Avino Silver & Gold Mines Ltd 6-K, filed May 8, 2024
Avino Silver & Gold Mines Ltd (ASM)
About this 6-K
Avino Silver & Gold Mines Ltd filed this 6-K on May 8, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of May, 2024
Commission File Number:
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
☐ Form 20-F ☒ Form 40-F
Explanatory Note
Avino Silver & Gold Mines Ltd. (the “Company”) is furnishing this Form 6-K to provide its financial information for the three months ended March 31, 2024, and to incorporate such financial information into the Company’s registration statement referenced below.
Exhibits 99.1 and 99.2 attached hereto are hereby incorporated by reference into the Company’s Registration Statement on Form F-10 (Registration Statement File number 333-270315) to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed.
Exhibits
The following exhibits are filed as part of this Form 6-K.
Exhibit No. |
| Document |
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AVINO SILVER & GOLD MINES LTD. | |||
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Date: May 8, 2024 | By: | /s/ Jennifer Trevitt | |
Jennifer Trevitt | |||
Corporate Secretary | |||
3 |
EXHIBIT 99.1
AVINO SILVER & GOLD MINES LTD.
Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited)
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Financial Position (Expressed in thousands of US dollars - Unaudited) |
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| Note |
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| March 31, 2024 |
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| December 31, 2023 |
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ASSETS |
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Current assets |
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Cash |
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| $ |
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| $ |
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Amounts receivable |
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Amounts due from related parties |
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| 10(b) |
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Taxes recoverable |
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| 4 |
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Prepaid expenses and other assets |
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Inventory |
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| 5 |
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Total current assets |
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Exploration and evaluation assets |
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| 7 |
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Plant, equipment and mining properties |
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| 9 |
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Long-term investments |
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| 6 |
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Other assets |
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Total assets |
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| $ |
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LIABILITIES |
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Current liabilities |
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Accounts payable and accrued liabilities |
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Taxes payable |
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Current portion of finance lease obligations |
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Current portion of equipment loans |
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Total current liabilities |
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Finance lease obligations |
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Equipment loans |
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Reclamation provision |
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| 11 |
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Deferred income tax liabilities |
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Total liabilities |
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EQUITY |
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Share capital |
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| 12 |
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Equity reserves |
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Treasury shares |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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Total equity |
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Total liabilities and equity |
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| $ |
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| $ |
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Commitments – Note 15
Approved by the Board of Directors on May 8, 2024.
Peter Bojtos | Director |
| David Wolfin | Director |
The accompanying notes are an integral part of the condensed consolidated interim financial statements
| - 1 - |
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss) (Expressed in thousands of US dollars, other than per share amounts - Unaudited) |
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| Three months ended March 31, |
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| Note |
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| 2024 |
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| 2023 |
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Revenue from mining operations |
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| 13 |
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| $ |
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| $ |
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Cost of sales |
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| 13 |
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Mine operating income |
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Operating expenses |
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General and administrative expenses |
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| 12(c)(d) |
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Share-based payments |
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| 12 |
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Other items |
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Interest and other income |
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Gain (loss) on long-term investments |
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| 6 |
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Fair value adjustment on warrant liability |
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Foreign exchange gain (loss) |
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Finance cost |
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Accretion of reclamation provision |
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| 11 |
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| ( | ) |
Interest expense |
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Income (loss) before income taxes |
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Income taxes: |
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Current income tax expense |
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Deferred income tax recovery |
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Income tax expense |
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Net income (loss) |
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Other comprehensive income (loss) |
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Items that may be reclassified subsequently to profit or loss: |
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Currency translation differences |
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| ( | ) |
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Total comprehensive income (loss) |
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| $ |
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| $ | ( | ) | |
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Earnings (loss) per share |
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| 12(e) |
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Basic |
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| $ |
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| $ | ( | ) | |
Diluted |
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| $ |
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| $ | ( | ) | |
Weighted average number of common shares outstanding |
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| 12(e) |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the condensed consolidated interim financial statements
| - 2 - |
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Changes in Equity (Expressed in thousands of US dollars - Unaudited) |
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| Note |
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| Number of Common Shares |
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| Share Capital Amount |
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| Equity Reserves |
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| Treasury Shares |
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| Accumulated Other Comprehensive Income (Loss) |
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| Accumulated Deficit |
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| Total Equity |
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Balance, January 1, 2023 |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Common shares issued: |
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At the market issuances |
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| 12 |
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Carrying value of RSUs exercised |
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| 12 |
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Issuance costs |
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| 12 |
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| - |
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Share-based payments |
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| 12 |
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| - |
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Net loss for the period |
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| - |
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Currency translation differences |
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| - |
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Balance, March 31, 2023 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
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| Note |
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| Number of Common Shares |
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| Share Capital Amount |
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| Equity Reserves |
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| Treasury Shares |
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| Accumulated Other Comprehensive Income (Loss) |
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| Accumulated Deficit |
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| Total Equity |
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Balance at January 1, 2024 |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Common shares issued: |
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At the market issuances |
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| 12 (b) |
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Carrying value of RSUs exercised |
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| 12 (d) |
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Issuance costs |
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| - |
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Share-based payments |
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| 12 (c) (d) |
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| - |
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Net income for the period |
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| 12 (e) |
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| - |
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Currency translation differences |
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| - |
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Balance at March 31, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
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The accompanying notes are an integral part of the condensed consolidated interim financial statements
| - 3 - |
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Cash Flows (Expressed in thousands of US dollars - Unaudited) |
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| Three months ended March 31, |
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| Note |
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| 2024 |
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| 2023 |
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Operating Activities |
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Net income |
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| $ |
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| $ | ( | ) | ||
Adjustments for non-cash items: |
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Deferred income tax expense (recovery) |
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| ( | ) |
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Depreciation and depletion |
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Accretion of reclamation provision |
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| 11 |
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(Gain) loss on investments |
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| 6 |
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Unrealized foreign exchange gain |
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| ( | ) |
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Unwinding of fair value adjustment |
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Fair value adjustment on warrant liability |
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Share-based payments |
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Net change in non-cash working capital items |
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| 16 |
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Cash provided by operating activities |
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Financing Activities |
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Shares and units issued for cash, net of issuance costs |
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Lease liability payments |
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| ( | ) |
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Equipment loan payments |
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Cash provided by (used in) financing activities |
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Investing Activities |
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Exploration and evaluation expenditures |
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Additions to plant, equipment and mining properties |
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Acquisition of La Preciosa |
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Cash provided by (used in) investing activities |
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Change in cash |
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Effect of exchange rate changes on cash |
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Cash, beginning |
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Cash, ending |
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| $ |
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| $ |
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Supplementary Cash Flow Information (Note 16)
The accompanying notes are an integral part of the condensed consolidated interim financial statements
| - 4 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
1. NATURE OF OPERATIONS
Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) was incorporated in 1968 under the laws of the Province of British Columbia, Canada. The Company is engaged in the production and sale of silver, gold, and copper and the acquisition, exploration, and advancement of mineral properties.
The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, BC, Canada. The Company is a reporting issuer in Canada (except for the province of Quebec) and the United States, and trades on the Toronto Stock Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges.
The Company operates the Elena Tolosa Mine (“ET Mine” or “Avino Mine”) which produces copper, silver and gold at the historic Avino property in the state of Durango, Mexico. The Avino property also hosts the San Gonzalo Mine, which is currently on care and maintenance. The Company also holds 100% interest in Proyectos Mineros La Preciosa S.A. de C.V. (“La Preciosa”), a Mexican corporation which owns the La Preciosa Property. The Company also owns interests in mineral properties located in British Columbia and Yukon, Canada.
2. BASIS OF PRESENTATION
Statement of Compliance
These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting under International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). These unaudited condensed consolidated interim financial statements follow the same accounting policies and methods of application as the most recent annual audited consolidated financial statements of the Company. These unaudited condensed consolidated interim financial statements do not contain all of the information required for full annual consolidated financial statements. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s December 31, 2023, annual consolidated financial statements, which were prepared in accordance with IFRS as issued by the IASB.
These unaudited condensed consolidated interim financial statements are expressed in US dollars and have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these unaudited condensed consolidated interim financial statements have been prepared using the accrual basis of accounting on a going concern basis. The accounting policies set out in the December 31, 2023 annual consolidated financial statements are applied consistently to all periods presented in these unaudited condensed consolidated interim financial statements as if the policies have always been in effect.
Basis of Presentation
These unaudited condensed consolidated interim financial statements are expressed in US dollars and have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting on a going concern basis. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements as if the policies have always been in effect.
Foreign Currency Translation
Foreign currency transactions
Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
| - 5 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
Foreign operations
Subsidiaries that have functional currencies other than the US dollar translate their statement of operations items at the average rate during the year. Assets and liabilities are translated at exchange rates prevailing at the end of each reporting period. Exchange rate variations resulting from the retranslation at the closing rate of the net investment in these subsidiaries, together with differences between their statement of operations items translated at actual and average rates, are recognized in accumulated other comprehensive income (loss). On disposition or partial disposition of a foreign operation, the cumulative amount of related exchange difference is recognized in the statement of operations.
Significant Accounting Judgments and Estimates
The Company’s management makes judgments in its process of applying the Company’s accounting policies to the preparation of its unaudited condensed consolidated interim financial statements. In addition, the preparation of financial data requires that the Company’s management make assumptions and estimates of the impacts on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period from uncertain future events and on the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.
The critical judgments and estimates applied in the preparation of the Company’s unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024, are consistent with those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2023.
Basis of Consolidation
The audited consolidated financial statements include the accounts of the Company and its Mexican subsidiaries as follows:
Subsidiary |
| Ownership Interest |
|
| Jurisdiction |
| Nature of Operations | ||
Oniva Silver and Gold Mines S.A. de C.V. |
|
| % |
|
| Mexican administration | |||
Nueva Vizcaya Mining, S.A. de C.V. |
|
| % |
|
| Mexican administration | |||
Promotora Avino, S.A. de C.V. (“Promotora”) |
|
| % |
|
| Holding company | |||
Compañía Minera Mexicana de Avino, S.A. de C.V. (“Avino Mexico”) |
|
|
|
| Mining and exploration | ||||
La Luna Silver & Gold Mines Ltd. |
|
| % |
|
| Holding company | |||
La Preciosa Silver & Gold Mines Ltd. |
|
| % |
|
| Holding company | |||
Proyectos Mineros La Preciosa S.A. de C.V. |
|
| % |
|
| Mining and exploration | |||
Cervantes LLP |
|
| % |
|
| Holding company | |||
| - 6 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.
3. RECENT ACCOUNTING PRONOUNCEMENTS
New and amended IFRS that are effective for the current year:
Certain new accounting standards and interpretations have been published that are either applicable in the current year, or are not mandatory for the current period and have not been early adopted. We have assessed these standards, and they are not expected to have a material impact on the Company in the current or future reporting periods.
4. TAXES RECOVERABLE
The Company’s taxes recoverable consist of the Mexican I.V.A. (“VAT”) and income taxes recoverable and Canadian sales taxes (“GST/HST”) recoverable.
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
VAT recoverable |
| $ |
|
| $ |
| ||
GST recoverable |
|
|
|
|
|
| ||
Income taxes recoverable |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
5. INVENTORY
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Process material stockpiles |
| $ |
|
| $ |
| ||
Concentrate inventory |
|
|
|
|
|
| ||
Materials and supplies |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
The amount of inventory recognized as an expense for the three months ended March 31, 2024 totalled $
During the three months ended March 31, 2024, the Company wrote down Nil of materials and supplies inventory due to obsolescence (year ended December 31, 2023 – $
| - 7 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
6. LONG-TERM INVESTMENTS
The Company classifies its long-term investments as designated at fair value through profit and loss under IFRS 9. Long-term investments are summarized as follows:
For the three months ended March 31, 2024:
|
| Fair Value December 31, |
|
| Net |
|
| Movements in foreign |
|
| Fair value adjustments |
|
| Fair Value March 31, |
| |||||
|
| 2023 |
|
| Additions |
|
| exchange |
|
| for the period |
|
| 2024 |
| |||||
Talisker Resources Common Shares |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| ||||
Silver Wolf Exploration Ltd. Common Shares |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||
Endurance Gold Corp. Common Shares |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
| |||
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| ||||
7. EXPLORATION AND EVALUATION ASSETS
The Company has accumulated the following acquisition, exploration and evaluation costs which are not subject to depletion:
|
| Avino, Mexico |
|
| La Preciosa, Mexico |
|
| British Columbia & Yukon, Canada |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
| ||||||||
Balance, December 31, 2022 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La Preciosa non-core concessions transfer |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
| ||
Drilling and exploration |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assessments and taxes |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Effect of movements in exchange rates |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Option income |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2023 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Costs incurred during 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and exploration |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assessments and taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of movements in exchange rates |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2024 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| - 8 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(a) Avino, Mexico
The Company’s subsidiary Avino Mexico owns
(i) Avino Mine area property
The Avino Mine area property is situated around the towns of Panuco de Coronado and San Jose de Avino and surrounding the historic Avino mine site. There are four exploration concessions covering
(ii) Gomez Palacio/Ana Maria property
The Ana Maria property is located near the town of Gomez Palacio, and consists of nine exploration concessions covering
Option Agreement – Silver Wolf Exploration Ltd. (formerly Gray Rock Resources Ltd.) (“Silver Wolf”)
On March 11, 2021, the Company entered into an option agreement to grant Silver Wolf the exclusive right to acquire a
All exploration expenditure requirements on the properties have been met as of March 31, 2024, and Silver Wolf is in compliance with the terms of the Option Agreement.
The Option Agreement between the Company and Silver Wolf is considered a related party transaction as the two companies have directors in common.
Unification La Platosa properties
The Unification La Platosa properties, consisting of three leased concessions in addition to the leased concessions situated within the Avino mine area property near the towns of Panuco de Coronado and San Jose de Avino and surrounding the Avino Mine.
In February 2012, the Company’s wholly-owned Mexican subsidiary entered into a new agreement with Minerales de Avino, S.A. de C.V. (“Minerales”) whereby Minerales has indirectly granted to the Company the exclusive right to explore and mine the La Platosa property known as the “ET zone”. The ET zone includes the Avino Mine, where production at levels intended by management was achieved on July 1, 2015.
Under the agreement,
| - 9 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(b) La Preciosa, Mexico
On March 21, 2022, the Company received approval for the closing of the acquisition of the La Preciosa property from Coeur Mining Inc.
(c) British Columbia & Yukon, Canada
Eagle Property - Yukon
Minto and Olympic-Kelvin properties – British Columbia
On May 2, 2022, the Company granted Endurance Gold Corporation the right to acquire an option to earn 100% ownership of the former Minto Gold Mine, Olympic and Kelvin gold prospects contained within a parcel of crown grant and mineral claims (the “Olympic Claims”).
As of March 31, 2024, Endurance was in compliance with all terms of the Option agreement.
8. NON-CONTROLLING INTEREST
At March 31, 2024, the Company had an effective
| - 10 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
9. PLANT, EQUIPMENT AND MINING PROPERTIES
|
| Mining properties |
|
| Office equipment, furniture, and fixtures |
|
| Computer equipment |
|
| Mine machinery and transportation equipment |
|
| Mill machinery and processing equipment |
|
| Buildings and construction in process |
|
| Total |
| |||||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||||
COST |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at January 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Writedowns |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Effect of movements in exchange rates |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
Balance at December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Writedowns |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) | ||||
Effect of movements in exchange rates |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED DEPLETION AND DEPRECIATION / IMPAIRMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Writedowns |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Balance at December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
At December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| - 11 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
Included in Buildings and construction in process above are assets under construction of $
As of March 31, 2024, the Company performed an evaluation of the property plant and equipment and recorded a write-down of $
As at March 31, 2024, plant, equipment and mining properties included a net carrying amount of $
10. RELATED PARTY TRANSACTIONS AND BALANCES
All related party transactions are recorded at the exchange amount which is the amount agreed to by the Company and the related party.
(a) Key management personnel
The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel is as follows:
|
| Three months ended March 31, |
| |||||
|
| 2024 | 2023 |
| ||||
Salaries, benefits, and consulting fees |
| $ |
|
| $ |
| ||
Share-based payments |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
(b) Amounts due to/from related parties
In the normal course of operations the Company transacts with companies related to Avino’s directors or officers. All amounts payable and receivable are non-interest bearing, unsecured and due on demand.
The following table summarizes the amounts were due to/(from) related parties:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Oniva International Services Corp. |
| $ |
|
| $ |
| ||
Directors Fees |
|
|
|
|
|
| ||
Silver Wolf Exploration Ltd. |
|
| ( | ) |
|
| ( | ) |
|
| $ | ( | ) |
| $ | ( | ) |
For services provided to the Company as President and Chief Executive Officer, the Company pays Intermark Capital Corporation (“ICC”), a company controlled by David Wolfin, the Company’s President and CEO and also a director, for consulting services. For the three months ended March 31, 2024, the Company paid $
(c) Other related party transactions
The Company has a cost sharing agreement with Oniva International Services Corp. (“Oniva”) for office and administration services. Pursuant to the cost sharing agreement, the Company will reimburse Oniva for the Company’s percentage of overhead and corporate expenses and for out-of-pocket expenses incurred on behalf of the Company, with a 2.5% markup. David Wolfin, President & CEO, and a director of the Company, is the sole owner of Oniva. The cost sharing agreement may be terminated with one-month notice by either party without penalty.
| - 12 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
The transactions with Oniva are summarized below:
|
| Three months ended March 31, |
| |||||
|
| 2024 | 2023 |
| ||||
Salaries and benefits |
| $ |
|
| $ |
| ||
Office and miscellaneous |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
11. RECLAMATION PROVISION
Management’s estimate of the reclamation provision at March 31, 2024, is $
The present value of the obligation was calculated using a risk-free interest rate of
A reconciliation of the changes in the Company’s reclamation provision is as follows:
|
| March 31, 2024 | December 31, 2023 |
| ||||
|
|
|
|
|
|
| ||
Balance at beginning of the period |
| $ |
|
| $ |
| ||
Changes in estimates |
|
|
|
|
|
| ||
Unwinding of discount related to continuing operations |
|
|
|
|
|
| ||
Effect of movements in exchange rates |
|
|
|
|
|
| ||
Balance at end of the period |
| $ |
|
| $ |
| ||
12. SHARE CAPITAL AND SHARE-BASED PAYMENTS
(a) Authorized: Unlimited common shares without par value
(b) Issued:
| (i) | During the three months ended March 31, 2024, the Company issued |
|
|
|
| During the three months ended March 31, 2024, the Company issued | |
|
|
|
| (ii) | During the year ended December 31, 2023, the Company issued |
|
|
|
| During the year ended December 31, 2023, the Company issued |
| - 13 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(c) Stock options:
The Company has a stock option plan to purchase the Company’s common shares, under which it may grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, and employees, and to persons providing investor relations or consulting services, the limits being based on the Company’s total number of issued and outstanding shares per year. The stock options vest on the date of grant, except for those issued to persons providing investor relations services, which vest over a period of one year. The option price must be greater than or equal to the discounted market price on the grant date, and the option term cannot exceed ten years from the grant date.
Continuity of stock options is as follows:
|
| Underlying Shares |
|
| Weighted Average Exercise Price (C$) |
| ||
|
|
|
|
|
|
| ||
Stock options outstanding, January 1, 2023 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Expired |
|
| ( | ) |
| $ |
| |
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
Stock options outstanding, December 31, 2023 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
Stock options outstanding, March 31, 2024 |
|
|
|
| $ |
| ||
Stock options exercisable, March 31, 2024 |
|
|
|
| $ |
| ||
The following table summarizes information about the stock options outstanding and exercisable at March 31, 2024:
|
|
|
| Outstanding |
|
| Exercisable |
| ||||||||||||
Expiry Date |
| Price (C$) |
|
| Number of Options |
|
| Weighted Average Remaining Contractual Life (Years) |
|
| Number of Options |
|
| Weighted Average Remaining Contractual Life (Years) |
| |||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
| - |
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| - 14 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
Valuation of stock options requires the use of estimates and assumptions including the expected stock price volatility. The expected volatility used in valuing stock options is based on volatility observed in historical periods. Changes in the underlying assumptions can materially affect the fair value estimates. The fair value of the stock options was calculated using the Black-Scholes model with the following weighted average assumptions and resulting fair values:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Weighted average assumptions: |
|
|
|
|
|
| ||
Risk-free interest rate |
|
| % |
|
| % | ||
Expected dividend yield |
|
| 0 | % |
|
| 0 | % |
Expected warrant life (years) |
|
|
|
|
|
| ||
Expected stock price volatility |
|
| % |
|
| % | ||
Expected forfeiture rate |
|
| % |
|
| % | ||
Weighted average fair value |
| C$ |
|
| C$ |
| ||
During the three months ended March 31, 2024, the Company charged $
(d) Restricted Share Units:
On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its shareholders. The RSU Plan is administered by the Compensation Committee under the supervision of the Board of Directors as compensation to officers, directors, consultants, and employees. The Compensation Committee determines the terms and conditions upon which a grant is made, including any performance criteria or vesting period.
Upon vesting, each RSU entitles the participant to receive one common share, provided that the participant is continuously employed with or providing services to the Company. RSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the RSU vests and the RSU participant receives common shares.
Continuity of RSUs is as follows:
|
| Underlying Shares |
|
| Weighted Average Price (C$) |
| ||
|
|
|
|
|
|
| ||
RSUs outstanding, January 1, 2023 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
RSUs outstanding, December 31, 2023 |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
RSUs outstanding, March 31, 2024 |
|
|
|
| $ |
| ||
| - 15 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
The following table summarizes information about the RSUs outstanding at March 31, 2024:
Issuance Date |
| Price (C$) | Number of RSUs Outstanding |
| ||||
March 25, 2022 |
| $ |
|
|
|
| ||
March 29, 2023 |
| $ |
|
|
|
| ||
July 10, 2023 |
| $ |
|
|
|
| ||
|
|
|
|
|
|
|
| |
During the three months ended March 31, 2024, no RSUs (year ended December 31, 2023 –
During the three months ended March 31, 2024, the Company charged $
(e) Earnings per share:
The calculations for basic earnings per share and diluted earnings per share are as follows:
|
| Three months ended March 31, |
| |||||
|
| 2024 | 2023 |
| ||||
Net income (loss) for the period |
| $ |
|
| $ | ( | ) | |
Basic weighted average number of shares outstanding |
|
|
|
|
|
| ||
Effect of dilutive share options, warrants, and RSUs |
|
|
|
|
|
| ||
Diluted weighted average number of shares outstanding |
|
|
|
|
|
| ||
Basic earnings (loss) per share |
| $ |
|
| $ | ( | ) | |
Diluted earnings (loss) per share |
| $ |
|
| $ | ( | ) | |
| - 16 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
13. REVENUE AND COST OF SALES
The Company’s revenues for the three months ended March 31, 2024 and 2023, are all attributable to Mexico, from shipments of concentrate from the Avino Mine.
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Concentrate sales |
| $ |
|
| $ |
| ||
Provisional pricing adjustments |
|
| ( | ) |
|
| ( | ) |
|
| $ |
|
| $ |
| ||
Cost of sales consists of changes in inventories, direct costs including personnel costs, mine site costs, energy costs (principally diesel fuel and electricity), maintenance and repair costs, operating supplies, external services, third party transport fees, depreciation and depletion, and other expenses for the periods. Direct costs include the costs of extracting co-products.
Cost of sales is based on the weighted average cost of inventory sold for the periods and consists of the following:
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Production costs |
| $ |
|
| $ |
| ||
Depreciation and depletion |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
14. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of the following:
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Salaries and benefits |
| $ |
|
| $ |
| ||
Office and miscellaneous |
|
|
|
|
|
| ||
Professional fees |
|
|
|
|
|
| ||
Management and consulting fees |
|
|
|
|
|
| ||
Investor relations |
|
|
|
|
|
| ||
Travel and promotion |
|
|
|
|
|
| ||
Directors fees |
|
|
|
|
|
| ||
Regulatory and compliance fees |
|
|
|
|
|
| ||
Depreciation |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| - 17 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
15. COMMITMENTS
The Company has a cost sharing agreement to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on Oniva’s total overhead and corporate expenses. The agreement may be terminated with one-month notice by either party. Transactions and balances with Oniva are disclosed in Note 10.
The Company and its subsidiaries have various operating lease agreements for their office premises, use of land, and equipment. Commitments in respect of these lease agreements are as follows:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Not later than one year |
| $ |
|
| $ |
| ||
Later than one year and not later than five years |
|
|
|
|
|
| ||
Later than five years |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Office lease payments recognized as an expense during the three months ended March 31, 2024, totalled $
16. SUPPLEMENTARY CASH FLOW INFORMATION
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Net change in non-cash working capital items: |
|
|
|
|
|
| ||
Inventory |
| $ |
|
| $ | ( | ) | |
Prepaid expenses and other assets |
|
| ( | ) |
|
| ( | ) |
Taxes recoverable |
|
|
|
|
| ( | ) | |
Taxes payable |
|
|
|
|
| ( | ) | |
Accounts payable and accrued liabilities |
|
| ( | ) |
|
|
| |
Amounts receivable |
|
|
|
|
|
| ||
Amounts due to related parties |
|
| ( | ) |
|
|
| |
|
| $ |
|
| $ | ( | ) | |
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Other non-cash supplementary information: |
|
|
|
|
|
| ||
Interest paid |
| $ |
|
| $ |
| ||
Taxes paid |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Shares acquired under terms of option agreements |
|
|
|
|
|
| ||
Transfer of share-based payments reserve upon exercise of RSUs |
|
|
|
|
|
| ||
Equipment acquired under finance leases and equipment loans |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| - 18 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
17. FINANCIAL INSTRUMENTS
The fair values of the Company’s amounts due to related parties and accounts payable approximate their carrying values because of the short-term nature of these instruments. Cash, amounts receivable, long-term investments, and warrant liability are recorded at fair value. The carrying amounts of the Company’s equipment loans, and finance lease obligations are a reasonable approximation of their fair values based on current market rates for similar financial instruments.
The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, and market risk.
(a) Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company has exposure to credit risk through its cash, long-term investments and amounts receivable. The Company manages credit risk, in respect of cash and short-term investments, by maintaining the majority of cash and short-term investments at highly rated financial institutions.
The Company is exposed to a significant concentration of credit risk with respect to its trade accounts receivable balance because all of its concentrate sales are with three (December 31, 2022 – two) counterparties (see Note 18). However, the Company has not recorded any allowance against its trade receivables because to-date all balances owed have been settled in full when due (typically within 60 days of submission) and because of the nature of the counterparties.
The Company’s maximum exposure to credit risk at the end of any period is equal to the carrying amount of these financial assets as recorded in the unaudited condensed consolidated interim statement of financial position. At March 31, 2024, no amounts were held as collateral.
(b) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows required by its operating, investing and financing activities. The Company had cash at March 31, 2024, in the amount of $
The maturity profiles of the Company’s contractual obligations and commitments as at March 31, 2024, are summarized as follows:
|
| Total |
|
| Less Than 1 Year |
|
| 1-5 years |
|
| More Than 5 Years |
| ||||
Accounts payable and accrued liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Minimum rental and lease payments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equipment loans |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance lease obligations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| - 19 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(c) Market Risk
Market risk consists of interest rate risk, foreign currency risk and price risk. These are discussed further below.
Interest Rate Risk
Interest rate risk consists of two components:
| (i) | To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk. |
|
|
|
| (ii) | To the extent that changes in prevailing market rates differ from the interest rates on the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk. |
In management’s opinion, the Company is not materially exposed to interest rate risk, as any material debt obligations that bear interest are fixed and not subject to floating interest rates.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Mexican pesos and Canadian dollars:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
| MXN |
|
| CDN |
|
| MXN |
|
| CDN |
| ||||
Cash |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Due from related parties |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term investments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Reclamation bonds |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amounts receivable |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts payable and accrued liabilities |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Due to related parties |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Finance lease obligations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Net exposure |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
US dollar equivalent |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Based on the net US dollar denominated asset and liability exposures as at March 31, 2024, a 10% fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings for the three months ended March 31, 2024, by approximately $
Price Risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk.
The Company is exposed to price risk with respect to its amounts receivable, as certain trade accounts receivable are recorded based on provisional terms that are subsequently adjusted according to quoted metal prices at the date of final settlement. Quoted metal prices are affected by numerous factors beyond the Company’s control and are subject to volatility, and the Company does not employ hedging strategies to limit its exposure to price risk. At March 31, 2024, based on outstanding accounts receivable that were subject to pricing adjustments, a 10% change in metals prices would have an impact on net earnings (loss) of approximately $
| - 20 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
The Company is exposed to price risk with respect to its long-term investments, as these investments are carried at fair value based on quoted market prices. Changes in market prices result in gains or losses being recognized in net income (loss). At March 31, 2024, a 10% change in market prices would have an impact on net earnings (loss) of approximately $
The Company’s profitability and ability to raise capital to fund exploration, evaluation and production activities is subject to risks associated with fluctuations in mineral prices. Management closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.
(d) Classification of Financial Instruments
IFRS 13 Financial Instruments: Disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table sets forth the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as at March 31, 2024:
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
Financial assets |
|
|
|
|
|
|
|
|
| |||
Cash |
| $ |
|
| $ |
|
| $ |
| |||
Amounts receivable |
|
|
|
|
|
|
|
|
| |||
Long-term investments |
|
|
|
|
|
|
|
|
| |||
Total financial assets |
| $ |
|
| $ |
|
| $ |
| |||
The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at March 31, 2024 the Company’s has no Level 3 financial instruments.
18. SEGMENTED INFORMATION
The Company reviews its segment reporting to ensure it reflects the operational structure of the Company and enables the Company's Chief Operating Decision Maker (the Company’s CEO) to review operating segment performance. We have determined that each producing mine represents an operating segment, of which there is one as of March 31, 2024.
The Company’s revenues for the three months ended March 31, 2024 of $
| - 21 - |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the three months ended March 31, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
On the condensed consolidated interim statements of operations, the Company had revenue from the following product mixes:
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Silver |
| $ |
|
| $ |
| ||
Gold |
|
|
|
|
|
| ||
Copper |
|
|
|
|
|
| ||
Penalties, treatment costs and refining charges |
|
| ( | ) |
|
| ( | ) |
Total revenue from mining operations |
| $ |
|
| $ |
| ||
For the three months ended March 31, 2024 and 2023, the Company had the following customers that accounted for total revenues as follows:
|
| March 31, 2024 |
|
| March 31, 2023 |
| ||
Customer #1 |
| $ |
|
| $ |
| ||
Customer #2 |
|
|
|
|
|
| ||
Other customers |
|
|
|
|
|
| ||
Total revenue from mining operations |
| $ |
|
| $ |
| ||
Geographical information relating to the Company’s non-current assets (other than financial instruments) is as follows:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Exploration and evaluation assets - Mexico |
| $ |
|
| $ |
| ||
Exploration and evaluation assets - Canada |
|
|
|
|
|
| ||
Total exploration and evaluation assets |
| $ |
|
| $ |
| ||
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Plant, equipment, and mining properties - Mexico |
| $ |
|
| $ |
| ||
Plant, equipment, and mining properties - Canada |
|
|
|
|
|
| ||
Total plant, equipment, and mining properties |
| $ |
|
| $ |
| ||
19. SUBSEQUENT EVENTS
At-The-Market Sales – Subsequent to March 31, 2024, the Company issued
| - 22 - |
EXHIBIT 99.2
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
The following discussion and analysis of the operations, results, and financial position of Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three months ended March 31, 2024, and the Company’s audited consolidated financial statements as at and for the year ended December 31, 2023, and the notes thereto.
This Management’s Discussion and Analysis (“MD&A”) is dated May 8, 2024, and discloses specified information up to that date. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Unless otherwise cited, references to dollar amounts are in US dollars. This MD&A contains “forward-looking statements” that are subject to risk factors including those set out in the “Cautionary Statement” at the end of this MD&A. All information contained in this MD&A is current and has been approved by the Company’s Board of Directors as of May 8, 2024, unless otherwise indicated. Throughout this report we refer to “Avino”, the “Company”, “we”, “us”, “our”, or “its”. All these terms are used in respect of Avino Silver & Gold Mines Ltd. We recommend that readers consult the “Cautionary Statement” on the last page of this report. Additional information relating to the Company is available on the Company’s website at www.avino.com and on SEDAR+ at www.sedarplus.ca.
Business Description
Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) was incorporated in 1968 under the laws of the Province of British Columbia, Canada. The Company is engaged in the production and sale of silver, gold, and copper and the acquisition, exploration, and advancement of mineral properties.
The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, BC, Canada. The Company is a reporting issuer in Canada (except for the province of Quebec) and the United States, and its common shares are listed on the Toronto Stock Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges.
Discussion of Operations
The Company’s production, exploration, and evaluation activities during the three months ended March 31, 2024, have been conducted on the Avino Property and the La Preciosa Property.
The Company holds a 99.67% effective interest in Compañía Minera Mexicana de Avino, S.A. de C.V. (“Avino Mexico”), a Mexican corporation which owns the Avino Property. The Avino Property covers approximately 1,104 contiguous hectares, and is located approximately 80 km north-east of the city of Durango. The Avino Property is equipped with milling and processing facilities that presently process all output from the Avino Mine located on the property. The Avino Property also hosts the San Gonzalo Mine, which is currently on care and maintenance. The Company also holds 100% interest in Proyectos Mineros La Preciosa S.A. de C.V. (“La Preciosa”), a Mexican corporation which owns the La Preciosa Property. The Company also owns interests in mineral properties located in British Columbia and Yukon, Canada.
| 1 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Operational Highlights
| HIGHLIGHTS (Expressed in US$, unless otherwise noted) | First Quarter 2024 | First Quarter 2023 | Change | First Quarter 2024 | Fourth Quarter 2023 | Change | ||||
| Operating | ||||||||||
| Tonnes Milled | 169,575 | 159,757 | 6% | 169,575 | 143,738 | 18% | ||||
| Silver Ounces Produced | 250,642 | 234,338 | 7% | 250,642 | 224,723 | 12% | ||||
| Gold Ounces Produced | 1,778 | 2,286 | -22% | 1,778 | 1,452 | 22% | ||||
| Copper Pounds Produced | 1,347,110 | 1,397,637 | -4% | 1,347,110 | 1,317,793 | 2% | ||||
| Silver Equivalent Ounces1 Produced | 629,302 | 678,247 | -7% | 629,302 | 558,460 | 13% | ||||
| Concentrate Sales and Cash Costs | ||||||||||
| Silver Equivalent Payable Ounces Sold2 | 610,877 | 506,727 | 21% | 610,877 | 584,061 | 5% | ||||
| Cash Cost per Silver Equivalent Payable Ounce1,2,3 | $ | 14.89 | $ | 14.22 | 5% | $ | 14.89 | $ | 15.04 | -1% |
| All-in Sustaining Cash Cost per Silver Equivalent Payable Ounce1,2,3 | $ | 20.23 | $ | 20.17 | -% | $ | 20.23 | $ | 21.67 | -7% |
1. In Q1 2024, AgEq was calculated using metal prices of $23.36 per oz Ag, $2,072 per oz Au and $3.83 per lb Cu. In Q4 2023, AgEq was calculated using metals prices of $23.23 oz Ag, $1,977 oz Au and $3.71 lb Cu. In Q1 2023, AgEq was calculated using metal prices of $22.56 per oz Ag, $1,888 per oz Au and $4.05 per lb Cu.
2. “Silver equivalent payable ounces sold” for the purposes of cash costs and all-in sustaining costs consists of the sum of payable silver ounces, gold ounces and copper tonnes sold, before penalties, treatment charges, and refining charges, multiplied by the ratio of the average spot gold and copper prices to the average spot silver price for the corresponding period.
3. The Company reports non-IFRS measures which include cash cost per silver equivalent payable ounce and all-in sustaining cash cost per payable ounce. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning under IFRS and the calculation methods may differ from methods used by other companies with similar reported measures. See Non-IFRS Measures section for further information and detailed reconciliations.
Financial Highlights
| HIGHLIGHTS (Expressed in 000’s of US$) | First Quarter 2024 | First Quarter 2023 |
Change | First Quarter 2024 | Fourth Quarter 2023 |
Change | ||||
| Financial Operating Performance |
|
|
| |||||||
| Revenues | $ | 12,393 | $ | 9,825 | 26% | $ | 12,393 | $ | 12,530 | -1% |
| Mine operating income | $ | 2,339 | $ | 1,851 | 26% | $ | 2,339 | $ | 2,561 | -9% |
| Net income | $ | 599 | $ | (352) | 270% | $ | 599 | $ | 563 | 6% |
| Earnings before interest, taxes and amortization (“EBITDA”)1 | $ | 1,713 | $ | 286 | 499% | $ | 1,713 | $ | 1,120 | 53% |
| Adjusted earnings1 | $ | 2,057 | $ | 1,054 | 95% | $ | 2,057 | $ | 1,972 | 4% |
| Cash provided by operating activities | $ | 2,347 | $ | 448 | 424% | $ | 2,347 | $ | 621 | 278% |
| Per Share Amounts |
|
|
| |||||||
| Earnings per share – basic & diluted | $ | 0.00 | $ | (0.00) | -% | $ | 0.00 | $ | 0.00 | -% |
| Adjusted earnings per share1 | $ | 0.02 | $ | 0.01 | 100% | $ | 0.02 | $ | 0.02 | -% |
| HIGHLIGHTS (Expressed in 000’s of US$) | March 31, 2024 | March 31, 2023 | Change | March 31, 2024 | December 31, 2023 |
Change | ||||
| Liquidity & Working Capital |
|
|
|
|
|
|
|
|
|
|
| Cash | $ | 3,474 | $ | 2,697 | 29% | $ | 3,474 | $ | 2,688 | 29% |
| Working capital1 | $ | 9,785 | $ | 5,109 | 92% | $ | 9,785 | $ | 9,727 | 1% |
1. The Company reports non-IFRS measures which include EBITDA, adjusted earnings, adjusted earnings per share, and working capital. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and the calculation methods may differ from methods used by other companies with similar reported measures. See Non-IFRS Measures section for further information and detailed reconciliations.
| 2 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
1st Quarter 2024 Highlights
La Preciosa Update:
On February 28, 2024, the Company provided an update on recently completed and ongoing work in connection with La Preciosa. Capital costs for 2024 are expected to be between US$3.0 – US$4.0 million and will include surface works and equipment procurement intended for the first phase of mine development for the Gloria and Abundancia veins. Avino already has the mining equipment necessary to commence operations at La Preciosa. The application for the Environmental Permit has been submitted by the Company to the relevant authorities. A further permit application will be submitted shortly after receipt of the Environmental Permit, which is required to commence the construction of the portal, haulage ramp, and the mining of the Gloria and Abundancia veins.
On January 9, 2024, the Company announced that it had signed a long-term land-use agreement with a local community for the development of La Preciosa in Durango, Mexico. La Preciosa hosts one of the largest undeveloped primary silver resources in Mexico and is located approximately 19 kilometres from the current Avino Mine production operations.
Consistent Production at Avino:
Silver equivalent production of 629,302 ounces is within our guidance range and the Company remains on track with our targeted full year production of 2.5 to 2.8 million silver equivalent ounces.
Oxide Tailings Project
On February 5, 2024, the Company released the results of the Preliminary Prefeasibility Study (the “PSF”) prepared in accordance with National Instrument 43-101 – Standard for Disclosure for Mineral Projects with NPV US$98 million (pre-tax) and US$61 million (post-tax) at a 5% discount rate, IRR 35% (pre-tax) and 26% (post-tax), proven and probable mineral reserves of 6.7 Million tonnes at a silver and gold grade of 55 g/t and 0.47 g/t respectively, nominal processing rate over a 9-year life of mine. The completion of the study is a milestone in our 5-year growth plan to become an intermediate silver producer in Mexico.
Dry Stack Tailings Facility:
With the rearrangement of our handling of tailings as a result of the completed dry-stack tailings facility, which has been in use for over a year, the prior method of wet tailings deposition is no longer in use. A tab is now available on our website that provides further information on our tailings management system, along with a video (in Spanish) from the minesite that can be viewed. In addition, a selection of short videos of the facility in operation can be viewed under Videos and Media.
| 3 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Financial Results
|
|
| Three months ended March 31, |
| |||||
|
|
| 2024 | 2023 |
| ||||
| Revenue from mining operations |
| $ | 12,393 |
|
| $ | 9,825 |
|
| Cost of sales |
|
| 10,054 |
|
|
| 7,974 |
|
| Mine operating income |
|
| 2,339 |
|
|
| 1,851 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| General and administrative expenses |
|
| 1,272 |
|
|
| 1,184 |
|
| Share-based payments |
|
| 423 |
|
|
| 339 |
|
| Income before other items |
|
| 644 |
|
|
| 328 |
|
|
|
|
|
|
|
|
|
|
|
| Other items: |
|
|
|
|
|
|
|
|
| Interest and other income (loss) |
|
| 3 |
|
|
| 209 |
|
| Gain (loss) on long-term investments |
|
| 132 |
|
|
| (319 | ) |
| Fair value adjustment on warrant liability |
|
| - |
|
|
| (293 | ) |
| Unrealized foreign exchange loss |
|
| 80 |
|
|
| (136 | ) |
| Finance cost |
|
| (2 | ) |
|
| (74 | ) |
| Accretion of reclamation provision |
|
| (51 | ) |
|
| (11 | ) |
| Interest expense |
|
| (90 | ) |
|
| (45 | ) |
| Income (loss) before income taxes |
|
| 716 |
|
|
| (341 | ) |
|
|
|
|
|
|
|
|
|
|
| Income taxes: |
|
|
|
|
|
|
|
|
| Current income tax expense |
|
| (199 | ) |
|
| (25 | ) |
| Deferred income tax expense |
|
| 82 |
|
|
| 14 |
|
| Income tax expense |
|
| (117 | ) |
|
| (11 | ) |
| Net income (loss) |
|
| 599 |
|
|
| (352 | ) |
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
| Currency translation differences |
|
| (111 | ) |
|
| (263 | ) |
| Total comprehensive income (loss) |
| $ | 488 |
|
| $ | (615 | ) |
| Income (loss) per share |
|
|
|
|
|
|
|
|
| Basic |
| $ | 0.00 |
|
| $ | (0.00 | ) |
| Diluted |
| $ | 0.00 |
|
| $ | (0.00 | ) |
| Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
| Basic |
|
| 130,027,962 |
|
|
| 118,572,700 |
|
| Diluted |
|
| 133,022,671 |
|
|
| 122,602,929 |
|
| 4 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Revenues
The Company recognized revenues of $12.4 million on the sale of Avino Mine bulk copper/silver/gold concentrate, compared to $9.8 million revenues for Q1 2023, an increase of $2.6 million.
The increase is a result of higher payable silver equivalent ounces sold in the current period of 610,877 ounces, compared to 506,727 ounces in Q1 2023, an increase of 21%.
Metal prices for revenues recognized during the period were $23.14 per ounce of silver, $2,066 per ounce of gold, and $8,384 per tonne of copper, with comparable prices for Q1 2023 were $23.29 per ounce of silver, $1,878 per ounce of gold, and $8,992 per tonne of copper.
Cost of Sales & Mine Operating Income
Cost of sales was $10.1 million, compared to $8.0 million in Q1 2023, an increase of $2.1 million. The increase is mainly attributable to a stronger Mexican peso during the current quarter, with an average of 17.01 Mexican Pesos to 1 US dollar in Q1 2024 compared to an average of 18.68 Mexican Pesos to 1 US dollar in Q1 2023, a difference of 10%. Further increases in cost of sales is partially attributable to 6% higher processed & milled tonnes in Q1 2024 compared to Q1 2023, which resulted in higher overall overhead costs despite similar ounces sold in the two comparable quarters.
Mine operating income, after depreciation and depletion, was $2.3 million, compared to $1.9 million in Q1 2023. The increase in mine operating income is a result of the items noted above, and partially due to provisional pricing adjustments described in the consolidated financial statements.
General and Administrative Expenses & Share-Based Payments
General and administrative expenses was $1.3 million, compared to $1.2 million in Q1 2023. This is in line with expectations, demonstrating another consistent quarter in managing administrative expenses.
Share-based payments was $0.4 million, compared to $0.3 million in Q1 2023, consistent with prior quarter, and as a result of the vesting of previously issued options and restricted share units.
Other Items
Other Items totaled a gain of $0.1 million for the period, a change of $0.7 million compared to a loss of $0.7 million related to other items in Q1 2023.
Unrealized gain on long-term investments was $0.1 million, a positive movement of $0.5 million compared to a loss of $0.3 million in Q1 2023. This is a direct result of fluctuations in the Company’s investment in shares of Talisker Resources, as well as the Company’s investment in shares of Silver Wolf Exploration and Endurance Gold.
Fair value adjustment on warrant liability was $Nil compared to a gain of $0.3 million in Q1 2023. The fair value adjustment on the Company’s warrant liability relates to the issuance of US dollar-denominated warrants, which are re-valued each reporting period, and the value fluctuates with changes in the US-Canadian dollar exchange rate, and in the variables used in the valuation model, such as the Company’s US share price, and expected share price volatility. All US dollar-denominated warrants expired in September 2023, thus there is no adjustment for Q1 2024.
The remaining net impact of Other Items resulted in no further gain or loss, a positive movement of $0.2 million when compared to a further loss of $0.1 million in Q1 2023.
| 5 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Current and Deferred Income Taxes
Current income tax expense of $0.2 million in Q1 2024, compared to Nil in income tax expense for Q1 2023, remains fairly consistent. The movement relates primarily to movements in the calculation of the Special Mining Duty tax that applies to mining profits generated in Mexico.
Deferred income tax recovery was $0.1 million, a change of $0.1 million compared to Nil in Q1 2023. Deferred income tax fluctuates due to movements in taxable and deductible temporary differences related to changes in inventory, plant, equipment and mining properties, and exploration and evaluation assets, amongst other factors. The changes in current income taxes and deferred income taxes during the current and comparable periods primarily relate to movements in the tax bases and mining profits and/or losses in Mexico.
Net Income/Loss
Net income was $0.6 million for the period, or $0.00 per share, compared to a net loss of $0.4 million, or $0.00 per share during Q1 2023. The changes are a result of the items noted above, which are primarily increases in revenues, cost of sales, mine operating income and movements in the fair value adjustment of the long-term investments and unrealized foreign exchange. The remain items were consistent, showing no significant variances as noted above.
EBITDA & Adjusted Income/Loss (see “Non-IFRS Measures”)
EBITDA was $1.7 million, an increase of $1.4 million when compared to $0.3 million for Q1 2023. The changes in EBITDA are primarily a factor of the items above, excluding any changes in depreciation and depletion, changes in interest expense and income, as well as any changes in income taxes. See Non-IFRS Measures for a reconciliation for EBITDA.
Adjusted earnings for the period was $2.1 million, an increase of $1.0 million when compared to adjusted earnings of $1.1 million in the corresponding quarter in 2023. Changes to adjusted earnings are a result of the items noted above in EBITDA, further excluding share-based payments, gains and losses related to warrants, and movements in unrealized foreign exchange. See Non-IFRS Measures for a reconciliation for adjusted earnings.
Cash Costs & All-in Sustaining Cash Costs (see “Non-IFRS Measures”)
Cash costs per silver equivalent payable ounce was $14.89, compared to $14.22 for Q1 2023. The increase in cost per ounce is a result of higher tonnes processed in Q1 2024 when compared to Q1 2023, primarily due to lower mill recoveries in the current quarter, stemming from lower feed grades, primarily in gold. The increase is also attributable to a stronger Mexican peso during the quarter, which directly impacted labour and contractor costs.
All-in sustaining cash costs per silver equivalent payable ounce was $20.23, compared to $20.17 for Q1 2023. The increases mentioned from the items above were primarily offset by reductions in penalties, with no significant difference between the comparable quarter in sustaining capital and exploration costs.
See Non-IFRS Measures for a reconciliation for cash costs and all-in sustaining cash costs.
| 6 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Avino Mine Production Highlights
| Q1 2024 | Q1 2023 | Change % |
| Q1 2024 | Q4 2023 | Change % |
| 169,595 | 159,757 | 6% | Total Mill Feed (dry tonnes) | 169,595 | 143,798 | 18% |
| 52 | 51 | 2% | Feed Grade Silver (g/t) | 52 | 56 | -7% |
| 0.47 | 0.58 | -19% | Feed Grade Gold (g/t) | 0.47 | 0.45 | 4% |
| 0.43 | 0.47 | -9% | Feed Grade Copper (%) | 0.43 | 0.49 | -12% |
| 88% | 89% | -1% | Recovery Silver (%) | 88% | 87% | 1% |
| 70% | 77% | -9% | Recovery Gold (%) | 70% | 70% | -% |
| 84% | 84% | -% | Recovery Copper (%) | 84% | 84% | -% |
| 250,642 | 234,338 | 7% | Total Silver Produced (oz) | 250,642 | 224,723 | 12% |
| 1,778 | 2,286 | -22% | Total Gold Produced (oz) | 1,778 | 1,452 | 22% |
| 1,347,110 | 1,397,637 | -4% | Total Copper Produced (lbs) | 1,347,110 | 1,317,793 | 2% |
| 629,302 | 678,247 | -7% | Total Silver Equivalent Produced (oz)1 | 629,302 | 558,460 | 13% |
1. In Q1 2024, AgEq was calculated using metal prices of $23.36 per oz Ag, $2,072 per oz Au and $3.83 per lb Cu. In Q4 2023, AgEq was calculated using metals prices of $23.23 oz Ag, $1,977 oz Au and $3.71 lb Cu. In Q1 2023, AgEq was calculated using metal prices of $22.56 per oz Ag, $1,888 per oz Au and $4.05 per lb Cu
Under National Instrument 43-101, the Company is required to disclose that it has not based its production decisions on NI 43-101-compliant reserve estimates, preliminary economic assessments, or feasibility studies, and historically projects without such reports have increased uncertainty and risk of economic viability. The Company's decision to place a mine into operation at levels intended by management, expand a mine, make other production-related decisions, or otherwise carry out mining and processing operations is largely based on internal non-public Company data, and on reports based on exploration and mining work by the Company and by geologists and engineers engaged by the Company. The results of this work are evident in the Company's discovery of the San Gonzalo and Avino Mine resources, and in the Company's record of mineral production and financial returns since operations at levels intended by management commenced at the San Gonzalo Mine in 2012.
Qualified Person(s)
Peter Latta, P.Eng, MBA, Vice President, Technical Services, Avino, is a qualified person within the context of National Instrument 43-101, and has reviewed and approved the technical data in this document.
Non – IFRS Measures
EBITDA and Adjusted earnings
Earnings, or loss, before interest, taxes and amortization (“EBITDA”) is a non IFRS financial measure which excludes the following items from net earnings:
|
| · | Income tax expense |
|
| · | Finance cost |
|
| · | Amortization and depletion |
Adjusted earnings excludes the following additional items from EBITDA
|
| · | Share based compensation; |
|
| · | Non-operational items including foreign exchange movements, fair value adjustments on outstanding warrants and other non-recurring items |
Management believes EBITDA and adjusted earnings provides an indication of continuing capacity to generate operating cash flow to fund capital needs, service debt obligations and fund capital expenditures. These measures are intended to provide additional information to investors and analysts. There are not standardized definitions under IFRS and should not be considered in isolation or as a substitute for measures of operating performance prepared in accordance with IFRS.
| 7 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Adjusted earnings excludes share-based payments, and non-operating or recurring items such as foreign exchange gains and losses and fair value adjustments on outstanding warrants. Under IFRS, entities must reflect within compensation expense the cost of share-based payments. In the Company’s circumstances, share-based compensation can involve significant amounts that will not be settled in cash but are settled by issuance of shares in exchange. The Company discloses adjusted earnings to aid in understanding the results of the Company.
The following table provides a reconciliation of net earnings in the financial statements to EBITDA and adjusted earnings:
| Expressed in 000’s of US$, unless otherwise noted |
| Q1 2024 |
|
| Q1 2023 |
|
| Q1 2024 |
|
| Q4 2023 |
| ||||
| Net income (loss) for the period |
| $ | 599 |
|
| $ | (352 | ) |
| $ | 599 |
|
| $ | 563 |
|
| Depreciation and depletion |
|
| 857 |
|
|
| 705 |
|
|
| 857 |
|
|
| 744 |
|
| Interest income and other |
|
| (3 | ) |
|
| (209 | ) |
|
| (3 | ) |
|
| (180 | ) |
| Interest expense |
|
| 90 |
|
|
| 45 |
|
|
| 90 |
|
|
| 106 |
|
| Finance cost |
|
| 2 |
|
|
| 74 |
|
|
| 2 |
|
|
| 1 |
|
| Accretion of reclamation provision |
|
| 51 |
|
|
| 11 |
|
|
| 51 |
|
|
| 13 |
|
| Current income tax expense |
|
| 199 |
|
|
| 26 |
|
|
| 199 |
|
|
| 118 |
|
| Deferred income tax recovery |
|
| (82 | ) |
|
| (14 | ) |
|
| (82 | ) |
|
| (245 | ) |
| EBITDA |
| $ | 1,713 |
|
| $ | 286 |
|
| $ | 1,713 |
|
| $ | 1,120 |
|
| Fair value adjustment on warrant liability |
|
| - |
|
|
| 293 |
|
|
| - |
|
|
| 1 |
|
| Share-based payments |
|
| 423 |
|
|
| 339 |
|
|
| 423 |
|
|
| 460 |
|
| Write down of equipment |
|
| 1 |
|
|
| - |
|
|
| 1 |
|
|
| 319 |
|
| Foreign exchange loss (gain) |
|
| (80 | ) |
|
| 136 |
|
|
| (80 | ) |
|
| 72 |
|
| Adjusted earnings |
| $ | 2,057 |
|
| $ | 1,054 |
|
| $ | 2,057 |
|
| $ | 1,972 |
|
| Shares outstanding (diluted) |
|
| 133,022,671 |
|
|
| 122,602,929 |
|
|
| 133,022,671 |
|
|
| 127,763,043 |
|
| Adjusted earnings per share |
| $ | 0.02 |
|
| $ | 0.01 |
|
| $ | 0.02 |
|
| $ | 0.02 |
|
Cash Cost and All-in Sustaining Cash Cost per Silver Equivalent Payable Ounce
The following tables provide a reconciliation of cost of sales from the consolidated financial statements to cash cost and all-in sustaining cash cost per silver equivalent payable ounce sold. In each table, “silver equivalent payable ounces sold” consists of the sum of payable silver ounces, gold ounces and copper tonnes sold, before penalties, treatment charges, and refining charges, multiplied by the ratio of the average spot gold and copper prices for the corresponding period.
Cash cost per payable ounce and all-in sustaining cash cost per payable ounce are measures developed by mining companies in an effort to provide a comparable standard. However, there can be no assurance that our reporting of these non-IFRS measures is similar to that reported by other mining companies. Total cash cost per payable ounce and all-in sustaining cash cost per payable ounce are measures used by the Company to manage and evaluate operating performance of the Company’s mining operations, and are widely reported in the silver and gold mining industry as benchmarks for performance, but do not have standardized meanings prescribed by IFRS as issued by the IASB, and are disclosed in addition to IFRS measures.
| 8 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Cash cost per payable ounce
Management believes that the Company’s ability to control the cash cost per payable silver equivalent ounce is one of its key performance drivers impacting both the Company’s financial condition and results of operations. Achieving a low silver equivalent production cost base allows the Company to remain profitable from mining operations even during times of low commodity prices, and provides more flexibility in responding to changing market conditions. In addition, a profitable operation results in the generation of positive cash flows, which then improve the Company’s financial condition.
The Company’s calculation of all-in sustaining cash costs includes sustaining capital expenditures of $306 for the three months ended March 31, 2024 (year ended December 31, 2023 - $1,041) and all of which is attributable to the Avino Mine.
To facilitate a better understanding of these measures as calculated by the Company, detailed reconciliations between the non-IFRS measures and the Company’s consolidated financial statements are provided below. The non-IFRS measures presented are intended to provide additional information, and should not be considered in isolation nor should they be considered substitutes for IFRS measures. Calculated figures may not add up accurately due to rounding.
The following table reconciles cost of sales to cash cost per payable AgEq oz and all-in sustaining cash cost per payable AgEq oz for the preceding quarters:
| Expressed in 000’s of US$, unless otherwise noted |
| Avino – Consolidated |
| |||||||||||||||||||||||||||||
|
|
| Q1 2024 |
|
| Q4 2023 |
|
| Q3 2023 |
|
| Q2 2023 |
|
| Q1 2023 |
|
| Q4 2022 |
|
| Q3 2022 |
|
| Q2 2022 |
| ||||||||
| Cost of sales |
| $ | 10,054 |
|
| $ | 9,969 |
|
| $ | 9,952 |
|
| $ | 8,175 |
|
| $ | 7,974 |
|
| $ | 10,293 |
|
| $ | 7,058 |
|
| $ | 5,468 |
|
| Exploration expenses |
|
| (135 | ) |
|
| (148 | ) |
|
| (41 | ) |
|
| (27 | ) |
|
| (95 | ) |
|
| (472 | ) |
|
| (336 | ) |
|
| (305 | ) |
| Write down of equipment and supplies and materials inventory |
|
| - |
|
|
| (319 | ) |
|
| (4 | ) |
|
| (91 | ) |
|
| - |
|
|
| (330 | ) |
|
| - |
|
|
| - |
|
| Depletion and depreciation |
|
| (821 | ) |
|
| (717 | ) |
|
| (720 | ) |
|
| (677 | ) |
|
| (670 | ) |
|
| (592 | ) |
|
| (514 | ) |
|
| (481 | ) |
| Cash production cost |
|
| 9,098 |
|
|
| 8,785 |
|
|
| 9,187 |
|
|
| 7,380 |
|
|
| 7,209 |
|
|
| 8,899 |
|
|
| 6,208 |
|
|
| 4,682 |
|
| Payable silver equivalent ounces sold |
|
| 610,877 |
|
|
| 584,061 |
|
|
| 543,686 |
|
|
| 452,011 |
|
|
| 506,727 |
|
|
| 756,536 |
|
|
| 603,360 |
|
|
| 594,700 |
|
| Cash cost per silver equivalent ounce |
| $ | 14.89 |
|
| $ | 15.04 |
|
| $ | 16.90 |
|
| $ | 16.33 |
|
| $ | 14.23 |
|
| $ | 11.76 |
|
| $ | 10.29 |
|
| $ | 7.87 |
|
| General and administrative expenses |
|
| 1,695 |
|
|
| 2,080 |
|
|
| 1,907 |
|
|
| 2,338 |
|
|
| 1,523 |
|
|
| 2,094 |
|
|
| 1,553 |
|
|
| 2,218 |
|
| Treatment & refining charges |
|
| 890 |
|
|
| 978 |
|
|
| 1,001 |
|
|
| 651 |
|
|
| 709 |
|
|
| 784 |
|
|
| 568 |
|
|
| 700 |
|
| Penalties |
|
| 692 |
|
|
| 834 |
|
|
| 535 |
|
|
| 634 |
|
|
| 898 |
|
|
| 1,649 |
|
|
| 1,705 |
|
|
| 897 |
|
| Sustaining capital expenditures |
|
| 306 |
|
|
| 318 |
|
|
| 289 |
|
|
| 270 |
|
|
| 163 |
|
|
| 639 |
|
|
| 672 |
|
|
| 1,586 |
|
| Exploration expenses |
|
| 135 |
|
|
| 148 |
|
|
| 41 |
|
|
| 27 |
|
|
| 95 |
|
|
| 472 |
|
|
| 336 |
|
|
| 305 |
|
| Share-based payments and G&A depreciation |
|
| (459 | ) |
|
| (487 | ) |
|
| (665 | ) |
|
| (878 | ) |
|
| (374 | ) |
|
| (442 | ) |
|
| (591 | ) |
|
| (899 | ) |
| Cash operating cost |
| $ | 12,357 |
|
| $ | 12,656 |
|
| $ | 12,295 |
|
| $ | 10,422 |
|
| $ | 10,223 |
|
| $ | 14,095 |
|
| $ | 10,451 |
|
| $ | 9,489 |
|
| AISC per silver equivalent ounce |
| $ | 20.23 |
|
| $ | 21.67 |
|
| $ | 22.61 |
|
| $ | 23.06 |
|
| $ | 20.17 |
|
| $ | 18.63 |
|
| $ | 17.32 |
|
| $ | 15.95 |
|
*Certain amounts shown may not add exactly to the total due to rounding differences
| 9 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Working Capital
Management uses working capital to assessment the Company’s ongoing liquidity position and future requirements, and believe it provides useful information to an investor. The Company’s working capital position is as follows:
|
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
| Current assets |
| $ | 22,441 |
|
| $ | 23,535 |
|
| Current liabilities |
|
| (12,656 | ) |
|
| (13,808 | ) |
| Working capital |
| $ | 9,785 |
|
| $ | 9,727 |
|
Results of Operations
Summary of Quarterly Results
| (000’s) |
| 2024 |
|
| 2023 |
|
| 2023 |
|
| 2023 |
|
| 2023 |
|
| 2022 |
|
| 2022 |
|
| 2022 |
| ||||||||
| Quarter ended |
| Mar 31 Q1 |
|
| Dec 31 Q4 |
|
| Sep 30 Q3 |
|
| Jun 30 Q2 |
|
| Mar 31 Q1 |
|
| Dec 31 Q4 |
|
| Sep 30 Q3 |
|
| Jun 30 Q2 |
| ||||||||
| Revenue |
| $ | 12,393 |
|
| $ | 12,530 |
|
| $ | 12,316 |
|
| $ | 9,218 |
|
| $ | 9,825 |
|
| $ | 14,649 |
|
| $ | 9,118 |
|
| $ | 9,370 |
|
| Net income (loss) |
|
| 599 |
|
|
| 563 |
|
|
| (803 | ) |
|
| 1,134 |
|
|
| (352 | ) |
|
| 1,296 |
|
|
| (1,129 | ) |
|
| 2,283 |
|
| Earnings (loss) per share - basic |
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.01 |
|
| $ | (0.01 | ) |
| $ | 0.02 |
|
| Earnings (loss) per share - diluted |
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.01 |
|
| $ | (0.01 | ) |
| $ | 0.02 |
|
| Total Assets |
| $ | 128,644 |
|
| $ | 128,340 |
|
| $ | 123,493 |
|
| $ | 120,469 |
|
| $ | 118,606 |
|
| $ | 121,196 |
|
| $ | 118,404 |
|
| $ | 118,092 |
|
During Q1 2024, revenue was consistent when compared to Q3 and Q4 2023 quarters, as a result of slightly higher realized silver and gold metal prices and higher silver equivalent ounces sold. When compared to Q4 2022, revenues were lower due to lower ounces sold. The increased revenues and ounces sold in Q4 2022 were due to better than expected grades in mining production and recoveries in the mill process, thus resulting in higher overall ounces sold.
Net income and earnings per share in Q1 2024 was positive, and in line with Q4 2023. Quarters prior to those two were inconsistent due to timing of concentrate shipments, as well as movements in non-operational items such as unrealized gain/loss on investments, as well as fair value adjustments on the Company’s warrant liability, which expired in Q3 2023. For further details see “Financial Results” section.
Total assets have increased overall when compared to previous quarters, as result of the acquisition of La Preciosa as well as operating and financing cash flow generation, and capital investment in the operation.
Quarterly results will fluctuate with changes in revenues, cost of sales, general and administrative expenses, including non-cash items such as share-based payments, and other items including foreign exchange and deferred income taxes. These fluctuations are mainly caused by market conditions such as fluctuations in metal prices, currency fluctuations as well as variations in mineralization of the zones mined.
| 10 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Cash Flow
| (000’s) |
| March 31, 2024 |
|
| March 31, 2023 |
| ||
| Cash generated by operating activities |
| $ | 2,347 |
|
| $ | 448 |
|
| Cash generated by (used in) financing activities |
|
| 392 |
|
|
| (166 | ) |
| Cash used in investing activities |
|
| (1,967 | ) |
|
| (8,839 | ) |
| Change in cash |
|
| 772 |
|
|
| (8,557 | ) |
| Effect of exchange rate changes on cash |
|
| 14 |
|
|
| 9 |
|
| Cash, beginning of period |
|
| 2,688 |
|
|
| 11,245 |
|
| Cash, end of period |
| $ | 3,474 |
|
| $ | 2,697 |
|
Operating Activities
Cash generated by operating activities for the three month ended March 31, 2024, was $2.3 million, an increase of $1.9 million compared to $0.4 million used for the three months ended March 31, 2023. Cash movements from operating activities can fluctuate with changes in net income and working capital movements. In Q1 2024, cash generated from operating activities increased primarily due to higher mine operating income as a result of higher levels of production activities and ounces sold. Other movements are primarily a result of working capital changes between the two periods.
Financing Activities
Cash provided by financing activities was $0.4 million for the three months ended March 31, 2024, compared to $0.2 million used for the three months ended March 31, 2023. The movement is a result of proceeds from shares issued on the ATM, partially offset by higher payments of lease and equipment loan. During the three months ended March 31, 2024, the Company received net proceeds from issuance of shares for cash of $0.9 million (March 31, 2023 – $0.2 million). The Company also made lease and equipment loan payments totalling $0.5 million (March 31, 2023 - $0.4 million).
Investing Activities
Cash used in investing activities for the three months ended March 31, 2024, was $2.0 million compared to $8.8 million for the three months ended March 31, 2023. Cash used in investing activities included $2.0 million (March 31, 2023 - $3.8 million) spent on the acquisition of property and equipment and exploration expenditures, as well as $5.0 million related to the repayment of the promissory note associated with the acquisition of La Preciosa during the three months ended March 31, 2023, with no comparable payment in the current period.
Liquidity and Capital Resources
The Company’s ability to generate sufficient amounts of cash, in both the short term and the long term, to maintain existing capacity and to fund ongoing exploration, is dependent upon the discovery of economically recoverable reserves or resources and the ability of the Company to continue with sustainable and profitable mining operations.
Management expects that the Company’s ongoing liquidity requirements will be funded from cash generated from current operations and from further financing, as required, in order to fund ongoing exploration activities, and meet its objectives, including ongoing advancement at the Avino Mine. The Company continues to evaluate financing opportunities to advance its projects. The Company’s ability to secure adequate financing is, in part, dependent on overall market conditions, the prices of silver, gold, and copper, and other factors.
| 11 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
The Company’s recent financing activities are summarized in the table below.
| Intended Use of Proceeds | Actual Use of Proceeds |
| During 2024, the Company received net proceeds of $0.9 million in connection with a brokered at-the-market offering issued under prospectus supplements.
| As of the date of this MD&A, the Company has used the funds as intended.
During 2024, all funds were used for exploration and evaluation activities, the acquisition of property and equipment, and the repayments of capital equipment acquired under lease and loan.
|
| During 2021, the Company received net proceeds of $18.1 million in connection with a brokered at-the-market offering issued under prospectus supplements, $0.8 million in connection with warrants exercised and $0.2 million in connection with stock options exercised.
| As of the date of this MD&A, the Company has used the funds as intended. During 2021, the Company announced an increase to its exploration from 12,000 to 30,600 metres of exploration and resource drilling. As of the date of this MD&A, over 20,000 metres of the program had been completed.
In supporting mining operations in Mexico, the Company acquired La Preciosa for net cash consideration of $15.3 million. During 2022, the remaining $3.8 million was used for exploration and evaluation activities, the acquisition of property and equipment, the repayment of capital equipment acquired under lease and loan.
|
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Transactions with Related Parties
All related party transactions are recorded at the exchange amount which is the amount agreed to by the Company and the related party.
(a) Key management personnel
The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel is as follows:
|
|
| Three months ended March 31, |
| |||||
|
|
| 2024 | 2023 |
| ||||
| Salaries, benefits, and consulting fees |
| $ | 293 |
|
| $ | 284 |
|
| Share-based payments |
|
| 387 |
|
|
| 321 |
|
|
|
| $ | 680 |
|
| $ | 605 |
|
(b) Amounts due to/(from) related parties
In the normal course of operations the Company transacts with companies related to Avino’s directors or officers. All amounts payable and receivable are non-interest bearing, unsecured and due on demand.
| 12 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
The following table summarizes the amounts were due to/(from) related parties:
|
|
| March 31, 2024 | December 31, 2023 |
| ||||
| Oniva International Services Corp. |
| $ | 100 |
|
| $ | 102 |
|
| Silver Wolf Exploration Ltd. |
|
| 44 |
|
|
| - |
|
| Directors Fees |
|
| (338 | ) |
|
| (269 | ) |
|
|
| $ | (194 | ) |
| $ | (167 | ) |
For services provided to the Company as President and Chief Executive Officer, the Company pays Intermark Capital Corporation (“ICC”), a company controlled by David Wolfin, the Company’s President and CEO and also a director, for consulting services. For the three months ended March 31, 2024, the Company paid $71 (March 31, 2023 - $71) to ICC.
(c) Other related party transactions
The Company has a cost sharing agreement with Oniva International Services Corp. (“Oniva”) for office and administration services. Pursuant to the cost sharing agreement, the Company will reimburse Oniva for the Company’s percentage of overhead and corporate expenses and for out-of-pocket expenses incurred on behalf of the Company, with a 2.5% markup. David Wolfin, President & CEO, and a director of the Company, is the sole owner of Oniva. The cost sharing agreement may be terminated with one-month notice by either party without penalty.
The transactions with Oniva are summarized below:
|
|
| Three months ended March 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| Salaries and benefits |
| $ | 254 |
|
| $ | 245 |
|
| Office and miscellaneous |
|
| 133 |
|
|
| 133 |
|
|
|
| $ | 387 |
|
| $ | 378 |
|
Financial Instruments and Risks
The fair values of the Company’s amounts due to related parties and accounts payable approximate their carrying values because of the short-term nature of these instruments. Cash, amounts receivable, long-term investments, and warrant liability are recorded at fair value. The carrying amounts of the Company’s equipment loans, and finance lease obligations are a reasonable approximation of their fair values based on current market rates for similar financial instruments.
The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, and market risk.
(a) Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company has exposure to credit risk through its cash, long-term investments and amounts receivable. The Company manages credit risk, in respect of cash and short-term investments, by maintaining the majority of cash and short-term investments at highly rated financial institutions.
| 13 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
The Company is exposed to a significant concentration of credit risk with respect to its trade accounts receivable balance because all of its concentrate sales are with three (December 31, 2023 – two) counterparties. However, the Company has not recorded any allowance against its trade receivables because to-date all balances owed have been settled in full when due (typically within 60 days of submission) and because of the nature of the counterparties.
The Company’s maximum exposure to credit risk at the end of any period is equal to the carrying amount of these financial assets as recorded in the unaudited condensed consolidated interim statement of financial position. At March 31, 2024, no amounts were held as collateral.
(b) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows required by its operating, investing and financing activities. The Company had cash at March 31, 2024, in the amount of $3,474 and working capital of $9,785 in order to meet short-term business requirements. Accounts payable have contractual maturities of approximately 30 to 90 days, or are due on demand and are subject to normal trade terms. The current portions of note payable and finance lease obligations are due within 12 months of the condensed consolidated interim statement of financial position date. Amounts due to related parties are without stated terms of interest or repayment.
The maturity profiles of the Company’s contractual obligations and commitments as at March 31, 2024, are summarized as follows:
|
|
| Total |
|
| Less Than 1 Year |
|
| 1-5 years |
|
| More Than 5 Years |
| ||||
| Accounts payable and accrued liabilities |
| $ | 10,713 |
|
| $ | 10,713 |
|
| $ | - |
|
| $ | - |
|
| Minimum rental and lease payments |
|
| 5,652 |
|
|
| 214 |
|
|
| 1,292 |
|
|
| 4,146 |
|
| Equipment loans |
|
| 341 |
|
|
| 184 |
|
|
| 157 |
|
|
| - |
|
| Finance lease obligations |
|
| 2,962 |
|
|
| 1,734 |
|
|
| 1,228 |
|
|
| - |
|
| Total |
| $ | 19,668 |
|
| $ | 12,845 |
|
| $ | 2,677 |
|
| $ | 4,146 |
|
(c) Market Risk
Market risk consists of interest rate risk, foreign currency risk and price risk. These are discussed further below.
Interest Rate Risk
Interest rate risk consists of two components:
|
| (i) | To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk. |
|
|
|
|
|
| (ii) | To the extent that changes in prevailing market rates differ from the interest rates on the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk. |
| 14 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
In management’s opinion, the Company is not materially exposed to interest rate risk, as any material debt obligations that bear interest are fixed and not subject to floating interest rates. A 10% change in the interest rate would not a result in a material impact on the Company’s operations.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that the following monetary assets and liabilities are denominated in Mexican pesos and Canadian dollars:
|
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
|
| MXN |
|
| CDN |
|
| MXN |
|
| CDN |
| ||||
| Cash |
| $ | 8,108 |
|
| $ | 252 |
|
| $ | 13,338 |
|
| $ | 70 |
|
| Due from related parties |
|
| 5,643 |
|
|
| - |
|
|
| 4,558 |
|
|
| - |
|
| Long-term investments |
|
| - |
|
|
| 1,414 |
|
|
| - |
|
|
| 1,236 |
|
| Reclamation bonds |
|
| - |
|
|
| 6 |
|
|
| - |
|
|
| 6 |
|
| Amounts receivable |
|
| 3,042 |
|
|
| 20 |
|
|
| 18,644 |
|
|
| 26 |
|
| Accounts payable and accrued liabilities |
|
| (78,884 | ) |
|
| (145 | ) |
|
| (95,662 | ) |
|
| (150 | ) |
| Due to related parties |
|
| - |
|
|
| (195 | ) |
|
| - |
|
|
| (135 | ) |
| Finance lease obligations |
|
| (800 | ) |
|
| (179 | ) |
|
| (1,129 | ) |
|
| (217 | ) |
| Net exposure |
|
| (62,891 | ) |
|
| 1,173 |
|
|
| (60,251 | ) |
|
| 836 |
|
| US dollar equivalent |
| $ | (3,767 | ) |
| $ | 865 |
|
| $ | (3,567 | ) |
| $ | 577 |
|
Based on the net US dollar denominated asset and liability exposures as at March 31, 2024, a 10% fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings for the three months ended March 31, 2024, by approximately $298. The Company has not entered into any foreign currency contracts to mitigate this risk.
Price Risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk.
The Company is exposed to price risk with respect to its amounts receivable, as certain trade accounts receivable are recorded based on provisional terms that are subsequently adjusted according to quoted metal prices at the date of final settlement. Quoted metal prices are affected by numerous factors beyond the Company’s control and are subject to volatility, and the Company does not employ hedging strategies to limit its exposure to price risk. At March 31, 2024, based on outstanding accounts receivable that were subject to pricing adjustments, a 10% change in metals prices would have an impact on net earnings (loss) of approximately $106.
The Company is exposed to price risk with respect to its long-term investments, as these investments are carried at fair value based on quoted market prices. Changes in market prices result in gains or losses being recognized in net income (loss). At March 31, 2024, a 10% change in market prices would have an impact on net earnings (loss) of approximately $105.
The Company’s profitability and ability to raise capital to fund exploration, evaluation and production activities is subject to risks associated with fluctuations in mineral prices. Management closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.
| 15 | Page |
(d) Classification of Financial Instruments
The following table sets forth the Company’s financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as at March 31, 2024:
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
| Financial assets |
|
|
|
|
|
|
|
|
| |||
| Cash |
| $ | 3,474 |
|
| $ | - |
|
| $ | - |
|
| Amounts receivable |
|
| - |
|
|
| 1,856 |
|
|
| - |
|
| Long-term investments |
|
| 1,043 |
|
|
| - |
|
|
| - |
|
| Total financial assets |
| $ | 4,517 |
|
| $ | 1,856 |
|
| $ | - |
|
The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at March 31, 2024, the Company’s has no Level 3 financial instruments.
Commitments
The Company has a cost sharing agreement to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on Oniva’s total overhead and corporate expenses. The agreement may be terminated with one-month notice by either party. Transactions and balances with Oniva are disclosed in Note 10 of the consolidated financial statements.
The Company and its subsidiaries have various operating lease agreements for their office premises, use of land, and equipment. Commitments in respect of these lease agreements are as follows:
|
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
| Not later than one year |
| $ | 214 |
|
| $ | 714 |
|
| Later than one year and not later than five years |
|
| 1,292 |
|
|
| 1,241 |
|
| Later than five years |
|
| 4,146 |
|
|
| 3,965 |
|
|
|
| $ | 5,652 |
|
| $ | 5,920 |
|
Office lease payments recognized as an expense during the three months ended March 31, 2024, totalled $10 (March 31, 2023 - $4).
Subsequent Events
At-The-Market Sales – Subsequent to March 31, 2024, the Company issued 1,256,000 common shares in at-the-market offerings under prospectus supplement for gross proceeds of $993.
| 16 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Outstanding Share Data
The Company’s authorized share capital consists of an unlimited number of common shares without par value.
As at May 8, 2024 the following common shares, warrants, and stock options were outstanding:
|
|
| Number of shares |
|
| Exercise price |
|
| Remaining life (years) |
| |||
| Share capital |
|
| 133,068,205 |
|
|
| - |
|
|
| - |
|
| Restricted Share Units (“RSUs”) |
|
| 3,678,000 |
|
|
| - |
|
| 0.88 – 2.90 |
| |
| Stock options |
|
| 8,976,000 |
|
| C$0.78 - C$1.64 |
|
| 0.28 – 4.88 |
| ||
| Fully diluted |
|
| 145,722,205 |
|
|
|
|
|
|
|
|
|
The following are details of outstanding stock options as at March 31, 2024 and May 8, 2024:
| Expiry Date | Exercise Price Per Share | Number of Shares Remaining Subject to Options (March 31, 2024) | Number of Shares Remaining Subject to Options (May 8, 2024) |
| August 21, 2024 | C$0.79 | 126,000 | 126,000 |
| August 4, 2025 | C$1.64 | 1,620,000 | 1,620,000 |
| March 25, 2027 | C$1.20 | 2,255,000 | 2,255,000 |
| May 4, 2027 | C$0.92 | 25,000 | 25,000 |
| March 29, 2028 | C$1.12 | 2,300,000 | 2,300,000 |
| July 10, 2028 | C$1.12 | 150,000 | 150,000 |
| March 25, 2029 | C$0.78 | 2,500,000 | 2,500,000 |
| Total: |
| 8,976,000 | 8,976,000 |
The following are details of outstanding RSUs as at March 31, 2024 and May 8, 2024:
| Expiry Date | Number of Shares Remaining Subject to RSUs (March 31, 2024) | Number of Shares Remaining Subject to RSUs (May 8, 2024) |
| March 25, 2025 | 577,000 | 577,000 |
| March 29, 2026 | 1,832,444 | 1,220,000 |
| April 1, 2027 | - | 1,881,000 |
| Total: | 2,409,444 | 3,678,000 |
Recent Accounting Pronouncements
New and amended IFRS that are effective for the current year:
Certain new accounting standards and interpretations have been published that are either applicable in the current year, or are not mandatory for the current period and have not been early adopted. We have assessed these standards, and they are not expected to have a material impact on the Company in the current or future reporting periods.
| 17 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024 |
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Cautionary Note regarding Reserves and Resources
National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), issued by the Canadian Securities Administrators, lays out the standards of disclosure for mineral projects. This includes a requirement that a certified Qualified Person (“QP”) (as defined under the NI 43-101) supervises the preparation of the mineral reserves and mineral resources. Peter Latta, Vice President, Technical Services is a certified QP for the Company and has reviewed this MD&A for QP technical disclosures. All NI 43-101 technical reports can be found on the Company’s website at www.avino.com or under the Company’s profile on SEDAR+ at www.sedarplus.ca.
Cautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Resources
This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws applicable to U.S. companies. Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in respects from the requirements of the United States Securities and Exchange Commission (the “SEC”) applicable to domestic United States issuers. Accordingly, the disclosure in this MD&A regarding our mineral properties may not be comparable to the disclosure of United States issuers subject to the SEC’s mining disclosure requirements.
Additional Information
Additional information on the Company, including the Company’s unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024, is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.avino.com.
Cautionary Statement
| This MD&A is based on a review of the Company’s operations, financial position and plans for the future based on facts and circumstances as of May 8, 2024. Except for historical information or statements of fact relating to the Company, this document contains “forward-looking statements” within the meaning of applicable Canadian securities regulations. Forward-looking statements in this document include, but are not limited to, those regarding the economic outlook for the mining industry, expectations regarding metals prices, expectations regarding production output, production costs, cash costs and other operating results, expectations regarding growth prospects and the outlook for the Company’s operations, and statements regarding the Company’s liquidity, capital resources, and capital expenditures. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company’s documents filed from time to time via SEDAR+ with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates or opinions change, except as required by applicable securities regulations. These statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Material linked to the Company’s website within this MD&A is not deemed to be incorporated by reference nor form a part of this MD&A. |
| 18 | Page |