At the company’s Zaruma Project, Dynasty is awaiting approval of its environmental impact study which has been submitted to the Ecuadorian Ministry of Energy and Mines. Bill McCartney told me that this is the final permit they need to start production. Dynasty expects to hear by the end of March and then, says Bill McCartney, “it will be full steam ahead. We are pushing to production for the end of 2007 at the Zaruma Project.”

Despite last year’s environmentally-friendly, anti-mining protests in Ecuador, and the refusal of one Canadian company’s Environmental Impact Study by Ecuadorian officials, Dynasty Metals reports that relations between the Ecuadorian government and the company are amicable and that so far things are progressing without any delay of the company’s projects. Even with Ecuador’s new president, Rafael Correa - a leftist economist and opponent of free trade - taking office in January of this year, Dynasty management appears confident. When asked if he expects to get the final permit, Bill McCartney, CFO of Dynasty Metals, reassures me they do. It’s the only permit left to get. These things just take time. Let’s hope so. Correa’s newly-appointed Minister of Energy and Mining, Alberto Acosta, has worked for environmental NGOs that have opposed mining in other areas of the country. He is also known for his opposition to free trade. So while some investors may consider the political situation in Ecuador to be enough of an incentive to stay away or wait longer, a USC Resource Consult profile of Dynasty, while acknowledging the risk, also hits reassuring tones in regards to Correa. “Correa…has struck rather moderate notes after he was elected.” The profile points out that there have been ten different presidents in Ecuador during the company’s 14 years there and none have effected any devastation to the mining industry. They also note that, “The good relationship to the ministries remains even if ‘the head at the top is replaced’.”

Dynasty’s technical reports cite the highest standards for environmental practices though. Describing environmental considerations with regards to tailings, Dynasty’s 43-101 of February 2006 and January 2007 says: “Dynasty’s plans will be an opportunity to implement best practice tailings deposition, and in so doing, set a precedent for the industry as a whole.” It also outlines plans for revegetation following environmental impact from open pits, waste dumps and tailings. It sounds pretty environmentally feasible to me, so if USC and Dynasty are right and the permit comes through, it could be another indication that the stock price is poised to rise, as one more risk is crossed off the list.

On the financial side, a search through SEDAR files reveals promising numbers. An Independent Preliminary Assessment conducted by qualified person W.J. Holly dated July 12, 2006 revealed that the Zaruma Gold Project with 1.5 million ounces of gold would enjoy a 14.5-year mine life and a cash flow of US$467 million. The assessment pegged annual gold production at 100,000 ounces and predicted a 116% rate of internal return (IRR). The price of gold used for calculations was US $500/ounce.

The Jerusalem project also looks good with an undiscounted, pretax cash flow of $267 million and a pre-tax IRR of 149%. The Jerusalem 43-101 technical report dated February 27, 2006 and revised in January of 2007 states: “The authors believe that the overall project risk is low and the potential for profitable operations is high”.

The company’s NI 43-101 total resource base is approximately 4.6 million ounces of gold. Here’s the remarkable thing about that: on a total resource basis, including measured, indicated and inferred resources, Dynasty’s market cap per ounce of gold is only US$19/ounce, compared to the average junior explorer which is approximately US$75. Once a junior exploration company goes to production they typically jump to a market cap valuation of US$200/ounce, which for Dynasty would be a jump of 953%. With the Zaruma Project slated to go into production this year, now is clearly the point that the stock chart will begin its climb.

Always reassuring is the news in the USC report that Dynasty Metals management holds 40% of company shares. That should keep them working hard, while at the same time, institutional investors are involved, which shows there is investor confidence in Dynasty. Dynasty owns 100% of its projects so it is unencumbered by tricky relations that sometimes beleaguer joint venture projects. Dynasty remains in control of exploration projects and financing for them. The USC report also notes that Dynasty currently has C$12 million in the bank, which will allow it to develop its products without diluting stock.

I like to hear that President and CEO Robert Washer has been living, working and negotiating in Ecuador for 14 years. That’s enough time to allow him to gain needed contacts and experience. He leads the company with 29 years of experience in mining including discovering, developing and completing six gold mines. Also important is Washer’s previous experience in the energy industry in Ecuador, where he previously was chairman of the board and held the largest share at Avatar Petroleum Inc.

So, with Zaruma and Jerusalem projects set to begin production later this year or soon after, risk has been reduced compared to earlier stages and Dynasty could be poised near the top of the exploration company heap. Adding to the optimism is the bullish outlook for gold and silver, which has investors scrambling to find companies like this. Katherine Young writes for Resourcex Investor, an internationally distributed newsletter specializing in identifying as-yet-undiscovered resource companies representing the best in their class. For more information, visit the website www.resourcexinvestor.com.

Katherine Young writes for Resourcex Investor, an internationally distributed newsletter specializing in identifying as-yet-undiscovered resource companies representing the best in their class. For more information, visit the website http://www.resourcexinvestor.com