DYNR.OQXDynaresource, INC

10-Q: DynaResource Announces Transition to Production Stage with Initial Mineral Reserve Estimate at San Jose de Gracia Mine

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DynaResource, Inc. reports its Q1 2025 financial results and announces its transition to a production stage issuer following the declaration of its initial mineral reserve estimate at the San Jose de Gracia (SJG) mine.

Better than expectedThe company's net income of $601,376 in Q1 2025 is a significant improvement from the net loss of $4,408,371 in Q1 2024.The company's revenue increased to $13,696,401 in Q1 2025 from $9,428,856 in Q1 2024.The company's transition to a production stage issuer is a positive development.

Summary

  • DynaResource, Inc. has transitioned to a production stage issuer following the declaration of its initial mineral reserve estimate at the San Jose de Gracia (SJG) mine.
  • The company reported revenue of $13.696 million for the three months ended March 31, 2025, compared to $9.429 million for the same period in 2024.
  • Net income for Q1 2025 was $601,376, a significant improvement from the net loss of $4.408 million in Q1 2024.
  • The company mined 64,032 tons of ore in Q1 2025, compared to 56,931 tons in Q1 2024.
  • The mill throughput was 67,374 tons in Q1 2025, compared to 61,601 tons in Q1 2024.
  • Gold ounces produced were 5,781 in Q1 2025, compared to 6,994 in Q1 2024.
  • The company's S-K 1300 Technical Report Summary (TRS) outlines a high-grade Proven and Probable Mineral Reserve of 250,000 gold ozs for the San Jose de Gracia mine.
  • The after-tax NPV of the Project is estimated at $84.4 M ($110.0 M pre-tax) under baseline scenarios of 5% discount rate and $2,500/oz Au.
  • An Operating Cash Cost of $1,327 (US$/oz Au Eq) and an All-in Sustaining Cost of $1,720 (US$/oz Au Eq) are estimated.
  • The company expects to increase average daily throughput to approximately 800 tons in 2025, with installed capacity to support up to approximately 1,000 tons per day.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for DynaResource, driven by the transition to a production stage, increased revenue, and a return to profitability. However, some concerns remain regarding working capital and gold recoveries, preventing a higher sentiment score.

Positives

  • The transition to a production stage issuer is a significant milestone for the company.
  • Increased revenue and a return to profitability in Q1 2025 demonstrate improved operational performance.
  • The initial mineral reserve estimate provides a solid foundation for future production and growth.
  • The company is actively working to optimize its operations and increase throughput.
  • The company is actively exploring near-mine extensions as well as geological studies and reinterpretations.
  • The company has identified opportunities to develop San Pablo, San Pablo Sur, La Mochomera, and Tres Amigos exploration potential.

Negatives

  • Gold ounces produced were 5,781 in Q1 2025, compared to 6,994 in Q1 2024.
  • Gold metal recoveries for the quarter averaged 74%, slightly lower than the 75% achieved in Q4 2024.
  • The average gold feed grade for the quarter was 3.63 g/t compared to 4.12 g/t in Q4 2024.
  • As of March 31, 2025, the Company had negative working capital of $18,663,754.

Risks

  • Fluctuations in commodity prices, particularly gold and silver, could impact revenue and profitability.
  • The company's ability to retain or engage qualified employees or contractors is crucial for continued operations.
  • Unexpected difficulties with milling and extraction could negatively affect production.
  • The company may face challenges in timing shipments of concentrates.
  • The company may not have sufficient capital to operate its SJG mine or facilitate further exploration.
  • Government orders may require temporary suspension of operations or affect suppliers.
  • The company's ability to raise additional financing necessary to conduct our business, make payments or refinance our debt.

Future Outlook

The company anticipates increasing daily processing throughput to an average of 800 tons per 24-hour operating day in 2025 and expects a steady increased rate of production for the remainder of the year to meet guidance. The company expects that a combination of higher-grade feed material, increased processing throughput, and higher gold prices will produce a significant increase in revenue in 2025.

Management Comments

  • Management believes that the SJG mine is well-positioned for the remainder of 2025, with increased grade forecasted as underground development drives are well ahead of schedule.

Industry Context

The announcement reflects a positive step for DynaResource as it transitions from an exploration-stage company to a production-stage company, joining the ranks of other gold producers. The company's focus on optimizing operations and expanding its resource base aligns with industry trends aimed at improving efficiency and increasing shareholder value.

Comparison to Industry Standards

  • The reported operating cash cost of $1,327/oz AuEq and all-in sustaining cost of $1,720/oz AuEq are within the range of other small to mid-tier gold producers.
  • Companies like Calibre Mining and Americas Gold and Silver report similar cost profiles for their Latin American operations.
  • The after-tax NPV of $84.4M is dependent on the gold price assumption of $2,500/oz, which is conservative compared to current spot prices.
  • Other projects with similar reserve sizes and grades, such as those held by companies like Orla Mining, have demonstrated higher valuations in the current market environment.

Corporate Governance

Change TypeDescriptionEffective DateImpact Assessment
Amendment to BylawsThe Board of Directors of the Company and the Series C and Series D Preferred Stockholders approved and adopted the Second Amendment to the Amended and Restated Bylaws of the Company (the Second Amendment), to restate Article III, Section 3.02 thereof in its entirety.May 20, 2025The effect of the Second Amendment is to alter the permitted composition of the Board of Directors of the Company, consistent with both (i) the July 17, 2023 Certificate of Amendment filed with the Secretary of State of the State of Delaware (the Certificate of Amendment) and (ii) the current composition of the Board of Directors.

Legal Proceedings

  • There were no material developments during the period covered by this Quarterly Report on Form 10-Q in the legal proceedings previously publicly disclosed by the Company.

Related Party Transactions

  • During the three months ended March 31, 2025 and 2024, the Company paid or accrued $ 90,000 and $ 87,500 in management fees to directors.
  • As of March 31, 2025 and December 31, 2024, amounts due to related parties and included in accrued liabilities totaled $377,500 and $412,500.

Stakeholder Impact

  • Shareholders: The transition to a production stage and improved financial performance are positive for shareholders.
  • Employees: Continued operations and potential expansion provide job security and opportunities.
  • Customers: Consistent supply of gold concentrate is important for customer relationships.
  • Suppliers: Ongoing operations ensure continued business for suppliers.
  • Creditors: Improved financial performance enhances the company's ability to meet its obligations.

Next Steps

  • The company plans to continue its exploration drilling program from underground and commence drilling from surface in the second half of 2025.
  • The company expects to start near-mine extension drilling in Q3 2025 and expand exploration to surrounding areas by year-end.
  • The capital works program to add a primary gravity gold circuit to the processing plant remains on schedule for completion and commissioning in early Q3 2025.
  • The company will prioritize exploration of high-grade underground targets that can be readily incorporated into the mine plan, as well continue the regional program to better understand the broader potential of the SJG land package.
  • The Company has also begun evaluating a potential location for a third tailings storage facility at the SJG mine.

Key Dates

DateDescription
September 28, 1937DynaResource, Inc. was organized as West Coast Mines, Inc.
1998The Company re-domiciled to Delaware and changed its name to DynaResource, Inc.
January 6, 201420 -year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracia was dated January 6, 2014 and continues through January 2033.
June 2018The Company entered into financing agreements for unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2017 and the period ended June 30, 2018.
February 2019The Company entered into a financing agreement for unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2018.
June 2019The Company ceased making monthly payments on the Francisco Arturo concession financing notes.
October 2019The Company entered into a financing agreement for unpaid mining concession taxes related to its core mining concessions.
February 4, 2021The Company entered into an Advance Credit Line Facility and Purchase Agreement (the ACL), with a commercial buyer.
October 7, 2021The Company paid $ 2,500,000 to repurchase one note.
October 18, 2021The Company issued 760,000 shares of Series D Preferred Stock.
February 2023The Company entered into a 52-month lease extension that included additional office space.
August 1, 2023The expansion was completed and the Company moved into the new space effective August 1, 2023.
August 2, 2023The ACL was extended through December 2026 in an Amendment Agreement (the Amendment).
December 1, 2023The Company exercised its option under the ACL to convert the outstanding balance of $9,750,000 into a one-year note payable (the RCL) bearing interest at 3M SOFR + 7.5%.
December 2023The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
February 16, 2024Mr. Quinton Hennigh was awarded options to purchase up to 400,000 shares of Common Stock at an exercise price of $5.00 per share.
March 2024FASB issued ASU 2024-03, which requires all public entities to disclose disaggregated expense information for certain natural expense categories.
April 2024The Company purchased Minera de Alica S.A. de C.V., (DynaAlica) a Mexican corporation with no assets, liabilities or activity.
May 2024An additional target zone, La Mochomera, was opened, which is expected to yield higher-grade material at depth.
June 3, 2024Mr. Rohan Hazelton was awarded options to purchase up to 750,000 shares of Common Stock at an exercise price of $1.75 per share.
June 20, 2024The Company amended the terms of the RCL. Under the amendment, the Company could receive up to an additional $4,000,000 under a temporary advance credit line (the TACL) at the same interest rate, with the TACL maturing on November 30, 2024.
June 27, 2024The Company issued 1,552,795 shares of Series E Preferred Stock for cash consideration of $ 2,500,000
June 28, 2024The Company issued 287,287 shares of Common Stock, valued at $ 462,532, to senior executives as compensation.
July 22, 2024Mr. Alonso Sotomayor was appointed Chief Financial Officer of the Company.
September 2024The Company entered into a commodity pricing arrangement through its major purchaser.
October 18, 2024The Company issued 5,769,231 shares of Common Stock for cash consideration of $ 6,000,000
November 2024The Company repaid the TACL in full and renewed the RCL for an additional one-year term.
January 1, 2025Effective January 1, 2025, following the completion of a Mineral Reserve estimate in accordance with S-K 1300, the Company transitioned from an Exploration Stage issuer to a Production Stage issuer.
March 24, 2025Mineral Reserves are reported using the 2014 CIM Definition Standards and 2019 Best Practices Guidelines and have an effective date of March 24, 2025.
March 31, 2025End of the reporting period for the Q1 2025 financial results.
April 2025The Company drew an additional $ 1.5 million under the Revolving Credit Line with Ocean Partners.
May 2025The Company drew an additional $1.15 million under the Revolving Credit Line with Ocean Partners.
May 20, 2025The Company filed a Technical Report Summary (TRS) for the SJG mine, which was prepared in accordance with S-K 1300.
May 20, 2025Effective May 20, 2025, the Board of Directors of the Company and the Series C and Series D Preferred Stockholders approved and adopted the Second Amendment to the Amended and Restated Bylaws of the Company.

Keywords

DynaResource, San Jose de Gracia, Gold, Mining, Mineral Reserves, Production, Exploration, S-K 1300, Financial Results

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.