Dynacor Group Inc. — Interim / Quarterly Report 2021

May 14, 2021

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Dynacor Gold Mines Inc.

Condensed Interim Consolidated Financial Statements

As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (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 Corporation have been prepared by, and are the responsibility of the Corporation's management.

The unaudited condensed interim consolidated financial statements of Dynacor Gold Mines Inc. as at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020, have not been reviewed by the Corporation’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 11) Exploration and evaluation assets (Note 9) Other non-current assets (Note 7) TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables (Note 10) Current tax liabilities Current portion of lease liabilities (Note 11) NON-CURRENT LIABILITIES Asset retirement obligations (Note 12) Lease liabilities (Note 11) Deferred tax liabilities TOTAL LIABILITIES SHAREHOLDERS' EQUITY Share capital (Note 13 a)) Contributed surplus (Notes 13 b) and c)) Retained earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	As at March 31, 2021 $ 17,239,000 7,176,510 11,433,479 285,686 36,134,675 19,706,950 653,873 18,508,101 3,443,120 42,312,044 78,446,719 7,031,351 1,537,184 204,769 8,773,304 3,566,717 426,345 1,303,694 5,296,756 14,070,060 20,983,459 3,550,218 39,842,982 64,376,659 78,446,719	As at December 31, 2020 $
		11,867,763 8,434,005 13,401,022 129,372
		33,832,162
		19,677,020 833,659 18,510,196 3,443,120
		42,463,995
		76,296,157
		7,081,900 1,123,549 223,899
		8,429,348
		3,603,616 482,849 1,036,164
		5,122,629
		13,551,977
		21,011,151 3,483,715 38,249,314
		62,744,180
		76,296,157

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

Jean Martineau

3

Dynacor Gold Mines Inc.

Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited) For the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

Sales Cost of sales (Note 15) Gross operating margin General and administrative expenses (Note 15) Other project expenses Operating income Financial income (Note 15) Financial expenses (Note 15) Foreign exchange loss Income before income taxes Income tax expense Current (Note 15) Deferred (Note 15) Net income and comprehensive income Weighted average number of outstanding common shares (Note 16) Basic Diluted Earnings per share (Note 16) Basic Diluted	For the three-month periods ended March 31, 2021 $ 2020 $ 40,909,064 30,869,043 (35,606,013) (25,920,479) 5,303,051 4,948,564 (1,207,404) (1,090,152) (16,284) (128,086) 4,079,363 3,730,326 8,601 42,743 (59,674) (60,927) (100,473) (65,313) 3,927,817 3,646,829 (1,553,866) (1,222,340) (267,530) (39,220) (1,821,396) (1,261,560) 2,106,421 2,385,269 38,856,049 38,787,256 39,229,142 39,156,536 $0.05 $0.06 $0.05 $0.06	For the three-month periods ended March 31, 2021 $ 2020 $ 40,909,064 30,869,043 (35,606,013) (25,920,479) 5,303,051 4,948,564 (1,207,404) (1,090,152) (16,284) (128,086) 4,079,363 3,730,326 8,601 42,743 (59,674) (60,927) (100,473) (65,313) 3,927,817 3,646,829 (1,553,866) (1,222,340) (267,530) (39,220) (1,821,396) (1,261,560) 2,106,421 2,385,269 38,856,049 38,787,256 39,229,142 39,156,536 $0.05 $0.06 $0.05 $0.06
		30,869,043 (25,920,479)
		4,948,564 (1,090,152) (128,086)
		3,730,326 42,743 (60,927) (65,313)
		3,646,829 (1,222,340) (39,220)
		(1,261,560)
		2,385,269
		38,787,256 39,156,536 $0.06 $0.06

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, 2021 and 2020 (Expressed in US dollars)

Balance, January 1, 2021 Net income and comprehensive income for the period Share-based compensation expense (Note 13 b)) Repurchase of common shares (Note 13 a) i)) Dividends (Note 13 d)) Transactions with owners Balance, March 31, 2021 Balance, January 1, 2020 Net income and comprehensive income for the period Share-based compensation expense (Note 13 b)) Dividends (Note 13 d)) Transactions with owners Balance, March 31, 2020	Share Capital Contributed surplus Retained earnings Total equity $ $ $ $
	21,011,151 3,483,715 38,249,314 62,744,180 - - 2,106,421 2,106,421
	21,011,151 3,483,715 40,355,735 64,850,601 - 66,503 - 66,503 (27,692) - (49,721) (77,413) - - (463,032) (463,032)
	(27,692) 66,503 (512,753) (473,942)
	20,983,459 3,550,218 39,842,982 64,376,659
	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

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 Cash Flows (Unaudited) For the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

Operating activities Net income Adjustments for: Provision for impairment of accounts receivable (Note 15) Depreciation (Note 15) Loss (gain) on disposal of property, plant and equipment and of right- of-use assets Deferred tax expense Interest expense on bank loan (Note 15) Accretion expense on asset retirement obligations (Note 12) Share-based compensation (Note 13 b)) Unrealized foreign exchange loss (gain) Changes in working capital items (Note 16) 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 from (used in) investing activities Financing activities Interest paid on bank loan (Note 15) Bank loan Payment on asset retirement obligations (Note 12) Repayment of lease liabilities and interests’ payments (Note 11) Repurchase of common shares (Note 13 a) i)) Dividends 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, 2021 $ 2020 $ 2,106,421 2,385,269 (8,678) 70,369 643,367 639,826 (10,173) (28,286) 315,753 34,586 - 14,770 18,046 2,500 66,503 18,538 (54,657) 84,166 3,076,582 3,221,738 3,750,555 9,847,879 6,827,137 13,069,617 11,017 65,264 (494,355) (6,933) 2,095 (28,387) (481,243) 29,944 - (14,770) - (3,000,000) (54,945) - (75,634) (188,230) (77,413) - (766,669) (447,993) (974,661) (3,650,993) 5,371,233 9,448,568 4 (84,891) 11,867,763 6,743,221 17,239,000 16,106,898 1,162,147 540,233	For the three-month periods ended March 31, 2021 $ 2020 $ 2,106,421 2,385,269 (8,678) 70,369 643,367 639,826 (10,173) (28,286) 315,753 34,586 - 14,770 18,046 2,500 66,503 18,538 (54,657) 84,166 3,076,582 3,221,738 3,750,555 9,847,879 6,827,137 13,069,617 11,017 65,264 (494,355) (6,933) 2,095 (28,387) (481,243) 29,944 - (14,770) - (3,000,000) (54,945) - (75,634) (188,230) (77,413) - (766,669) (447,993) (974,661) (3,650,993) 5,371,233 9,448,568 4 (84,891) 11,867,763 6,743,221 17,239,000 16,106,898 1,162,147 540,233
		2,385,269 70,369 639,826 (28,286) 34,586 14,770 2,500 18,538 84,166
		3,221,738 9,847,879
		13,069,617
		65,264 (6,933) (28,387)
		29,944
		(14,770) (3,000,000) - (188,230) - (447,993)
		(3,650,993)
		9,448,568 (84,891) 6,743,221
		16,106,898
		540,233

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

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Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

1. Statute of incorporation and nature of activities

Dynacor Gold Mines Inc. (“Dynacor”, the ultimate controlling Corporation), an ore processing and exploration Corporation 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 Corporation’s principal place of business is 625 René-Lévesque Blvd West, suite 1200, Montréal, Québec, Canada.

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

The Corporation 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 Corporation's continued existence is dependent upon the continuation of ore processing operations.

In December 2019, the Peruvian authorities retained one of the Corporation’s shipment containing 2,650 ounces of gold. Following this export retention, the Corporation temporarily stopped exporting gold. However, it continued purchasing and processing ore at record levels and consequently increased 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. Although management is closely following this situation, it cannot predict at this time when this shipment will be released by the authorities and therefore, the related inventory was classified under other non-current assets.

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 Corporation had to temporarily stop its ore purchase and process operations. On June 6, 2020, the Corporation successfully resumed its operations.

However, the Covid-19 pandemic is still active worldwide and its duration and full impacts are still unknown. Therefore, it could still have a prospective material impact on the Corporation’s activities, cash flow and liquidities. The Corporation has taken and will continue to take actions and monitor the situation to minimize any future potential negative impacts.

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, 2020.

These condensed interim consolidated financial statements are presented in United States dollars, which is the Corporation’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 13, 2021.

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, 2021 and for the three-month periods ended March 31, 2021 and 2020 (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 wholly owned Peruvian subsidiary Minera Veta Dorada SAC.

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 Corporation’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.

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Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

5. Cash

Cash (equivalent in USD) United States dollars(1) Peruvian Nuevo soles Canadian dollars	As at March 31, 2021 $ 17,103,538 108,011 27,451 17,239,000	As at December 31, 2020 $
		11,287,995 29,563 550,205
		11,867,763

• (1) As at March 31, 2021 and December 31, 2020, $187,887 has been given as collateral against stand-by letters of credit totaling $187,887.

6. Accounts receivable

Accounts receivable
Sales tax receivable(1) Trade and other receivables(2) Advances to suppliers	As at March 31, 2021 $ 4,016,241 2,637,386 522,883 7,176,510	As at December 31, 2020 $
		4,979,053 3,185,764 269,188
		8,434,005

• (1) Subsequent to period end, an amount of $1.9 million was recovered from previous months filing claims.

• (2) Fully recovered subsequent to period end.

The Corporation’s gold sales, at market price in effect at the time of delivery, were done with one sole customer of which its president is a director of the Corporation since August 12, 2020. Economic dependence is mitigated as the Corporation 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, 2021 $ 5,763,089 5,285,391 3,443,120 384,999 14,876,599 (3,443,120) 11,433,479	As at December 31, 2020 $
		6,036,977 7,089,422 3,443,120 274,623
		16,844,142 (3,443,120)
		13,401,022

No inventories are carried at fair value less cost to sell at March 31, 2021 and December 31, 2020.

• (1) The Finished goods-Gold dore bars corresponds to the December 2019 shipment retained by the Peruvian authorities (Note 1). Management cannot predict at this time when this shipment will be released by the authorities and therefore, the related inventory was classified under other non-current assets.

9

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

8. Property, plant and equipment

Cost Balance, January 1, 2021 Additions Reclassification from right-of-use assets Disposals Balance, March 31, 2021 Accumulated Depreciation Balance, January 1, 2021 Depreciation Reclassification from right-of-use assets Disposals Balance, March 31, 2021 Net book value, March 31, 2021 Cost Balance, January 1, 2020 Additions Reclassification from right-of-use assets Disposals Other adjustments and reclassifications Balance, December 31, 2020 Accumulated Depreciation Balance, January 1, 2020 Depreciation Depreciation capitalized as exploration and evaluation assets Reclassification from right-of-use assets Disposals Balance, December 31, 2020 Net book value, December 31, 2020	Land $ Buildings $ Plant & equipment $ Rolling stock $ Total $
	686,960 4,766,667 21,427,544 2,860,631 29,741,802 - 31,332 298,871 164,152 494,355 - - - 211,292 211,292 - - - (27,680) (27,680)
	686,960 4,797,999 21,726,415 3,208,395 30,419,769
	- 1,137,807 7,095,924 1,831,051 10,064,782 - 70,942 408,603 110,100 589,645 - - - 85,228 85,228 - - - (26,836) (26,836)
	- 1,208,749 7,504,527 1,999,543 10,712,819
	686,960 3,589,250 14,221,888 1,208,852 19,706,950
	Land $ Buildings $ Plant & equipment $ Rolling stock $ Total $
	647,334 4,745,443 21,340,063 2,156,018 28,888,858 40,000 21,224 548,881 242,696 852,801 - - - 680,702 680,702 - - (224,994) (218,785) (443,779) (374) - (236,406) - (236,780)
	686,960 4,766,667 21,427,544 2,860,631 29,741,802
	- 824,905 5,757,589 1,347,653 7,930,147 - 312,158 1,527,327 323,928 2,163,413 - 744 5,475 - 6,219 - - - 356,565 356,565 - - (194,467) (197,095) (391,562)
	- 1,137,807 7,095,924 1,831,051 10,064,782
	686,960 3,628,860 14,331,620 1,029,580 19,677,020

10

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

9. Exploration and evaluation assets

Mining rights Balance, January 1, 2021 Balance, March 31, 2021 Deferred exploration and evaluation costs Balance, January 1, 2021 Additions(1) Balance, March 31, 2021 TOTAL	Exploration properties
	Tumipampa Anta Others Total $ $ $ $
	1,305,496 180,193 24,832 1,510,521
	1,305,496 180,193 24,832 1,510,521
	16,692,692 306,983 - 16,999,675 (2,095) - - (2,095)
	16,690,597 306,983 - 16,997,580
	17,996,093 487,176 24,832 18,508,101

• (1) Royalty income derived from the Tumipampa property ($2,095).

Mining rights Balance, January 1, 2020 Additions Write-off Balance, December 31, 2020 Deferred exploration and evaluation costs Balance, January 1, 2020 Additions Write-off Balance, December 31, 2020 TOTAL	Exploration properties
	Tumipampa Anta Others Total $ $ $ $
	1,306,960 192,084 22,646 1,521,690 - - 2,186 2,186 (1,464) (11,891) - (13,355)
	1,305,496 180,193 24,832 1,510,521
	16,909,509 306,983 - 17,216,492 35,033 - - 35,033 (251,850) - - (251,850)
	16,692,692 306,983 - 16,999,675
	17,998,188 487,176 24,832 18,510,196

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 7,027 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 six concessions that cover an area of 4,400 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, 2021 and for the three-month periods ended March 31, 2021 and 2020 (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, 2021 $ 5,862,144 416,452 752,755 7,031,351	As at December 31, 2020 $
		5,682,329 984,383 415,188
		7,081,900

(1) Including $154,258 of dividends paid in April 2021 ($457,896 as at December 31, 2020 of dividends paid in January 2021).

(2) Under Peruvian labor laws, the Corporation 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. Leases

The Corporation 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 16 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, 2021 Reclassification to Property, plant and equipment Balance, March 31, 2021 Accumulated Depreciation Balance, January 1, 2021 Depreciation Reclassification to Property, plant and equipment Balance, March 31, 2021 Net book value, March 31, 2021	Land Building Rolling Stock Total $ $ $ $
	260,643 745,745 330,467 1,336,855 - - (211,292) (211,292)
	260,643 745,745 119,175 1,125,563
	30,220 326,174 146,802 503,196 3,778 43,985 5,959 53,722 - - (85,228) (85,228)
	33,998 370,159 67,533 471,690
	226,645 375,586 51,642 653,873

These right-of-use assets are located in Peru except for $87,371 in Canada.

12

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

11. Leases (continued)

Right-of-use assets (continued)

Costs Balance, January 1, 2020 Additions Reclassification to Property, plant and equipment Disposals and cancellations Balance, December 31, 2020 Accumulated Depreciation Balance, January 1, 2020 Depreciation Depreciation capitalized as exploration and evaluation assets Reclassification to Property, plant and equipment Disposals and cancellations Balance, December 31, 2020 Net book value, December 31, 2020	Land Building Rolling Stock Total $ $ $ $
	260,643 782,014 1,040,964 2,083,621 - 22,284 - 22,284 - - (680,702) (680,702) - (58,553) (29,795) (88,348)
	260,643 745,745 330,467 1,336,855
	15,110 156,348 351,489 522,947 15,110 177,960 157,684 350,754 - - 4,125 4,125 - - (356,565) (356,565) - (8,134) (9,931) (18,065)
	30,220 326,174 146,802 503,196
	230,423 419,571 183,665 833,659

Lease liabilities

Balance, beginning of the period 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, 2021 $ 706,748 - - (75,634) 631,114	As at December 31, 2020 $ 1,329,181 22,284 (51,107) (593,610) 706,748

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% (2020 – 5.00% to 6.70%) Less: current portion	As at March 31, 2021 $ 235,981 209,430 104,863 202,753 753,027 (121,913) 631,114 204,769 426,345	As at December 31, 2020 $
		258,903 224,219 143,149 215,971
		842,242 (135,494)
		706,748 223,899
		482,849

13

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

Dynacor Gold Mines Inc.

11. Leases (continued)

Renewal option

Some leases for office space include renewal options that can be exercised at the Corporation’s option. These options are used to maximise the operational flexibility of the Corporation’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 Corporation. This is also the case when the underlying office space is not vital to the Corporation and there are other alternative solutions to replace the underlying assets. The Corporation’s practice is to ensure that the space meets its needs, which evolve over time.

The potential future rental payments as at March 31, 2021, 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 periods ended March 31, 2021 and March 31, 2020 and relates to short term leases.

The Corporation has short-term lease agreements (less than 12 months). As at March 31, 2021, future minimum lease payments required to meet obligations total $40,500 ($44,000 as at December 31, 2020).

12. 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 Change in assumptions Disbursement Accretion of discounted cash flows Balance, end of the period	As at March 31, 2021 $ 3,603,616 - (54,945) 18,046 3,566,717	As at December 31, 2020 $
		3,769,373 (236,406) - 70,649
		3,603,616

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 2021 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.

($4.9 million as at December 31, 2020) which has been discounted using annual risk-free rates up 2.17% in periods of up to 18 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, 2021 $ 3,344,393 222,324 3,566,717	As at December 31, 2020 $
		3,326,347 277,269
		3,603,616

14

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

Dynacor Gold Mines Inc.

12. Asset retirement obligations (continued)

The Corporation believes that this liability is sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines (MEM). As of March 31, 2021, the Corporation has constituted letters of credit in favor of the MEM for $1,848,000 ($1,848,000 as at December 31, 2020) to secure closure plans of its production facilities and exploration projects.

13. 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 Corporation’s share capital during the three-month periods ended March 31, 2021 and 2020, are as follows:

Balance beginning of year Repurchase of common shares i) Balance, end of period	2021 Numbers of common shares Amount $ 38,866,254 21,011,151 (51,225) (27,692) 38,815,029 20,983,459	2021 Numbers of common shares Amount $ 38,866,254 21,011,151 (51,225) (27,692) 38,815,029 20,983,459	2020	2020
	Numbers of common shares 38,866,254 (51,225) 38,815,029		Numbers of common shares 38,787,256 - 38,787,256	Amount $
		21,011,151 (27,692) 20,983,459		20,631,364 -
				20,631,364

i) In 2019, the Toronto Stock Exchange (TSX) has approved the new normal course issuer bid share buyback program (NCIB), over a period of twelve months commencing on May 2, 2019 and ending May 1, 2020, 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 as of April 17, 2019.

In 2020, the TSX has approved the new NCIB, over a period of twelve months commencing on May 2, 2020 and ending May 1, 2021, under which Dynacor may purchase, for cancellation, with a daily maximum of 11,945 shares, up to 3,725,828 common shares or approximately 10% of its public float as of April 14, 2020.

May 2, 2022, under which Dynacor may purchase, for cancellation, with a daily maximum of 10,919 shares, up to 3,111,165 common shares or approximately 10% of its public float as of April 20, 2021.

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 Corporation's management team. The purchases will be funded from existing cash balances.

For the three-month period ending March 31, 2021, the Corporation has repurchased 51,225 common shares for a total cash consideration of $77,413 (CA$ 97,462), an average repurchase cost of $ 1.51 (CA$ 1.90) per share. Total cash consideration paid exceeded by $49,721 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.

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

15

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

13. 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, 2017 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 Corporation’s share purchase options during the three-month periods ended March 31, 2021 and 2020, are as follows:

Balance, beginning of period Granted Balance, end of period Exercisable options	2021 Numbers of options Weighted average exercise price CA$ 1,045,000 1.99 500,000 1.80 1,545,000 1.93 993,000 2.01	2021 Numbers of options Weighted average exercise price CA$ 1,045,000 1.99 500,000 1.80 1,545,000 1.93 993,000 2.01	2020	2020
	Numbers of options 1,045,000 500,000 1,545,000 993,000		Number of options 1,252,500 - 1,252,500 1,015,000	Weighted average exercise price
		CA$ 1.99 1.80 1.93 2.01		CA$ 1.92 -
				1.92
				1.94

During the three-month period ended March 31, 2021, 150,000 share purchase options were granted with a grant date fair value of $0.45 per share purchase option. The fair values of these options were determines using the Black-Scholes option pricing model.

Additionally, during the three-month period ended March 31, 2021, 350,000 share purchase options were granted with a grant date fair value of $0.43 per share purchase option. Share purchase options under this programme will vest if certain market conditions are met. These market conditions are based on the performance of the Corporation share price in different steps within a specified period. The fair values of these options were determined using a Monte Carlo simulation.

The table below shows the assumptions, or weighted average parameters and performance conditions, applied to determine share-based compensation costs over the life of the awards for share purchase options granted during this period.

Risk-free interest rate Expected volatility Expected life Exercise price Share price Dividend yield Forfeiture rate(1)	2021
	0.8% 44.7% 84 months CA$1.80 CA$1.80 3.3% 2.0%

(1) Applies only to the valuation using the Black-Scholes model

16

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

13. Share capital (continued)

b) Share purchase options (continued)

For the three-month period ended March 31, 2021, the total share-based compensation costs amounted to $66,503 and was charged to the consolidated statement of comprehensive income ($18,538 for the three-month period ended March 31, 2020).

Subsequent to quarter end, 167,500 common shares were issued following the exercise of 167,500 purchase options for a total consideration of $241,306 (CA$296,300).

c) Deferred share units “DSU”

Effective May 11, 2015, the Corporation 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 Corporation’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 Corporation in accordance with the terms of the DSU Plan.

Balance, beginning and end of period	2021 Numbers of DSUs Cost $ 404,399 547,023	2020	2020
	Numbers of DSUs 404,399	Numbers of DSUs 365,506	Cost $
			493,770

There was no movement related to the Corporation’s DSUs during the three-month periods ended March 31, 2021 and 2020. Consequently, the Corporation has not recorded any compensation costs relating to DSU’s in the condensed interim consolidated statement of comprehensive income.

d) Dividends

The following dividends were declared by the Corporation:

March 31, 2021 resulting in a total dividend amounting to $463,032 (CA$582,642).

• A quarterly dividend of CA$0.015 per qualifying common share during the three-month period ended March 31, 2020 resulting in a total dividend amounting to $410,099 (CA$581,807).

Since February 2021, a CA$0.005 monthly dividend is replacing the CA$0.015 quarterly dividend. The first monthly dividend was declared and paid in February 2021.

14. 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, 2021 and 2020.

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, 2021 2020 2,106,421 $2,385,269 38,856,049 38,787,256 373,093 369,280 39,229,142 39,156,536 $0.05 $0.06 $0.05 $0.06	Three-month periods ended March 31, 2021 2020 2,106,421 $2,385,269 38,856,049 38,787,256 373,093 369,280 39,229,142 39,156,536 $0.05 $0.06 $0.05 $0.06
		$2,385,269
		38,787,256 369,280
		39,156,536
		$0.06
		$0.06

(1) As at March 31, 2021, 490,000 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, 2021 (1,052,500 excluded as at March 31, 2020).

17

Dynacor Gold Mines Inc. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

15. 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 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, investor relation and corporate expenses Travel expenses Depreciation of property, plant and equipment and of right-of-use assets Peruvian profit-sharing expense Share-based compensation: Options	Three-month periods ended March 31, 2021 $ 2020 $ 894,859 897,552 696,168 564,738 - 28,449 1,591,027 1,490,739 66,503 18,538 66,503 18,538 1,657,530 1,509,277 Three-month periods ended March 31, 2021 $ 2020 $ 29,386,854 15,263,287 979,956 968,458 920,186 732,981 1,198,330 650,429 419,881 320,878 (8,678) 70,369 570,076 568,925 335,377 282,506 - (2,848,157) 1,804,031 9,910,803 35,606,013 25,920,479 703,287 568,860 101,063 83,954 88,372 174,791 52,985 62,922 38,059 39,559 73,291 70,901 83,844 70,627 1,140,901 1,071,614 66,503 18,538 1,207,404 1,090,152	Three-month periods ended March 31, 2021 $ 2020 $ 894,859 897,552 696,168 564,738 - 28,449 1,591,027 1,490,739 66,503 18,538 66,503 18,538 1,657,530 1,509,277 Three-month periods ended March 31, 2021 $ 2020 $ 29,386,854 15,263,287 979,956 968,458 920,186 732,981 1,198,330 650,429 419,881 320,878 (8,678) 70,369 570,076 568,925 335,377 282,506 - (2,848,157) 1,804,031 9,910,803 35,606,013 25,920,479 703,287 568,860 101,063 83,954 88,372 174,791 52,985 62,922 38,059 39,559 73,291 70,901 83,844 70,627 1,140,901 1,071,614 66,503 18,538 1,207,404 1,090,152
		15,263,287 968,458 732,981 650,429 320,878 70,369 568,925 282,506 (2,848,157) 9,910,803
		25,920,479
		568,860 83,954 174,791 62,922 39,559 70,901 70,627
		1,071,614 18,538
		1,090,152

18

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

15. 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, 2021 $ 2020 $ 8,601 42,743 - 14,770 10,121 18,772 31,507 24,885 18,046 2,500 59,674 60,927 Three-month periods ended March 31, 2021 $ 2020 $ 560,340 518,504 9,736 50,421 570,076 568,925 29,305 24,027 43,986 46,874 73,291 70,901 643,367 639,826	Three-month periods ended March 31, 2021 $ 2020 $ 8,601 42,743 - 14,770 10,121 18,772 31,507 24,885 18,046 2,500 59,674 60,927 Three-month periods ended March 31, 2021 $ 2020 $ 560,340 518,504 9,736 50,421 570,076 568,925 29,305 24,027 43,986 46,874 73,291 70,901 643,367 639,826
		518,504 50,421
		568,925 24,027 46,874
		70,901
		639,826

Income taxes

The major components of the income tax expense are:

Current income tax Deferred income tax(1)	Three-month periods ended March 31, 2021 $ 2020 $ 1,553,866 1,222,340 267,530 39,220 1,821,396 1,261,560	Three-month periods ended March 31, 2021 $ 2020 $ 1,553,866 1,222,340 267,530 39,220 1,821,396 1,261,560
		1,222,340 39,220
		1,261,560

(1) The deferred income tax charge mainly relates to fixed assets and exploration expenses.

During the three-month period ended March 31, 2021, the Corporation recognized a deferred tax expense in the amount of $305,831 related to the difference between the carrying amount for accounting purposes and (which reflects the historical cost in the entity’s functional currency) and the underlying tax basis (which reflects the current local tax cost, translated into the functional currency using the current foreign exchange rate). No deferred tax expense (recovery) was recorded for the threemonth period ended March 31, 2020.

The total tax income expense comprises $288,660 ($250,010 for the three-period ended March 31, 2020) of unused tax losses for which no deferred taxes were recognized.

19

Dynacor Gold Mines Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) As at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020 (Expressed in US dollars)

16. 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, 2021 $ 2020 $ 1,154,640 1,988,036 456,475 546,167 1,967,543 9,855,471 (156,314) (103,040) 328,211 (2,438,755) 3,750,555 9,847,879	Three-month periods ended March 31, 2021 $ 2020 $ 1,154,640 1,988,036 456,475 546,167 1,967,543 9,855,471 (156,314) (103,040) 328,211 (2,438,755) 3,750,555 9,847,879
		1,988,036 546,167 9,855,471 (103,040) (2,438,755)
		9,847,879

17. 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 Corporation as a whole. The Corporation has determined that key management personnel consists of members of the Corporation’s Board of Directors, corporate officers, including the Corporation’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, 2021 $ 2020 $ 341,310 237,587 13,632 - 354,942 237,587	Three-month periods ended March 31, 2021 $ 2020 $ 341,310 237,587 13,632 - 354,942 237,587
		237,587 -
		237,587

(1) Represents the share-based compensation costs charged to the consolidated statement of comprehensive income during the period.

Subsequent to quarter end, directors of the Corporation exercised 167,500 share purchase options for a total consideration of CA$296,300 (Note 13 b)).

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 Corporation is a partner, charged legal fees amounting to $15,007 for the three-month period ended March 31, 2021 ($18,718 for the three-month period ended March 31, 2020).

A Director charged consulting fees relating to the revision of health, safety and environmental procedures and amounting to $13,229 for the for the three-month period ended March 31, 2021 (nil for the three-month period ended March 31, 2020).

18. Other commitments

The Corporation has contractual commitments with suppliers. As at March 31, 2021, the obligations are $300,000, $130,000 and $40,000 over the next three years.

20