Management Report


This management report for Dynacor Gold Mines Inc. (“Dynacor” or the “Company”) comments the major

activities of the Company which occurred during the year ended December 31, 2009 as well as the

subsequent period up to March 29, 2010.




Between the months of July 2008 to April 2009, the Peruvian authorities have withheld the sales tax

receivable from a Peruvian subsidiary. The sales tax is 19% of the sales value. The authorities have

informed the Company that the withholding is due to the fact that certain companies operating in the

same region as the Company were charging sales taxes and never remitting them to the Peruvian

authorities. These suppliers were shell operations. Dynacor vigorously contests this withholding. The

Peruvian authorities are conducting their tax audit which was expected to be completed in the fourth

quarter of 2009. The Company is waiting for the results of the audit. Thus, the Company was unable to

recover the withholding tax funds as planned in this quarter. Dynacor now considers receiving about 66%

of this amount in 2010. Since it is impossible to determine when the remaining 34% will be recovered, the

sum of $1.5M is presented as long term. As at December 31, 2009, the withholding amounts to

12,206,403 nuevo soles (approximately $4,400,000). The Company has taken all necessary measures to

recover these amounts. In the event the settlement attempts are not successful, the Company will

continue to operate at a reduced rate of output until such time that the Company significantly increases its

cash flow generated from operating activities or receives financing in the form of share issues or

borrowing. The Company has taken steps to this end.



Old management report:



They clearly can be held liable from the Dynacor Entity....they even stated that they (Dynacor) would issue debt or issue shares if the judgement goes against them.

I'm not laughing....can we get someone to respond to this (DNG management)?