Avino Silver & Gold Mines Ltd 6-K/A, filed Aug 15, 2022
Avino Silver & Gold Mines Ltd (ASM)
About this 6-K/A
Avino Silver & Gold Mines Ltd filed this 6-K/A on August 15, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1 to Form 6-K filed on August 11, 2022)
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of August 2022
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
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
EXPLANATORY NOTE
Avino Gold and Silver (the “Company”) is furnishing this Amendment No. 1 on Form 6-K/A (the “Amendment”) to provide its three and six month interim financial statements using Inline XBRL in accordance with Section 405 of Regulation S-T and to incorporate such financial statements into the Company’s registration statements referenced below.
This Form 6-K, including exhibit 99.1 attached hereto, are hereby incorporated by reference into the Company’s Registration Statements on Form F-3 (Registration file number 333-252081 and 333-226963) and Form S-8 (Registration file number 333-195120) to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibit:
|
|
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, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Avino Silver & Gold Mines, Ltd. | |||
Date: August 15, 2022 | By: | /s/ Nathan Harte | |
|
| Nathan Harte | |
Chief Financial Officer | |||
3 |
EXHIBIT 99.1
|
AVINO SILVER & GOLD MINES LTD.
Condensed Consolidated Interim Financial Statements
For the six months ended June 30, 2022 and 2021
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Financial Position (Expressed in thousands of US dollars) |
|
| Note |
|
| June 30, 2022 (unaudited) |
|
| December 31, 2021 |
| |||
ASSETS |
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| |||
Current assets |
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| |||
Cash |
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| $ |
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| $ |
| |||
Amounts receivable |
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| |||
Taxes recoverable |
|
| 5 |
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| ||
Prepaid expenses and other assets |
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| ||
Inventory |
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| 6 |
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| ||
Total current assets |
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Exploration and evaluation assets |
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| 8 |
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| ||
Plant, equipment and mining properties |
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| 10 |
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| ||
Long-term investments |
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| 7 |
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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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| $ |
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| $ |
| ||
Amounts due to related parties |
|
| 11(b) |
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| |||
Taxes payable |
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Note payable |
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| 12 |
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Current portion of finance lease obligations |
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Total current liabilities |
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Finance lease obligations |
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Warrant liability |
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| 13 |
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Reclamation provision |
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| 14 |
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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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| 15 |
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| ||
Equity reserves |
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| ||
Treasury shares |
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|
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|
|
| ( | ) |
|
| ( | ) |
Accumulated other comprehensive loss |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated deficit |
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|
|
|
|
| ( | ) |
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| ( | ) |
Total equity |
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| ||
Total liabilities and equity |
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|
|
|
| $ |
|
| $ |
| ||
Commitments – Note 18
Approved by the Board of Directors on August 10, 2022:
Peter Bojtos |
| Director |
| David Wolfin |
| Director |
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 Operations and Comprehensive Income (Loss) (Expressed in thousands of US dollars) |
|
|
|
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| |||||||||||
|
| Note |
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| 2022 |
|
| 2021 |
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| 2022 |
|
| 2021 |
| |||||
Revenue from mining operations |
|
| 16 |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Cost of sales |
|
| 16 |
|
|
|
|
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|
|
|
|
|
| ||||
Mine operating income (loss) |
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|
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|
|
| ( | ) |
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|
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| ( | ) | ||
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Operating expenses |
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|
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General and administrative expenses |
|
| 17 |
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| ||||
Share-based payments |
|
| 15 |
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|
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|
|
| ||||
Income (loss) before other items |
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|
|
|
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|
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| ( | ) |
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| ( | ) | ||
Other items |
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Interest and other income |
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| ||||
(Loss) gain on long-term investments |
|
| 7 |
|
|
| ( | ) |
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|
|
|
| ( | ) |
|
|
| ||
Fair value adjustment on warrant liability |
|
| 13 |
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| ||||
Realized loss on warrants exercised |
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|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Unrealized foreign exchange gain (loss) |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Project evaluation expenses |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Finance cost |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Accretion of reclamation provision |
|
| 14 |
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Interest expense |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Income (loss) before income taxes |
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|
|
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|
|
|
|
| ( | ) |
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|
|
|
| ( | ) | ||
Income taxes: |
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|
Current income tax expense |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Deferred income tax recovery (expense) |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Income tax recovery (expense) |
|
|
|
|
|
| ( | ) |
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|
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| ( | ) |
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| ||
|
|
|
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Net income (loss) |
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|
|
|
|
|
|
|
| ( | ) |
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|
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| ( | ) | ||
|
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Other comprehensive income (loss) |
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|
Currency translation differences |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Total comprehensive income (loss) |
|
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
Income (loss) per share |
|
| 15(e) |
|
|
|
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|
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|
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Basic |
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|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
Diluted |
|
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
Weighted average number of common shares outstanding |
|
| 15(e) |
|
|
|
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|
|
|
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|
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|
|
|
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|
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Basic |
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|
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| ||||
Diluted |
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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 Changes in Equity (Expressed in thousands of US dollars - Unaudited) |
|
| Note |
|
|
Number of CommonShares |
|
| Share CapitalAmount |
|
| Equity Reserves |
|
| Treasury Shares |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Accumulated Deficit |
|
| Total Equity |
| ||||||||
Balance, January 1, 2021 |
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||
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| |
Common shares issued for cash: |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
At the market issuances |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
| ||||
Exercise of warrants |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
| ||||
Exercise of options |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
| ||||
Issuance costs |
|
|
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) | |
Share-based payments |
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
| |||
Net loss for the period |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) | |
Currency translation differences |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||
Balance, June 30, 2021 |
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||
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|
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|
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|
|
|
|
|
|
| |
Balance, January 1, 2022 |
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||
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|
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|
|
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|
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|
|
| |
Common shares issued for cash: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Exercise of options |
|
| 15 |
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
| |||||
Common shares issued for acquisition of La Preciosa |
|
| 15 |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
| ||||||
Issuance costs |
|
| 15 |
|
|
| - |
|
|
| ( | ) |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) | |||
Share-based payments |
|
| 15 |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
| |||||
Net income for the period |
|
| 15 |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
| |||||
Currency translation differences |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
| |||||
Balance, June 30, 2022 |
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ | (97 | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements
| -4- |
AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Cash Flows (Expressed in thousands of US dollars - Unaudited) |
|
|
|
| Six months ended June 30, |
| |||||||
|
| Note |
|
| 2022 |
|
| 2021 |
| |||
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| |||
Cash generated by (used in): |
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| |||
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| |||
Operating activities |
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| |||
Net income (loss) |
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|
|
| $ |
|
| $ | ( | ) | ||
Adjustments for non-cash items: |
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|
|
|
|
|
|
|
|
|
| |
Deferred income tax expense (recovery) |
|
|
|
|
|
|
|
| ( | ) | ||
Depreciation and depletion |
|
|
|
|
|
|
|
|
| |||
Accretion of reclamation provision |
|
| 14 |
|
|
|
|
|
|
| ||
Gain (loss) on investments |
|
| 7 |
|
|
|
|
|
| ( | ) | |
Unrealized foreign exchange loss |
|
|
|
|
|
|
|
|
|
| ||
Unwinding of fair value adjustment |
|
| 12 |
|
|
|
|
|
| ( | ) | |
Fair value adjustment on warrant liability |
|
| 13 |
|
|
| ( | ) |
|
| ( | ) |
Realized loss on warrants exercised |
|
|
|
|
|
| - |
|
|
|
| |
Share-based payments |
|
|
|
|
|
|
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|
| ||
Cash provided by (used in) operating activities before working capital items |
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| ( | ) | |
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|
Net change in non-cash working capital items |
|
| 19 |
|
|
|
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| ||
Cash provided by (used in) operating activities |
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| ( | ) | |
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Financing activities |
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Shares and units issued for cash, net of issuance costs |
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| ||
Term facility payments |
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|
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|
|
| - |
|
|
| ( | ) |
Lease liability payments |
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|
|
|
|
| ( | ) |
|
| ( | ) |
Equipment loan payments |
|
|
|
|
|
| - |
|
|
| ( | ) |
Cash provided by (used in) financing activities |
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| ( | ) |
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| |
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Investing activities |
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|
Exploration and evaluation expenditures |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Additions to plant, equipment and mining properties |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Acquisition of La Preciosa |
|
|
|
|
|
| ( | ) |
|
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| |
Cash provided by (used in) investing activities |
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| ( | ) |
|
| ( | ) |
|
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Change in cash |
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| ( | ) |
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| |
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Effect of exchange rate changes on cash |
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|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
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|
|
|
Cash, beginning |
|
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| ||
|
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|
|
|
|
|
|
|
|
|
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Cash, ending |
|
|
|
|
| $ |
|
| $ |
| ||
Supplementary Cash Flow Information (Note 19)
The accompanying notes are an integral part of the condensed consolidated interim financial statements
| -5- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
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 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 Avino Mine which produces copper, silver and gold at the historic Avino property in the state of Durango, Mexico. The Company also owns interests in mineral properties located in British Columbia and Yukon, Canada.
Risks associated with Public Health Crises, including COVID-19
The Company’s business, operations and financial condition could be materially adversely affected by the outbreak of epidemics, pandemics or other health crises, such as the outbreak of COVID-19 that was designated as a pandemic by the World Health Organization on March 11, 2020. The international response to the spread of COVID-19 has led to significant restrictions on travel, temporary business closures, quarantines, global stock market volatility and a general reduction in consumer activity. Such public health crises can result in operating, supply chain and project development delays and disruptions, global stock market and financial market volatility, declining trade and market sentiment, reduced movement of people and labour shortages, and travel and shipping disruption and shutdowns, including as a result of government regulation and prevention measures, or a fear of any of the foregoing, all of which could affect commodity prices, interest rates, credit risk and inflation. In addition, the current COVID-19 pandemic, and any future emergence and spread of similar pathogens could have an adverse impact on global economic conditions which may adversely impact the Company’s operations, and the operations of suppliers, contractors and service providers, including smelter and refining service providers, and the demand for the Company’s production.
The Company may experience business interruptions, including suspended (whether government mandated or otherwise) or reduced operations relating to COVID-19 and other such events outside of the Company’s control, which could have a material adverse impact on its business, operations and operating results, financial condition and liquidity.
As at the date of the condensed consolidated interim financial statements, the duration of the business disruptions internationally and related financial impact of COVID-19 cannot be reasonably estimated. It is unknown whether and how the Company may be affected if the pandemic persists for an extended period of time. In particular, the region in which we operate may not have sufficient public infrastructure to adequately respond or efficiently and quickly recover from such event, which could have a materially adverse effect on the Company’s operations. The Company’s exposure to such public health crises also includes risks to employee health and safety. Should an employee, contractor, community member or visitor become infected with a serious illness that has the potential to spread rapidly, this could place the Company’s workforce at risk.
| -6- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
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, 2021, 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 below have been applied consistently to all periods presented in these unaudited condensed consolidated interim financial statements as if the policies have always been in effect.
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 six months ended June 30, 2022, are consistent with those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2021.
| -7- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
Basis of Consolidation
The unaudited condensed consolidated interim financial statements include the accounts of the Company and its Mexican subsidiaries as follows:
Subsidiary |
| Ownership Interest |
| Jurisdiction |
| Nature of Operations |
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Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the unaudited condensed consolidated interim financial statements.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Application of new and revised accounting standards:
Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss. The amendments are applied on or after the first annual reporting period beginning on or after January 1, 2022, with early application permitted. The amendments are applied retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the Company first applies the amendments. This amendment will impact the Company’s accounting for proceeds from mineral sales prior to reaching commercial production at levels intended by management.
| -8- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
Future Changes in Accounting Policies Not Yet Effective as at June 30, 2022:
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact on the Company in the current or future reporting periods.
4. ACQUISITION OF LA PRECIOSA
On March 21, 2022, the Company closed the acquisition with Coeur Mining Inc. (“Coeur”) of all of the issued and outstanding shares of Proyectos Mineros La Preciosa S.A de C.V, a Mexican corporation, and Cervantes LLC, a Delaware LLC, that together hold the La Preciosa property in Mexico (“La Preciosa”).
Total consideration paid to Coeur was comprised of:
| a) | Cash consideration of $ |
| b) | A promissory note for $ |
| c) | |
| d) |
Additionally, Avino issued the following consideration for which payment is contingent on a future event and due to acquisition date uncertainty these are valued at Nil. A liability for these contingent payments will be recognized when related activity and events occur.
| e) | An additional cash payment of $ |
| f) | A |
| g) |
The transaction has been accounted for as an asset acquisition as La Preciosa is in the exploration and evaluation stage and had not demonstrated technical feasibility, commercial viability, or the ability to provide economic benefits. La Preciosa did not have the workforce, resources and/or reserves, mine plan, or financial resources to the meet the definition of a business for accounting purposes.
| -9- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
The purchase consideration has been assigned based on the relative fair values of the assets acquired and liabilities assumed and is summarized as follows:
Cash paid |
| $ |
| |
Note payable |
|
|
| |
Common shares |
|
|
| |
Share purchase warrants |
|
|
| |
Total purchase consideration |
|
|
| |
Transaction costs |
|
|
| |
Total acquisition cost |
| $ |
| |
|
|
|
|
|
Cash |
| $ |
| |
Other current assets |
|
|
| |
Plant and equipment |
|
|
| |
Exploration and evaluation assets |
|
|
| |
Accounts payable |
|
| ( | ) |
Net assets acquired |
| $ |
|
5. 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.
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
VAT recoverable |
| $ |
|
| $ |
| ||
GST recoverable |
|
|
|
|
|
| ||
Income taxes recoverable |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
6. INVENTORY
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Process material stockpiles |
| $ |
|
| $ |
| ||
Concentrate inventory |
|
|
|
|
|
| ||
Materials and supplies |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
The amount of inventory recognized as an expense for the six months ended June 30, 2022 totalled $
| -10- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
7. 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:
|
| Fair Value December 31, |
|
| Net |
|
| Movements in foreign |
|
| Fair value adjustments |
|
| Fair Value June 30, |
| |||||
|
| 2021 |
|
| Additions |
|
| exchange |
|
| for the period |
|
| 2022 |
| |||||
Talisker Resources Common Shares |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||
Silver Wolf Exploration Ltd. Common Shares |
|
|
|
|
|
|
|
| (1 | ) |
|
| ( | ) |
|
|
| |||
Endurance Gold Corp. Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||
Silver Wolf Exploration Ltd.
During the six months ended June 30, 2022, the Company received
See Note 8 for full details of the Option Agreement.
Endurance Gold Corp.
During the six months ended June 30, 2022, the Company received
See Note 8 for full details of the Option Agreement.
| -11- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
8. 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, January 1, 2021 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs incurred during 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and exploration |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assessments and taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of movements in exchange rates |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Option income |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Costs incurred during 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs – Note 4 |
|
|
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|
|
|
|
|
|
|
| ||||
Drilling and exploration |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assessments and taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of movements in exchange rates |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Option income |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2022 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| -12- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
Additional information on the Company’s exploration and evaluation properties by region is as follows:
(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”)
During the year ended December 31, 2021, the Company was informed that Silver Wolf received TSX Venture Exchange approval on the previously-announced entrance into an option agreement to grant Silver Wolf the exclusive right to acquire a
| 1. | Issue to Avino a total of C$ |
| a. | C$50 in common shares of Silver Wolf within 30 days of March 8, 2021 (received on March 26, 2021 – see Note 7 for details); |
| b. | A further C$50 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2022 (received on March 30, 2022 – See Note 7 for details); |
| c. | A further C$100 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2023; |
| d. | A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2024; and |
| e. | A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2025; and |
| 2. | Incur a total of C$ |
| a. | C$50 on or before March 8, 2022; |
| b. | A further C$100 on or before March 8, 2023; and |
| c. | A further C$600 on or before March 8, 2025. |
Under the Option Agreement, all share issuances will be based on the average volume weighted trading price of Silver Wolf’s shares on the TSX Venture Exchange for the ten (10) trading days immediately preceding the date of issuance of the shares, and the shares will be subject to resale restrictions under applicable securities legislation for 4 months and a day from their date of issue.
The Option Agreement between the Company and Silver Wolf is considered a related party transaction as the two companies have directors in common.
| -13- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
(iii) Santiago Papasquiaro property
The Santiago Papasquiaro property is located near the village of Santiago Papasquiaro, and consists of four exploration concessions covering
(iv) Unification La Platosa properties
The Unification La Platosa properties, consisting of three leased concessions in addition to the leased concession described in note (i) above, are 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,
(b) La Preciosa, Mexico
During the six months ended June 30, 2022, the Company received approval for the closing of the acquisition of the La Preciosa property from Coeur Mining Inc. (“Coeur”).
La Preciosa consists of
For further details on the transaction, see Note 4.
| -14- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
(c) British Columbia, Canada
(i) Minto and Olympic-Kelvin properties
During the six months ended June 30, 2022, the Company has granted Endurance Gold Corp. (“Endurance”) the right to acquire an option to earn
Under the terms of the letter agreement,
As part of the final requirement to earn its interest, Endurance agreed to grant to Avino
The Option agreement is subject to the TSX Venture Exchange acceptance, and any Shares or Warrants to be issued will be subject to a four-month hold period on issuance as per the policies of the TSX Venture Exchange.
During the six months ended June 30, 2022, Endurance granted
(ii) Yukon, Canada
9. NON-CONTROLLING INTEREST
At June 30, 2022, the Company had an effective
| -15- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
10. 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 December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of movements in exchange rates |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Effect of movements in exchange rates |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED DEPLETION AND DEPRECIATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Effect of movements in exchange rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Additions / Transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Effect of movements in exchange rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
At June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |||||||
At December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
At December 31, 2020 |
|
| 4,506 |
|
|
| 376 |
|
|
| 91 |
|
|
| 8,048 |
|
|
| 12,186 |
|
|
| 9,639 |
|
|
| 34,846 |
|
| -16- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
Included in Buildings and construction in process above are assets under construction of $8,281 as at June 30, 2022 (December 31, 2021 - $6,348) on which no depreciation was charged in the periods then ended. Once the assets are put into service, they will be transferred to the appropriate class of plant, equipment and mining properties.
As at June 30, 2022, plant, equipment and mining properties included a net carrying amount of $2,538 (December 31, 2021 - $1,306) for mining equipment and right of use assets under lease.
11. 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 for the three and six months ended June 30, 2022 and 2021 is as follows:
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
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 related parties:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Oniva International Services Corp. |
| $ |
|
| $ |
| ||
Silver Wolf Exploration Ltd. |
|
| ( | ) |
|
|
| |
Directors |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
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 six months ended June 30, 2022, 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. 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.
| -17- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
The transactions with Oniva during the three and six months ended June 30, 2022 and 2021 are summarized below:
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Salaries and benefits |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Office and miscellaneous |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
12. NOTE PAYABLE
On March 21, 2022, the Company closed the acquisition of the La Preciosa property from Coeur Mining Inc. (see Note 4 for further details). As part of the agreement, the Company issued a promissory note payable of $
The note is unsecured and non-interest bearing assuming that the note is repaid in full on or before March 21, 2023. If the note is not repaid by March 21, 2023, a sum of $
The continuity of the note payable is as follows:
|
| June 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Balance at beginning of the period |
| $ |
|
| $ |
| ||
Additions |
|
|
|
|
|
| ||
Repayments |
|
|
|
|
|
| ||
Unwinding of fair value adjustment |
|
|
|
|
|
| ||
Balance at end of the period |
|
|
|
|
|
| ||
Less: Current portion |
|
| ( | ) |
|
|
| |
Non-current portion |
| $ |
|
| $ |
| ||
| -18- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
13. WARRANT LIABILITY
The Company’s warrant liability arises as a result of the issuance of warrants exercisable in US dollars. As the denomination is different from the Canadian dollar functional currency of the entity issuing the underlying shares, the Company recognizes a derivative liability for these warrants and re-measures the liability at the end of each reporting period using the Black-Scholes model. Changes in respect of the Company’s warrant liability are as follows:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Balance at beginning of the period |
| $ |
|
| $ |
| ||
Warrants issued |
|
|
|
|
|
| ||
Fair value adjustment |
|
| ( | ) |
|
| ( | ) |
Effect of movement in exchange rates |
|
| ( | ) |
|
|
| |
Balance at end of the period |
| $ |
|
| $ |
| ||
Continuity of warrants during the periods is as follows:
|
| Underlying Shares |
|
| Weighted Average Exercise Price |
| ||
Warrants outstanding and exercisable, January 1, 2021 |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Warrants outstanding and exercisable, December 31, 2021 |
|
|
|
| $ |
| ||
Issued |
|
|
|
| $ |
| ||
Warrants outstanding and exercisable, June 30, 2022 |
|
|
|
| $ |
| ||
|
| All Warrants Outstanding and Exercisable |
| |||||||||
Expiry Date |
| Exercise Price per Share |
|
| June 30, 2022 |
|
| December 31, 2021 |
| |||
| $ |
|
|
|
|
|
| - |
| |||
| $ |
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||
As at June 30, 2022, the weighted average remaining contractual life of warrants outstanding was
Valuation of the warrant liability requires the use of estimates and assumptions including the expected stock price volatility. The expected volatility used in valuing warrants 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 warrant liability was calculated using the Black-Scholes model with the following weighted average assumptions and resulting fair values:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Weighted average assumptions: |
|
|
|
|
|
| ||
Risk-free interest rate |
|
| % |
|
| % | ||
Expected dividend yield |
|
| % |
|
| % | ||
Expected warrant life (years) |
|
|
|
|
|
| ||
Expected stock price volatility |
|
| % |
|
| % | ||
Weighted average fair value |
| $ |
|
| $ |
| ||
During the six months ended June 30, 2022, the Company recorded no realized loss on the exercise of warrants (December 31, 2021 - $
| -19- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
14. RECLAMATION PROVISION
Management’s estimate of the reclamation provision at June 30, 2022, 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:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
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 |
| $ |
|
| $ |
| ||
15. SHARE CAPITAL AND SHARE-BASED PAYMENTS
(a) Authorized: Unlimited common shares without par value, 14,180 treasury shares issued at cost of $97
(b) Issued:
| (i) | During the six months ended June 30, 2022, the Company issued |
|
|
|
|
| The Company further issued |
|
|
|
|
| During the six months ended June 30, 2022, the Company issued |
|
|
|
| (ii) | During the year ended December 31, 2021, the Company issued |
|
|
|
|
| During the year ended December 31, 2021, the Company issued |
|
|
|
|
| During the year ended December 31, 2021, the Company issued |
|
|
|
|
| During the year ended December 31, 2021, the Company issued |
| -20- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
(c) Stock options:
The Company has a stock option plan to purchase the Company’s common shares, under which it may grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, and employees, and to persons providing investor relations or consulting services, the limits being based on the Company’s total number of issued and outstanding shares per year. The stock options vest on the date of grant, except for those issued to persons providing investor relations services, which vest over a period of one year. The option price must be greater than or equal to the discounted market price on the grant date, and the option term cannot exceed ten years from the grant date.
Continuity of stock options is as follows:
|
| Underlying Shares |
|
| Weighted Average Exercise Price (C$) |
| ||
|
|
|
|
|
|
| ||
Stock options outstanding, January 1, 2021 |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Expired |
|
| ( | ) |
| $ |
| |
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
Stock options outstanding, December 31, 2021 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Stock options outstanding, June 30, 2022 |
|
|
|
| $ |
| ||
Stock options exercisable, June 30, 2022 |
|
|
|
| $ |
| ||
The following table summarizes information about the stock options outstanding and exercisable at June 30, 2022:
|
|
|
| Outstanding |
|
| Exercisable |
| ||||||||||||
Expiry Date |
| Price (C$) |
|
| Number of Options |
|
| Weighted Average Remaining Contractual Life (Years) |
|
| Number of Options |
|
| Weighted Average Remaining Contractual Life (Years) |
| |||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| $ |
|
|
|
|
|
|
|
|
| - |
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| -21- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
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:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Weighted average assumptions: |
|
|
|
|
|
| ||
Risk-free interest rate |
|
| % |
| - | % | ||
Expected dividend yield |
|
| % |
| - | % | ||
Expected warrant life (years) |
|
|
|
|
| - |
| |
Expected stock price volatility |
|
| % |
| - | % | ||
Expected forfeiture rate |
|
| % |
| - | % | ||
Weighted average fair value |
| $ |
|
|
| - |
| |
During the six months ended June 30, 2022, 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, 2021 |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
RSUs outstanding, December 31, 2021 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Cancelled / Forfeited |
|
| ( | ) |
| $ |
| |
RSUs outstanding, June 30, 2022 |
|
|
|
| $ |
| ||
The following table summarizes information about the RSUs outstanding at June 30, 2022:
Issuance Date |
| Price (C$) |
|
| Number of RSUs Outstanding |
| ||
| $ |
|
|
|
| |||
| $ |
|
|
|
| |||
| $ |
|
|
|
| |||
|
|
|
|
|
|
|
| |
During the six months ended June 30, 2022,
During the six months ended June 30, 2022, the Company charged $558 (June 30, 2021 - $779) to operations as share-based payments for the fair value of the RSUs vested. The fair value of the RSUs is recognized over the vesting period with reference to vesting conditions and the estimated RSUs expected to vest.
| -22- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
(e) Earnings (loss) per share:
The calculations for basic earnings (loss) per share and diluted earnings (loss) per share are as follows:
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net income (loss) for the period |
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
Basic weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive share options, warrants, and RSUs (‘000) |
|
|
|
|
| - |
|
|
|
|
|
| - |
| ||
Diluted weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic loss per share |
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
Diluted loss per share |
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||
16. REVENUE AND COST OF SALES
The Company’s revenues for the six months ended June 30, 2022 and 2021, are all attributable to Mexico, from shipments of concentrate from the Avino Mine.
Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
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. Stand-by costs consists of care and maintenance costs incurred during the work stoppage at the Avino Mine during the six months ended June 30, 2021.
Cost of sales is based on the weighted average cost of inventory sold for the periods and consists of the following:
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Production costs |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Stand-by and ramp-up costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and depletion |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| -23- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
17. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses on the condensed consolidated interim statements of operations consist of the following:
|
| Three months ended June 30, |
|
| Six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Salaries and benefits |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Office and miscellaneous |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Management and consulting fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investor relations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Travel and promotion |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Directors fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Regulatory and compliance fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
18. 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 11.
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:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
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 six months ended June 30, 2022, totalled $
| -24- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
19. SUPPLEMENTARY CASH FLOW INFORMATION
|
| June 30, 2022 |
|
| June 30, 2021 |
| ||
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 |
|
| ( | ) |
|
|
| |
|
| $ |
|
| $ |
| ||
|
| June 30, 2022 |
|
| June 30, 2021 |
| ||
Interest paid |
| $ |
|
| $ |
| ||
Taxes paid |
| $ |
|
| $ |
| ||
Equipment acquired under finance leases and equipment loans |
| $ |
|
| $ |
| ||
20. 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 term facility, 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 four (December 31, 2021 – two) counterparties (see Note 21). 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 June 30, 2022, 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 June 30, 2022, in the amount of $
| -25- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
The maturity profiles of the Company’s contractual obligations and commitments as at June 30, 2022, are summarized as follows:
|
| Total |
|
| Less Than 1 Year |
|
| 1-5 years |
|
| More Than 5 Years |
| ||||
Accounts payable and accrued liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Amounts due to related parties |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Minimum rental and lease payments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Note payable |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance lease obligations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
(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 exposed to interest rate risk primarily on its outstanding term facility, as the interest rate is subject to floating rates of interest.
| -26- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
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:
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| June 30, 2022 |
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| December 31, 2021 |
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| MXN |
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| CDN |
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| MXN |
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Cash |
| $ |
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| $ |
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| $ |
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| $ |
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Long-term investments |
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Reclamation bonds |
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Amounts receivable |
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Accounts payable and accrued liabilities |
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Due to related parties |
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Finance lease obligations |
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Net exposure |
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US dollar equivalent |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) | |
Based on the net US dollar denominated asset and liability exposures as at June 30, 2022, a 10% fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings for the six months ended June 30, 2022, 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 June 30, 2022, 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 $
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 June 30, 2022, 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 7 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).
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AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
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 June 30, 2022:
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| Level 1 |
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| Level 2 |
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| Level 3 |
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Financial assets |
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Cash |
| $ |
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| $ |
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| $ |
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Amounts receivable |
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Long-term investments |
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Total financial assets |
| $ |
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| $ |
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| $ |
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Financial liabilities |
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Warrant liability |
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Total financial liabilities |
| $ |
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| $ |
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| $ | ( | ) | ||
The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at June 30, 2022, the Company’s Level 3 financial instruments consisted of the warrant liability.
For the Company’s warrant liability valuation and fair value adjustments during the six months ended June 30, 2022 and the year ended December 31, 2021, see Note 13.
21. SEGMENTED INFORMATION
The Company’s revenues for the three and six months ended June 30, 2022 are all attributable to Mexico, from shipments of concentrate produced by the Avino Mine, and is considered to be one single reportable operating segment.
On the condensed consolidated interim statements of operations, the Company had revenue from the following product mixes:
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| Three months ended June 30, |
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| Six months ended June 30, |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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Silver |
| $ |
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| $ |
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| $ |
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| $ |
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Copper |
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Gold |
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Penalties, treatment costs and refining charges |
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Total revenue from mining operations |
| $ |
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| $ |
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| $ |
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| $ |
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For the three and six months ended June 30, 2022, the Company had four customers (June 30, 2021 – one customer) that accounted for total revenues as follows:
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| Three months ended June 30, |
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| Six months ended June 30, |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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Customer #1 |
| $ |
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| $ |
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| $ |
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| $ |
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Customer #2 |
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Other customers |
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Total revenue from mining operations |
| $ |
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| $ |
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| $ |
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| $ |
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| -28- |
AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated interim financial statements For the six months ended June 30, 2022 and 2021 (Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
Geographical information relating to the Company’s non-current assets (other than financial instruments) is as follows:
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| June 30, 2022 |
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| December 31, 2021 |
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Exploration and evaluation assets - Mexico |
| $ |
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| $ |
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Exploration and evaluation assets - Canada |
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Total exploration and evaluation assets |
| $ |
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| $ |
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| June 30, 2022 |
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| December 31, 2021 |
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Plant, equipment, and mining properties - Mexico |
| $ |
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| $ |
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Plant, equipment, and mining properties - Canada |
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Total plant, equipment, and mining properties |
| $ |
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| $ |
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