As at December 31, 2012, the Company had cash resources of $0.4 million and negative working capital (consisting of cash, receivables, prepaid and inventory less accounts payable and short term loans) of $2.7 million compared to cash resources of $6.2 million and a positive working capital balance of $6.4 million as at December 31, 2011.
The reduction in working capital for the year ended December 31, 2012 was primarily a result of decreased production of gold and silver during the period in which the Company could not access higher grade material as a result of the dewatering of the main declines (see earlier discussion) during the second half of 2012. To offset the decrease in cash inflows from reduced production the Company reduced its cash balance and extended acceptable payment terms with trade creditors, which resulted in no material effect on the supply of goods or operations.
Subsequent to December 31, 2012 and up to the date of this report, the Company's liquidity position has been positively impacted by the following:
-- the Company exported and sold approximately 5,000 ounces of gold and 16,000 ounces of silver with an aggregate approximate value of $8.5 million;-- the Company reached agreement whereby the Ecuadorian Government has agreed to allow the Company to defer the NSR royalty owed of approximately $0.4 million and the 2013 concession fee payments of approximately $1.2 million. The Company is paying these in six monthly installments which commenced in March 2013. The Company is grateful for the ongoing support of the government in reaching this agreement;-- the grade of material mined and production at the Zaruma Gold Project has increased (see "Mining" section earlier in this news release).
Small Mining Licenses
During the year ended December 31, 2012 the Company was granted small scale mining licenses for five concessions at its Zaruma Gold Project.
These five concessions are the focus of the Company's current mine development plans at Zaruma. Under the current Mining Law of Ecuador such licenses permit the Company to mine up to 300 tonnes per day from each concession at a royalty of 3%, payable to the Ecuador government, and no windfall tax on the extraction and sale of precious metals. Other corporate taxes are unaffected.
About Dynasty Metals & Mining
Dynasty Metals & Mining Inc. is a Canadian based mining company involved in the exploration and development of mineral properties in Ecuador.
The Company has the intermittent production at its developing Zaruma Gold Project, the advanced-stage Jerusalem Project, and a highly prospective exploration project, the Dynasty Copper-Gold Belt, which includes the advanced-stage Dynasty Goldfield.
For further information regarding the Company's Zaruma project readers should refer to the Company's Independent Technical Report entitled "Independent Preliminary Assessment - Zaruma Project - El Oro Province" dated August 21, 2006, available on SEDAR at www.sedar.com.
Luis Bravo, a member of AUSIMM (Australian Institute of Mining and Metallurgy) and a "qualified person" within the definition of that term in the National Instrument 43-101, has supervised the preparation of the technical information contained in this news release.
For further information please visit the Company's website at www.dynastymining.com.