Avino Silver & Gold Mines Ltd.

Welcome, everybody. Pleasure to be here. Avino is in its 57th year of being in business. We've got close to 40 years of production under our belt, and we're embarking on the biggest expansion in company history. Our tagline is a clear path to transformational growth. It's clear because we own the assets that are going to drive our growth. And so we're a junior silver producer and explorer. The project is in the heart of Mexico in the state of Durango. It's a safe jurisdiction. We have the special distinction of having 100% Mexican labor force right up to our chief operating officer, which makes it a very unique company to say that because everyone's been sourced in-country. Project portfolio is made up of three key assets. The Avino Mine, which produces around 2.5 million ounces of silver equivalent on an annual basis. La Preciosa we acquired from Koor Mining in 2022. We paid $30 million for it. Koor paid $350 million buying Orco in 2013. They were planning a giant open pit mine, and under the current government, they were not giving open pit licenses. And so they decided to go in big with their Nevada project at Rochester. So they were divesting a non-core assets. So we acquired that, and we're developing that right now. And then the third asset is the Oxide Tailings Development Project. So when we opened pit mine in the 70s and 80s, we didn't have the best recovery rates because the material was oxidized and didn't recover well under conventional milling methods. So we see an opportunity to reprocess that material. So we did a pre-feasibility study on that one, and we're considering moving that project forward. We have a large silver equivalent resource base, 127 million ounces of silver equivalent in the proven and probable category, 300 million ounces of measured and indicated, 87 million ounces of inferred, 70% of that is pure silver. Here's our growth profile. So since we acquired La Preciosa, we got the permit last year in March. We were one of the first companies to get the permit in Mexico. So our stock really took off, and we started developing on La Preciosa. And the plan before the rally was to operate it like hub and spoke, put in a decline, mine the material, and haul it 19 kilometers to Avino. But since our financial position has changed, we are now looking at a standalone operation at La Preciosa. And so we've retained the services of an independent engineering firm. We expect the pre-feasibility study to be ready in June or July next year. You can see here, so the production this year is around 2.5 million. Next year, we expect it to go over 3, and that's because of grade improvement alone. Avino Mill is made up of four independent circuits, and the two smaller circuits are handling the development material from La Preciosa right now. And so the grade is three times higher than what we're mining at Avino, so it's driving the growth. Here you can see revenue. So last year, 49% was from silver, 20% gold, 31% copper. This year, it's already trending higher because we started developing the La Preciosa material through circuit one and circuit two. We're at 58% and going higher, and this is base case. We think we can even do better than this, but time will tell. And so this year, earlier this year, we published reserves for the first time in company history. There's only two ways to qualify to publish reserves. One's through a feasibility study that was done in 1968, and the other way is under 43101, you need $90 million in revenue. So we crossed that threshold in 2024, and so now you can see our reserves. So there's 13 years of mine life at Avino and 12 at La Preciosa, and the industry average is eight. So you can see the peer groups there who we're comparing to. And here you can see our stock in the dark line. The light line is silver. In 2022, we built a dry stack tailings facility. We were not mandated. We built it because we're very large shareholders of this company, and we didn't want a disaster there, so we wanted to put the best practice in while we build out our plan here. And then you can see what happened in early 2025. As I mentioned earlier, we were one of the first companies to receive a permit in Mexico, and the stock took off, and this was early 2025. Then you see we announced reserves. So we were trending higher prior to the silver rally and precious metals rally. And then a couple weeks ago, for the second year in a row, we got included in the TSX 30, so we got to ring the bell. We were ranked fifth of all companies on the exchange. We were in the top 30, ranked fifth. And we were up 1,000% on a three-year trailing average. Here you can see financial performance for Q2, $26.8 million for revenue, but you go down and you see $5.6 million of free cash flow, a really good balance sheet, $45 million US, no debt other than equipment debt, and we're not financing anymore. We're just buying the equipment outright. Here you can see Avino. So we're, we're in a unique location. It's a volcanic caldera, and it's structurally controlled. There's two offsetting faults, and in between where the ground broke up, all these veins came up over millions of years. It's, it's like a window, a geological window, and it's very unique because down at the bottom you have the oldest veins, which is the Avino mine. And as you go north to northeast, they're younger. So we get into the low sulfidization, higher grade, uh, vein systems. So it's very unique and we're, we're fortunate to have that. We have a twenty-five hundred ton per day processing plant. We have five hundred and fifty employees at Avino. We have a hundred and fifty at La Preciosa. Here you can see Avino. So a long strike, one to one and a half kilometers of strike below the surface down to six hundred and fifty meters. There's about eleven million tons of proven and probable. There's about twenty-eight million tons of M&I, and, uh, thirteen million tons of inferred. So long life still after hundreds of years. This mine was discovered in the fifteen hundreds, and we're still mining it, and it's still open at depth. We've had four independent structural geologists there to try to help us model it, and you get four different opinions. There could be a porphyry at depth, there could be a skarn or a VMS, we don't know. So we've got two drills turning at Avino and three at La Preciosa. Here you can see La Preciosa. We're in the high desert. This is a safe jurisdiction. It's not a, a contested state by cartels. There's no one fighting there for farmland. Uh, we produce concentrate, which is a security feature, as we don't produce doré, so we're not a target. And you can see the, the farms there. We're around twen- two thousand meters above sea level. Uh, there's no trees, so you're not in a remote area. And because it's been there for hundreds of years, the infrastructure built up. We've got a twenty-kilometer dedicated power line capable of seven point three megawatts. Uh, current excess capacity is two megawatts. We're extending the power line over to La Preciosa right now and requesting more power, and the CFE has been, uh, pretty optimistic that they can deliver more power. High water supply because we built dry stack. We're recycling water at Avino, uh, about ninety percent, and so we're not even using much water. Moving on to La Preciosa, two kilometers of strike, uh, between three to five hundred meters deep. You can see there's about, uh, eleven million tons of proven and probable, thirty-three million tons of measured and indicated, eleven million tons of inferred. So long life asset. And so what have we done since we, um, got the permit? So we put in, uh, three kilometers of decline. We cross-cut along the two veins, La Gloria and Abundancia, and we're mining north to south, north to south on level two. We've ramped down to level three. We're doing that now. And we've been hauling this development material to our mill and running it through the plant, and it's, it's a diluted about, uh, two hundred gram material, making money paying for itself. And we're gonna start long hauling, um, in Q4, uh, so a- any day now, and we're expecting those grades to go up substantially from there. So this asset's been pin cushioned, fifteen hundred drill holes, half a million meters. This was done by Pan American Silver and Coeur Mining and Orco, so it's well understood. You can see it's all red, so a lot of, a lot of material between a hundred and fifty and five hundred grams of pure silver. These red zones you can see are above five hundred grams, so there's really a high grade material in there that we're excited to get to. And so when we, uh, were doing our due diligence and we, um, were in the process of purchasing La Preciosa, uh, we inspected the drill core 'cause we wanted to understand, um, the, the geology and how we would mine La, La Gloria and Abundancia. We originally thought there were really narrow veins, and we would shrinkage stope mine it. But when we went and twinned some holes and drilled it, we were pleasantly surprised. Seven point nine meters of sixteen hundred gram silver, two grams gold, six point four two meters of five hundred and forty-four grams silver, half a gram gold. So you can see it changed our opinion of Gloria and Abundancia, and now we're looking at long hauling it, which we're starting, uh, shortly, as I mentioned. Global reserves, so a hundred and twenty-seven million ounces of, uh, proven and probable, and that's by way of twenty-seven point one nine million tons of TP, uh, sixty-seven point seven million tons of measured and indicated, twenty-five million tons of inferred. So if you add all that up and you take our current capacity of seven hundred and fifty thousand tons of processing ca- capacity, uh, per year, that's a hundred years of mine life. So that's a gross value. You could cut it in half, it's still long. So this is what's justifying us to wanting to build a standalone operation at La Preciosa. Capital structure, so a billion dollars, uh, US, um, a hundred and seventy million shares out. It's actually less than that 'cause we have a normal course issue of bid out there. We've bought half a million shares and canceled them, and so we're under one seventy. Uh, there's five million options in RSUs, no warrants, fully diluted, a hundred and seventy-five million. Uh, trades TSX and, uh, NYSE American. We trade between four to six million shares a day, so it's a liquid stock Um, 135 institutional holders, uh, predominantly long only. Um, they hold about 30%. In, uh, retail is 64% and management at 6%. I'm the, uh, largest shareholder of the company outside of these ETFs. A disciplined silver producer with scale, growth and financial strength. I mean, uh, La Preciosa is the-- one of the largest undeveloped silver assets in Mexico that's fully permitted and scalable. So that's what's a special distinction for Avino. Silver-weighted exposure, growth with execution. We've completed several expansions in the last few years, so we know what we're doing. Um, milestones delivered, um, acquiring, uh, La Preciosa, getting the permits, getting long-term agreements with the locals there, um, at TSX 30 inclusion and financial strength. A hundred and forty-five million US in the bank, no debt, a lot of, um, ounces in the ground, uh, decades of mine life. And so that's the end of the story. So there's a bit of time left. So- Yeah, we do have a few minutes. Thanks, David. Um, uh, if there's any questions from the audience, if you have to take them. Uh, we have a gentleman in the front row here. We'll just wait for the mic to come over. When are you going to, uh, get involved in the tailings? Well, the tailings been in-- put on hold, the tailings ox-oxide tailings project because now we're focused on La Preciosa of doing a pre-feasibility study that would... is, um, a, a longer life, higher payable project. So if you look at all three, um, La Preciosa can probably do seven or eight million ounces of silver equivalent on its own. Avino can do two to three, and the oxide tailings could do two. So we can get between ten to twelve million ounces in the next three to five years. And we, we see, um, the opportunity to get a premium in our stock. Last year, MAG, SilverCrest and Gatos all got taken out. Their PNavs were over two. We're at one. So once we can deliver the f- pre-feasibility study, show the, the market, you know, the plans, we think we're gonna get a re-rating and, uh, higher valuation. Yes, sir. Go ahead. How far are the tailings from the, um, mill? If you look at the picture, it's right beside it. Oh. Oh, see [laughs] [laughs] 'Cause I was, uh, gonna ask... Oh, all right. So you don't have to truck it then. No. No, no. No, no. We, we did a pre-feasibility study at... So during COVID, we shut down the mine to build the dry stack. We let it dry out, and we grid drilled it. We did 130 holes. Um, we did a PFS. So the CapEx is forty-nine dollars, uh, to, uh, forty, forty-nine million dollars to build a dynamic leaching operation, so that would be using, like, large, uh, thickener tanks, so to contain it and get higher recovery rates. And the AISC at that time was ten dollars, and that was using twenty-dollar silver for the base case. Okay, we still have time for a few more questions. I see one in the back row there. What size plant are you gonna put at La Preciosa, and what's the timing [crosstalking] ? We're looking, we're looking, we're looking at similar size to what we're doing now because that's what we can manage, so 2,500 ton per day, 3,000. It really depends on the engineering firm as we go through the process with them. Um, timing, so PFS, uh, mid-next year, June, July. If we go to final feasibility study, add another 12 months, so mid-2028. We go to build it, 16 months. So by 2030, we could have it up and running. But if you think about it, all the infrastructure is there. The underground development work wi-will be done, so the discount rate will be pretty small. The Nav will be very high because it's been de-risked before we even break ground on surface. And, uh, maybe as a follow-up to that, um, you know, you have this roadmap of, of which La Preciosa is a key part. What is the, um, the sort of approximate CapEx to execute on this roadmap to eight to ten million ounces? And I, I understand the FS, PFS is pending, but then also what, what do you think in terms of financing it with your currently strong balance sheet- Yeah ... but what would you look to? How would you finance it? If there was no infrastructure, it could be around $200 million. But by the time we get to go build the mill part, it could be half that because a lot of the underground work will be done. The power line will be there. We don't have to build a camp to, uh, house people. All the infrastructure is there. So yeah. And so you're thinking maybe debt would be, uh, an option for financing? Potentially. I mean, we have many levers. We have cash. We have the debt, offtake. Uh, our biggest offtaker right now is Samsung. We've been dealing with them for ten years. They want more material. Uh, all the traders want more material. So there's a few different levers that we could pull to get the best terms for our shareholders. I think we still have time for another question or two, um, [clears throat] to get, uh, more color on this great silver growth story. Um, David, you mentioned the synergies in having the two sites close together in proximity. Um, do you share labor? I mean, what, what are the extent of... W-would you envision sharing labor and, and equipment and so on? Yeah. Well, we're training up new people, um, at La Preciosa. We had no employees there two years ago. Now we're at 150 Um, Caterpillar and Sandvik supply simulators, so we're training them with really good equipment, um, with brand-new equipment, so it's really efficient. And we just plan to continue to build our labor force locally. Keep the morale up. Although, when you go to site and you look in the parking lot, do you see US license plates? So I said to Carlos, our chief operating officer, "What's going on?" He says, "They're all coming back 'cause of what's going on in the US." Mm-hmm. So those were some of the high, highest skilled labor, uh, that we had, um, got visas and went to work in the US, but they're coming home. And you mentioned the M&A precedents in the silver sector, Gatos and, and others. Uh, what attributes do you think that Avino offers that might make it an attractive, uh, takeout target? Well, pure silver. Lot of silver, pure silver there. Okay. Yeah. Okay, great. Well, thank you very much, David. Thank you. [audience applauding]