In the past couple of years, Ecuador has ammended their royalty and taxation regime for the mining industry. The company is not subject to pay the Windfall Profit Tax, (which was Kinross's main reason for exitting the country), as Dynasty is only operating as a small scale miner. Currently, the company is only subject to 3% royalties on all precious metals sales. The company also has to pay a 15% employee participation tax, of which 10% is paid directly to the employees, and the other 5% is paid to the gov't which is mandated for community improvements in the surrounding area. Corporate tax rates are 22% in Ecuador.

Excerpt from Q1 2014 MD&A

"On April 18, 2008, Ecuador`s Constitutional Assembly passed a Constituent Mandate resolution (the “Mining Mandate”), which provided, among other provisions, for the suspension of mineral exploration activities for 180 days, or until a new Mining Law was approved. In January 2009, the new Mining Act was published. In November 2009, the regulations and procedures to operate under the new Mining Act were signed by the President of Ecuador and published in the Official Registry, after which time the new Mining Act and Regulations (collectively, the “Mining Law”) were enacted. The Mining Law was further amended in July 2013 and now distinguishes between small, medium and large scale operations. The Mining Law provides that operations mining up to 300 tonnes of mined material per day on an individual concession may be categorized as a smaller scale operation and are required to pay a fixed royalty of 3%; operations mining between 301 and 1,000 tonnes of mined material per day on an individual concession may be categorized as a medium scale operation and are required to pay a fixed royalty of 4%; and operations mining in excess of 1,000 tonnes of mined material per day on an individual concession are categorized as large scale operations and are required to enter into an exploitation contract with the government which sets out specific terms and conditions of the particular operation, including the royalty between 5% and 8% and the application of a windfall tax.

To date, the Company has obtained small scale mining licenses for five concessions at its Zaruma Gold Project. Such licenses permit the Company to mine up to 300 tonnes per day from each concession which has obtained the small scale mining license at a royalty rate of 3%, payable to the Ecuador government, and no windfall tax on the extraction and sale of precious metals. Although these five concessions are the focus of the Company’s current mine development plans at its Zaruma Gold Project, there is no assurance that the Company will be able to obtain additional small scale mining licenses for other concessions within the Zaruma Gold Project to the extent they may become necessary based on the Company’s development plans in the future.

The Company’s other principal projects are expected to fall into either the medium or large scale operation category and may therefore require the Company to enter into exploitation contracts for these projects in the future. There is no assurance that the Company will be able to agree on the terms and conditions an exploitation contract with the government. In the event that an exploitation contract with the government is determined to adversely impact the viability such other projects, it may be necessary, in the future, to re-evaluate the carrying value of the Company’s mine exploration and evaluation properties and certain other capital assets.

From inception until 2010, the Company had funded substantially all of its operating and capital expenses with proceeds from the sale of capital stock. From 2010 and up until September 30, 2013, mine development expenses and overheads were primarily funded from the sale of precious metals produced during mine construction at the Zaruma Gold Project. During this time the Company was in the pre-commercial stage of operations having yet to reach the stage of sustainable commercial production.

In the fourth quarter of the year ended December 31, 2013, management determined that commercial production at the Zaruma Gold Project had commenced as the mine was operating as intended. This decision was based on a number of factors including, amongst other, the completion of operational commissioning of major mine components, the achievement of consistent operating results for a period of time and the indication that these results will continue. For accounting purposes the Company commenced recognizing earnings from mine operations separately effective October 1, 2013.

Continuing operations are dependent upon the Company’s ability in the future to mitigate the risks and overcome the challenges generally associated with comparable development and early stage production enterprises, most significantly, it must either continue to generate sufficient cash flow from the sale of precious metals in the future or secure additional working capital as required, neither of which is assured."