What changed in this filing

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Item 1. Business

2024-04-16 compared with 2023-04-17 · 58 added, 54 removed, 49 unchanged (70% of the section changed)

History and Organization

The Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling operations through an operating subsidiary in México, with specific focus on precious and base metals in México.

The Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling activities through an operating subsidiary in México, with specific focus on precious and base metals in México.

The Company was originally incorporated in the State of California on September 28, 1937, under the name West Coast Mines, Inc.

In November 1998, the Company re-domiciled from California to Delaware and changed its name to DynaResource, Inc.

DynaUSA currently owns 80% of the outstanding shares of DynaMéxico, 79% owned directly and 1% hold by the current CEO on behalf of the Company compliance with Mexican law and DynaMéxico currently holds 20% of the shares of DynaMéxico as treasury shares after complete foreclosure and recovery of those share on February 20, 2020 from goldgroup Resources, Inc., a wholly owned subsidiary of Goldgroup Mining Inc.

Vancouver, BC (“Goldgroup”).

DynaMéxico owns 100% of the mining concessions, equipment, camp and related facilities which comprise the San Jose de Gracía Property (“SJG”), in northern Sinaloa State, México.

We also own 100% of Mineras de DynaResource S.A.

(“DynaMineras”).

The Company also has another wholly owned subsidiary, DynaResource Operaciones, S.A.

(“DynaOperaciones”).

The Company currently conducts test mining and pilot milling operations, and other exploration activities in México.

Segment Information

Our only current operating segment is gold mining and milling operation.

The end use product produced at our test mining and pilot milling operations at SJG is in the form of gold-silver concentrates.

Gold-silver concentrates, or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue (waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component.

Concentrates processed and produced from San Jose de Gracía are shipped to third-party smelters, refineries or third parties for further processing or re-sale.

During 2022, we reported the delivery and sale of 25,554 (subject to final settlements) net Oz gold-silver contained in concentrates.

All gold-silver concentrate originated from the San Jose de Gracía Property in México.

Gold-silver concentrates are sold at a small discount to the prevailing spot market price, based on the price per ounce of gold and silver quoted at the London PM fix, with the actual net precious metals prices received depending on the sales contract.

Concentrates are priced by individual concentrate lots of 36 to 72 tons, or as a series of lots under contract, whereby the final selling price and gold-silver quantities are subject to final adjustments at the time of final purchase settlement.

Our common stock is traded on the OTCQX, the top tier of the OTC Markets Group under the symbol “DYNR”.

DynaUSA owns 100% of the outstanding shares of DynaResource de México, S.A.

which owns 100% of the mining concessions, equipment, camp and related facilities which comprise the San Jose de Gracia mining project.

We have one wholly owned subsidiary in the USA, DynaMexico US Holding LLC (“US Holding”) and three in Mexico, DynaResource de Mexico S.A.

(“DynaMexico”), Mineras de DynaResource S.A.

(“DynaMineras”) and DynaResource Operaciones, S.A.

(“DynaOperaciones”) in Mexico, collectively referred to as “the Company”.

Although we consider the three Mexican subsidiaries to be wholly owned, each has issued one qualifying share to a second shareholder as required under Mexican law, with such qualifying shares held by either US Holding or DynaUSA’s Chief Executive Officer.

The Company currently conducts test mining and pilot milling operations, and other exploration activities of the San Jose de Gracía Property (“SJG”), in northern Sinaloa State, México.

The end use product produced at our test mining and pilot milling operations at SJG is in the form of gold-silver concentrate.

Gold-silver concentrate, or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue (waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component.

Concentrate processed and produced from San Jose de Gracía is transported to a third-party for processing.

During 2023, we reported the delivery and sale of 24,829 net ounces (Oz) gold (subject to final settlements) contained in concentrate.

All gold concentrate originated from the San Jose de Gracía Property in México.

Gold concentrates are sold at a small discount to the prevailing spot market price, based on the price per ounce of gold quoted at the London PM gold fix, with the actual net precious metals prices received depending on the sales contract.

Concentrates are priced by the assay of the gold content in the concentrate deliveries and the final selling price and gold quantities are subject to final adjustments at the time of final purchase settlement.

In the first three quarters of 2023, the final adjustments decreased initial reported delivered ounces by approximately 15%.

Since and including the fourth quarter of 2023, there have been no material adjustments to the reported delivered ounces.

Metals Prices

The results of the Company are substantially dependent upon the market prices of gold and silver, which fluctuate widely.

In the past, the Company has not entered into derivative contracts to protect the selling price for certain anticipated gold and silver production and to manage risks associated with foreign currencies.

Gold and Silver Pilot Processing Methods

1 unchanged sentence

The mineralized material is extracted by underground mining methods.

The processing plant at the San José de Gracía mine is composed of conventional crushing and grinding circuits, and with gravity and flotation recovery methods.

The gravity and flotation concentrates are dewatered and shipped to purchasers in semi-truck trailers.

The processing plant at the San José de Gracía mine site is composed of conventional crushing and grinding circuits, and with gravity and flotation recovery methods.

The gravity and flotation concentrates are partially dewatered and transported to purchasers in armored and secured semi-trailer trucks.

We purchase materials and supplies from third parties to conduct our business, including electricity, fuel, chemical reagents, explosives, steel and concrete.

Prices for these commodities are volatile and can fluctuate due to conditions that are difficult to predict, including inflation, currency fluctuations, global competition for resources, consumer or industrial demand and other factors.

For most of these commodities, we have existing alternate sources of supply or alternate sources of supply are readily available.

We continuously monitor supply and cost trends for these items.

Exploration Stage

The Company is an exploration stage issuer as defined in Section 1300 of Regulation S-K.

Segment Information

The Company operates in one segment:

test mining and milling gold-silver concentrate for sale from its location in Mexico.

General Government Regulations

4 unchanged sentences

Exploration and exploitation of minerals in México may be carried out through Mexican companies incorporated under Mexican law by means of obtaining mining concessions.

Mining concessions are granted by the Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable for a further period of fifty years upon application within five years prior to the expiration of such concession in accordance with the Mining Law and its regulations.

Mining concessions are subject to annual work requirements and payment of annual surface taxes which are assessed and levied on a semi-annual basis.

The Company’s mining concessions were granted by the Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable for a further period of fifty years upon application within five years prior to the expiration of such concession in accordance with the Mining Law and its regulations at their issuance.

These mining concessions are subject to annual work requirements and payment of annual surface taxes which are assessed and levied on a semi-annual basis.

Such concessions may be transferred or assigned by their holders, but such transfers or assignments must be registered with the Public Registry of Mining in order to be valid against third parties.

The holder of a concession must pay semi-annual duties in January and July of each year on a per hectare basis and in accordance with the amounts provided by the Federal Fees Law.

During the month of May of each year, the concessionaire must file with the General Bureau of Mines, the work assessment reports made on each concession or group of concessions for the preceding calendar year.

During the month of May of each year, the concessionaire must file the work assessment reports made on each concession or group of concessions for the preceding calendar year with the General Bureau of Mines.

The regulations of the Mining Law provide tables containing the minimum investment amounts that must be made on a concession.

4 unchanged sentences

While the Company has agreements or is in the process of negotiating agreements with the Ejido that impact all of its projects in México, some of these agreements may be subject to renegotiation.

Environmental Law.

The Environmental Law in México, called the "General Law of Ecological Balance and Protection to the Environment" ("General Law"), provides for general environmental policies, with specific requirements for certain activities such as exploration set forth in regulations called "Mexican official norms".

Responsibility for enforcement of the General Law, the regulations and the Mexican official norms is with the Ministry of Environment and Natural Resources, which regulate all environmental matters with the assistance of Procuraduria Federal de Protección al Ambiente (known as "PROFEPA").

2020 Forestry Law.

The 2020 Forestry Law provides for general policies for the use and protection of the surface, and for plants, soil and trees.

The regulation of the Forestry Law is with the Ministry of Environment and Natural Resources, with the assistance of PROFEPA.

Residues Law.

The Residues Law, also known as Norm 141, provides for general policies for the deposit and storage of residue and waste.

The regulation of the Residues Law is with the Ministry Of Environment and Natural Resources, with the assistance of PROFEPA.

The primary laws and regulations used by the State of Sinaloa, where our San Jose de Gracía property is located, in order to govern environmental protection for mining and exploration are:

The General Law, the 2020 Forestry Law, Residues Law, as well as their specific regulations on air, water and residues, and the Mexican official norms (known as "NOM-120").

In order to comply with the environmental regulations, a concessionaire must obtain a series of permits during the exploitation and exploration stage.

The time required to obtain the required permits is dependent on a few factors including the type of vegetation and trees impacted by proposed activities.

Mining Permits.

7 unchanged sentences

The Land Use Change requires that an evaluation be made of the existing conditions of the land, including a plant and wildlife study, an evaluation of the current and proposed use of the land, impacts to naturally occurring resources, and an evaluation of reclamation/re-vegetation plans.

We believe that all of our properties are operated in compliance with all applicable governmental laws and regulations and the costs of compliance are paid for on an ongoing basis.

Costs of compliance - due to the nature of our permit, we have requirements for landscape restoration which are fulfilled on an ongoing basis.

We do not have an asset retirement obligation.

We are working under a permit which required a Bond of approximately 120,000 pesos which was requested as a Forest Fund bond and does not require, other than the replanting of material, any reclamation work since we are mining underground.

We believe we operate in compliance with all applicable governmental laws and regulations and the costs of compliance are paid for on an ongoing basis.

Due to the nature of our permit, we have requirements for landscape restoration which are fulfilled on an ongoing basis.

We are working under a permit which required a Forest Fund bond of approximately 134,487 pesos and does not require, other than the replanting of like vegetation material, any reclamation work since we are mining underground.

We maintain a greenhouse of approximately 20,000 trees that are used in the replanting of vegetation material.

The Company sells its concentrates to the buyer who offers the best terms based upon price, treatment costs, refining costs, and other terms of payment.

During the year ended December 31, 2022, the Company sold gold-silver concentrates to one purchaser pursuant to a Revolving Credit Line Facility and Commercial Offtake Agreement (the “RCL”).

As a result of the RCL, the Company’s financial well-being is heavily dependent on a single purchaser.

Distribution Methods

As gold and silver can be sold through numerous gold and silver market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.

In 2022, we sold to one buyer that gave us the best overall terms.

During the year ended December 31, 2023 and 2022, the Company sold gold-silver concentrates to one purchaser pursuant to an Advance Credit Line Facility (“ACL”) and a Revolving Credit Line Facility (the “RCL”) in accordance with the Commercial Offtake Agreement.

As gold-silver concentrate can be sold through numerous gold and silver market traders worldwide, and the price paid to the Company under the ACL/RCL varies based on market conditions, the Company is effectively not economically dependent on a limited number of customers for the sale of its product.

Products and Raw Materials

We have no new products.

Gold concentrates is the only product we produce.

Gold-silver concentrate is the only product we produce.

Additionally, we have no major suppliers of raw materials as the ore we mine is the most important raw material we use.

Supplementary supplies such as fuel and chemicals are in ready supply from a number of vendors.

Supplementary supplies such as fuel and organic solutions are in ready supply from a number of vendors.

Competitive Business Conditions

1 unchanged sentence

There is a limited supply of desirable mineral lands available for claim-staking, lease, or acquisition in the United States, Canada, Mexico, Argentina, and other areas where we may conduct our mining or exploration activities.

We may be at a competitive disadvantage in acquiring mineral properties, since we compete with these individuals and companies, many of which have significantly greater financial resources and larger technical staffs than we do.

We may be at a competitive disadvantage in acquiring mineral properties, since we compete with these entities, many of which have significantly greater financial resources and larger technical staffs than we do.

From time to time, specific properties or areas that would otherwise be attractive to us for exploration or acquisition may be unavailable due to their previous acquisition by other companies or our lack of financial resources.

6 unchanged sentences

Human Capital Resources

As of December 31, 2022, we had 200 employees in Mexico and 5 in the United States.

All our employees based in the United States work in an executive, technical or administrative position, while our employees in Mexico include management, laborers, craftsmen, mining, geologist environmental specialists, information technologists, and various other support roles.

As of December 31, 2023, we had approximately 200 employees in Mexico and 6 in the United States.

We also frequently engage independent contractors in connection with certain administrative matters and the exploration of our properties, such as drillers, geophysicists, geologists, and other specialty technical disciplines.

1 unchanged sentence

None of our employees in México are covered by union contracts and the Company believes we have good relations with our employees.

As part of our fundamental need to attract and retain talent, we regularly evaluate our compensation, benefits and employee wellness offerings.

As part of our fundamental need to attract, reward and retain talent, we regularly evaluate our compensation, benefits and employee wellness offerings.

We have determined that our compensation arrangements are competitive in the industry.

Not applicable for smaller reporting companies.

UNRESOLVED STAFF COMMENTS

Responsibility

The San Jose de Gracia community is home to DynaMéxico activities.

We’ve devoted significant capital and resources to ensuring our project is a good neighbor to SJG and the surrounding villages.

We strive for best-in-class safety and environmental policies through an approach of responsible production, including the sole use of biodegradable and organic solvents and a focus on best safety practices.

DynaResource has constructed and donated a hospital to the SJG community and contributed funds for repairs and upgrades to the local church and school, and provided education and business training to adults, creating new opportunities for current residents.

Additionally, we’ve funded and constructed roads within the community and improved a road from Sinaloa de Leyva to SJG, a distance of over 60 kilometers.

Available Information

We make available links on our website (http://www.dynaresource.com) to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements, as well as Forms 3, 4 and 5 with respect to our common stock, including any amendments to any of the foregoing, as soon as reasonably practicable after such reports are electronically filed with the U.S.

Securities and Exchange Commission (“SEC”).

These filings are also available at http://www.sec.gov.

Copies of our Code of Business Conduct and Ethics, applicable to the executive officers, are also available on our website.

Information contained on our website is not a part of this report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business