Disclaimer
kairoscap is NOT a financial advisory service, nor is its author qualified to offer such services.
All content on this website and publications, as well as all communications from the author, are for educational and entertainment purposes only and under no circumstances, express or implied, should be considered financial, legal, or any other type of advice. Each individual should carry out their own analysis and make their own investment decisions.
Introduction and business model
Dynacor Group is a Canadian company with operations in Peru, dedicated to the production of gold ingots and silver pellets through the processing of ore purchased from local artisanal producers. It trades in the canadian stock exchange under the ticker DNG.TO, at 3.06C$/s, for a total market cap of 119MC$. Their business model consists of purchasing raw ore from gold and silver producers and transforming it into value-added products. The company buys metals from artisanal producers in various regions of the country listed in public records and sells its processed products at international prices to a single customer (the Swiss refinery PX Precinox). However, there is no concentration risk as their product is fungible and could be sold to any other buyer. In addition to the processing plant, the company holds rights to several mining properties, which are still in the exploration phase, with the most significant project being Tumipampa.
Specifically, the company has an operational processing plant in southern Peru (expanded in 2021 and 2022), and plans to expand its operations within the country and internationally to regions where artisanal mining represents a significant and sufficient volume, such as West Africa.
As a summary snapshot of Dynacor, the following graph highlights the key points that characterize it as an investment option: a 20+ year operational track record in the region, a history of uninterrupted (and growing, as we will see later) profits, optionality in mining asset exploration and expansion into new geographies, combined with a strong balance sheet and an attractive shareholder return program.
Investment thesis
Let's review the operational, financial, and balance aspects of the company in order to perform an evaluation and reach a conclusion about the company. Specifically, we will analyze the following points, which form the basis of the investment thesis:
Operations
Cash generation
Balance sheet
Capital structure
Risks
Keep reading with a 7-day free trial
Subscribe to LWS Financial Research to keep reading this post and get 7 days of free access to the full post archives.