DNG Featured In This Writeup. Link to full article.
https://seekingalpha.com/article/2783235-top-10-gold-stocks-for-2015-part-ii
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Top 10 Gold Stocks For 2015, Part II
Dynacor Gold (OTC:DNGDF)
Dynacor has got to be the most misunderstood stock I've ever seen. It may look like just another junior gold mining stock at first glance, but the company is far from it - Dynacor operates a profitable, low-risk gold ore processing division in Peru, where it has been in operation since 1996. In a nutshell, Dynacor buys high-grade ore from small scale miners in Peru, and processes this ore at its mill. Currently, Dynacor brings in more than $10 million a year in cash flow from this business.
Dynacor is a non-dilutive junior gold stock, which means it doesn't have to issue equity to fund exploration or operations - that's why Dynacor has just 36.3 million shares outstanding.
Currently, Dynacor has a market cap of $49.7 million, but has over $21 million in working capital, of which $14 million in cash, and zero debt, so the company's enterprise value is $36.6 million.
But, the company is profitable, despite the constant weakness in gold. For the last quarter, Dynacor recorded sales of $24 million, EBITDA of $3.4 million and net income of $1.8 million, or $.05 per share. So with full-year EBITDA in the range of $13-$15 million, Dynacor is trading at just 2-3 times 2014 EBITDA. And with full year earnings per share of $.20, Dynacor trades at a very low P/E of 6.8.
This cheap valuation has prompted management to wisely initiate a share buyback program. The company can buy back up to 1.82 million of its own shares, reducing the total share count to 34.7 million shares.
And I haven't even mentioned the company's high-grade Tumipampa project in Peru, which is located in the heart of a mining region where $8 billion has been spent on development. Exploration results at Tumipampa has been outstanding thus far, with Dynacor striking 4.85 metres of 36.48 g/t gold in one drill in 2013, and 111.5 g/t gold and 1.13% copper in another drill. An exploration budget has been set for 2015, and if Dynacor can keep striking results like this, shareholders should be very pleased.
The market continues to ignore Dynacor, but investors shouldn't, as I feel the stock has huge long-term upside.