Dynacor Group Inc. — Interim / Quarterly Report 2020

May 13, 2020

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Dynacor Gold Mines Inc.

Condensed Interim Consolidated Financial Statements

As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (in US dollars) (Unaudited)

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UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by, and are the responsibility of the Company's management.

The unaudited condensed interim consolidated financial statements of Dynacor Gold Mines Inc. as at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019, have not been reviewed by the Company’s external auditors.

Jean Martineau

Leonard Teoli

Jean Martineau President and Chief Executive Officer

Leonard Teoli, CPA, CA Vice President of finance and Chief Financial Officer

2

Dynacor Gold Mines Inc.

Condensed Interim Consolidated Statements of Financial Position (Unaudited) (Expressed in US dollars)

ASSETS CURRENT ASSETS Cash (Note 5) Accounts receivable (Note 6) Inventories (Note 7) Prepaid expenses and other assets NON-CURRENT ASSETS Property, plant and equipment (Note 8) Right-of-use assets (Note 12) Exploration and evaluation assets (Note 9) Deferred tax assets Other non-current assets (Note 7) TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables (Note 10) Bank loan (Note11) Current tax liabilities Current portion of lease liabilities (Note 12) NON-CURRENT LIABILITIES Asset retirement obligations (Note 13) Lease liabilities (Note 12) TOTAL LIABILITIES SHAREHOLDERS' EQUITY Share capital (Note 14 a)) Contributed surplus (Notes 14 b) and c)) Retained earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	As at March 31, 2020 $ 16,106,898 2,550,986 8,445,614 282,759 27,386,257 20,399,092 1,411,255 18,776,913 120,759 3,443,120 44,151,139 71,537,396 3,742,792 - 965,044 471,283 5,179,119 3,771,873 640,845 4,412,718 9,591,837 20,631,364 3,563,822 37,750,373 61,945,559 71,537,396	As at December 31, 2019 $
		6,743,221 4,728,742 18,301,085 179,719
		29,952,767
		20,958,711 1,560,674 18,738,182 159,979 3,443,120
		44,860,666
		74,813,433
		6,344,151 3,000,000 418,877 572,316
		10,335,344
		3,769,373 756,865
		4,526,238
		14,861,582
		20,631,364 3,545,284 35,775,203
		59,951,851
		74,813,433

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

Approved by the Board of Directors,

(s) Jean Martineau (s) Roger Demers FCPA,FCA,ASC Jean Martineau Roger Demers FCPA, FCA, ASC

3

Dynacor Gold Mines Inc.

Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited) For the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

Sales Cost of sales (Note 16) Gross operating margin General and administrative expenses (Note 16) Other project expenses Operating income Financial income (Note 16) Financial expenses (Note 16) Foreign exchange gain (loss) Income before income taxes Income taxes Net income and comprehensive income Weighted average number of outstanding common shares (Note 15) Basic Diluted Earnings per share (Note 15) Basic Diluted	For the three-month periods ended March 31, 2020 $ 2019 $ 30,869,043 22,918,730 (25,920,479) (20,129,263) 4,948,564 2,789,467 (1,090,152) (956,546) (128,086) - 3,730,326 1,832,921 42,743 17,294 (60,927) (57,648) (65,313) (11,133) 3,646,829 1,781,434 (1,261,560) (601,434) 2,385,269 1,180,000 38,787,256 39,373,928 39,156,536 39,724,625 $0.06 $0.03 $0.06 $0.03	For the three-month periods ended March 31, 2020 $ 2019 $ 30,869,043 22,918,730 (25,920,479) (20,129,263) 4,948,564 2,789,467 (1,090,152) (956,546) (128,086) - 3,730,326 1,832,921 42,743 17,294 (60,927) (57,648) (65,313) (11,133) 3,646,829 1,781,434 (1,261,560) (601,434) 2,385,269 1,180,000 38,787,256 39,373,928 39,156,536 39,724,625 $0.06 $0.03 $0.06 $0.03
		22,918,730 (20,129,263)
		2,789,467 (956,546) -
		1,832,921 17,294 (57,648) (11,133)
		1,781,434 (601,434)
		1,180,000
		39,373,928 39,724,625 $0.03 $0.03

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

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Dynacor Gold Mines Inc.

Condensed Interim Consolidated Statements of Changes in Equity (Unaudited) For the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

Balance, January 1, 2020 Net income and comprehensive income for the period Share-based compensation expense (Note 14 b)) Dividends (Note 14 d)) Transactions with owners Balance, March 31, 2020 Balance, January 1, 2019 Net income and comprehensive income for the period Share-based compensation expense (Note 14 b)) Share-based compensation capitalized to exploration and evaluation assets (Note 14 b)) Repurchase of common shares (Note 14 a) i)) Dividends (Note 14 d)) Transactions with owners Balance, March 31, 2019	Share Capital Contributed surplus Retained earnings Total equity $ $ $ $
	20,631,364 3,545,284 35,775,203 59,951,851 - - 2,385,269 2,385,269
	20,631,364 3,545,284 38,160,472 62,337,120 - 18,538 - 18,538 - - (410,099) (410,099)
	- 18,538 (410,099) (391,561)
	20,631,364 3,563,822 37,750,373 61,945,559
	Share Capital Contributed surplus Retained earnings Total equity $ $ $ $
	20,958,860 3,333,246 32,593,929 56,886,035 - - 1,180,000 1,180,000
	20,958,860 3,333,246 33,773,929 58,066,035 - 16,297 - 16,297 - 887 - 887 (166,452) - (245,689) (412,141) - - (293,430) (293,430)
	(166,452) 17,184 (539,119) (688,387)
	20,792,408 3,350,430 33,234,810 57,377,648

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

5

Condensed Interim Consolidated Statements of Cash Flows (Unaudited) For the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

Dynacor Gold Mines Inc.

Operating activities Net income Adjustments for: Provision for impairment of accounts receivable (Note 16) Depreciation (Note 16) Loss (gain) on disposal of property, plant and equipment and of right- of-use assets Deferred tax expense Interest expense on bank loan (Note 16) Accretion expense on asset retirement obligations (Note 13) Share-based compensation (Note 14 b)) Unrealized foreign exchange loss (gain) Changes in working capital items (Note 17) Net cash from operating activities Investing activities Proceeds from disposal of property, plant and equipment and right-of- use assets Acquisition of property, plant and equipment (Note 8) Additions to exploration and evaluation assets Net cash used in investing activities Financing activities Interest paid on bank loan (Note 16) Bank loan (Note 11) Repayment of lease liabilities and interests’ payments (Note 12) Repurchase of common shares (Note 14 a) i)) Dividends (Note 14 d)) Net cash (used in) from financing activities Change in cash during the period Effect of exchange rate fluctuation on cash Cash, beginning of period Cash, end of period Income taxes paid related to operating activities	For the three-month periods ended March 31, 2020 $ 2019 $ 2,385,269 1,180,000 70,369 39,669 639,826 644,773 (28,286) (2,404) 34,586 56,673 14,770 - 2,500 2,337 18,538 16,297 84,166 (18,174) 3,221,738 1,919,171 9,847,879 (472,484) 13,069,617 1,446,687 65,264 13,136 (6,933) (44,077) (28,387) (72,966) 29,944 (103,907) (14,770) - (3,000,000) - (188,230) (155,737) - (412,141) (447,993) (291,154) (3,650,993) (859,032) 9,448,568 483,748 (84,891) 14,933 6,743,221 13,928,980 16,106,898 14,427,661 656,783 546,885	For the three-month periods ended March 31, 2020 $ 2019 $ 2,385,269 1,180,000 70,369 39,669 639,826 644,773 (28,286) (2,404) 34,586 56,673 14,770 - 2,500 2,337 18,538 16,297 84,166 (18,174) 3,221,738 1,919,171 9,847,879 (472,484) 13,069,617 1,446,687 65,264 13,136 (6,933) (44,077) (28,387) (72,966) 29,944 (103,907) (14,770) - (3,000,000) - (188,230) (155,737) - (412,141) (447,993) (291,154) (3,650,993) (859,032) 9,448,568 483,748 (84,891) 14,933 6,743,221 13,928,980 16,106,898 14,427,661 656,783 546,885
		1,180,000 39,669 644,773 (2,404) 56,673 - 2,337 16,297 (18,174)
		1,919,171 (472,484)
		1,446,687
		13,136 (44,077) (72,966)
		(103,907)
		- - (155,737) (412,141) (291,154)
		(859,032)
		483,748 14,933 13,928,980
		14,427,661
		546,885

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

6

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

1. Statute of incorporation and nature of activities

Dynacor Gold Mines Inc. (“Dynacor”, the ultimate controlling company), an ore processing and exploration company active in Peru, incorporated under Part 1A of the Companies Act (Québec) and as of February 14, 2011, is governed under the Business Corporations Act (Québec). The Company’s principal place of business is 625 René-Lévesque Blvd West, suite 1200, Montréal, Québec, Canada.

Dynacor, including its subsidiary (collectively, the “Company”), produces gold and silver from ore purchased from local Peruvian miners which is processed at the Company’s wholly-owned processing plant. The Corporation derives all its sales from Peru. The Company does not have any mining producing properties.

The Company also hold interests in mineral properties in Peru that are currently in the exploration stage. The business of exploration, development and mining of minerals involves a high degree of risk and there can be no assurance that current exploration, development and mining plans will result in profitable mining operations. The recoverability of the carrying value of assets and the Company's continued existence is dependent upon the continuation of ore processing operations.

In December 2019, the Peruvian authorities retained our gold shipment of 2,650 ounces. Following this export retention, the company temporarily stopped exporting gold. However, it continued purchasing and processing ore, therefore increasing its ore and gold in process inventory at the end of 2019. In January 2020, exports and sales resumed and year-end accumulated gold in process inventory was poured to gold and sold. At the date of approval of these financial statements, this shipment of finished goods is still being retained by the Peruvian authorities.

In 2020, the COVID-19 became a worldwide crisis. Following the state of emergency decree in Peru, which was declared on March 16, 2020, the Company temporarily stopped its ore purchase and process operations.

The duration and impacts of this crisis are still unknown, therefore it could have a prospective material impact on the Company’s activities, cash flow and liquidities. Following these events, the Company has taken and will continue to take action to minimize the impact. However, it is impossible to precisely determine the prospective financial implications of these events.

At the date of this report the Company has a solid financial situation. The Company continues to monitor the overall situation and apply its liquidity control plan. The Company is ready to restart its operations in a safely environment for its employees and suppliers as soon as official government measures will permit.

2. Statement of compliance with IFRS, basis of measurement and basis of consolidation

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting and does not include all the information required for full annual consolidated financial statements. Accordingly, certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board have been omitted or condensed. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of the Corporation since the last annual consolidated financial statements as at and for the year ended December 31, 2019.

These condensed interim consolidated financial statements are presented in United States dollars, which is the Company’s functional currency. The functional currency has remained unchanged during the reporting periods.

These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors (the “Board”) on May 12, 2020.

Basis of measurement

The condensed interim consolidated financial statements have been prepared on a historical cost basis.

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Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

2. Statement of compliance with IFRS, basis of measurement and basis of consolidation (continued)

Basis of consolidation

The condensed interim consolidated financial statements include the accounts of Dynacor and its subsidiary. Dynacor controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All intercompany balances and transactions are eliminated on consolidation. Dynacor and its subsidiary have a year end of December 31.

These condensed interim consolidated financial statements include the financial statements of Dynacor and its subsidiary listed below:

Minera Veta Dorada SAC	Country of incorporation Peru	Equity Interest 100%

3. Significant accounting policies

The policies applied in these condensed interim consolidated financial statements are the same accounting policies and methods as those in our most recent audited annual financial statements.

4. Judgments, estimates and assumptions

The preparation of consolidated financial statements requires the Company’s management to make judgments, estimates and assumptions on reported amounts of assets and liabilities, and reported amounts of revenues and expenses. The estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may be substantially different.

The critical accounting, judgements, estimates and assumptions are the same as those in our most recent audited annual financial statements except as noted below.

Impairment of property, plant and equipment and right-of-use assets

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations in many cases. In assessing impairment, management estimates the recoverable amount of each cash-generating asset based on discounted future cash flows. As of March 31, 2020, management assessed that the current COVID-19 crisis was an impairment indicator with regards to its property, plant and equipment and right-of-use assets. However, there was no impairment recorded in the current reporting period following an impairment test.

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Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

5. Cash

Cash (equivalent in USD) United States dollars(1) Peruvian Nuevo soles Canadian dollars	As at March 31, 2020 $ 14,471,890 585,511 1,049,497 16,106,898	As at December 31, 2019 $
		6,120,224 63,485 559,512
		6,743,221

• (1) As at March 31, 2020 and December 31, 2019, $187,887 has been given as collateral against stand-by letters of credit totaling $187,887.

6. Accounts receivable

Sales tax receivable Trade and other receivables Advances to suppliers	As at March 31, 2020 $ 2,204,058 26,617 320,311 2,550,986	As at December 31, 2019 $
		4,020,838 77,761 630,143
		4,728,742

The Company’s gold sales were with one sole customer at the market prices in effect at the time of delivery. Economic dependence is mitigated as the Company can sell its gold to numerous clients worldwide.

7. Inventories

Ore Gold in process Finished goods-Gold dore bars(1) Supplies Less: long term portion – other assets	As at March 31, 2020 $ 1,767,107 3,573,994 6,291,277 256,356 11,888,734 (3,443,120) 8,445,614	As at December 31, 2019 $
		4,546,978 13,484,797 3,443,120 269,310
		21,744,205 (3,443,120)
		18,301,085

No inventories are carried at fair value less cost to sell at March 31, 2020 and December 31, 2019.

• (Note 1). We cannot predict at this time when this shipment will be released by the authorities and therefore, we have classified then under other non-current assets.

9

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

8. Property, plant and equipment

Cost Balance, January 1, 2020 Additions Disposals Balance, March 31, 2020 Accumulated Depreciation Balance, January 1, 2020 Depreciation Depreciation capitalized as exploration and evaluation assets Disposals Balance, March 31, 2020 Net book value, March 31, 2020 Cost Balance, January 1, 2019 Reclassification to right-of-use assets Additions Reclassification from right-of-use assets Disposals Balance, December 31, 2019 Accumulated Depreciation Balance, January 1, 2019 Reclassification to right-of-use assets Depreciation Depreciation capitalized as exploration and evaluation assets Reclassification from right-of-use assets Disposals Balance, December 31, 2019 Net book value, December 31, 2019	Land $ Buildings $ Plant & equipment $ Rolling stock $ Total $
	647,334 4,745,443 21,340,063 2,156,018 28,888,858 - - 6,933 - 6,933 - - (184,211) (76,396) (260,607)
	647,334 4,745,443 21,162,785 2,079,622 28,635,184
	- 824,905 5,757,589 1,347,653 7,930,147 - 65,766 398,524 78,241 542,531 - 744 5,475 - 6,219 - - (171,593) (71,212) (242,805)
	- 891,415 5,989,995 1,354,682 8,236,092
	647,334 3,854,028 15,172,790 724,940 20,399,092
	Land $ Buildings $ Plant & equipment $ Rolling stock $ Total $
	367,138 4,697,378 21,093,439 2,516,024 28,673,979 - - - (1,240,824) (1,240,824) 280,196 48,065 338,284 621,090 1,287,635 - - - 377,085 377,085 - - (91,660) (117,357) (209,017)
	647,334 4,745,443 21,340,063 2,156,018 28,888,858
	- 564,841 4,177,669 1,319,260 6,061,770 - - - (321,790) (321,790) - 260,064 1,642,215 217,107 2,119,386 - - 28,493 3,304 31,797 - - - 228,563 228,563 - - (90,788) (98,791) (189,579)
	- 824,905 5,757,589 1,347,653 7,930,147
	647,334 3,920,538 15,582,474 808,365 20,958,711

10

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

9. Exploration and evaluation assets

Mining rights Balance, January 1, 2020 Balance, March 31, 2020 Deferred exploration and evaluation costs Balance, January 1, 2020 Additions(1) Balance, March 31, 2020 TOTAL	Exploration properties
	Tumipampa Anta Others Total $ $ $ $
	1,306,960 192,084 22,646 1,521,690
	1,306,960 192,084 22,646 1,521,690
	16,909,509 306,983 - 17,216,492 38,731 - - 38,731
	16,948,240 306,983 - 17,255,223
	18,255,200 499,067 22,646 18,776,913

(1) Net of royalty income derived from the Tumipampa property ($16,263).

Mining rights Balance, January 1, 2019 Write-off Balance, December 31, 2019 Deferred exploration and evaluation costs Balance, January 1, 2019 Additions Balance, December 31, 2019 TOTAL	Exploration properties
	Tumipampa Anta Others Total $ $ $ $
	1,340,773 192,084 27,479 1,560,336 (33,813) - (4,833) (38,646)
	1,306,960 192,084 22,646 1,521,690
	16,669,366 306,718 - 16,976,084 240,143 265 - 240,408
	16,909,509 306,983 - 17,216,492
	18,216,469 499,067 22,646 18,738,182

Tumipampa property (“Tumipampa”)

Tumipampa is 500 km from Lima, Peru, in the Circa district, Province of Abancay, department of Apurimac. The Tumipampa project covers an area of 8,432 hectares.

Anta property (“Anta”)

Anta is in the district of San Pedro, 72 km west of Nazca, within the Western Andean Cordillera in the Province of Lucanas, Department of Ayacucho. Anta includes five concessions that cover an area of 5,100 hectares and is a copper/silver exploration prospect.

11

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

10. Trade and other payables

Accounts payable and accrued liabilities(1) Accrued profit sharing(2) Wages and benefits	As at March 31, 2020 $ 2,600,732 356,411 785,649 3,742,792	As at December 31, 2019 $
		4,973,989 858,706 511,456
		6,344,151

(1) Including $410,099 of dividends paid in April 2020 ($447,993 as at December 31, 2019 of dividends paid in January 2020).

(2) Under Peruvian labor laws, the Company is required to distribute 8% of its annual taxable income before tax to employees for each of its Peruvian subsidiary. Amounts accrued as at December 31 are paid in March of the following year.

11. Bank loan

On December 19, 2019, the Company entered into a non-secured short-term bank loan agreement in the amount $3,000,000, bearing interest at an annual rate of 3.75% and maturing on February 18, 2020, and at which date was fully reimbursed.

12. Leases

The Company has leases for the land of the Chala plant, office spaces and some of its rolling stock. The leases have an initial term of 2 to 17 years and some have a renewal option after that date. The lease terms are negotiated individually and encompass a wide range of different terms and conditions.

Right-of-use assets

Costs Balance, January 1, 2020 Additions Disposals and cancellations Balance, March 31, 2020 Accumulated Depreciation Balance, January 1, 2020 Depreciation Depreciation capitalized as exploration and evaluation assets Disposals and cancellations Balance, March 31, 2020 Net book value, March 31, 2020	Land Building Rolling Stock Total $ $ $ $
	260,643 782,014 1,040,964 2,083,621 - 22,284 - 22,284 - (58,553) (29,795) (88,348)
	260,643 745,745 1,011,169 2,017,557
	15,110 156,348 351,489 522,947 3,777 46,002 47,516 97,295 - - 4,125 4,125 - (8,134) (9,931) (18,065)
	18,887 194,216 393,199 606,302
	241,756 551,529 617,970 1,411,255

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Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

12. Leases (continued)

Right-of-use assets (continued)

Costs Adjustment on adoption to IFRS 16 Reclassification from Property, plant and equipment Additions Reclassification to Property, plant and equipment Disposals Balance, December 31, 2019 Accumulated Depreciation Reclassification from Property, plant and equipment Depreciation Depreciation capitalized as exploration and evaluation assets Reclassification to Property, plant and equipment Disposals Balance, December 31, 2019 Net book value, December 31, 2019 Lease liabilities	Land Building Rolling Stock Total $ $ $ $
	260,643 595,601 - 856,244 - - 1,240,824 1,240,824 - 186,413 212,378 398,791 - - (377,085) (377,085) - - (35,153) (35,153)
	260,643 782,014 1,040,964 2,083,621
	- - 321,790 321,790 15,110 156,348 260,157 431,615 - - 16,501 16,501 - - (228,563) (228,563) - - (18,396) (18,396)
	15,110 156,348 351,489 522,947
	245,533 625,666 689,475 1,560,674

Balance, beginning of the period Adoption of IFRS 16 New leases and changes in leases Cancellation of right of use assets Repayment of lease liabilities and interests’ payments Balance, end of the period	As at March 31, 2020 $ 1,329,181 - 22,284 (51,107) (188,230) 1,112,128	As at December 31, 2019 $ 747,689 856,244 398,791 (673,543) 1,329,181

The future minimum lease payments due for the next years are as follows:

Within one year 1 to 2 years 2 to 5 years After 5 years Total Less: implicit interest from 5.00% to 6.70% (2019 – 5.00% to 6.70%) Less: current portion	As at March 31, 2020 $ 522,184 234,432 291,400 244,679 1,292,695 (180,567) 1,112,128 (471,283) 640,845	As at December 31, 2019 $
		641,642 279,301 357,030 258,610
		1,536,583 (207,402)
		1,329,181 (572,316)
		756,865

13

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

12. Leases (continued)

Renewal option

Some leases for office space include renewal options that can be exercised at the Company’s option. These options are used to maximise the operational flexibility of the Company’s activities. These options are not reflected in measuring lease liabilities in many cases because the options are not reasonably certain to be exercised by the Company. This is also the case when the underlying office space is not vital to the Company and there are other alternative solutions to replace the underlying assets. The Company’s practice is to ensure that the space meets its needs, which evolve over time.

The potential future rental payments as at March 31, 2020, relating to periods following the exercise dates of extension options is not significant.

Lease payments not recognised as a liability

The expense relating to payments not included in the measurement of a lease liability is $23,500 for the three-month period ended March 31, 2020 ($27,300 for the three-month period ended March 31, 2019) and relates to short term leases.

The Company has short-term lease agreements (less than 12 months). As at March 31, 2020, future minimum lease payments required to meet obligations total $35,000 ($30,000 as at December 31, 2019).

13. Asset retirement obligations

The table below presents the reconciliation of the provision for asset retirement obligations for the periods ended:

Balance, beginning of the period Disbursement Accretion of discounted cash flows Balance, end of the period	As at March 31, 2020 $ 3,769,373 - 2,500 3,771,873	As at December 31, 2019 $
		3,778,010 (17,985) 9,348
		3,769,373

The provision for closure of production facilities and exploration projects represents the present value of the closure costs that are expected to be incurred between the years 2020 and 2038 for the Veta Dorada Plant and Tumipampa. These estimates are based on studies prepared by independent advisers that meet the environmental regulations in effect. The provision for closure of the production facilities and exploration projects corresponds mostly to activities that must be carried out for restoring the areas affected by operation and production activities. The principal works to be performed correspond to earthworks, revegetation efforts and dismantling of the production facilities. Closure budgets are reviewed regularly to consider any significant change in the studies conducted. Nevertheless, the closure costs will depend on the market prices for the closure works required, which would reflect future economic conditions. Also, the time when the disbursements will be made depends on the useful life of the facilities.

($5.9 million as at December 31, 2019) which has been discounted using annual risk-free rates up 2.8% in periods of up to 19 years.

The table below presents the breakdown of the provision for asset retirement obligations for the periods ended:

Veta Dorada Plant Tumipampa Balance, end of the period	As at March 31, 2020 $ 3,494,604 277,269 3,771,873	As at December 31, 2019 $
		3,492,104 277,269
		3,769,373

14

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

13. Asset retirement obligations (continued)

The Company believes that this liability is sufficient to meet the current environmental protection laws approved by the MEM. As of March 31, 2020, the Company has constituted letters of credit in favor of the MEM for $1,632,000 ($1,426,000 as at December 31, 2019) to secure closure plans of its production facilities and exploration projects.

14. Share capital

a) Shares authorized

Unlimited number of common shares, without par value.

Unlimited number of preferred shares, without par value, non-cumulative annual dividend of 8%, redeemable at their issue price, non-participating, non-voting.

Issued and fully paid

Movements in the Company’s share capital during the three-month periods ended March 31, 2020 and 2019, are as follows:

Balance beginning of year Repurchase of common shares i) Balance, end of period	2020 Numbers of common shares Amount $ 38,787,256 20,631,364 - - 38,787,256 20,631,364	2020 Numbers of common shares Amount $ 38,787,256 20,631,364 - - 38,787,256 20,631,364	2019	2019
	Numbers of common shares 38,787,256 - 38,787,256		Numbers of common shares 39,524,977 (313,900) 39,211,077	Amount $
		20,631,364 - 20,631,364		20,958,860 (166,452)
				20,792,408

i) In April 2018, the Company announced the implementation of a normal course issuer bid share buyback program, through which the Company may purchase, for cancellation, up to 1,982,717 or approximately 5% of its outstanding common shares as of April 10, 2018, over the 12 month period beginning April 23, 2018 and ending April 22, 2019, when the bid expires, with a daily maximum of 12,692 common shares which is equal to 25% of the average daily trading volume on the TSX for the nine month period ended March 31, 2018 except where purchases are made in accordance with the “block purchase exception” of the TSX rules.

In April 17, 2019, the Toronto Stock Exchange (TSX) has approved the new NCIB, under which Dynacor may purchase, for cancellation, with a daily maximum of 6,387 shares, up to 3,273,485 common shares or approximately 10% of its public float until April 16, 2020. The NCIB was reconducted at maturity (note 19).

The extent to which Dynacor repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations, as determined by the Company's management team. The purchases will be funded from existing cash balances.

The Company did not repurchase common shares during the three-month period ending March 31, 2020.

For the three-month period ending March 31, 2019, the Company has repurchased 313,900 common shares for a total cash consideration of $412,141 (CA$ 546,130), an average repurchase cost of $1.31 (CA$1.74) per share. Total cash consideration paid exceeded by $245,689 the respective book value of the shares repurchased. This excess was recorded as a reduction of retained earnings in the Consolidated Statement of Changes in Equity.

Since April 23, 2018, the Company has repurchased 1,294,088 common shares for a total cash consideration of $1,679,467 (CA$ 2,216,174), an average repurchase cost of $1.30 (CA$1,71) per share.

15

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

14. Share capital (continued)

b) Share purchase options

On August 14, 2007, the Board adopted a stock option plan (the “Plan”) whereby they may grant to directors, officers, employees, or consultants options to acquire common shares up to 10% of the issued and outstanding common shares. The Board has the authority to determine the terms, limits, restrictions and conditions of the grant of options, to interpret the Plan and make all decisions relating thereto. The option exercise price is established by the Board and may not be lower than the market price of the common shares at the time of grant. At the June 20, 2019 annual meeting of shareholders, the shareholders approved a Board resolution authorizing an amendment to the Plan allowing the replenishment of 920,000 options previously issued under the Plan and that have already been exercised by their holders. This replenishment of options will allow the Corporation to issue additional options without having to increase the total amount of shares issuable under the Plan, which is 3,500,000 common shares. The options may be exercised during a period determined by the Board, which may vary, but will not exceed ten years from the date of the grant.

Movements in the Company’s share purchase options during the three-month periods ended March 31, 2020 and 2019, are as follows:

Balance, beginning and end of period Exercisable options	2020 Numbers of options Weighted average exercise price CA$ 1,252,500 1.92 1,015,000 1.94	2020 Numbers of options Weighted average exercise price CA$ 1,252,500 1.92 1,015,000 1.94	2019	2019
	Numbers of options 1,252,500 1,015,000		Number of options 1,217,500 1,026,500	Weighted average exercise price
		CA$ 1.92 1.94		CA$
				1.85
				1.80

For the three-month period ended March 31, 2020, the share-based compensation costs amounted to $18,538 and was charged to the consolidated statement of comprehensive income ($17,184 for the three-month period ended March 31, 2019 of which $887 was capitalized to exploration and evaluation assets.

c) Deferred share units “DSU”

Effective May 11, 2015, the Company put in place the DSU Plan, whereby the Board may grant to its directors, senior officers and shareholders DSUs. DSUs are units that are credited to an eligible participant’s account, the value of which, on a particular date, shall be equal to the fair market value of the Company’s common share for such date. The Board has the authority to determine the number of DSUs to be awarded and the terms and conditions of each award. The number of shares that are reserved for issuance under the DSU Plan is limited to 500,000. DSUs can only be settled following departure from the Company in accordance with the terms of the DSU Plan.

Balance, beginning and end of period	2020 Numbers of DSUs Cost $ 365,506 493,770	2019	2019
	Numbers of DSUs 365,506	Numbers of DSUs 270,094	Cost $
			372,034

There was no movement related to the Company’s DSUs during the three-month periods ended March 31, 2020 and 2019. Consequently, the Company has not recorded any compensation costs relating to DSU’s in the condensed interim consolidated statement of comprehensive income.

16

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

14. Share capital (continued)

• d) Dividends

The following dividends were declared by the Company:

• March 4, 2020 - CA$0.015 per qualifying common share resulting in a total dividend amounting to $410,099 (CA$581,807) paid on April 2, 2020.

• November 28, 2019 - CA$0.015 per qualifying common share resulting in a total dividend amounting to $447,993 (CA$581,854) paid on January 6, 2020.

• September 5, 2019 - CA$0.01 per qualifying common share resulting in a total dividend amounting to $294,184 (CA$389,588) paid on October 3, 2019.

• June 5, 2019 - CA$0.01 per qualifying common share resulting in a total dividend amounting to $298,878 (CA$391,140) paid on July 3, 2019.

• March 12, 2019 - CA$0.01 per qualifying common share resulting in a total dividend amounting to $293,430 (CA$392,111) paid on April 3, 2019.

• November 29, 2018 - CA$0.01 per qualifying common share resulting in a total dividend amounting to $291,154 (CA$397,194) paid on January 3, 2019.

15. Earnings per share

Both the basic and diluted earnings per share have been calculated using the net income as the numerator, i.e. no adjustment to net income was necessary during the three-month periods ended March 31, 2020 and 2019.

Net income for the period Weighted average number of common shares outstanding Dilutive share purchase options and DSUs(1) Weighted average number of outstanding shares for diluted earnings per share Basic earnings per share Diluted earnings per shares(1)	Three-month periods ended March 31, 2020 2019 $2,385,269 $1,180,000 38,787,256 39,373,928 369,280 350,697 39,156,536 39,724,625 $0.06 $0.03 $0.06 $0.03	Three-month periods ended March 31, 2020 2019 $2,385,269 $1,180,000 38,787,256 39,373,928 369,280 350,697 39,156,536 39,724,625 $0.06 $0.03 $0.06 $0.03
		$1,180,000
		39,373,928 350,697
		39,724,625
		$0.03
		$0.03

(1) As at March 31, 2020, 1,052,500 share purchase options are excluded from diluted earnings per share since their exercise price are higher than the average share price for Dynacor shares during the three-month period ended March 31, 2020 (782,500 excluded as at March 31, 2019).

17

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

16. Information included in the consolidated statements of comprehensive income

The following table provides a breakdown of employee remuneration:

Salaries and short-term employee benefits Cost of sales General and administration expenses Capitalized in exploration and evaluation assets Salaries and short-term employee benefits Share-based compensation General and administration expenses Capitalized in exploration and evaluation assets Share based compensation and DSU expense Total employee remuneration Cost of sales Ore Salaries, benefits and other employee expenses Production supplies Transportation Other production costs Provision for impairment of accounts receivable Depreciation of property, plant and equipment and of right-of-use assets Peruvian profit-sharing expense Variation of finished goods – Gold dore bars Variation of gold in process inventory General and administrative expenses Salaries and benefits and other employee expenses Office and other expenses Professional fees Promotion and corporate development Travel expenses Peruvian profit-sharing expense Share-based compensation: Options	Three-month periods ended March 31, 2020 $ 2019 $ 897,552 855,003 564,738 582,327 28,449 59,625 1,490,739 1,496,955 18,538 16,297 - 887 18,538 17,184 1,509,277 1,514,139 Three-month periods ended March 31, 2020 $ 2019 $ 15,263,287 15,347,965 968,458 933,661 732,981 795,288 650,429 773,235 320,878 359,257 70,369 39,669 568,925 590,514 282,506 121,099 (2,848,157) - 9,910,803 1,168,575 25,920,479 20,129,263 564,738 582,327 161,256 149,268 174,791 68,871 62,922 73,452 37,280 40,648 70,627 25,683 1,071,614 940,249 18,538 16,297 1,090,152 956,546	Three-month periods ended March 31, 2020 $ 2019 $ 897,552 855,003 564,738 582,327 28,449 59,625 1,490,739 1,496,955 18,538 16,297 - 887 18,538 17,184 1,509,277 1,514,139 Three-month periods ended March 31, 2020 $ 2019 $ 15,263,287 15,347,965 968,458 933,661 732,981 795,288 650,429 773,235 320,878 359,257 70,369 39,669 568,925 590,514 282,506 121,099 (2,848,157) - 9,910,803 1,168,575 25,920,479 20,129,263 564,738 582,327 161,256 149,268 174,791 68,871 62,922 73,452 37,280 40,648 70,627 25,683 1,071,614 940,249 18,538 16,297 1,090,152 956,546
		15,347,965 933,661 795,288 773,235 359,257 39,669 590,514 121,099 - 1,168,575
		20,129,263
		582,327 149,268 68,871 73,452 40,648 25,683
		940,249 16,297
		956,546

18

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

16. Information included in the consolidated statements of comprehensive income (continued)

Financial income Interest and other financial income Financial expenses Interest on bank loan Interest on lease liabilities Other interest and financial expenses Accretion expense on asset retirement obligation Depreciation Depreciation of property, plant and equipment Depreciation of right-of-use assets Depreciation included in costs of sales Depreciation of property, plant and equipment Depreciation of right-of-use assets Depreciation included in general and administration expenses	Three-month periods ended March 31, 2020 $ 2019 $ 42,743 17,294 14,770 - 25,314 20,163 18,343 35,148 2,500 2,337 60,927 57,648 Three-month periods ended March 31, 2020 $ 2019 $ 518,504 522,916 50,421 67,598 568,925 590,514 24,027 12,718 46,874 41,541 70,901 54,259 639,826 644,773	Three-month periods ended March 31, 2020 $ 2019 $ 42,743 17,294 14,770 - 25,314 20,163 18,343 35,148 2,500 2,337 60,927 57,648 Three-month periods ended March 31, 2020 $ 2019 $ 518,504 522,916 50,421 67,598 568,925 590,514 24,027 12,718 46,874 41,541 70,901 54,259 639,826 644,773
		522,916 67,598
		590,514 12,718 41,541
		54,259
		644,773

Income taxes

The current income tax charge amounts to $1,222,340 ($546,536 for the three-period ended March 31, 2019) and the deferred income tax charge amounts to $39,220 ($54,898 for the three-period ended March 31, 2019) and relates to origination and reversal of temporary differences mainly relating to fixed assets and exploration expenses.

The total tax income expense comprises $250,010 ($225,446 for the three-period ended March 31, 2019) of unused tax losses for which no deferred taxes were recognized.

17. Information included in the statements of cash flows

Changes in working capital items Accounts receivables Current tax assets Inventories Prepaid expenses Trade and other payables	Three-month periods ended March 31, 2020 $ 2019 $ 1,988,036 (1,152,928) 546,167 (281) 9,855,471 1,676,160 (103,040) (159,848) (2,438,755) (835,587) 9,847,879 (472,484)	Three-month periods ended March 31, 2020 $ 2019 $ 1,988,036 (1,152,928) 546,167 (281) 9,855,471 1,676,160 (103,040) (159,848) (2,438,755) (835,587) 9,847,879 (472,484)
		(1,152,928) (281) 1,676,160 (159,848) (835,587)
		(472,484)

19

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019 (Expressed in US dollars)

18. Related party transactions and disclosures

Key management personnel

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board of Directors, corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer and Vice President Operations.

Remuneration attributed to key management personnel can be summarized as follows:

Salaries, benefits and directors’ fees Share-based compensation(1)	Three-month periods ended March 31, 2020 $ 2019 $ 237,587 239,767 - 1,930 237,587 241,697	Three-month periods ended March 31, 2020 $ 2019 $ 237,587 239,767 - 1,930 237,587 241,697
		239,767 1,930
		241,697

(1) Represents the value of share purchase options which have vested during the period.

Transactions

In January 2018, a loan of $158,000 ($CA$198,000) bearing interest at 4% was made to the Company President and CEO in order for him to exercise 600,000 share purchase options at a price of CA$0.26 which came to maturity. During 2019 the loan and accrued interests were reimbursed.

Other related parties

In the normal course of operations and at fair value, being the amount of consideration determined and agreed to by the related parties:

A firm of which an officer of the Company is a partner, charged legal fees amounting to $18,718 for the three-month period ended March 31, 2020 ($20,999 for the three-month period ended March 31, 2019).

19. Subsequent events

In April 2020, the Toronto Stock Exchange (TSX) has approved the new Corporation's normal course issuer bid (NCIB), under which Dynacor may purchase, for cancellation, up to 3,725,828 common shares or approximately 10% of its public float as of April 14, 2020.

20