Dynatec Reports Record Results for 2006



    
                      Record revenues of $211.4 million

                 Earnings from continuing operations up 138%
                       (excluding 2005 dilution gain)

          Year end cash and marketable securities of $128.9 million
    

    RICHMOND HILL, ON, March 6 /CNW/ - Dynatec Corporation (DY-TSX) today
reported record revenues in 2006 of $211.4 million, up $24.1 million or 12.9%
from 2005. Earnings from continuing operations in 2006 totaled $25.5 million
compared with $27.5 million a year earlier. Excluding a $16.8 million non-cash
dilution gain in 2005 related to the Company's 24.5% interest in FNX Mining
Company Inc. ("FNX"), Dynatec's earnings in 2006 increased $14.8 million or
138.0% from the comparable 2005 level, reflecting solid earnings growth from
the Company's Mining Services Division and its earnings leverage to nickel,
copper and other metal prices through equity income from its FNX interest.
    Bruce V. Walter, President and Chief Executive Officer of Dynatec,
commented: "In 2006, Dynatec made excellent progress. We completed a new
shareholders agreement for the Ambatovy Project, significantly advanced
discussions on a project debt financing expected to total at least
US$1.7 billion, and kept the Project on track for release to construction by
the middle of this year. We also benefited from a substantial increase in the
value of our 20.5 million common shares of FNX, and have seen more value added
over the last few weeks. The performance of our services business remained
strong in a favourable market environment, with a positive outlook for 2007."

    
    -------------------------------------------------------------------------
    Financial Review
    Canadian $ millions except per
     share amounts                      2006 vs. 2005       Q4/06 vs. Q4/05
                                        -------------       ---------------
    Revenues(1)                       $211.4 vs. $187.3    $ 60.8 vs. $ 47.6
    Earnings before income taxes
     and equity income(1)             $ 14.0 vs. $ 20.2    $  4.0 vs. $  4.3
    FNX equity income                 $ 14.3 vs. $  0.2    $  4.1 vs. $  0.2
    Earnings(1)                       $ 25.5 vs. $ 27.5    $  8.6 vs. $ 17.9
    Earnings per share (basic)(1)     $0.083 vs. $0.125    $0.028 vs. $0.069
    Earnings per share (diluted)(1)   $0.083 vs. $0.122    $0.028 vs. $0.067
    Net earnings                      $ 17.1 vs. $ 28.6    $  0.4 vs. $ 17.4
    Net earnings per share (basic)    $0.056 vs. $0.130    $0.001 vs. $0.067
    Net earnings per share (diluted)  $0.056 vs. $0.126    $0.001 vs. $0.065
    (1) From continuing operations.
    -------------------------------------------------------------------------
    

    Financial Capacity

    At December 31, 2006, Dynatec had cash, cash equivalents and marketable
securities of $128.9 million. Current assets exceeded current liabilities by
$120.3 million, and the Company had virtually no long-term debt. Shareholders'
equity at year end totaled $330.5 million, while total assets were $398.3
million. Included in the Company's assets was a carrying value of $89.1
million for its 20.5 million FNX common shares. The market value of these
shares at December 31, 2006 totaled $374.5 million. At the close of trading on
March 6, 2007, the value of these shares had increased to $435.4 million based
on a FNX share price of $21.24 per share.

    
    2006 vs. 2005

    -------------------------------------------------------------------------
    Segment
     Results(*)      Mining  Metallurgical  Corporate
    $ millions      Services  Technologies   & Other      SBJV        Total
    -------------------------------------------------------------------------
                  2006  2005  2006  2005  2006  2005  2006  2005  2006  2005
    -------------------------------------------------------------------------
    Revenues     193.7 150.6  17.5  21.9   0.2   0.3     -  14.5 211.4 187.3
    -------------------------------------------------------------------------
    Depreciation,
     depletion and
     amortization  3.0   3.1   0.4   0.5   1.1   1.0     -   1.1   4.5   5.7
    -------------------------------------------------------------------------
    Earnings
     (loss) before
     income taxes
     and equity
     income       18.4  10.1   2.6   8.7  (7.0) (3.8)    -   5.2  14.0  20.2
    -------------------------------------------------------------------------
    Identifiable
     assets       60.5  45.5   7.3   9.0 327.2 309.7     -     - 395.0 364.2
    -------------------------------------------------------------------------
    Capital
     expenditures  4.2   4.0   0.2   0.2  21.3  19.4     -   9.6  25.7  33.2
    -------------------------------------------------------------------------
    (*) From continuing operations
    

    Earnings from continuing operations in 2006 totaled $25.5 million
compared to $27.5 million in 2005. Accounting for $16.8 million of earnings
from continuing operations in 2005 was a one-time, non-cash dilution gain
related to the issuance of 7.5 million common shares by FNX in November 2005
which reduced Dynatec's interest in FNX from 27.0% to 24.6% (24.5% at
December 31, 2006). Excluding this gain, earnings from continuing operations
in 2006 increased by $14.8 million from the comparable 2005 level.
    Factors contributing to higher earnings from continuing operations in
2006 included strong profitability from the Mining Services Division, sharply
higher equity income from the Company's interest in FNX and the impact of a
lower effective tax rate.
    The Mining Services Division's revenues increased $43.1 million or 28.6%,
while pre-tax earnings were $8.3 million or 82.2% higher. Both increases
largely reflected higher work volumes and increased proceeds from FNX and
strong business growth in the United States. Revenues and pre-tax earnings
from the Metallurgical Technologies Division declined from 2005 levels. Both
revenues and pre-tax earnings in 2005 included $6.1 million related to a
license fee received in the first quarter of that year. Excluding this license
fee, revenues in 2006 increased $1.7 million while pre-tax earnings were
similar to the comparable 2005 levels.
    Equity income from the Company's 24.5% interest in FNX totaled
$14.3 million in 2006. FNX reported stronger earnings in 2006 largely driven
by robust commodity prices and efficient operations at FNX's McCreedy West
Mine. In 2005, Dynatec reported equity income from its FNX interest of $0.2
million, representing equity income during the fourth quarter of the year
following the exchange of the Company's 25% interest in the Sudbury Basin
Joint Venture ("SBJV") and 50% interest in Aurora Platinum Corp. ("Aurora")
for 20.5 million FNX common shares effective October 1, 2005. The Company also
reported $5.2 million of pre-tax earnings from its interest in the SBJV for
the first nine months of 2005, reflecting its share of metal sale proceeds and
related costs during that period.
    A pre-tax loss of $7.0 million was reported from the Company's Corporate
and Other Segment in 2006 versus a loss of $3.8 million in 2005. The greater
loss in 2006 mainly reflected a $1.9 million increase in corporate, general
and administrative expenses, due to higher stock option expense and increased
corporate costs, and lower interest and other income. In addition to the
current year's interest and other income of $2.3 million, which mainly
comprised interest income earned on cash and cash equivalents, not reflected
in the consolidated financial statements were $1.8 million of unrealized
mark-to-market gains at December 31, 2006 related to $112.1 million invested
in marketable securities. Income from these investments will be recorded in
the consolidated statements of earnings when they are realized, upon
disposition. Interest and other income in 2005 of $3.3 million included $1.9
million of pre-tax gains related to the disposition of securities in addition
to interest income earned on cash and cash equivalents.
    The effective tax rate in 2006 was 20.2% compared to 47.9% in 2005. The
lower tax rate in 2006 was largely due to changes in the estimates of future
tax liabilities from prior periods, the application of unrecognized timing
differences and the impact of federal income tax rate reductions during 2006.
    A loss of $8.4 million was recorded from discontinued operations in 2006.
Included in this loss were a $7.3 million non-cash, after-tax writedown of the
carrying value of the Company's mineral products operations and $1.1 million
of losses related to these operations during the year. The writedown resulted
from an assessment of the carrying value of the Company's remaining mineral
products assets after these assets were not sold during the course of 2006. It
remains the Company's intention to sell these assets. In 2005, earnings of
$1.1 million from discontinued operations primarily resulted from a
$1.6 million after-tax gain recorded on the sale of the Company's Drilling
Services Division, which more than offset operating losses during the year
from discontinued operations.

    
    Fourth Quarter 2006 vs. Fourth Quarter 2005

    -------------------------------------------------------------------------
    Segment
     Results(*)      Mining  Metallurgical  Corporate
    $ millions      Services  Technologies   & Other      SBJV        Total
    -------------------------------------------------------------------------
                    Q4/   Q4/   Q4/   Q4/   Q4/   Q4/   Q4/   Q4/   Q4/   Q4/
                    06    05    06    05    06    05    06    05    06    05
    -------------------------------------------------------------------------
    Revenues      56.7  41.4   4.1   6.0     -   0.2     -     -  60.8  47.6
    -------------------------------------------------------------------------
    Depreciation,
     depletion and
     amortization  0.3   0.8   0.1   0.1   0.3   0.2     -     -   0.7   1.1
    -------------------------------------------------------------------------
    Earnings
     (loss) before
     income taxes
     and equity
     income        4.3   2.8   1.1   1.5  (1.4)    -     -     -   4.0   4.3
    -------------------------------------------------------------------------
    Identifiable
     assets       60.5  45.5   7.3   9.0 327.2 309.7     -     - 395.0 364.2
    -------------------------------------------------------------------------
    Capital
     expenditures  1.2   1.5   0.2   0.1   7.3   7.8     -   0.5   8.7   9.9
    -------------------------------------------------------------------------
    (*) From continuing operations
    

    Earnings from continuing operations for the fourth quarter of 2006
totaled $8.6 million versus $17.9 million for the fourth quarter of 2005.
Excluding the $16.8 million dilution gain related to the issuance of common
shares by FNX during the fourth quarter of 2005, earnings from continuing
operations in 2006 increased $7.5 million from the same period a year earlier.
    The primary factors leading to higher earnings from continuing operations
were increased earnings from the Mining Services Division, higher equity
income from FNX and the impact of an income tax recovery.
    Revenues from the Mining Services Division totaled $56.7 million in the
fourth quarter of 2006, up $15.3 million from the fourth quarter of 2005.
Pre-tax earnings of $4.3 million, were up $1.5 million from the comparable
period a year earlier. Both increases largely resulted from higher levels of
work for FNX and increased business volumes in the United States.
    Revenues and pre-tax earnings from the Metallurgical Technologies
Division of $4.1 million and $1.1 million compared with revenues of
$6.0 million and pre-tax earnings of $1.5 million in the fourth quarter of
2005. The reductions mainly reflected lower volumes from last year's fourth
quarter.
    Equity income from FNX totaled $4.1 million for the fourth quarter of
2006 compared with $0.2 million for the comparable period a year earlier. The
increase largely reflected higher metal prices and efficient operations at
FNX's McCreedy West Mine, where Dynatec crews are engaged through a mining
services contract.
    A pre-tax loss of $1.4 million was reported from the Company's Corporate
and Other segment in the fourth quarter of 2006 versus a break-even
performance in the fourth quarter of 2005. The change from the prior period
mainly reflected higher corporate, general and administrative expenses and a
reduction in interest and other income.
    The Company recorded an income tax recovery of $0.4 million for the
fourth quarter of 2006, primarily reflecting changes to estimates of future
income tax liabilities recorded in prior periods. Income tax expense of
$3.4 million recorded in the fourth quarter of 2005 (for an effective tax rate
of 78.8%) largely related to the income tax accounting impact of the October
2005 transaction with FNX, through which the Company exchanged its direct
interest in the SBJV properties for an indirect interest in those properties
as a shareholder of FNX.
    A loss of $8.2 million was recorded from discontinued operations in the
fourth quarter of 2006, reflecting a $7.3 million after-tax writedown of the
carrying value of the Company's mineral products operations and a loss of
$0.9 million related to these operations during the fourth quarter. A loss of
$0.5 million was recorded from discontinued operations for the fourth quarter
of 2005.

    Liquidity
    ---------

    Operating Activities: Operating activities in 2006 represented a net
source of cash totaling $17.9 million versus being a source of $46.1 million
of cash during 2005. Of the $17.9 million of cash generated in 2006,
$14.8 million related to continuing operations, mainly reflecting strong
profitability from the Company's Mining Services Division during the year.
Discontinued operations were a source of $3.1 million of cash during 2006. Of
the $46.1 million of cash generated in 2005 from operating activities,
$38.1 million was from continuing operations and $8.0 million was from
discontinued operations.
    Operating activities in the fourth quarter of 2006 generated cash of
$32.2 million, mainly reflecting lower levels of accounts receivable and other
changes to non-cash working capital. $7.1 million of cash was generated in the
fourth quarter of 2005.
    Investing Activities: Investing activities used $28.3 million of cash in
2006, compared with being a use of $139.1 million in 2005. The largest uses of
cash during 2006 were $21.3 million of net additions to mining properties
under development, mainly related to Ambatovy, $4.0 million of net investments
in marketable securities and investments, and $2.8 million of net additions to
property, plant and equipment. The use of $139.1 million of cash in 2005
mainly reflected the investment of $107.8 million of proceeds from an equity
offering in November of that year in marketable securities, plus the impact of
net additions to mining properties under development and property, plant and
equipment totaling $31.7 million.
    For the fourth quarter of 2006, investing activities used $40.4 million
of cash reflecting increased investments in marketable securities and the
impact of capital expenditures related to Ambatovy. Investing activities in
the fourth quarter of 2005 used $119.8 million, mainly due to the investment
of proceeds from the November 2005 equity offering.
    Financing Activities: Financing activities represented a net use of cash
totaling $16.6 million in 2006 versus being a source of $104.7 million of cash
in 2005, the latter reflecting net proceeds of $109.8 million from an equity
offering in the fourth quarter of that year. The use of cash from financing
activities in 2006 largely reflected reductions in bank indebtedness of
$14.1 million and the repayment of $1.9 million of long-term debt. The Company
had almost no long-term debt at December 31, 2006, while bank indebtedness
stood at $4.6 million versus $18.8 million at the end of 2005.
    For the fourth quarter of 2006, financing activities used $12.8 million
of cash, largely reflecting reduced bank indebtedness. The addition of cash
from the November 2005 equity offering resulted in financing activities being
a source of $106.9 million of cash in the fourth quarter of 2005.

    Capital Resources
    -----------------

    At December 31, 2006, the Company had cash, cash equivalents and
marketable securities of $128.9 million compared with $151.6 million at the
end of 2005. The reduction in cash mainly related to net additions to mining
properties under development and reductions in bank indebtedness.
    Current assets at December 31, 2006 exceeded current liabilities by
$120.3 million. Short-term borrowings at December 31, 2006 were $4.6 million,
being the amount drawn on the Company's $30 million operating facility with a
major Canadian bank, which is renewable annually. The Company had almost no
long-term debt as of December 31, 2006 versus long-term debt of $1.9 million
at December 31, 2005. Also included on the Company's December 31, 2006 balance
sheet is an $89.1 million carrying value related to Dynatec's 20.5 million
common shares of FNX. These shares had a market value at the close of trading
on March 6, 2007 of $435.4 million.
    By far the Company's most significant funding requirement going forward
relates to its interest in the Ambatovy Project. In 2007, Dynatec intends to
draw on available cash, cash equivalents and marketable securities to fund
capital expenditures until such time as the Ambatovy project debt financing
closes, anticipated around the end of the second quarter. Upon completion of
the project financing, Project expenditures are expected to be met from
drawdowns on the project debt until a target ratio of debt to equity is
achieved. Once additional equity is required, Dynatec will begin drawing down
the US$236 million of limited recourse, subordinated loans being provided by
the Company's partners in the Ambatovy Project. Based on the Company's
existing capital resources and the financial support it will receive from its
partners, Dynatec has sufficient resources to meet its financial requirements
for Ambatovy, as well as other commitments, through 2007.

    Outlook
    -------

    Dynatec expects favourable market conditions for the Company's service
businesses to continue in 2007. The Mining Services Division anticipates solid
business volumes during the year, including its ongoing two-year mining
services contract with FNX, which extends until the end of 2007, its
underground mining operations contract with Goldcorp Inc., and continued
higher volumes in the U.S. market. The Goldcorp contract was extended in
January 2007 for an additional year, until December 31, 2007. A priority of
the Division will be to obtain new work assignments in the current favourable
market environment in order to grow profitability and to replace any work
completed during the year or contracts that may not be extended beyond 2007.
The Metallurgical Technologies Division expects strong market demand to
continue in 2007 and to be better positioned to pursue business growth as its
work related to Ambatovy is diminished and more of its resources become
available for third-party client work.
    Equity income from the Company's 24.5% interest in FNX in 2007 will be
largely dependent on commodity prices and production levels from FNX's
McCreedy West and Levack mining operations. In a press release dated
February 23, 2007, FNX published a target for ore production in 2007 of
900,000 tons, representing an increase of 42% over equivalent ore production
in 2006. Payable metal is estimated at 12.7 million pounds of nickel, 10.9
million pounds of copper and 29,500 ounces of total precious metals (platinum,
palladium and gold). During 2006, payable metal sold included 8.1 million
pounds of nickel, 9.6 million pounds of copper and 30,232 ounces of total
precious metals when only the McCreedy West Mine was in commercial production.
    The Ambatovy Project remains on track for release to construction by
mid-2007. Based on the current development schedule, mechanical completion is
expected to be achieved by early in 2010. As the Project approaches
construction, the Ambatovy partners are continuing to advance detailed
engineering, to update Project costs for current pricing, and to progress
discussions with a syndicate of international lenders towards completing a
project debt financing totaling not less than US$1.7 billion, expected by
around the end of the second quarter.
    Gas deliveries from the Company's coal-bed methane initiative are
currently being recorded from four pilot production units, each comprising a
single horizontal well connecting to a vertical well, and one full production
test unit, involving two horizontal wells connecting to a vertical well. The
Company will continue to collect data from ongoing pilot production as it
moves forward with the Project in order to evaluate its overall economic
potential. A decision on whether to move forward with further development or
to sell the asset is expected during 2007. Until this decision is made,
additional capital requirements for the project are expected to be minimal.

    Capital Stock
    -------------

    As of December 31, 2006, the Company had 310,051,776 common shares issued
and outstanding (312,583,492 common shares outstanding at March 5, 2007).

    About Dynatec Corporation
    -------------------------

    Dynatec Corporation is a growing mining company with extensive
metallurgical and mining expertise. The Company has developed this expertise
as a leading service provider to the global mining industry for over 25 years.
Dynatec is now focused on opportunities to own and operate mineral assets,
involving nickel and other base and precious metals that draw on the Company's
extensive metallurgical and mining capabilities. In addition, Dynatec is also
pursuing production of natural gas. The Company currently has three principal
growth assets in its portfolio.
    The Ambatovy Nickel Project located in Madagascar has the potential to
become one of the world's largest nickel operations with among the lowest unit
operating costs in the industry and an expected project life of approximately
27 years. Annual production capacity is expected to total 60,000 tonnes of
nickel and 5,600 tonnes of cobalt. The Company also owns 20.5 million common
shares of FNX, a growing producer of nickel, copper, platinum, palladium and
gold in the Sudbury district of northeastern Ontario, with Dynatec providing
mine production, development and construction work to FNX through a mining
services contract. The Company is also involved in pilot production of natural
gas through a coal-bed methane lease arrangement in West Virginia.

    Forward-Looking Statements
    --------------------------

    Certain statements contained or incorporated by reference in this press
release, including information as to the future financial or operating
performance of the Company, its subsidiaries and its projects, constitute
forward-looking statements. Such forward-looking statements involve known and
unknown risks and uncertainties that could cause actual events or results to
differ materially from estimated or anticipated events or results implied or
expressed in such forward-looking statements. The words "believe", "expect",
"anticipate", "contemplate", "target", "plan", "intends", "continue",
"budget", "estimate", "may", "will", "schedule" and similar expressions
identify forward-looking statements. Such forward-looking statements include,
among other things, statements regarding targets, estimates and assumptions in
respect of nickel, copper, cobalt, gold or other metal production and prices,
operating costs, results and capital expenditures, mineral reserves and
mineral resources and anticipated grades and recovery rates are or may be
based on assumptions and estimates related to future economic, market,
political, social and other conditions. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable by the Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties and
contingencies. Many factors could cause the Company's actual results to differ
materially from those expressed or implied in any forward-looking statements
made by, or on behalf of, the Company. Such factors include the risks
identified in the "Risk and Uncertainties" sections of the most recent interim
and annual Management's Discussion and Analysis and the "Risk Factors" section
of the most recent Annual Information Form. These forward-looking statements
are made as of the date of the release, and the Company disclaims any intent
or obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or results or otherwise. Investors
are cautioned that forward-looking statements are not guarantees of future
performance and accordingly investors should not put undue reliance on
forward-looking statements due to the inherent uncertainty therein.

    PLEASE NOTE: The Company will be holding a teleconference on Wednesday,
March 7, 2007 at 10:00 a.m. EST, to discuss its 2006 financial and operating
results. Those wishing to participate should refer to the information that
follows. The teleconference will also be available via the Internet at
www.dynatec.ca.

    
    Dial in numbers:   800-594-3615 or 416-644-3422
    Replay numbers:    877-289-8525 or 416-640-1917
    Passcode No.:      21221560 followed by the number sign
    Available until:   March 14, 2007




                             DYNATEC CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                          (In thousands of dollars)

    -------------------------------------------------------------------------
                                                          2006          2005
    -------------------------------------------------------------------------
                                                     Unaudited
    ASSETS
    Current assets:
    Cash and cash equivalents                          $16,785       $43,767
    Marketable securities                              112,078       107,824
    Accounts receivable                                 44,037        28,887
    Income taxes recoverable                                 -           844
    Inventories                                          3,423         3,714
    Prepaid expenses and other assets                      814           927
    Current assets of discontinued operations            2,292         9,594
    -------------------------------------------------------------------------
                                                       179,429       195,557

    Property, plant and equipment                       21,146        22,732
    Investment in mining and resource properties
     under development                                 103,927        82,662
    Investment in FNX                                   89,136        71,708
    Income taxes recoverable                             2,355             -
    Investments and other assets                         1,283         1,137
    Long-term assets of discontinued operations          1,057         6,704
    -------------------------------------------------------------------------
                                                      $398,333      $380,500
    -------------------------------------------------------------------------

    LIABILITIES

    Current liabilities:
    Bank indebtedness                                   $4,641       $18,760
    Accounts payable and accrued liabilities            51,966        34,888
    Income taxes payable                                   574             -
    Deferred revenue                                       491         2,274
    Current portion of long-term debt                       30           300
    Current liabilities of discontinued operations       1,410         7,148
    -------------------------------------------------------------------------
                                                        59,112        63,370

    Long-term debt                                          73         1,600
    Future income taxes                                  7,586         6,469
    Long-term liabilities of discontinued operations     1,102         1,029
    -------------------------------------------------------------------------
                                                        67,873        72,468
    -------------------------------------------------------------------------

    Shareholders' equity:
    Capital stock                                      277,570       274,076
    Contributed surplus                                  3,075         1,792
    Cumulative translation adjustment                   (5,363)       (5,875)
    Retained earnings                                   55,178        38,039
    -------------------------------------------------------------------------
                                                       330,460       308,032
    -------------------------------------------------------------------------
                                                      $398,333      $380,500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             DYNATEC CORPORATION
                     CONSOLIDATED STATEMENTS OF EARNINGS
           (In thousands of dollars except for per share amounts)

    -------------------------------------------------------------------------
                            Unaudited    Unaudited
                               Fourth       Fourth    Unaudited
                              Quarter      Quarter         Year         Year
                                Ended        Ended        Ended        Ended
                              Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,
                                 2006         2005         2006         2005
    -------------------------------------------------------------------------
    Revenues                  $60,830      $47,623     $211,363     $187,272
    -------------------------------------------------------------------------
    Operating expenses

    Contract and mining
     costs                     54,789       42,180      186,640      158,019
    Depreciation, depletion
     and amortization             675        1,148        4,520        5,672
    -------------------------------------------------------------------------
                               55,464       43,328      191,160      163,691
    Corporate, general and
     administrative             2,358        1,537        8,395        6,541
    Interest and other income  (1,043)      (1,486)      (2,321)      (3,251)
    -------------------------------------------------------------------------
                               56,779       43,379      197,234      166,981
    -------------------------------------------------------------------------
                                4,051        4,244       14,129       20,291
    Interest expense                3          (90)         148           48
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before taxes
     and equity income          4,048        4,334       13,981       20,243
    Income tax (recovery)
     expense                     (411)       3,417        2,819        9,696
    Equity income from
     investment in FNX          4,064          174       14,267          174
    Dilution gain on shares
     issued by FNX                 86       16,806           86       16,806
    -------------------------------------------------------------------------
    Earnings from continuing
     operations                 8,609       17,897       25,515       27,527

    (Loss) earnings from
     discontinued operations   (8,173)        (533)      (8,376)       1,098
    -------------------------------------------------------------------------
    Net earnings for the period  $436      $17,364      $17,139      $28,625
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share from
     continuing operations
    -------------------------------------------------------------------------
      Basic                    $0.028       $0.069       $0.083       $0.125
    -------------------------------------------------------------------------
      Diluted                   0.028        0.067        0.083        0.122
    -------------------------------------------------------------------------
    Earnings per share
    -------------------------------------------------------------------------
      Basic                    $0.001       $0.067       $0.056       $0.130
    -------------------------------------------------------------------------
      Diluted                   0.001        0.065        0.056        0.126
    -------------------------------------------------------------------------
    Weighted average shares
     outstanding (000's)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Basic                   308,517      259,552      305,851      220,861
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                 311,579      265,398      308,913      226,707
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             DYNATEC CORPORATION
                 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                          (In thousands of dollars)

    -------------------------------------------------------------------------
                                                     Unaudited
                                                          2006          2005
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Retained earnings at beginning of year             $38,039       $ 9,414
    Net earnings                                        17,139        28,625
    -------------------------------------------------------------------------
    Retained earnings at end of year                   $55,178       $38,039
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             DYNATEC CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (In thousands of dollars)

    -------------------------------------------------------------------------
                            Unaudited    Unaudited
                               Fourth       Fourth    Unaudited
                              Quarter      Quarter         Year         Year
                                Ended        Ended        Ended        Ended
                              Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,
                                 2006         2005         2006         2005
    -------------------------------------------------------------------------
    Cash provided by (used for):
    Operating Activities:
    Earnings from continuing
     operations for the
     period                    $8,609      $17,897      $25,515      $27,527
    Items not involving cash:
      Depreciation and
       amortization               675        1,148        4,520        5,672
      Future income taxes      (6,914)       4,050       (4,313)       8,944
      Gain on sale of
       marketable securities        -         (157)        (272)      (1,159)
      Gain on FNX transaction       -         (857)           -         (857)
      Stock based compensation    362          204        1,366          656
      Equity income from
       investment in FNX       (4,064)        (174)     (14,267)        (174)
      Dilution gain on shares
       issued by FNX              (86)     (16,806)         (86)     (16,806)
      Effect of exchange rate
       changes on cash and
       cash equivalents         1,555           (2)         438         (555)
      Other                       (36)         238          (87)        (865)
    -------------------------------------------------------------------------
                                  101        5,541       12,814       22,383
    Change in non-cash
     operating working
     capital                   28,504        2,744        1,965       15,731
    -------------------------------------------------------------------------
    Cash provided by
     operating activities      28,605        8,285       14,779       38,114
    -------------------------------------------------------------------------
    Discontinued operations
      Cash used for
       discontinued
       operations              (2,343)        (534)      (2,546)      (3,756)
      Changes in non-cash
       working capital
       balances                 5,888         (694)       5,706       11,730
    -------------------------------------------------------------------------
                                3,545       (1,228)       3,160        7,974
    -------------------------------------------------------------------------
                               32,150        7,057       17,939       46,088
    -------------------------------------------------------------------------
    Investing Activities:
    Additions to mining
     properties under
     development, net of
     proceeds received         (7,298)      (7,937)     (21,265)     (25,876)
    Additions to property,
     plant and equipment       (1,423)      (2,004)      (4,403)      (7,334)
    Proceeds on sale of
     property, plant and
     equipment                  1,332            2        1,634        1,485
    Investments in marketable
     securities/investments   (38,701)    (107,824)     (77,545)    (107,824)
    Proceeds on sale
     of marketable
     securities/investments     5,613        1,334       73,563        8,534
    Deposit on investment
     acquisition                    -       (3,081)           -       (3,081)
    Investment in Aurora            -          (12)           -      (12,648)
    Investments in other assets  (147)        (133)        (145)         124
    Investing activities of
     discontinued operations      210         (194)        (113)       7,568
    -------------------------------------------------------------------------
    Cash used for investing
     activities               (40,414)    (119,849)     (28,274)    (139,052)
    -------------------------------------------------------------------------
    Financing Activities:
    Bank indebtedness
     (net change)              (8,612)      (2,953)     (14,119)      (3,002)
    Common shares issued
     net of issue costs             -      109,764            -      109,764
    Common shares issued-stock
     options/employee
     purchase plan              2,945            -        3,411          488
    Non-controlling interest   (2,454)           -            -            -
    Increase in long-term debt      -            -          118            -
    Repayment of long-term debt    (7)          35       (1,915)      (2,434)
    Financing activities of
     discontinued operations   (4,626)          51       (4,142)        (126)
    -------------------------------------------------------------------------
    Cash used for financing
     activities               (12,754)     106,897      (16,647)     104,690
    -------------------------------------------------------------------------
    (Decrease) increase in
     cash and cash
     equivalents              (21,018)      (5,895)     (26,982)      11,726
    Cash and cash equivalents
     at beginning of period    37,803       49,662       43,767       32,041
    -------------------------------------------------------------------------
    Cash and cash equivalents
     at end of period         $16,785      $43,767      $16,785      $43,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additional disclosure of
     cash payments:
      Interest                     $3         $(90)        $148          $48
      Income taxes                 24           18          476          192
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00008191E




For further information:

For further information: Dynatec Corporation, Mark Utting, Director,
Communications & Investor Relations, (905) 780-1980 Ext. 329, (905) 780-1990
(Fax), Email: Mutting@dynatec.ca

Organization Profile

DYNATEC CORPORATION

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