StageZero Life Sciences Ltd. — Interim / Quarterly Report 2024

May 16, 2024

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Dynacor Group Inc.

Management Discussion and Analysis For the three-month period ended

March 31, 2024

Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Index

MANAGEMENT DISCUSSION AND ANALYSIS ........................................................................................ 4 Introduction ................................................................................................................................................ 4 Responsibility of financial reports .............................................................................................................. 4 Business and strategy ............................................................................................................................... 5 1-Q1-2024 OVERVIEW AND HIGHLIGHTS ................................................................................................ 6 OVERVIEW ............................................................................................................................................... 6 HIGHLIGHTS ............................................................................................................................................. 6 2-KEY ECONOMIC TRENDS ....................................................................................................................... 8 Gold market price ...................................................................................................................................... 8 Exchange rates .......................................................................................................................................... 8 3-OVERALL PERFORMANCE..................................................................................................................... 9 4-CONSOLIDATED RESULTS AND GOLD ORE PROCESSING OPERATIONS ................................... 10 Consolidated Statement of net income and comprehensive income ...................................................... 10 Production, sales and gross operating margin ........................................................................................ 11 Net income and comprehensive income variance analysis .................................................................... 12 Reconciliation of non-IFRS measures ..................................................................................................... 13 Ore processing production statistics and financial summary .................................................................. 14 5-CONSOLIDATED CASH FLOW AND LIQUIDITY.................................................................................. 15 Operating activities .................................................................................................................................. 15 Investing activities ................................................................................................................................... 15 Financing activities .................................................................................................................................. 15 Working capital and liquidity .................................................................................................................... 16 6-CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................ 16 Assets and short-term liabilities ............................................................................................................... 16 Long-term liabilities and contractual commitments ................................................................................. 17 Contingencies .......................................................................................................................................... 17 Shareholders’ equity ................................................................................................................................ 18 Capital resources and capital management ............................................................................................ 18 Off-balance sheet transactions ................................................................................................................ 18 7-QUARTERLY REVIEW ........................................................................................................................... 19 8-INFORMATION ON OUTSTANDING SHARES...................................................................................... 20 9-TRANSACTIONS WITH RELATED PARTIES ....................................................................................... 20 Key management personnel ................................................................................................................... 20 Other related parties ................................................................................................................................ 20 10-MINING EXPLORATION PROPERTIES ............................................................................................... 21 Tumipampa .............................................................................................................................................. 21 11- FOLLOW-UP OUTLOOK 2024 ............................................................................................................ 21 Ore processing ........................................................................................................................................ 21 Capex ...................................................................................................................................................... 21 12-RISKS AND UNCERTAINTIES ............................................................................................................. 22

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

13-JUDGMENTS, ESTIMATES AND ASSUMPTIONS ............................................................................. 22 14-ACCOUNTING POLICIES AND MODIFICATIONS .............................................................................. 22 Changes in accounting policies and policies issued but not yet effective ............................................... 22 15-NON-IFRS MEASURES ........................................................................................................................ 22 16-DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING ............................................................................................................................................... 23 Disclosure controls and procedures (“DC&P”) ........................................................................................ 23 Internal control over financial reporting (“ICFR”) ..................................................................................... 23 Limitations of controls and procedures .................................................................................................... 23 Changes to ICFR ..................................................................................................................................... 23 17-CAUTION REGARDING FORWARD LOOKING STATEMENTS ........................................................ 24 18-CORPORATE INFORMATION ............................................................................................................. 25

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

MANAGEMENT DISCUSSION AND ANALYSIS

Introduction

This Management Discussion and Analysis (the “MD&A”) for Dynacor Group Inc. (“Dynacor” or the “Corporation”) is intended to help the reader understand the strategy, continuing operations and financial performance of the Corporation and comments on the Corporation’s major activities which have occurred during the three-month period ended March 31, 2024 (“Q1-2024”) as well as the subsequent period up to May 14, 2024. This MD&A should be read in conjunction with Dynacor’s audited consolidated financial statements as at and for the year ended December 31, 2023 (the “Annual Financial Statements”), and is intended to supplement and complement the unaudited condensed interim consolidated financial statements and notes thereto as of March 31, 2024, and for the three-month periods ended March 31, 2024 and 2023 (the “Financial Statements”).

The Corporation has prepared the MD&A with reference to National Instrument 51-102, “Continuous Disclosure Obligations” of the Canadian Securities Administrators.

All amounts are in United States dollars (in “US dollars”), unless otherwise indicated, which is the Corporation’s presentation and functional currency.

Where we say “we”, “us”, “our”, the “Corporation” or “Dynacor”, we mean Dynacor Group Inc. and/or one or all of its subsidiaries, as it may apply. The information provided herein, effective as of May 11, 2024, is based on assumptions related to future events and results, which may vary. Further information on the Corporation and its operations has been filed electronically on the System for Electronic Document Analysis and Retrieval (“SEDAR+”) at www.sedarplus.com.

Responsibility of financial reports

Management is responsible for the preparation of the Financial Statements and the MD&A. The Corporation’s Board of Directors (the “Board”) has the responsibility to ensure that management assumes its responsibilities with regards to the preparation of the Financial Statements and the MD&A. To assist management, the Board has created an Audit and Risk management Committee “Audit Committee”. The Audit Committee meets with management to discuss the operating results and the financial situation of the Corporation. It then makes its recommendations and submits the Financial Statements and the MD&A to the Board for their review and approval. Following the recommendation of the Audit Committee, the Board has approved the Financial Statements and the MD&A on May 14, 2024.

The Financial Statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). Consequently, all comparative financial information presented in the MD&A reflects the consistent application of IFRS Accounting Standards. The Financial Statements have been filed electronically on SEDAR+ at www.sedarplus.com.

Listing

Dynacor is a publicly traded Corporation listed on the Toronto Stock Exchange (“TSX”) under the symbol “DNG”.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Business and strategy

The Corporation’s main activities consist of:

• the production of gold and silver from the processing of mineral material purchased from small scale artisanal miners registered with the Peruvian government;

• the development of new processing activities in Peru and in other jurisdictions;

• the exploration of its mining properties located in Peru, with the potential for commercial extraction

• of gold and other precious metals.

The Corporation purchases ore from local government registered artisanal ore producers from various regions of Peru which is then processed at its wholly owned milling facility to produce gold dores and silver pellets which are sold internationally at market prices. All the Corporation’s gold sales were with one sole customer. However, management considers economic dependence does not exist as the Corporation can sell its gold to numerous clients worldwide. The Corporation also owns the rights on several mining properties which are at the exploration stage, including its flagship exploration gold, copper, and silver prospect, the Tumipampa property (“Tumipampa”).

The Corporation’s strategy is to maximize shareholders’ value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities. With its ore processing activities, Dynacor has succeeded in implementing and growing a solid source of cash flow which enables the Corporation to fund its current capital need and any exploration and development program of its exploration assets, explore growth opportunities as well as to face difficult market conditions by not being required to rely on the equity markets to raise capital.

During the fourth quarter of 2022, the corporation completed another plant expansion which increased gold ore-processing capacity by an additional 16% to 500 tpd, the current operating rate, from 430 tpd. This capacity increase followed the 25% increase completed in mid-2021.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

1-Q1-2024 OVERVIEW AND HIGHLIGHTS

OVERVIEW

Dynacor completed the three-month period ended March 31, 2024 (“Q1-2024”) with record quarterly sales of $67.7 million and a net income of $4.8 million (US$0.13 per share) compared to sales of $56.7 million and a net income of $4.5 million (US$0.11 per share) for the first quarter of 2023 (“Q1-2023”).

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In 2023, second half of January planned exports had been postponed to February explaining the high sales level in February and lower sales in January.

HIGHLIGHTS

Operational

• Higher ore volume supplied. Total ore volume supplied exceeded 43,000 tonnes during the quarter, a 19.9% increase compared to Q1-2023. At the end of Q1-2024, the ore inventory level represented more than 40 days of production;

• Higher volume processed. Thanks to the level of ore inventory at the beginning of the period and to the volume of ore supplied, the Veta Dorada plant processed a volume of 44,006 tonnes of ore (484 tpd average) compared to 41,566 tonnes in Q1-2023 (462 tpd), a 5.9% increase;

• Higher gold production. In Q1-2024, gold equivalent production amounted to 31,769 AuEq ounces compared to 29,299 AuEq ounces in Q1-2023 a 8.4% increase.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Financial

• Constant increases in gold prices from March and high operational performance positively impacted the Q1-2024 financial performance. The gold price has increased from 2,075 $/oz in January 2024 to 2,207 $/oz in March 2024, as well, the higher tonnage processed positively impacted the sales figures;

• Increase of 19.4% in sales. Sales amounted to $67.7 million compared to $56.7 million in Q1-2023;

• Increase of 16.7% in gross operating margin . Gross operating margin amounted to $9.1 million (13.5% of sales), compared to $7.8 million (13.8% of sales) in Q1-2023;

• Increased of 19.5% in operating income. Operating income of $7.2 million in Q1-2024, compared to $6.1 million in Q1-2023;

• Increased cash gross operating margin. Cash gross operating margin of $305 per AuEq ounce sold[(1)] compared to $283 in Q1-2023, a 7.8% increase;

• Record EBITDA up 17.4%. EBITDA[(2)] of $8.1 million, compared to $6.9 million in Q1-2023;

• Increase of 15.4% in cash-flow per share. Cash-flows from operating activities before change in working capital items of $5.6 million ($0.15 per share)[(3)] compared to $5.0 million ($0.13 per share) in Q1-2023;

• Increased net income of $4.8 million in Q1-2024 ($0.13 or CA$0.17 per share), compared to the $4.5 million net income ($0.11 or CA$0.15 per share) in Q1-2023.

• Solid cash position . Cash on hand of $27.7 million at the end of Q1-2024 compared to $22.5 million at year end 2023;

Return to Shareholders

• Increased share buy-back . 926,800 common shares repurchased for $2.7 million (CA$3.7 million) in Q1-2024, compared to 29,080 common shares for $0.1 million (CA$0.1 million) in Q1-2023;

• Increased dividends. A 16.7% monthly dividend increase is paid since January 2024. On an annual basis, the 2024 dividend will represent CA$0.14 per share or 2.6% dividend yield based on the current share price.

( Variance %, are calculated based on rounded figures)

(Detailed variance calculations and explanations are contained in section 4)

(1) Cash gross operating margin per AuEq ounce is in US$ and is calculated by subtracting the average cash cost of sale per equivalent ounces of Au from the average selling price per equivalent ounces of Au and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another company. See the “non-IFRS Measures” section 15 of this MD&A.

(2) EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure as an indicator of the cash generated by the operations and allows investor to compare the profitability of the Corporation with others by canceling effects of different assets basis, effects due to different tax structures as well as the effects of different capital structures. EBITDA is calculated on p.13 of this MD&A. See the “Non-IFRS Measures” section 15 of this MD&A.

(3) Cash-flow per share is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. This measure is calculated on p.13 of this MD&A. See the “Non-IFRS Measures” section 15 of this MD&A. The Corporation uses this non-IFRS measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

2-KEY ECONOMIC TRENDS

Gold market price

During Q1-2024, the market price of gold averaged $2,072/oz, compared to $1,889/oz in Q1-2023.

Below, the charts of the overall market price of gold for since 2023. In 2024, the gold market price increased significantly since March. On May 14, 2024 the gold market price was $2,358/oz. This gold price context impacts our level of sales and margin.

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Exchange rates

The quarter-end and quarterly average exchange rates for 2024 and 2023 were as follows:

March 31 (closing rate) Q-1 (average rate) December 31 (closing rate)	US$/CA$ 2024 2023 1.355 1.353 1.349 1.353 1.323	US$/Soles 2024 2023
		3.718 3.758 3.756 3.815 3.709

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In 2023, the Peruvian Sol had gain value over the US dollar +2.8%. In Q1-2024 the exchange rate remained relatively stable. At the date of this report the exchange rate US$/Soles is 3.72.

The Corporation has not entered into any hedging contracts.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

3-OVERALL PERFORMANCE

Given the high ore inventory level built at year-end 2023, and our continuously strong level of purchases in Q1-2024, we were able to process 44,006 tonnes in Q1-2024 which represents the second highest quarter ever. Combine with a higher gold market price, this helps propel quarterly sales to record level.

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The Q1-2024 gold production is 8.4% higher than Q1-2023.

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Other variances of gross margin and net income are detailed in section 4.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

4-CONSOLIDATED RESULTS AND GOLD ORE PROCESSING OPERATIONS

Consolidated Statement of net income and comprehensive income

(in $'000) (unaudited) Sales Cost of sales Gross operating margin General and administrative expenses Other projects expenses Operating income Financial income (net of expenses) Foreign exchange gain (loss) Income before income taxes Current income tax expense Deferred income tax recovery Net income and comprehensive income Earnings per share Basic Diluted	For the three-month periods ended March 31, 2024 2023
	67,733 56,733 (58,585) (48,904)
	9,148 7,829 (1,704) (1,553) (214) (224)
	7,230 6,052 171 153 (59) 50
	7,342 6,255 (2,577) (1,979) 16 191
	4,781 4,467 $0.13 $0.11 $0.13 $0.11

Total sales amounted to a record level of $67.7 million compared to $56.7 million in Q1-2023. The $11.0 million increase is explained by higher quantities sold ($4.5 million) and by higher average selling prices ($6.5 million).

The Q1-2024 gross operating margin increased by 16.7% and amounted to $9.1 million (13.5% of sales) compared to $7.8 million (13.8% of sales) in Q1-2023. The Q1-2024 gross operating margin was positively impacted by increases in gold market prices from March.

General and administrative expenses amounted to $1.7 million compared to $ 1.5 million in Q1-2023.

As budgeted, other projects represent the expenses incurred by the Corporation to duplicate its unique business model in other jurisdictions.

The Q1-2024 net income was also affected by the recording of a $2.6 million income tax expense compared to $1.8 million in Q1-2023. The increase as a percentage of the net income before taxes is mainly explained by the recording of withholding taxes on dividends received from a Peruvian subsidiary (none in Q1-2023) and by the effect on the current and deferred tax expense of the variance throughout the periods of the Peruvian Sol against the US$. Future fluctuations will affect positively or negatively the current and deferred tax at the end of each period.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Production, sales and gross operating margin

Gold production and sales for the three-month periods ended March 31, 2024 and 2023, are summarized as follows:

Gold Production (AuEq ounces) Gold sales (AuEq ounces) Total sales Total cash cost of sales(1) Cash gross operating margin(2) Depreciation Gross operating margin Gross Operating Margin per AuEq ounce sold ($/ounce) Average gold market price ($/ounce) Cash gross operating margin per AuEq ounce sold Average selling price Average cash cost of sales(3) Cash gross operating margin(4)	For the three-month periods ended March 31, 2024 2023
	Ounces Ounces
	31,769 29,299 32,637 30,257
	($‘000) ($‘000)
	67,733 56,733 (57,783) (48,159)
	9,950 8,574 (802) (745)
	9,148 7,829 280 259 2,072 1,889 $/ounce (*) $/ounce (*) 2,075 1,875 (1,770) (1,592)
	305 283

(*) per AuEq ounce sold

The cash gross operating margin amounted to $305/oz in Q1-2024 compared to $283/oz in Q1-2023. The variance is mostly due to the timing of gold export during the period.

(1) Cash cost of sales is the cost of sales and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. See the “non-IFRS Measures” section 15 of this MD&A.

(2) Cash gross operating margin is calculated by deducting to the sales the cash cost of sales and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. See the “non-IFRS Measures” section 15 of this MD&A.

(3) Average cash cost of sales is calculated by dividing the cash cost of sales by sales volume in ounces and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another company. See the “non-IFRS Measures” section 15 of this MD&A.

(4) Cash gross operating margin per AuEq ounce is calculated by subtracting the average cash cost of sale per equivalent ounces of Au from the average selling price per equivalent ounces of Au and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another company. See the “non-IFRS Measures” section 15 of this MD&A.

These non-IFRS measures are used by management as indicators of the gross amount of cash which could be generated from the production of one unit (ounce) of gold.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Net income and comprehensive income variance analysis

The variance in the net income and comprehensive income between Q1-2023 and Q1-2024 is as follows:

(in million $) (unaudited) Net income Q1-2023 Increase in gross operating margin Increase in general administrative expenses Increase in foreign exchange result Increase in income tax expenses (current and deferred) Total variances Net income Q1-2024	Q1-2023 vs. Q1-2024 4.5 1.3 (0.1) (0.1) (0.8)
	0.3
	4.8

The gross operating margin variance and the income tax expenses (current and deferred) which represents the main variance in net income were explained in the previous pages.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Reconciliation of non-IFRS measures

(in $’000) (unaudited) Reconciliation of net income and comprehensive income to EBITDA(1) Net income and comprehensive income Income taxes expense (current and deferred) Financial income net of expenses Depreciation EBITDA(1) Reconciliation of net cash flow from operating activities before change in working capital items per share(2) Net cash flow from operating activities before change in working capital items (in $'000) Basic weighted average number of common shares outstanding (‘000) Net cash flow from operating activities before change in working capital items per share(2)	For the three-month periods ended March 31, 2024 2023
	4,781 4,467 2,561 1,788 (171) (153) 885 784
	8,056 6,886
	5,651 5,009 36,879 38,434
	$0.15 $0.13

(1) EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another Corporation. The Corporation uses this non-IFRS measure as an indicator of the cash generated by the operations and allows investor to compare the profitability of the Corporation with others by canceling effects of different assets bases, effects due to different tax structures as well as the effects of different capital structures. See the “Non-IFRS Measures” section 15 of this MD&A.

(2) Net cash-flow from operating activities before change in working capital per share is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another Corporation. See the “Non-IFRS Measures” section 15 of this MD&A. The Corporation uses this nonIFRS measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Ore processing production statistics and financial summary

Below is the table explaining the variances between the three-month periods ended March 31, 2024 and 2023.

Ore processing production statistics summary	Q1- 2024	Comments and explanations over variances	Q1- 2023	Variance in %
Tonnes processed	44,006	As per last year, the plant ran at full capacity during the quarter.	41,566	+5.9%
Average daily tonnes processed(1)	484	Consistent with variances in tonnes processed.	462	+4.8%
Ounces produced (AuEq ounce)	31,769	In line with the increase in tonnes processed at a higher grade.	29,299	+8.4%
Ounces sold (AuEq ounce)	32,637	In line with production and variance in inventories.	30,257	+7.9%
Financial summary
Sales (million $)	67.7	Increase due to higher quantities sold ($4.5 million) at a higher average gold price ($6.5 million).	56.7	+19.4%
Average selling price per AuEq ounce sold ($)	2,075	Consistent with the average gold market price and the timing of exports.	1,875	+10.7%
Gross operating margin (million $)	9.1	Increase attributable to higher sales.	7.8	+16.7%
Gross operating margin (% of sales)	13.5%	In line with last year.	13.8%	-2.2%
Gross operating margin per AuEq ounce sold ($)	280	Increase due to higher average selling prices.	259	+8.1%
Cash gross operating margin per AuEq ounce sold ($)	305	Increase due to higher average selling prices.	283	+7.8%
EBITDA (millions $)	8.1	In line with increase in sales.	6.9	+17.4%
Cash flows before changes in working capital items (million $)	5.6	In line with increase in gross operating margin at a slightly lower percentage of sales.	5.0	+12.0%
Net cash flow from operating activities before change in working capital items per share ($)	0.15	In line with the increase in EBITDAand the number of outstanding shares.	0.13	+15.4%
Net income (million $)	4.8	Main variances coming from the increase in gross operating margin +$1.3 million partially offset by the increase in income tax charge (-$0.8 million).	4.5	+6.7%
Earnings per share ($)	0.13	In line with the increase in net incomeand thenumberofoutstanding shares.	0.11	+18.2%

(Variance % are calculated based on these rounded figures)

• (1) Considering 91 days in 2024 and 90 days in 2023.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

5-CONSOLIDATED CASH FLOW AND LIQUIDITY

The impacts of all the activities on the Corporation’s cash flow are summarized below:

(in $'000) (unaudited) Operating activities Net income, adjusted for non-cash items Change in working capital items Net cash from operating activities Investing activities Acquisition of property, plant and equipment, net of proceeds from disposals Additions to exploration and evaluation assets Net cash used in investing activities Financing activities Repayment of lease obligations Proceeds from the exercise of stock options Repurchase of common shares Dividends paid Net cash used in financing activities Change in cash during the period Effect of exchange rate changes on cash Cash, beginning of the period Cash, end of the period	Three-month periods ended March 31, 2024 2023 5,651 5,009 3,940 4,743
	9,591 9,752
	(714) (3,683) (4) -
	(718) (3,683)
	(33) (13) 88 - (2,752) (65) (969) (854)
	(3,666) (932)
	5,207 5,137 (13) (3) 22,481 25,595
	27,675 30,729

Operating activities

For the three-month period ended March 31, 2024, the cash flow from operations, before changes in working capital items, amounted to $5.6 million compared to $5.0 million for the three-month period ended March 31, 2023. Net cash from operating activities amounted to $9.6 million compared to $9.7 million for the three-month period ended March 31, 2023. Changes in working capital items amounted to $3.9 million compared to $4.7 million for the three-month period ended March 31, 2023.

Investing activities

During the three-month period ended March 31, 2024, the Corporation invested $0.7 million ($3.7 million for the three-month period ended March 31, 2023). This amount mainly includes investments at the plant and new vehicles. All investments have been financed with internally generated cash-flows.

Financing activities

In Q1-2024, monthly dividends totaling CA$0.035 per share were disbursed for a total consideration of $1.0 million (CA$ 1.3 million) compared to CA$0.030 per share for a total consideration of $0.9 million (CA$ 1.2 million) in Q1-2023.

In Q1-2024, 926,800 common shares were repurchased under the Corporation normal course issuer bid share buyback program for a total cash consideration of $2.7 million (CA$3.7 million) (29,080 shares for a total cash consideration of $0.1 million (CA$0.1 million) in Q1-2023).

In Q1-2024, the Corporation issued 62,925 common shares following the exercise of purchase options for a consideration of $0.1 million (CA$ 0.1 million).

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Working capital and liquidity

As at March 31, 2024, the Corporation’s working capital increased to $52.1 million, including $27.7 million in cash ($50.8 million, including $22.5 million in cash at December 31, 2023).

6-CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in $'000) (unaudited) Cash Accounts receivable Inventories Prepaid Property, plant and equipment Right-of-use assets Exploration and evaluation assets Total assets Trade and other payables Current tax liabilities Asset retirement obligations Deferred tax liabilities Lease liabilities Shareholders' equity Total liabilities and equity	As at March 31, As at December 31, 2024 2023
	27,675 22,481 12,013 13,328 27,321 31,925 841 277 24,496 24,590 591 613 18,570 18,566
	111,507 111,780
	13,530 15,357 2,230 1,799 3,746 3,724 661 677 602 636 90,738 89,587
	111,507 111,780

Assets and short-term liabilities

As at March 31, 2024, total assets amounted to $111.5 million ($111.8 million as at December 31, 2023). Major variances since last year-end come from the increase in cash and variances in working capital items (mainly inventories and trade and other payables).

Accounts receivable amount to $12.0 million ($13.3 million as at December 31, 2023) and are mainly comprised of trade receivable that were collected after period end ($4.7 million), two months of current sales taxes (IGV) ($6.9 million) of which $3.5 million were collected after period-end and net advances to suppliers for ore purchases ($0.4 million).

Property, plant and equipment amount to $24.5 million ($24.6 million as at December 31, 2023) and are mainly comprised of the Veta Dorada Plant and capitalized rehabilitation costs.

Total exploration and evaluation assets amounted to $18.6 million (same amount as at December 31, 2023) and are mainly comprised of accumulated capitalized exploration work performed at Tumipampa.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Long-term liabilities and contractual commitments

Payment due by period (in $’000)
	Within 1	1 to 2	2 to 5	Beyond
Contractual commitments	year	years	years	5 years	Total
Trade and other payables	10,922	-	-	-	10,922
Other commitments with suppliers	415	5	105	-	525
Leases liabilities(1)	74	83	260	394	811
Short-term leases	75	-	-	-	75
Asset retirement obligation(2)	-	-	1,489	3,297	4,786
Total	11,486	88	1,854	3,691	17,119

(1) The amount is different from the amount disclosed in the Financial Statements as it includes overall interest calculated to the term of the related agreement.

(2) The amount is different from the amount disclosed in the Financial Statements as it represents the undiscounted value of the remaining proposed work program as per the supporting valuation report.

During the period, the Corporation met all its obligations. The Corporation’s operations are governed by regulations regarding the protection of the environment. Subject to these regulations, the Corporation must implement progressive measures for rehabilitation work as part of its operations. Management reviews its asset retirement obligations (“ARO”) on a regular basis.

As of March 31, 2024, and December 31, 2023, the $3.7 million provision for assets retirement obligation fully relates to the Veta Dorada plant.

This estimate is subject to change following developments on each site, modifications to laws and regulations or as new information becomes available. As at March 31, 2024 and December 31, 2023, the Corporation has constituted letters of credit in favor of the Ministry of Energy and Mines (MEM) for $3.6 million to secure closure plans of its production facilities and exploration projects.

As at March 31, 2024, the future value of the provision for closure of facilities and exploration projects is $4.8 million (same as at December 31, 2023), which is estimated to be disbursed in periods up to 14 years.

Contingencies

On October 26, 2021, October 28, 2022 and December 29, 2022 respectively, a Corporation subsidiary received notices of assessment from the Peruvian tax authorities, in Peruvian Sol, for each of the fiscal years 2015, 2016 and 2017 in the aggregate amount equivalent to $16.0 million including $12.0 million in penalties and interests. Additional penalties and interests since the notices of assessment are estimated at $1.4 million. The main item of the assessment relates to the ore purchased from certain suppliers, qualified as non-genuine transactions by the local tax authorities and therefore considered by the authorities as nondeductible expenses.

The Corporation and its legal tax counsel strongly believe that ore purchases are genuine and fully supported deductible transactions. Therefore, the Corporation contested these claims.

The Corporation recorded a tax provision related to uncertain tax position for items other than ore purchases, in the amount of $0.7 million (including $0.6 million in penalties and interest). Although the Corporation considers that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect the consolidated financial statements.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

Shareholders’ equity

In Q1-2024, 926,800 shares were repurchased.

Other than results from operations and capital increases, transactions affecting the shareholders’ equity are reflected in the financing activities section.

Capital resources and capital management

The Corporation generates cash flow from its ore processing activities. This positive cash flow is re-invested in the commercial operations, capital investments and exploration activities. The Corporation has access to the capital market and may eventually need from time to time to turn to the financial market in order to fund any exploration program, capital requirement and project or investment opportunities. As at March 31, 2024, the Corporation has enough resources to meet its commitments for the upcoming year, however management is always looking at financing or investment opportunities which could benefit to the growth of the Corporation.

The Corporation’s capital structure consists of common shares, stock options and deferred share units (“DSUs”). The Corporation manages its capital structure and makes changes pursuant to economic conditions and conditions related to its assets. The Corporation has the ability to raise capital when it is necessary to meet its requirements and therefore, it does not have a specific target debt to capital ratio. The Corporation also possesses the ability to raise debt to maintain a balance between debt and shareholders’ equity.

The Corporation’s objectives in managing capital are the following:

• i. to preserve the capacity to continue its operations in order to maximize the return to its shareholders and maintain an optimal capital structure in order to increase the shareholders’ equity in the long term.

• ii. to ensure the Corporation has sufficient capital to meet its short-term needs and ensure the development of its projects and processing activities.

• iii. to satisfy the external requirements with regards to capital needed in respect of any lending agreements.

• iv. to maintain an optimal capital structure in order to minimize the cost of debt financing.

The Corporation is not subject to any externally imposed capital requirements. However, for the Corporation’s Peruvian subsidiary, the General Corporate Law (Peru) establishes that a minimum of 10% of the distributable profit of each year must be allocated to a legal reserve account, until this account reaches 20% of its capital ($3.0 million as at March 31, 2024 and December 31, 2023). Dynacor may transfer the funds from this legal reserve account, but the Corporation will be obliged to replace these funds in the subsequent year.

Off-balance sheet transactions

The Corporation did not enter any significant off-balance sheet transactions in 2024.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

7-QUARTERLY REVIEW

(Unaudited, in accordance with IAS 34)

2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022	2024 2023 2022
Financials (in $'000) Sales Cost of sales Depreciation General and administrative expenses Loss (gain) on foreign exchange Income tax expenses Net income (loss) Acquisition of property, plant and equipment Additional exploration and evaluation Gross operating margin (%) Earnings per share ($) Basic Diluted	Q1 67,733 58,585 885 1,704 59 2,561 4,781 779 4 13.5% 0.13 0.13	Q4 65,555 57,818 866 2,081 (55) 1,944 3,578 720 11 11.8% 0.09 0.09	Q3 63,428 56,450 866 1,648 168 2,662 2,544 945 2 11.0% 0.07 0.07	Q2 64,472 56,817 833 1,814 (161) 1,485 4,478 1,126 17 11.9% 0.12 0.12	Q1 56,733 48,904 784 1,553 (50) 1,788 4,467 3,747 - 13.8% 0.11 0.11	Q4 47,523 41,421 936 1,588 (105) 1,108 3,511 1,058 4 12.8% 0.09 0.09	Q3 45,998 41,485 799 1,229 127 2,316 801 792 - 9.8% 0.02 0.02	Q2 53,944 47,659 787 1,756 65 1,792 2,576 1,154 23 11.7% 0.07 0.06

==> picture [345 x 201] intentionally omitted <==

First quarter results (refer to section 4 for variance analysis).

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

8-INFORMATION ON OUTSTANDING SHARES

Data concerning outstanding shares (as at May 14, 2024)

	Number
Common shares	36,568,356
Share purchase options	777,825
DSUs	636,844

9-TRANSACTIONS WITH RELATED PARTIES

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, Chief Operating Officer for 2024 (none for 2023) and Vice President Operations, Latin America.

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

(in $) Salaries, benefits and directors’ fees Share-based compensation(1)	Three-month periods ended March 31, 2024 2023 400,810 433,336 41,146 5,440 441,956 438,776	Three-month periods ended March 31, 2024 2023 400,810 433,336 41,146 5,440 441,956 438,776
		433,336 5,440
		438,776

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

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 professional fees amounting to $17,509 for the three-month period ended March 31, 2024 ($19,106 for the three-month period ended March 31, 2023).

A Director charged consulting fees relating to the revision of ESG procedures and amounting to $10,963 for the for the three-month period ended March 31, 2023 (none for the three-month period ended March 31, 2024).

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.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

10-MINING EXPLORATION PROPERTIES

Tumipampa

Location and Geological Context

Tumipampa is located 500 km from Lima, Peru, in the Circa district, Province of Abancay, Department of Apurimac. Tumipampa’s concessions cover an area of 5,796 hectares and are located geographically on the eastern slopes of the Andes Mountain Range between 4,200 and 4,800 metres above sea level. The northern part of Tumipampa straddles the limestones of the host Ferrobamba deposit ‘Tintaya’ skarn-type (copper-gold), which is recognized as a major world class deposit of this type with more than 139 million tonnes at 1.23% Cu and 0.23g/t Au. The Tintaya mine is located 197 km northeast of Tumipampa. Moreover, major deposits have been recently unearthed at Los Chancas (355 million tons at 0.62% Cu, 0.05%Mo and 0.039g/t Au) (Southern Copper), Las Bambas (1.13 billion tonnes of 0.77% Cu,0.05 – 0.068 g/t Au and 0.01% Mo) (MMG Limited) and Constancia-which just began production (Hudbay), which are located on either side and near Tumipampa, respectively. All these major deposits are part of a belt of porphyry type deposits Cu-Au Skarn-related batholiths Andahuaylas-Yauri, an intrusive that is 300 km long and 150 km wide.

Currently, all of the land surrounding Tumipampa is claimed by major mining companies such as Southern Copper, MMG Limited, Buenaventura, Golden Ideal Gold Mining (China), Super Strong Mining (China) and Bear Creek Mining.

11- FOLLOW-UP OUTLOOK 2024

Ore processing

For 2024, the Corporation forecasted sales[(1)] ranging between $265-285 million representing a growth of 6-14% over 2023 sales. Net income is forecasted ranging between $12-15 million ($0.33-0.41 per share) (CA$0.45-0.56 per share) and include expenses of $2.7 million to advance other projects in other jurisdictions. So far in 2024, the Corporation is in line with its financial forecast.

• (1) Using a market gold price ranging between $2,000 and $2,050 per ounce

Capex

Dynacor Group plans to invest up to US$13 million in capital expenditures in 2024. This investment will be used at our Veta Dorada plant for new equipment to improve efficiency, increase tailing pond capacity, vehicles to support the security of our purchasers working in remote areas and will include, upon favourable conditions, up to $4 million to pursue the due diligence process and development of new projects in other jurisdictions.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

12-RISKS AND UNCERTAINTIES

The Corporation operates in the mining industry which is subject to numerous significant risks that can influence the profitability of a company. Please refer the Corporation’s annual information form or it’s MD&A for the year ended December 31, 2023, filed electronically on SEDAR+ www.sedarplus.com for more details.

13-JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of consolidated financial statements (refer to note 5 of the Annual Financial Statements) requires management to make judgments, estimates and assumptions on the reported amounts of assets and liabilities, and 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 significant accounting estimates are those that require assumptions on matters that are substantially uncertain at the time of the estimate, that should the assumptions be modified, it would have a material impact on the reported earnings or the financial position of the Corporation. A description of the Corporation’s main accounting policies can be found in the Annual Consolidated Financial Statements, filed electronically on SEDAR+ at www.sedarplus.com.

14-ACCOUNTING POLICIES AND MODIFICATIONS

Changes in accounting policies and policies issued but not yet effective

There were no changes in accounting policies during the year. Please refer to note 3 of the Annual Consolidated Financial Statements.

15-NON-IFRS MEASURES

Throughout this document, the Corporation has provided measures prepared according to IFRS Accounting Standards as well as some non-IFRS financial performance measures. Because the non-IFRS performance measures do not have any standardized definition prescribed by IFRS Accounting Standards, they may not be comparable to similar measures presented by other companies. The Corporation provides these nonIFRS financial performance measures as they may be used by some investors to evaluate our financial performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS Accounting Standards. These non-IFRS financial performance measures were reconciled to reported IFRS measures within the document. (Refer to section 4 for description and reconciliation of those non-IFRS measures).

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

16-DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Disclosure controls and procedures (“DC&P”)

The CEO and the CFO of the Corporation are responsible for establishing and maintaining the Corporation’s DC&P, including adherence to the Disclosure Policy adopted by the Corporation. The Disclosure Policy requires all staff to keep senior management fully apprised of all material information affecting the Corporation so that they may evaluate and discuss this information and determine the appropriateness and timing for public release. The CEO and CFO evaluated the effectiveness of the Corporation’s DC&P as required by Multilateral Instrument 52-109 issued by the Canadian Securities Administrators. They concluded that as of March 31, 2024, the Corporation’s DC&P were effective. Since the March 31, 2024 evaluation, there have been no adverse changes to the Corporation’s DC&P and they continue to remain effective.

Internal control over financial reporting (“ICFR”)

Management has developed a system for ICFR in order to provide reasonable assurance with regards to the reliability of the financial information published and the preparation of the consolidated financial statements in accordance with IFRS. The CEO and the CFO evaluated the effectiveness of the ICFR as at March 31, 2024, based on the framework and criteria established in Internal Control – Integrated Framework as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, and based on their evaluation, management has concluded that the Corporation’s ICFR were effective.

Limitations of controls and procedures

The Corporation’s management, including the CEO and CFO, believe that any DC&P or ICFR, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Corporation have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the controls. The design of any systems of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a costeffective control system, misstatements due to error or fraud may occur and not be detected.

Changes to ICFR

No changes were made to our ICFR during the three-month period ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our ICFR.

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

17-CAUTION REGARDING FORWARD LOOKING STATEMENTS

Statements contained in this document that are not historical facts are regarded as forward-looking statements. These statements may involve risk, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Many factors could cause such differences, including: volatility in market metal prices; changes in foreign currency exchange rates and interest rates; unexpected variations in geological conditions of a property of erroneous geological data; environmental risks including increased regulatory constraints; unexpected adverse mining conditions; adverse political conditions, and changes in government regulations and policies. Although the Corporation believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this document. The Corporation has not committed to maintaining this forward-looking information unless so required by law.

(s) Jean Martineau Jean Martineau President and Chief Executive Officer

(s) Leonard Teoli CPA Leonard Teoli Vice-President and Chief Financial Officer

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Dynacor Group Inc. March 31, 2024

Management Discussion and Analysis

18-CORPORATE INFORMATION

Dynacor Group Inc. Corporate Office 625 René Lévesque Ouest Suite 1200 Montreal, Québec, Canada H3B 1R2 Tel.: (514) 393-9000 Fax: (514) 393-9002 Website: http://www.dynacor.com Twitter:http://twitter.com/DynacorGold

Directors and Officers

Pierre Lépine, CPA, ICD-D - Chairman of the Board Jean Martineau- President and CEO Roger Demers, FCPA, ASC- Director Réjean Gourde, Ing- Director Cyril Gradis, MBA- Director Isabel Rocha, B.Eng. MSc. MBA- Director Philippe Chave, Ing- Director Rocio Rodriguez-Perrot, LLB- Director Leonard Teoli, CPA- VP Finance and CFO Jorge Luis Cardenas, Ing- VP Operations, Latin America

René Branchaud, LLB- Corporate Secretary

Legal Counsel

Lavery, de Billy LLP

Auditors

Raymond Chabot Grant Thornton LLP

Transfer Agent

TSX Trust Company (Canada)

Exchange listings

Toronto Stock Exchange – DNG

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