J Taylors

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D o w J o n e s /G o ld A n n u a l R e tu rn s

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Energy & Tech Stocks

Februa

Weekly Hotline Message

(Now in our 34th Year)

October 9, 2015

Update

Dynacor Gold Mines

Business: Gold production from ore purchasing
program in Peru. Also, exploration and development of
its own gold deposit.
Traded TSX:
DNG
USOTC:
DNGDF
Initial Recommendation 8/13/10: $0.32
Shares Outstanding:
36.5 Million
Fully Diluted:
38.6 Million
Price 10/9/15:
US$1.41
Market Cap:
US$ 51.5 Million
2014 EPS:
C$0.17
2015 EPS (6 months):
C$0.06
Gold Resource (historical non 43-101) 858,000 oz.
Progress Rating:
A1
Telephone:
514-393-9000
Web Site:
www.dynacorgold.com

Dynacor samples 35m of 27 g/t Au, 2.19% Cu at Tumipampa

Dynacor is one of my two top picks in the junior mining sector. The other is Novo Resources. There are two reasons
why both of these firms are my favorites. First, from all I can see, the management of both firms are highly ethical
and they are seeking to build their businesses for long-term shareholders rather than the get-quick-rich brokers who
line their own pockets with smooth pump-and-dump strategies that result in average folks seeing their shareholdings
diluted to oblivion. And so both Dynacor and Novo Resources are seeking to fund exploration and growth
organically rather than issuing Toronto or Vancouver brokers huge positions of massively underpriced stock with
massive dilutive warrants and the highly tempting multimillion secondary offering that brokers lick their chops
over.
The second reason I like both of these companies is because I believe both have enormous long-term world-class
potential. Let me talk first about Dynacor Gold Mines, not only because the headline noted above came out just this
past week, but also because, unlike Novo Resources, Dynacor is further advanced toward its goal. It already has
several years of profitable production under its belt, while Novo is moving toward a modest startup level of
production in 2016. I believe the odds favor Novos success in generating cash flows from which it can fund
exciting exploration projects but the proof of profitable production remains in the pudding for now. Dynacor has
been producing strong cash flows over several years of operation already and is now funding exploration work on
its own exciting Tumipampa Project in Peru.
I wrote a four-page report in my August 28 issue outlining why I have loved this stock so much and providing a
TAYLOR HARD MONEY ADVISORS, INC.

PO Box 780555, Maspeth, NY 11378

(718) 457-1426

Oct. 9, 2015

discussion regarding the enormous exploration potential at Tumipampa where Dynacor will soon be bolstering its
profits from production from there. I would suggest you go back and review what I wrote if you are not familiar
with that August 28 article.
While the companys profits are down a bit in 2015 because of less production from the small producer from whom
Dynacor buys its ore, it should be noted that Dynacors operating profit margins remain strong. If and when the gold
price begins to improve, we should see a dramatic rise in profit margins, not only as more production from these
mom-and-pop gold miners takes place, but as production from the companys own high-grade deposit at
Tumipampa should also boost margins and profits considerably over the next two or three years. Indeed, after a bit
more bulk sampling, management expects to send a 1,500-ton bulk sample of high-grade material from the Manto
Dorado Vein to its Huanca Mill.
And that brings me to the headline news displayed above. To put the grades into context of current metals prices,
the in-ground value of 27 g/t gold (0.88 oz/ton) and 2.19% copper is worth about $1,100 per ton with about $1,000
of that coming from gold and $100 from copper. While this 35-meter intersection is among the best announced to
date, as the schematic below illustrates, there have been numerous high grades intersected along the cross cut
intersected by Dynacor. Overall grades will likely be considerably lower than this grade. Based on the data that is
available, Im guessing average grades taken from the veins in this mine will likely be closer to ounce than the
0.88 oz. average over the sample intersection taken over Rise 215. But milling its own half-ounce-per-ton gold
material is expected to be much more profitable for Dynacor than for its bred and butter mill purchasing program.
With its ongoing operation, Dynacor does not need to spend huge amounts of money doing feasibility studies like

startup mining companies need to spend to satisfy funding sources. President Jean Martineau can start out with bulk
samples and then simply mine there, following the veins and hauling the material to its Huanca Mill to start with.
Then, as the new mill at Chala replaces the Huanca Mill, material will likely be processed there. But ultimately, as
sufficient resources and reserves are outlined on Tumipampa, management expects to build its own 600-ton-per-day
(or larger) mill at Tumipampa, thus eliminating transportation costs that, even with high-grade ore would not only
be a considerable direct cost, but also an opportunity cost since the goal of the company is to continue its ore
purchasing program even as it produces from its own Tumipampa Project.
TAYLOR HARD MONEY ADVISORS, INC.
PO Box 780555, Maspeth, NY 11378 (718) 457-1426
Copyright @ 2015 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED

Oct. 9, 2015

The Truly Big Potential

As I noted in my August 28 comments on Dynacor, the Tumipampa Project has three different types of
mineralization. There is the vein-hosted high-grade free-milling gold such as contained in the Manto Dorado
Vein and intersecting vein structures, and there is disseminated gold mineralization that may or may not be
mined by Dynacor. Last but certainly not least, I have been most excited about the skarn mineralization at
Tumipampa because the skarn has massive, world-class potential. Dynacor is not expected to produce from
any such skarn deposit should a viable deposit exist, because the financial and technical resources required to
do so are way beyond the scope of a junior miner like Dynacor. But if and when such a deposit is outlined,
Dynacor wants to be in a position to gain significant value from it for its shareholders.
Indeed, surrounding Tumipampa are several other world-class copper-gold and gold-copper deposits being
mined by some of the largest mining companies in the world. It is my understanding that Dynacor has been
approached by more than one of these world-class players in search of a possible exploration arrangement with
Dynacor on its Tumipampa Project. So far, Jean Martineau has resisted signing any joint venture agreement
with a major because he believes with his cash flow he can prudently spend a bit more on exploration to
leverage more value for shareholders by revealing more of the projects potential. Time will tell if he is right
about that. But with cash flow, a relatively small amount of capital can be spent in an attempt to do so without
injuring shareholders. Were Dynacor a one-trick pony with only a skarn project, in these markets it would
likely have disappeared from the scene. But being able to hold on to that project provides it with the potential
for a windfall for shareholders if/when a major works with it to outline a major gold-copper discovery in the
future.
The Bottom Line
The way I see this company is that it has enormous upside potential. Many exploration companies also have
enormous upside potential but they do not have cash flow to fund exploration. So what they do is blow out the
share structure at the cost and consternation of early, longtime, honest shareholders. No doubt that is what the
recent predatory hedge fund company wanted to do when they made a run at Dynacor. Existing shareholders
overwhelmingly told those get-rich-quick raiders to take a hike. That company says it will not give up and that
it expects to pick up more shares on weakness.
Weakness is certainly displayed in the companys stock chart. While the stock is even now some 300+% above
my recommendation price in 2010, it has a lot more going for it now than it had then. And whats more, with
only 36.5 million shares outstanding, those of you who bought it then stand to reap huge rewards longer term,
thanks to the conservative and honest approach to business engaged in by Jean Martineau. In my view,
management is running Dynacor in a highly ethical manner, without debt and destruction of longer-term
shareholders. I would suggest you may want to consider picking up some shares at these current share price
levels. While I think it is true there could be some other producers that will see their share prices rise more
dramatically once the gold price heads back north, for longer-term investors, I think Dynacor provides the best
risk/reward prospect on my entire list.
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TAYLOR HARD MONEY ADVISORS, INC.
PO Box 780555, Maspeth, NY 11378 (718) 457-1426
Copyright @ 2015 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED

Oct. 9, 2015