Final Construction Permit New Gold Ore-Processing Plant in Chala

MONTREAL - Dynacor Gold Mines Inc. has just obtained the construction permit for its new gold ore processing plant in Chala in Southern Peru. The construction permit has been issued by the Ministry of Energy and Mines (MEM) in Lima, which regulates medium and large scale (capacity >350 tpd) mining operations throughout Peru. The Company is currently commissioning construction companies.

The new plant will have an initial ore processing capacity of 300-tpd (102,000 t/y). The Chala plant has been designed to be readily expanded to 450-tpd (153,000 t/y) and then to 600-tpd (204,000 t/y) by adding additional processing lines and ball mills.

The Chala facility will be built on a 135-hectare site that is part of a 200-hectare mining concession, which was purchased by Dynacor in March 2011. This concession is located in the Department of Arequipa, District of Chala, in the heart of one of the most productive gold mining regions of Peru. The total construction cost has been estimated at10-million USD and will be entirely financed internally.

The above mentioned total cost includes USD 2.3 million that has already been spent on general infrastructure and equipment, including: A 5 km hardened road connecting the site to the Pan-American South highway; A power line connected to the National Power grid; Water wells and water storage tanks as well as a pumping station; A perimeter security fence and gate; Housing facilities for the company's employees and construction crews; and Milling heavy equipment including two 7'x8' ball mills that have already been tested at the Huanca mill.

Dynacor expects to process in excess of 102,000 tonnes of purchase ore per year at its new facility in Chala, compared to a processing capacity of 85,000 t/y in Huanca.

The Company is very pleased that despite the difficult operational climate for most junior mining companies, its auto-financing business model has allowed the Company to finance the expansion of its gold processing operations and the ongoing exploration of its mining properties.