the year was US$21.0 million (7% of revenue), surpassing management's guidance of US$15-18 million but falling short of analyst expectations of US$22.4 million.
The company ended 2024 with US$25.8 million in cash and equivalents and US$1.1 million in debt, not including its recent CA$31.6 million equity raise. This strong financial position supports Dynacor's expansion plans in Africa, including the construction of a 50,000 tonnes per day pilot mill in Senegal and continued planning in Côte d'Ivoire and Ghana.
Management's 2025 guidance projects production of 120-130 thousand ounces (+6% at the midpoint), revenue of US$345-375 million (+27% at the midpoint), assuming gold prices of US$2,800-3,000 per ounce, and net income of US$14-17 million. The analysts expect more significant growth in 2026, forecasting gold production of 153 thousand ounces, representing 24% growth over 2025 estimates.
Dynacor currently trades at 3.8x/2.5x 2025E/2026E EBITDA compared to Canadian industrials at 9.6x/8.7x and mining service firms at 3.9x/3.6x, despite posting one of the best sales and EBITDA compound annual growth rates in its peer group. The CA$7.50 target price is based on 9x 2025E operating cash flow and represents a 48% potential return from the share price at the time of the report of CA$5.08, plus a 2.8% dividend yield.
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Disclosures for Atrium Research, Dynacor Group, March 27, 2025
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