Avino Silver & Gold Mines Ltd 6-K, filed Nov 13, 2024
Avino Silver & Gold Mines Ltd (ASM)
About this 6-K
Avino Silver & Gold Mines Ltd filed this 6-K on November 13, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of November, 2024
Commission File Number: 001-35254
| AVINO SILVER & GOLD MINES LTD. |
Suite 900, 570 Granville Street, Vancouver, BC V6C 3P1
(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 and nine months ended September 30, 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File number 333-270315) to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed.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 |
|
| ||
|
| ||
| 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). |
______________
* To be filed by amendment
| 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. | |||
|
|
| ||
| Date: November 12, 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 and nine months ended September 30, 2024 and 2023
(Unaudited)
| AVINO SILVER & GOLD MINES LTD. Condensed Consolidated Interim Statements of Financial Position (Expressed in thousands of US dollars - Unaudited) |
|
|
| Note |
|
| September 30, 2024 |
|
| December 31, 2023 |
| |||
| ASSETS |
|
|
|
|
|
|
|
|
| |||
| Current assets |
|
|
|
|
|
|
|
|
| |||
| Cash |
|
|
|
| $ | 7,767 |
|
| $ | 2,688 |
| |
| Amounts receivable |
|
|
|
|
| 3,030 |
|
|
| 3,303 |
| |
| Amounts due from related parties |
|
| 10(b) |
|
| - |
|
|
| 167 |
| |
| Taxes recoverable |
|
| 4 |
|
|
| 3,492 |
|
|
| 6,580 |
|
| Prepaid expenses and other assets |
|
|
|
|
|
| 2,403 |
|
|
| 1,971 |
|
| Inventory |
|
| 5 |
|
|
| 10,874 |
|
|
| 8,826 |
|
| Total current assets |
|
|
|
|
|
| 27,566 |
|
|
| 23,535 |
|
| Exploration and evaluation assets |
|
| 7 |
|
|
| 52,714 |
|
|
| 50,111 |
|
| Plant, equipment and mining properties |
|
| 9 |
|
|
| 53,616 |
|
|
| 53,069 |
|
| Long-term investments |
|
| 6 |
|
|
| 1,466 |
|
|
| 934 |
|
| Other assets |
|
|
|
|
|
| 4 |
|
|
| 691 |
|
| Total assets |
|
|
|
|
| $ | 135,366 |
|
| $ | 128,340 |
|
| LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
|
|
|
|
| $ | 9,243 |
|
| $ | 11,867 |
|
| Amounts due to related parties |
|
| 10(b) |
|
| 61 |
|
|
| - |
| |
| Taxes payable |
|
|
|
|
|
| 656 |
|
|
| 127 |
|
| Current portion of finance lease obligations |
|
|
|
|
|
| 1,563 |
|
|
| 1,650 |
|
| Current portion of equipment loans |
|
|
|
|
|
| 165 |
|
|
| 164 |
|
| Total current liabilities |
|
|
|
|
|
| 11,688 |
|
|
| 13,808 |
|
| Finance lease obligations |
|
|
|
|
|
| 1,351 |
|
|
| 1,445 |
|
| Equipment loans |
|
|
|
|
|
| 69 |
|
|
| 195 |
|
| Reclamation provision |
|
| 11 |
|
|
| 2,012 |
|
|
| 2,195 |
|
| Deferred income tax liabilities |
|
|
|
|
|
| 5,757 |
|
|
| 4,696 |
|
| Total liabilities |
|
|
|
|
|
| 20,877 |
|
|
| 22,339 |
|
| EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
| 12 |
|
|
| 156,908 |
|
|
| 151,688 |
|
| Equity reserves |
|
|
|
|
|
| 11,424 |
|
|
| 11,041 |
|
| Treasury shares |
|
|
|
|
|
| (97 | ) |
|
| (97 | ) |
| Accumulated other comprehensive loss |
|
|
|
|
|
| (5,331 | ) |
|
| (5,208 | ) |
| Accumulated deficit |
|
|
|
|
|
| (48,415 | ) |
|
| (51,423 | ) |
| Total equity |
|
|
|
|
|
| 114,489 |
|
|
| 106,001 |
|
| Total liabilities and equity |
|
|
|
|
| $ | 135,366 |
|
| $ | 128,340 |
|
Commitments & Contingencies – Note 15
Approved by the Board of Directors on November 12, 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 - Unaudited) |
|
|
|
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| |||||||||||
|
|
| Note |
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| |||||
| Revenue from mining operations |
|
| 13 |
|
| $ | 14,616 |
|
| $ | 12,316 |
|
| $ | 41,796 |
|
| $ | 31,359 |
|
| Cost of sales |
|
| 13 |
|
|
| 8,907 |
|
|
| 9,952 |
|
|
| 29,051 |
|
|
| 26,101 |
|
| Mine operating income |
|
|
|
|
|
| 5,709 |
|
|
| 2,364 |
|
|
| 12,745 |
|
|
| 5,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative expenses |
|
| 14 |
|
|
| 1,455 |
|
|
| 1,280 |
|
|
| 4,518 |
|
|
| 3,999 |
|
| Share-based payments |
|
| 12 |
|
|
| 531 |
|
|
| 627 |
|
|
| 1,601 |
|
|
| 1,809 |
|
| Income (loss) before other items |
|
|
|
|
|
| 3,723 |
|
|
| 457 |
|
|
| 6,626 |
|
|
| (550 | ) |
| Other items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and other income (loss) |
|
|
|
|
|
| (77 | ) |
|
| 5 |
|
|
| 77 |
|
|
| 234 |
|
| Gain (loss) on long-term investments |
|
| 6 |
|
|
| (268 | ) |
|
| (295 | ) |
|
| 87 |
|
|
| (899 | ) |
| Fair value adjustment on warrant liability |
|
|
|
|
|
| - |
|
|
| 20 |
|
|
| - |
|
|
| 478 |
|
| Foreign exchange gain (loss) |
|
|
|
|
|
| 170 |
|
|
| (234 | ) |
|
| 342 |
|
|
| 182 |
|
| Finance cost |
|
|
|
|
|
| (5 | ) |
|
| (3 | ) |
|
| (10 | ) |
|
| (80 | ) |
| Accretion of reclamation provision |
|
| 11 |
|
|
| (49 | ) |
|
| (13 | ) |
|
| (151 | ) |
|
| (36 | ) |
| Write-down of uncollectible account |
|
|
|
|
|
| (621 | ) |
|
| - |
|
|
| (621 | ) |
|
| - |
|
| Interest expense |
|
|
|
|
|
| (77 | ) |
|
| (158 | ) |
|
| (248 | ) |
|
| (275 | ) |
| Income (loss) before income taxes |
|
|
|
|
|
| 2,796 |
|
|
| (221 | ) |
|
| 6,102 |
|
|
| (946 | ) |
| Income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current income tax recovery (expense) |
|
|
|
|
|
| (1,258 | ) |
|
| 111 |
|
|
| (2,033 | ) |
|
| 645 |
|
| Deferred income tax recovery (expense) |
|
|
|
|
|
| (369 | ) |
|
| (693 | ) |
|
| (1,061 | ) |
|
| 280 |
|
| Income tax recovery (expense) |
|
|
|
|
|
| (1,627 | ) |
|
| (582 | ) |
|
| (3,094 | ) |
|
| 925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
|
|
| 1,169 |
|
|
| (803 | ) |
|
| 3,008 |
|
|
| (21 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Currency translation differences |
|
|
|
|
|
| 1 |
|
|
| 230 |
|
|
| (123 | ) |
|
| (346 | ) |
| Total comprehensive income (loss) |
|
|
|
|
| $ | 1,170 |
|
| $ | (573 | ) |
| $ | 2,885 |
|
| $ | (367 | ) |
| Income (loss) per share |
|
| 12(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Basic |
|
|
|
|
| $ | 0.01 |
|
| ($0.01) |
|
| $ | 0.02 |
|
| $ | 0.00 |
| |
| Diluted |
|
|
|
|
| $ | 0.01 |
|
| ($0.01) |
|
| $ | 0.02 |
|
| $ | 0.00 |
| |
| Weighted average number of common shares outstanding |
|
| 12(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Basic |
|
|
|
|
|
| 135,070,079 |
|
|
| 122,433,272 |
|
|
| 132,925,193 |
|
|
| 120,093,760 |
|
| Diluted |
|
|
|
|
|
| 140,429,861 |
|
|
| 122,433,272 |
|
|
| 138,723,903 |
|
|
| 120,093,760 |
|
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) |
|
|
| Note |
|
| Number of Common Shares |
|
| Share Capital Amount |
|
| Equity Reserves |
|
| Treasury Shares |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Accumulated Deficit |
|
| Total Equity |
| ||||||||
| Balance, January 1, 2023 |
|
|
|
|
| 118,349,090 |
|
| $ | 145,515 |
|
| $ | 9,852 |
|
| $ | (97 | ) |
| $ | (5,223 | ) |
| $ | (52,026 | ) |
| $ | 98,021 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Common shares issued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| At the market issuances |
|
| 12 |
|
|
| 5,360,300 |
|
|
| 3,597 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,597 |
|
| Carrying value of RSUs exercised |
|
| 12 |
|
|
| 1,005,333 |
|
|
| 1,019 |
|
|
| (1,019 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Issuance costs |
|
| 12 |
|
|
| - |
|
|
| (355 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (355 | ) |
| Share-based payments |
|
| 12 |
|
|
| - |
|
|
| - |
|
|
| 1,809 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,809 |
|
| Options cancelled or expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (61 | ) |
|
|
|
|
|
|
|
|
|
| 61 |
|
|
| - |
|
| Net loss for the period |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21 | ) |
|
| (21 | ) |
| Currency translation differences |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (346 | ) |
|
| - |
|
|
| (346 | ) |
| Balance, September 30, 2023 |
|
|
|
|
|
| 124,714,723 |
|
| $ | 149,776 |
|
| $ | 10,581 |
|
| $ | (97 | ) |
| $ | (5,569 | ) |
| $ | (51,986 | ) |
| $ | 102,705 |
|
| Balance, January 1, 2024 |
|
|
|
|
|
| 128,728,248 |
|
| $ | 151,688 |
|
| $ | 11,041 |
|
| $ | (97 | ) |
| $ | (5,208 | ) |
| $ | (51,423 | ) |
| $ | 106,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares issued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At the market issuances |
|
| 12 (b) |
|
| 5,050,585 |
|
|
| 3,906 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,906 |
| |
| Exercise of options |
|
| 12 (b) |
|
| 561,000 |
|
|
| 572 |
|
|
| (200 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 372 |
| |
| Carrying value of RSUs exercised |
|
| 12 (d) |
|
| 1,197,709 |
|
|
| 1,018 |
|
|
| (1,018 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
| Issuance costs |
|
|
|
|
|
| - |
|
|
| (276 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (276 | ) |
| Share-based payments |
|
| 12 (c) (d) |
|
| - |
|
|
| - |
|
|
| 1,601 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,601 |
| |
| Net income for the period |
|
| 12 (e) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,008 |
|
|
| 3,008 |
| |
| Currency translation differences |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (123 | ) |
|
| - |
|
|
| (123 | ) |
| Balance, September 30, 2024 |
|
|
|
|
|
| 135,537,542 |
|
| $ | 156,908 |
|
| $ | 11,424 |
|
| $ | (97 | ) |
| $ | (5,331 | ) |
| $ | (48,415 | ) |
| $ | 114,489 |
|
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) |
|
|
|
|
| Nine months ended September 30, |
| |||||||
|
|
| Note |
|
| 2024 |
|
| 2023 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
| |||
| Operating Activities |
|
|
|
|
|
|
|
|
| |||
| Net income |
|
|
|
| $ | 3,008 |
|
| $ | (21 | ) | |
| Adjustments for non-cash items: |
|
|
|
|
|
|
|
|
|
|
| |
| Deferred income tax expense (recovery) |
|
|
|
|
| 1,061 |
|
|
| (280 | ) | |
| Depreciation and depletion |
|
|
|
|
| 2,504 |
|
|
| 2,175 |
| |
| Accretion of reclamation provision |
|
| 11 |
|
|
| 151 |
|
|
| 36 |
|
| (Gain) loss on investments |
|
| 6 |
|
|
| (87 | ) |
|
| 899 |
|
| Unrealized foreign exchange gain |
|
|
|
|
|
| (283 | ) |
|
| (241 | ) |
| Write down of uncollectible account |
|
|
|
|
|
| 621 |
|
|
| - |
|
| Unwinding of fair value adjustment |
|
|
|
|
|
| - |
|
|
| 74 |
|
| Fair value adjustment on warrant liability |
|
|
|
|
|
| - |
|
|
| (478 | ) |
| Write down of equipment and materials and supplies inventory |
|
|
|
|
|
| 566 |
|
|
| 95 |
|
| Share-based payments |
|
|
|
|
|
| 1,601 |
|
|
| 1,809 |
|
|
|
|
|
|
|
|
| 9,142 |
|
|
| 4,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net change in non-cash working capital items |
|
| 16 |
|
|
| (1,569 | ) |
|
| (3,201 | ) |
| Cash provided by operating activities |
|
|
|
|
|
| 7,573 |
|
|
| 867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares and units issued for cash, net of issuance costs |
|
|
|
|
|
| 3,630 |
|
|
| 3,242 |
|
| Proceeds from option exercise |
|
|
|
|
|
| 372 |
|
|
| - |
|
| Lease liability payments |
|
|
|
|
|
| (1,371 | ) |
|
| (933 | ) |
| Equipment loan payments |
|
|
|
|
|
| (126 | ) |
|
| (184 | ) |
| Cash provided by (used in) financing activities |
|
|
|
|
|
| 2,505 |
|
|
| 2,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
| Exploration and evaluation expenditures |
|
|
|
|
|
| (1,920 | ) |
|
| (809 | ) |
| Additions to plant, equipment and mining properties |
|
|
|
|
|
| (3,112 | ) |
|
| (6,575 | ) |
| Acquisition of La Preciosa |
|
|
|
|
|
| - |
|
|
| (5,000 | ) |
| Cash used in investing activities |
|
|
|
|
|
| (5,032 | ) |
|
| (12,384 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change in cash |
|
|
|
|
|
| 5,046 |
|
|
| (9,392 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash |
|
|
|
|
|
| 33 |
|
|
| 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash, beginning |
|
|
|
|
|
| 2,688 |
|
|
| 11,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash, ending |
|
|
|
|
| $ | 7,767 |
|
| $ | 1,856 |
|
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 financial statements For the nine months ended September 30, 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.
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.
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.
| - 5 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
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 nine months ended September 30, 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. | 100% | Mexico | Mexican administration |
| Nueva Vizcaya Mining, S.A. de C.V. | 100% | Mexico | Mexican administration |
| Promotora Avino, S.A. de C.V. (“Promotora”) | 79.09% | Mexico | Holding company |
| Compañía Minera Mexicana de Avino, S.A. de C.V. (“Avino Mexico”) | 98.45% direct 1.22% indirect (Promotora) 99.67% effective | Mexico | Mining and exploration |
| La Luna Silver & Gold Mines Ltd. | 100% | Canada | Holding company |
| La Preciosa Silver & Gold Mines Ltd. | 100% | Canada | Holding company |
| Proyectos Mineros La Preciosa S.A. de C.V. | 100% | Mexico | Mining and exploration |
| Cervantes LLP | 100% | U.S. | Holding company |
Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.
| - 6 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
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.
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| VAT recoverable |
| $ | 1,550 |
|
| $ | 3,231 |
|
| GST recoverable |
|
| 22 |
|
|
| 20 |
|
| Income taxes recoverable |
|
| 1,920 |
|
|
| 3,329 |
|
|
|
| $ | 3,492 |
|
| $ | 6,580 |
|
5. INVENTORY
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Process material stockpiles |
| $ | 3,482 |
|
| $ | 4,050 |
|
| Concentrate inventory |
|
| 4,328 |
|
|
| 2,448 |
|
| Materials and supplies |
|
| 3,064 |
|
|
| 2,328 |
|
|
|
| $ | 10,874 |
|
| $ | 8,826 |
|
The amount of inventory recognized as an expense for the three and nine months ended September 30, 2024 totalled $8,725 and $28,485 (three and nine months ended September 30, 2023 – $9,948 and $26,006). See Note 13 for further details.
During the nine months ended September 30, 2024, the Company wrote down Nil of materials and supplies inventory due to obsolescence (September 30, 2023 – 84).
| - 7 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 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:
|
|
| Fair Value December 31, |
|
| Net |
|
| Movements in foreign |
|
| Fair value adjustments |
|
| Fair Value September 30, |
| |||||
|
|
| 2023 |
|
| Additions |
|
| exchange |
|
| for the period |
|
| 2024 |
| |||||
| Talisker Resources Common Shares |
| $ | 782 |
|
| $ | - |
|
| $ | (7 | ) |
| $ | 155 |
|
| $ | 930 |
|
| Silver Wolf Exploration Ltd. (“Silver Wolf”) Common Shares |
|
| 71 |
|
|
| 426 |
|
|
| (4 | ) |
|
| (46 | ) |
|
| 447 |
|
| Silver Wolf Exploration Ltd. Warrants |
|
| - |
|
|
| 30 |
|
|
| - |
|
|
| (3 | ) |
|
| 27 |
|
| Endurance Gold Corp. Common Shares |
|
| 81 |
|
|
| - |
|
|
| (1 | ) |
|
| (19 | ) |
|
| 61 |
|
| Other |
|
| - |
|
|
| 1 |
|
|
| - |
|
|
| - |
|
|
| 1 |
|
|
|
| $ | 934 |
|
| $ | 457 |
|
| $ | (12 | ) |
| $ | 87 |
|
| $ | 1,466 |
|
Silver Wolf
During the nine months ended September 30, 2024, the Company received 2,292,000 common shares as part of debt settlement from Silver Wolf for $335 (C$458). The Company further acquired, by way of participation in Silver Wolf’s Listed Issuer Financing Exemption private placement, 833,334 units at a purchase price of C$0.15 consisting of 833,334 common shares and 416,667 non-transferable common share purchase warrants at an exercise price of C$0.25 as for a total investment of $91 (C$125). The share purchase warrants were recorded at a fair value. Any subsequent revaluation under IFRS 9 at fair value through profit and loss will be recorded as a gain or loss on long-term investments.
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 |
| $ | 11,828 |
|
| $ | 37,975 |
|
| $ | 1 |
|
| $ | 49,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| La Preciosa non-core concessions transfer |
|
| 2,946 |
|
|
| (2,946 | ) |
|
|
|
|
|
| - |
|
| Drilling and exploration |
|
| 877 |
|
|
| 435 |
|
|
| - |
|
|
| 1,312 |
|
| Assessments and taxes |
|
| 88 |
|
|
| (930 | ) |
|
| - |
|
|
| (842 | ) |
| Effect of movements in exchange rates |
|
| 22 |
|
|
| (122 | ) |
|
| - |
|
|
| (100 | ) |
| Option income |
|
| (63 | ) |
|
| - |
|
|
| - |
|
|
| (63 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2023 |
| $ | 15,698 |
|
| $ | 34,412 |
|
| $ | 1 |
|
| $ | 50,111 |
|
| Drilling and exploration |
|
| 129 |
|
|
| 1,265 |
|
|
| - |
|
|
| 1,394 |
|
| Assessments and taxes |
|
| 195 |
|
|
| 1,018 |
|
|
| - |
|
|
| 1,213 |
|
| Effect of movements in exchange rates |
|
| (4 | ) |
|
| - |
|
|
| - |
|
|
| (4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, September 30, 2024 |
| $ | 16,018 |
|
| $ | 36,695 |
|
| $ | 1 |
|
| $ | 52,714 |
|
| - 8 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(a) Avino, Mexico
The Company’s subsidiary Avino Mexico owns 42 mineral claims and leases four mineral claims in the state of Durango, Mexico. The Company’s mineral claims in Mexico are divided into the following two groups:
(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 154.4 hectares, 24 exploitation concessions covering 1,284.7 hectares, and one leased exploitation concession covering 98.83 hectares.
(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 2,549 hectares, and is also known as the Ana Maria property.
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 100% interest in the Ana Maria and El Laberinto properties in Mexico (the “Option Agreement”).
All exploration expenditure requirements on the properties have been met as of September 30, 2024. Future requirements remain to exercise the option and Silver Wolf is in compliance with the terms of the Option Agreement as of September 30, 2024.
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, the Company has obtained the exclusive right to explore and mine the property for an initial period of 15 years, with the option to extend the agreement for another 5 years. In consideration of the granting of these rights, the Company issued 135,189 common shares with a fair value of C$250 during the year ended December 31, 2012.The Company has agreed to pay to Minerales a royalty equal to 3.5% of net smelter returns (“NSR”). In addition, after the start of production, if the minimum monthly processing rate of the mine facilities is less than 15,000 tonnes, then the Company must pay to Minerales a minimum royalty equal to the applicable NSR royalty based on the processing at a monthly rate of 15,000 tonnes.
Minerales has also granted to the Company the exclusive right to purchase a 100% interest in the property at any time during the term of the agreement (or any renewal thereof), upon payment of $8 million within 15 days of the Company’s notice of election to acquire the property. The purchase would be subject to a separate purchase agreement for the legal transfer of the property.
| - 9 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(b) La Preciosa, Mexico
La Preciosa is a development stage mineral property located in the state of Durango, Mexico, within the municipalities of Pánuco de Coronado and Canatlán. The Project is hosting one of the largest undeveloped primary silver resources in Mexico, and is located adjacent to Avino’s existing operations at the Avino Property in Durango, Mexico. The property covers an area of approximately 1,134 hectares and is located on the eastern flank of the Sierra Madre Occidental mountain range.
(c) British Columbia & Yukon, Canada
Eagle Property - Yukon
The Company has a 100% interest in 14 quartz leases located in the Mayo Mining Division of Yukon, Canada, which collectively comprise the Eagle property. During the year ended December 31, 2023, the Company sold to a subsidiary of Hecla Mining Company (“Hecla”) the Eagle Property for cash consideration of C$250. The gain on sale of the Eagle Property was recorded to “Interest and other income” on the consolidated statements of operations and comprehensive income (loss).
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 September 30, 2024, Endurance was in compliance with all terms of the Option agreement.
8. NON-CONTROLLING INTEREST
At September 30, 2024, the Company had an effective 99.67% (December 31, 2023 - 99.67%) interest in its subsidiary Avino Mexico and the remaining 0.33% (December 31, 2023 - 0.33%) interest represents a non-controlling interest. The accumulated deficit and current period income attributable to the non-controlling interest are insignificant and accordingly have not been presented separately in the consolidated financial statements.
| - 10 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 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 |
|
| 14,687 |
|
|
| 763 |
|
|
| 774 |
|
|
| 14,930 |
|
|
| 23,294 |
|
|
| 14,693 |
|
|
| 69,141 |
|
| Additions / Transfers |
|
| 3,716 |
|
|
| 78 |
|
|
| 1,176 |
|
|
| 3,270 |
|
|
| 3,079 |
|
|
| 701 |
|
|
| 12,020 |
|
| Writedowns |
|
| - |
|
|
| (6 | ) |
|
| (22 | ) |
|
| (629 | ) |
|
| (141 | ) |
|
| - |
|
|
| (798 | ) |
| Effect of movements in exchange rates |
|
| (28 | ) |
|
| 9 |
|
|
| 1 |
|
|
| 2 |
|
|
| - |
|
|
| (24 | ) |
|
| (40 | ) |
| Balance at December 31, 2023 |
|
| 18,375 |
|
|
| 844 |
|
|
| 1,929 |
|
|
| 17,573 |
|
|
| 26,232 |
|
|
| 15,370 |
|
|
| 80,323 |
|
| Additions / Transfers |
|
| 542 |
|
|
| 410 |
|
|
| 15 |
|
|
| 398 |
|
|
| 1,932 |
|
|
| 325 |
|
|
| 3,622 |
|
| Writedowns |
|
| - |
|
|
| (23 | ) |
|
| (23 | ) |
|
| (1,339 | ) |
|
| (221 | ) |
|
| (517 | ) |
|
| (2,123 | ) |
| Effect of movements in exchange rates |
|
| 4 |
|
|
| (3 | ) |
|
| - |
|
|
| (1 | ) |
|
| - |
|
|
| (8 | ) |
|
| (8 | ) |
| Balance at September 30, 2024 |
|
| 18,921 |
|
|
| 1,228 |
|
|
| 1,921 |
|
|
| 16,631 |
|
|
| 27,943 |
|
|
| 15,170 |
|
|
| 81,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ACCUMULATED DEPLETION AND DEPRECIATION / IMPAIRMENT |
|
|
| |||||||||||||||||||||||||
| Balance at January 1, 2023 |
|
| 9,106 |
|
|
| 441 |
|
|
| 598 |
|
|
| 5,178 |
|
|
| 6,733 |
|
|
| 3,029 |
|
|
| 25,085 |
|
| Additions / Transfers |
|
| 367 |
|
|
| 111 |
|
|
| 204 |
|
|
| 676 |
|
|
| 1,170 |
|
|
| 294 |
|
|
| 2,822 |
|
| Writedowns |
|
| - |
|
|
| (4 | ) |
|
| (21 | ) |
|
| (619 | ) |
|
| (9 | ) |
|
| - |
|
|
| (653 | ) |
| Balance at December 31, 2023 |
|
| 9,473 |
|
|
| 548 |
|
|
| 781 |
|
|
| 5,235 |
|
|
| 7,894 |
|
|
| 3,323 |
|
|
| 27,254 |
|
| Additions / Transfers |
|
| 317 |
|
|
| 99 |
|
|
| 302 |
|
|
| 1,200 |
|
|
| 346 |
|
|
| 237 |
|
|
| 2,501 |
|
| Writedowns |
|
| - |
|
|
| (23 | ) |
|
| (23 | ) |
|
| (1,164 | ) |
|
| (151 | ) |
|
| (196 | ) |
|
| (1,557 | ) |
| Balance at September 30, 2024 |
|
| 9,790 |
|
|
| 624 |
|
|
| 1,060 |
|
|
| 5,271 |
|
|
| 8,089 |
|
|
| 3,364 |
|
|
| 28,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET BOOK VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At September 30, 2024 |
|
| 9,131 |
|
|
| 604 |
|
|
| 861 |
|
|
| 11,360 |
|
|
| 19,854 |
|
|
| 11,806 |
|
|
| 53,616 |
|
| At December 31, 2023 |
|
| 8,902 |
|
|
| 296 |
|
|
| 1,148 |
|
|
| 12,339 |
|
|
| 18,338 |
|
|
| 12,047 |
|
|
| 53,069 |
|
| - 11 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 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 $2,610 as at September 30, 2024 (December 31, 2023 - $3,166) on which no depreciation was charged in the periods then ended. Once the assets are available for use, they will be transferred to the appropriate class of plant, equipment and mining properties.
As of September 30, 2024, the Company performed an evaluation of the property plant and equipment and recorded a write-down of $566 (December 31, 2023 - $144) against the carrying value of mine and mill machinery and transportation equipment due to damage and obsolescence.
As at September 30, 2024, plant, equipment and mining properties included a net carrying amount of $5,325 (December 31, 2023 - $5,832) for mining equipment and right of use assets under lease.
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 for the three and nine months ended September 30, 2024 and 2023 is as follows:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Salaries, benefits, and consulting fees |
| $ | 273 |
|
| $ | 289 |
|
| $ | 886 |
|
| $ | 869 |
|
| Share-based payments |
|
| 424 |
|
|
| 502 |
|
|
| 1,318 |
|
|
| 1,472 |
|
|
|
| $ | 697 |
|
| $ | 791 |
|
| $ | 2,204 |
|
| $ | 2,341 |
|
(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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Oniva International Services Corp. |
| $ | 100 |
|
| $ | 102 |
|
| Silver Wolf Exploration Ltd. |
|
| (39 | ) |
|
| (269 | ) |
|
|
| $ | 61 |
|
| $ | (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 nine months ended September 30, 2024, the Company paid $212 (September 30, 2023 - $215) to ICC.
| - 12 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(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 September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Salaries and benefits |
| $ | 235 |
|
| $ | 240 |
|
| $ | 731 |
|
| $ | 729 |
|
| Office and miscellaneous |
|
| 95 |
|
|
| 107 |
|
|
| 342 |
|
|
| 364 |
|
|
|
| $ | 330 |
|
| $ | 347 |
|
| $ | 1,073 |
|
| $ | 1,093 |
|
11. RECLAMATION PROVISION
Management’s estimate of the reclamation provision at September 30, 2024, is $2,012 (December 31, 2023 – $2,195), and the undiscounted value of the obligation is $4,887 (December 31, 2023 – $5,491).
The present value of the obligation was calculated using a risk-free interest rate of 9.72% (December 31, 2023 – 9.82%) and an inflation rate of 3.76% (December 31, 2023 – 3.76%). Reclamation activities are estimated to begin in 2025 for the San Gonzalo Mine and in 2042 for the Avino Mine.
A reconciliation of the changes in the Company’s reclamation provision is as follows:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
|
| ||
| Balance at beginning of the period |
| $ | 2,195 |
|
| $ | 445 |
|
| Changes in estimates |
|
| - |
|
|
| 1,615 |
|
| Unwinding of discount related to continuing operations |
|
| 151 |
|
|
| 49 |
|
| Effect of movements in exchange rates |
|
| (334 | ) |
|
| 86 |
|
| Balance at end of the period |
| $ | 2,012 |
|
| $ | 2,195 |
|
| - 13 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
12. SHARE CAPITAL AND SHARE-BASED PAYMENTS
(a) Authorized: Unlimited common shares without par value
(b) Issued:
(i) During the nine months ended September 30, 2024, the Company issued 5,050,585 common shares in an at-the-market offering under prospectus supplement for gross proceeds of $3,906. The Company paid a 2.75% cash commission of $107 on gross proceeds, for net proceeds of $3,799. The Company also incurred $169 in share issuance costs related to its base shelf prospectus and prospectus supplement filings.
During the nine months ended September 30, 2024, the Company issued 1,197,709 common shares upon exercise of RSUs. As a result, $1,018 was recorded to share capital.
During the nine months ended September 30, 2024, the Company issued 561,000 common shares following the exercise of 561,000 options. As a result, $572 was recorded to share capital, representing cash proceeds of $372 and the fair value upon issuance of $200.
(ii) During the year ended December 31, 2023, the Company issued 9,373,825 common shares in an at-the-market offering under prospectus supplement for gross proceeds of $5,648. The Company paid a 2.75% cash commission of $155 on gross proceeds, for net proceeds of $5,493. The Company also incurred $339 in share issuance costs related to its base shelf prospectus and prospectus supplement filings.
During the year ended December 31, 2023, the Company issued 1,005,333 common shares upon exercise of RSUs. As a result, $1,019 was recorded to share capital.
(c) Stock options:
The Company has a stock option plan to purchase the Company’s common shares, under which it may grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, and employees, and to persons providing investor relations or consulting services, the limits being based on the Company’s total number of issued and outstanding shares per year. The stock options vest on the date of grant, except for those issued to persons providing investor relations services, which vest over a period of one year. The option price must be greater than or equal to the discounted market price on the grant date, and the option term cannot exceed ten years from the grant date.
Continuity of stock options is as follows:
|
|
| Underlying Shares |
|
| Weighted Average Exercise Price (C$) |
| ||
|
|
|
|
|
|
|
| ||
| Stock options outstanding, January 1, 2023 |
|
| 4,256,000 |
|
| $ | 1.36 |
|
| Granted |
|
| 2,545,000 |
|
| $ | 1.12 |
|
| Expired |
|
| (105,000 | ) |
| $ | 1.30 |
|
| Cancelled / Forfeited |
|
| (30,000 | ) |
| $ | 1.40 |
|
| Stock options outstanding, December 31, 2023 |
|
| 6,666,000 |
|
| $ | 1.27 |
|
| Granted |
|
| 2,500,000 |
|
| $ | 0.78 |
|
| Exercised |
|
| (561,000 | ) |
| $ | 0.90 |
|
| Cancelled / Forfeited |
|
| (190,000 | ) |
| $ | 1.26 |
|
| Stock options outstanding, September 30, 2024 |
|
| 8,415,000 |
|
| $ | 1.15 |
|
| Stock options exercisable, September 30, 2024 |
|
| 7,165,000 |
|
| $ | 1.21 |
|
| - 14 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
The following table summarizes information about the stock options outstanding and exercisable at September 30, 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) |
| |||||
| August 4, 2025 |
| $ | 1.64 |
|
|
| 1,620,000 |
|
|
| 0.84 |
|
|
| 1,620,000 |
|
|
| 0.84 |
|
| March 25, 2027 |
| $ | 1.20 |
|
|
| 2,195,000 |
|
|
| 2.48 |
|
|
| 2,195,000 |
|
|
| 2.48 |
|
| May 4, 2027 |
| $ | 0.92 |
|
|
| 25,000 |
|
|
| 2.59 |
|
|
| 25,000 |
|
|
| 2.59 |
|
| March 29, 2028 |
| $ | 1.12 |
|
|
| 2,180,000 |
|
|
| 3.50 |
|
|
| 2,180,000 |
|
|
| 3.50 |
|
| July 10, 2028 |
| $ | 1.12 |
|
|
| 150,000 |
|
|
| 3.78 |
|
|
| 150,000 |
|
|
| 3.78 |
|
| March 25, 2029 |
| $ | 0.78 |
|
|
| 2,245,000 |
|
|
| 4.48 |
|
|
| 995,000 |
|
|
| 4.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,415,000 |
|
|
| 2.99 |
|
|
| 7,165,000 |
|
|
| 2.10 |
|
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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Weighted average assumptions: |
|
|
|
|
|
| ||
| Risk-free interest rate |
|
| 3.51 | % |
|
| 3.10 | % |
| Expected dividend yield |
|
| 0 | % |
|
| 0 | % |
| Expected warrant life (years) |
|
| 5 |
|
|
| 5 |
|
| Expected stock price volatility |
|
| 60.73 | % |
|
| 61.10 | % |
| Expected forfeiture rate |
|
| 15 | % |
|
| 17 | % |
| Weighted average fair value |
| C$0.43 |
|
| C$0.60 |
| ||
During the nine months ended September 30, 2024, the Company charged $610 (nine months ended September 30, 2023 - $783) to operations as share-based payments for the fair value of stock options granted.
(d) Restricted Share Units:
On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its shareholders. The RSU Plan is administered by the Compensation Committee under the supervision of the Board of Directors as compensation to officers, directors, consultants, and employees. The Compensation Committee determines the terms and conditions upon which a grant is made, including any performance criteria or vesting period.
| - 15 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
Upon vesting, each RSU entitles the participant to receive one common share, provided that the participant is continuously employed with or providing services to the Company. RSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the RSU vests and the RSU participant receives common shares.
Continuity of RSUs is as follows:
|
|
| Underlying Shares |
|
| Weighted Average Price (C$) |
| ||
|
|
|
|
|
|
|
| ||
| RSUs outstanding, January 1, 2023 |
|
| 2,190,666 |
|
| $ | 1.27 |
|
| Granted |
|
| 1,878,320 |
|
| $ | 1.11 |
|
| Exercised |
|
| (1,005,334 | ) |
| $ | 1.37 |
|
| Cancelled / Forfeited |
|
| (68,943 | ) |
| $ | 1.14 |
|
| RSUs outstanding, December 31, 2023 |
|
| 2,994,709 |
|
| $ | 1.03 |
|
| Granted |
|
| 1,881,000 |
|
| $ | 1.02 |
|
| Exercised |
|
| (1,197,709 | ) |
| $ | 1.15 |
|
| Cancelled / Forfeited |
|
| (137,132 | ) |
| $ | 1.08 |
|
| RSUs outstanding, September 30, 2024 |
|
| 3,540,868 |
|
| $ | 1.08 |
|
The following table summarizes information about the RSUs outstanding at September 30, 2024:
| Issuance Date |
| Price (C$) |
|
| Number of RSUs Outstanding |
| ||
| March 25, 2022 |
| $ | 1.19 |
|
|
| 556,539 |
|
| March 29, 2023 |
| $ | 1.12 |
|
|
| 1,124,288 |
|
| July 10, 2023 |
| $ | 0.94 |
|
|
| 50,000 |
|
| April 1, 2024 |
| $ | 1.02 |
|
|
| 1,810,041 |
|
|
|
|
|
|
|
|
| 3,540,868 |
|
During the nine months ended September 30, 2024, 1,881,000 RSUs (year ended December 31, 2023 – 1,878,320) were granted. The weighted average fair value at the measurement date was C$1.02, based on the TSX market price of the Company’s shares on the date the RSUs were granted.
During the nine months ended September 30, 2024, the Company charged $991 (September 30, 2023 - $1,026) 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.
| - 16 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(e) Earnings (loss) per share:
The calculations for basic earnings per share and diluted earnings per share are as follows:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Net income (loss) for the period |
| $ | 1,169 |
|
| $ | (803 | ) |
| $ | 3,008 |
|
| $ | (21 | ) |
| Basic weighted average number of shares outstanding |
|
| 135,070,079 |
|
|
| 122,433,272 |
|
|
| 132,925,193 |
|
|
| 120,093,760 |
|
| Effect of dilutive share options, warrants, and RSUs |
|
| 5,359,782 |
|
|
| - |
|
|
| 5,798,710 |
|
|
| - |
|
| Diluted weighted average number of shares outstanding |
|
| 140,429,861 |
|
|
| 122,433,272 |
|
|
| 138,723,903 |
|
|
| 120,093,760 |
|
| Basic income (loss) per share |
| $ | 0.01 |
|
| $ | (0.01 | ) |
| $ | 0.02 |
|
| $ | (0.00 | ) |
| Diluted income (loss) per share |
| $ | 0.01 |
|
| $ | (0.01 | ) |
| $ | 0.02 |
|
| $ | (0.00 | ) |
13. REVENUE AND COST OF SALES
The Company’s revenues for the nine months ended September 30, 2024 and 2023, are all attributable to Mexico, from shipments of concentrate from the Avino Mine.
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Concentrate sales |
| $ | 13,974 |
|
| $ | 11,599 |
|
| $ | 40,994 |
|
| $ | 31,429 |
|
| Provisional pricing adjustments |
|
| 642 |
|
|
| 717 |
|
|
| 802 |
|
|
| (70 | ) |
|
|
| $ | 14,616 |
|
| $ | 12,316 |
|
| $ | 41,796 |
|
| $ | 31,359 |
|
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:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Production costs |
| $ | 7,952 |
|
| $ | 9,228 |
|
| $ | 26,095 |
|
| $ | 23,939 |
|
| Write down of equipment and materials and supplies inventory |
|
| 182 |
|
|
| 4 |
|
|
| 566 |
|
|
| 95 |
|
| Depreciation and depletion |
|
| 773 |
|
|
| 720 |
|
|
| 2,390 |
|
|
| 2,067 |
|
|
|
| $ | 8,907 |
|
| $ | 9,952 |
|
| $ | 29,051 |
|
| $ | 26,101 |
|
| - 17 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
14. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of the following:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Salaries and benefits |
| $ | 585 |
|
| $ | 383 |
|
| $ | 1,440 |
|
| $ | 1,069 |
|
| Office and miscellaneous |
|
| 308 |
|
|
| 391 |
|
|
| 1,266 |
|
|
| 1,008 |
|
| Management and consulting fees |
|
| 126 |
|
|
| 109 |
|
|
| 391 |
|
|
| 312 |
|
| Professional fees |
|
| 240 |
|
|
| 195 |
|
|
| 709 |
|
|
| 898 |
|
| Investor relations |
|
| 44 |
|
|
| 49 |
|
|
| 225 |
|
|
| 216 |
|
| Regulatory and compliance fees |
|
| 52 |
|
|
| 35 |
|
|
| 145 |
|
|
| 126 |
|
| Directors fees |
|
| 38 |
|
|
| 43 |
|
|
| 128 |
|
|
| 132 |
|
| Depreciation |
|
| 39 |
|
|
| 38 |
|
|
| 114 |
|
|
| 108 |
|
| Travel and promotion |
|
| 23 |
|
|
| 37 |
|
|
| 100 |
|
|
| 130 |
|
|
|
| $ | 1,455 |
|
| $ | 1,280 |
|
| $ | 4,518 |
|
| $ | 3,999 |
|
15. COMMITMENTS & CONTINGENCIES
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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Not later than one year |
| $ | 189 |
|
| $ | 714 |
|
| Later than one year and not later than five years |
|
| 1,173 |
|
|
| 1,241 |
|
| Later than five years |
|
| 3,710 |
|
|
| 3,965 |
|
|
|
| $ | 5,072 |
|
| $ | 5,920 |
|
Office lease payments recognized as an expense during the nine months ended September 30, 2024, totalled $30 (September 30, 2023 - $27).
Due to the nature of the Company’s activities, the Company is from time to time involved in various claims and legal proceedings arising in the conduct of its business. At the reporting date, none of such claims and legal proceedings are considered probable of resulting in a material loss or judgment against the Company.
| - 18 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
16. SUPPLEMENTARY CASH FLOW INFORMATION
|
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
| Net change in non-cash working capital items: |
|
|
|
|
|
| ||
| Inventory |
| $ | (2,050 | ) |
| $ | (2,720 | ) |
| Prepaid expenses and other assets |
|
| (432 | ) |
|
| (329 | ) |
| Taxes recoverable |
|
| 3,088 |
|
|
| (2,075 | ) |
| Taxes payable |
|
| 529 |
|
|
| (809 | ) |
| Accounts payable and accrued liabilities |
|
| (2,622 | ) |
|
| 2,592 |
|
| Amounts receivable |
|
| 273 |
|
|
| 199 |
|
| Amounts due to related parties |
|
| (355 | ) |
|
| (59 | ) |
|
|
| $ | (1,569 | ) |
| $ | (3,201 | ) |
|
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
| Other supplementary information: |
|
|
|
|
|
| ||
| Interest paid |
| $ | 187 |
|
| $ | 180 |
|
| Taxes paid |
|
| 13 |
|
|
| 29 |
|
|
|
| $ | 200 |
|
| $ | 209 |
|
|
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
| Non-cash investing and financing activities: |
|
|
|
|
|
| ||
| Shares acquired under terms of option agreements |
|
| - |
|
|
| 41 |
|
| Transfer of share-based payments reserve upon exercise of RSUs |
|
| 1,018 |
|
|
| 1,019 |
|
| Transfer of share-based payments reserve upon exercise of options |
|
| 572 |
|
|
| - |
|
| Equipment acquired under finance leases and equipment loans |
|
| 887 |
|
|
| 2,888 |
|
|
|
| $ | 2,477 |
|
| $ | 3,948 |
|
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, 2023 – 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 September 30, 2024, no amounts were held as collateral.
| - 19 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(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 September 30, 2024, in the amount of $7,767 and current assets exceeded current liabilities by $15,878 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 finance lease obligations are due within 12 months of the consolidated 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 September 30, 2024, are summarized as follows:
|
|
| Total |
|
| Less Than 1 Year |
|
| 1-5 years |
|
| More Than 5 Years |
| ||||
| Accounts payable and accrued liabilities |
| $ | 9,243 |
|
| $ | 9,243 |
|
| $ | - |
|
| $ | - |
|
| Due to related parties |
|
| 61 |
|
|
| 61 |
|
|
|
|
|
|
|
|
|
| Minimum rental and lease payments |
|
| 5,072 |
|
|
| 189 |
|
|
| 1,173 |
|
|
| 3,710 |
|
| Equipment loans |
|
| 248 |
|
|
| 178 |
|
|
| 70 |
|
|
| - |
|
| Finance lease obligations |
|
| 3,148 |
|
|
| 1,743 |
|
|
| 1,405 |
|
|
| - |
|
| Total |
| $ | 17,772 |
|
| $ | 11,414 |
|
| $ | 2,648 |
|
| $ | 3,710 |
|
(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. A 10% change in the interest rate would not result in a material impact on the Company’s operations.
| - 20 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
|
| MXN |
|
| CDN |
|
| MXN |
|
| CDN |
| ||||
| Cash |
| $ | 5,060 |
|
| $ | 518 |
|
| $ | 13,338 |
|
| $ | 70 |
|
| Due from related parties |
|
| 764 |
|
|
| - |
|
|
| 4,558 |
|
|
| - |
|
| Long-term investments |
|
| - |
|
|
| 1,979 |
|
|
| - |
|
|
| 1,236 |
|
| Reclamation bonds |
|
| - |
|
|
| 6 |
|
|
| - |
|
|
| 6 |
|
| Amounts receivable |
|
| 463 |
|
|
| 29 |
|
|
| 18,644 |
|
|
| 26 |
|
| Accounts payable and accrued liabilities |
|
| (64,581 | ) |
|
| (44 | ) |
|
| (95,662 | ) |
|
| (150 | ) |
| Due to related parties |
|
| - |
|
|
| (136 | ) |
|
| - |
|
|
| (135 | ) |
| Finance lease obligations |
|
| (2,413 | ) |
|
| (584 | ) |
|
| (1,129 | ) |
|
| (217 | ) |
| Net exposure |
|
| (60,707 | ) |
|
| 1,768 |
|
|
| (60,251 | ) |
|
| 836 |
|
| US dollar equivalent |
| $ | (3,084 | ) |
| $ | 1,310 |
|
| $ | (3,567 | ) |
| $ | 577 |
|
Based on the net US dollar denominated asset and liability exposures as at September 30, 2024, a 10% fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings for the nine months ended September 30, 2024, by approximately $189. 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 September 30, 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 $212.
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 September 30, 2024, a 10% change in market prices would have an impact on net earnings (loss) of approximately $147.
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.
| - 21 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
(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 September 30, 2024:
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
| Financial assets |
|
|
|
|
|
|
|
|
| |||
| Cash |
| $ | 7,767 |
|
| $ | - |
|
| $ | - |
|
| Amounts receivable |
|
| - |
|
|
| 3,030 |
|
|
| - |
|
| Long-term investments |
|
| 1,439 |
|
|
| - |
|
|
| 27 |
|
| Total financial assets |
| $ | 9,206 |
|
| $ | 3,030 |
|
| $ | 27 |
|
The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at September 30, 2024 the Company’s Level 3 financial instruments consisted of share purchase warrants in Silver Wolf Exploration Ltd.. See Note 6 for further details.
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 there is a single reportable operating segment as of September 30, 2024.
The Company’s revenues for the nine months ended September 30, 2024 of $41,796 (September 30, 2023 - $31,359) are all attributable to Mexico, from shipments of concentrate.
On the condensed consolidated interim statements of operations, the Company had revenue from the following product mixes:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Silver |
| $ | 6,462 |
|
| $ | 4,280 |
|
| $ | 18,246 |
|
| $ | 11,610 |
|
| Copper |
|
| 6,497 |
|
|
| 5,907 |
|
|
| 18,329 |
|
|
| 14,658 |
|
| Gold |
|
| 3,359 |
|
|
| 3,669 |
|
|
| 9,894 |
|
|
| 9,516 |
|
| Penalties, treatment costs and refining charges |
|
| (1,702 | ) |
|
| (1,540 | ) |
|
| (4,673 | ) |
|
| (4,425 | ) |
| Total revenue from mining operations |
| $ | 14,616 |
|
| $ | 12,316 |
|
| $ | 41,796 |
|
| $ | 31,359 |
|
| - 22 - |
| AVINO SILVER & GOLD MINES LTD. Notes to the unaudited condensed consolidated financial statements For the nine months ended September 30, 2024, and 2023 (Expressed in thousands of US dollars, except where otherwise noted) |
For the three and nine months ended September 30, 2024 and 2023, the Company had the following customers that accounted for total revenues as follows:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Customer #1 |
| $ | 14,117 |
|
| $ | 9,101 |
|
| $ | 35,404 |
|
| $ | 26,209 |
|
| Customer #2 |
|
| 487 |
|
|
| 3,220 |
|
|
| 5,930 |
|
|
| 5,246 |
|
| Other customers |
|
| 12 |
|
|
| (5 | ) |
|
| 462 |
|
|
| (96 | ) |
| Total revenue from mining operations |
| $ | 14,616 |
|
| $ | 12,316 |
|
| $ | 41,796 |
|
| $ | 31,359 |
|
Geographical information relating to the Company’s non-current assets (other than financial instruments) is as follows:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Exploration and evaluation assets - Mexico |
| $ | 52,713 |
|
| $ | 50,110 |
|
| Exploration and evaluation assets - Canada |
|
| 1 |
|
|
| 1 |
|
| Total exploration and evaluation assets |
| $ | 52,714 |
|
| $ | 50,111 |
|
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Plant, equipment, and mining properties - Mexico |
| $ | 53,162 |
|
| $ | 52,891 |
|
| Plant, equipment, and mining properties - Canada |
|
| 454 |
|
|
| 178 |
|
| Total plant, equipment, and mining properties |
| $ | 53,616 |
|
| $ | 53,069 |
|
19. SUBSEQUENT EVENTS
Subsequent to September 30, 2024, the Company issued 702,500 common shares through the exercise of 702,500 stock options at an average exercise price of C$1.15 for proceeds of C$806
Subsequent to September 30, 2024, the Company issued 4,288,100 common shares in at-the-market offerings under prospectus supplement for gross proceeds of $5,827.
| - 23 - |
EXHIBIT 99.2
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 and nine ended September 30, 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 November 12, 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 November 12, 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 nine months ended September 30, 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 NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Operational Highlights
| HIGHLIGHTS (Expressed in US$) |
| Third Quarter 2024 |
|
| Third Quarter 2023 |
|
| Change |
|
| YTD 2024 |
|
| YTD 2023 |
|
| Change |
| ||||||
| Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Tonnes Milled |
|
| 156,512 |
|
|
| 154,507 |
|
|
| 1 | % |
|
| 467,041 |
|
|
| 471,635 |
|
|
| -1 | % |
| Silver Ounces Produced |
|
| 281,831 |
|
|
| 237,165 |
|
|
| 19 | % |
|
| 825,420 |
|
|
| 703,920 |
|
|
| 17 | % |
| Gold Ounces Produced |
|
| 1,625 |
|
|
| 2,077 |
|
|
| -22 | % |
|
| 4,917 |
|
|
| 5,883 |
|
|
| -16 | % |
| Copper Pounds Produced |
|
| 1,771,250 |
|
|
| 1,143,827 |
|
|
| 55 | % |
|
| 4,423,909 |
|
|
| 3,987,016 |
|
|
| 11 | % |
| Silver Equivalent Ounces1 Produced |
|
| 670,887 |
|
|
| 591,208 |
|
|
| 13 | % |
|
| 1,916,940 |
|
|
| 1,856,772 |
|
|
| 3 | % |
| Concentrate Sales and Cash Costs | ||||||||||||||||||||||||
| Silver Equivalent Payable Ounces Sold2 |
|
| 525,003 |
|
|
| 543,686 |
|
|
| -3 | % |
|
| 1,672,917 |
|
|
| 1,502,424 |
|
|
| 11 | % |
| Cash Cost per Silver Equivalent Payable Ounce1,2,3 |
| $ | 14.94 |
|
| $ | 16.90 |
|
|
| -12 | % |
| $ | 15.35 |
|
| $ | 15.83 |
|
|
| -3 | % |
| All-in Sustaining Cash Cost per Silver Equivalent Payable Ounce1,2,3 |
| $ | 22.06 |
|
| $ | 22.61 |
|
|
| -3 | % |
| $ | 21.61 |
|
| $ | 21.95 |
|
|
| -2 | % |
1. In Q3 2024, AgEq was calculated using metal prices of $29.42 per oz Ag, $2,476 per oz Au and $4.18 per lb Cu. In Q3 2023, AgEq was calculated using metals prices of $23.57 oz Ag, $1,929 oz Au and $3.79 lb Cu. For YTD 2024, AgEq was calculated using metal prices of $27.21 per oz Ag, $2,295 per oz Au and $4.15 per lb Cu. For YTD 2023, AgEq was calculated using metal prices of $23.44 oz Ag, $1,932 oz Au and $3.90 lb Cu. Calculated figures may not add up due to rounding.
2. “Silver equivalent payable ounces sold” for the purposes of cash costs and all-in sustaining costs consists of the sum of payable silver ounces, gold ounces and copper tonnes sold, before penalties, treatment charges, and refining charges, multiplied by the ratio of the average spot gold and copper prices to the average spot silver price for the corresponding period.
3. Non-IFRS measure. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning under IFRS and the calculation methods may differ from methods used by other companies with similar reported measures. See Non-IFRS Measures section for further information and detailed reconciliations.
Financial Highlights
| HIGHLIGHTS (Expressed in 000’s of US$) |
| Third Quarter 2024 |
|
| Third Quarter 2023 |
|
| Change |
|
| YTD 2024 |
|
| YTD 2023 |
|
| Change |
| ||||||
| Financial Operating Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Revenues |
| $ | 14,616 |
|
| $ | 12,316 |
|
|
| 19 | % |
| $ | 41,796 |
|
| $ | 31,359 |
|
|
| 33 | % |
| Mine operating income |
| $ | 5,709 |
|
| $ | 2,364 |
|
|
| 141 | % |
| $ | 12,745 |
|
| $ | 5,258 |
|
|
| 142 | % |
| Net income (loss) |
| $ | 1,169 |
|
| $ | (803 | ) |
|
| 246 | % |
| $ | 3,008 |
|
| $ | (21 | ) |
| >1000 | % | |
| Earnings before interest, taxes and amortization (“EBITDA”)1 |
| $ | 3,816 |
|
| $ | 706 |
|
|
| 441 | % |
| $ | 8,938 |
|
| $ | 1,386 |
|
|
| 545 | % |
| Adjusted earnings1 |
| $ | 4,980 |
|
| $ | 1,551 |
|
|
| 221 | % |
| $ | 11,384 |
|
| $ | 2,630 |
|
|
| 333 | % |
| Cash flow provided by operating activities |
| $ | 4,148 |
|
| $ | (83 | ) |
| >1000 | % |
| $ | 7,573 |
|
| $ | 867 |
|
|
| 773 | % | |
| Mine operating cash flow before taxes1 |
| $ | 6,664 |
|
| $ | 3,088 |
|
|
| 116 | % |
| $ | 15,701 |
|
| $ | 7,420 |
|
|
| 112 | % |
| Per Share Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Earnings (loss) per share |
| $ | 0.01 |
|
| $ | (0.01 | ) |
|
| 200 | % |
| $ | 0.02 |
|
| $ | 0.00 |
|
|
| 100 | % |
| Adjusted earnings per share1 |
| $ | 0.04 |
|
| $ | 0.01 |
|
|
| 300 | % |
| $ | 0.08 |
|
| $ | 0.02 |
|
|
| 300 | % |
| HIGHLIGHTS (Expressed in 000’s of US$) |
| September 30, 2024 |
|
| June 30, 2024 |
|
| Change |
|
| September 30, 2024 |
|
| December 31, 2023 |
|
| Change |
| ||||||
| Liquidity & Working Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash |
| $ | 7,767 |
|
| $ | 5,311 |
|
|
| 46 | % |
| $ | 7,767 |
|
| $ | 2,688 |
|
|
| 189 | % |
| Working capital1 |
| $ | 15,878 |
|
| $ | 13,570 |
|
|
| 17 | % |
| $ | 15,878 |
|
| $ | 9,727 |
|
|
| 63 | % |
1. Non-IFRS measure. 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 NINE MONTHS ENDED SEPTEMBER 30, 2024 |
3rd Quarter 2024 Highlights
|
| · | Revenues of $14.6 million, an increase of 19% from Q3 2023 |
|
| · | Gross Profit (mine operating income) of $5.7 million |
|
| · | Net income of $1.2 million, or $0.01 per share |
|
| · | Adjusted earnings of $5.0 million, or $0.04 per share |
|
| · | Cash flow provided by operating activities of $4.1 million |
|
| · | Mine operating income before taxes of $6.7 million |
|
| · | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3.8 million |
|
| · | Cash costs per silver equivalent payable ounce sold of $14.94 |
|
| · | All in sustaining cash costs per silver equivalent payable ounce sold of $22.06 |
La Preciosa Stockpiles:
During the quarter, the Company continued to analyze the results of processing La Preciosa historical stockpile material as part of a sampling program to better prepare for fresh mill feed. Initial recoveries from the lower-grade material were better than expected and provide for potential upside as the project moves forward.
Consistent Production at Avino:
During the quarter, production significantly increased due to overall mill performance and availability. The Company remains on track with our targeted full year production of 2.5M to 2.8M silver equivalent ounces. October 2024 production continued to build off a strong Q3, and puts the Company on track to deliver on our production estimate for 2024.
La Preciosa Progress
Following the signing of the long-term land use agreement with a local community on January 9th, 2024, our operations team is in the final stages for approval to move forward with underground development at La Preciosa. Recent photos from the La Preciosa property can be viewed on our website by clicking here.
| 3 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Financial Results – Three months ended September 30, 2024, compared to three months ended September 30, 2023
|
|
| Three months ended September 30, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| Revenue from mining operations |
| $ | 14,616 |
|
| $ | 12,316 |
|
| Cost of sales |
|
| 8,907 |
|
|
| 9,952 |
|
| Mine operating income |
|
| 5,709 |
|
|
| 2,364 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| General and administrative expenses |
|
| 1,455 |
|
|
| 1,280 |
|
| Share-based payments |
|
| 531 |
|
|
| 627 |
|
| Income before other items |
|
| 3,723 |
|
|
| 457 |
|
|
|
|
|
|
|
|
|
|
|
| Other items: |
|
|
|
|
|
|
|
|
| Interest and other income (loss) |
|
| (77 | ) |
|
| 5 |
|
| Loss on long-term investments |
|
| (268 | ) |
|
| (295 | ) |
| Fair value adjustment on warrant liability |
|
| - |
|
|
| 20 |
|
| Unrealized foreign exchange gain (loss) |
|
| 170 |
|
|
| (234 | ) |
| Finance cost |
|
| (5 | ) |
|
| (3 | ) |
| Accretion of reclamation provision |
|
| (49 | ) |
|
| (13 | ) |
| Write-down of uncollectible account |
|
| (621 | ) |
|
| - |
|
| Interest expense |
|
| (77 | ) |
|
| (158 | ) |
| Income (loss) before income taxes |
|
| 2,796 |
|
|
| (221 | ) |
|
|
|
|
|
|
|
|
|
|
| Income taxes: |
|
|
|
|
|
|
|
|
| Current income tax (expense) recovery |
|
| (1,258 | ) |
|
| 111 |
|
| Deferred income tax expense |
|
| (369 | ) |
|
| (693 | ) |
| Income tax expense |
|
| (1,627 | ) |
|
| (582 | ) |
| Net income (loss) |
|
| 1,169 |
|
|
| (803 | ) |
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income: |
|
|
|
|
|
|
|
|
| Currency translation differences |
|
| 1 |
|
|
| 230 |
|
| Total comprehensive income (loss) |
| $ | 1,170 |
|
| $ | (573 | ) |
| Income (loss) per share |
|
|
|
|
|
|
|
|
| Basic |
| $ | 0.01 |
|
| $ | (0.01 | ) |
| Diluted |
| $ | 0.01 |
|
| $ | (0.01 | ) |
| Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
| Basic |
|
| 135,070,079 |
|
|
| 122,433,272 |
|
| Diluted |
|
| 140,429,861 |
|
|
| 122,433,272 |
|
| 4 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Revenues
The Company recognized revenues of $14.6 million on the sale of Avino Mine bulk copper/silver/gold concentrate, compared to $12.3 million revenues for Q3 2023, an increase of $2.3 million.
The increase is a result of materially higher average realized metal prices, as described below, and was partially offset by 3% less payable silver equivalent ounces sold in the current period.
Metal prices for revenues recognized during the period were $29.17 per ounce of silver, $2,445 per ounce of gold, and $9,154 per tonne of copper, with comparable prices for Q3 2023 were $23.26 per ounce of silver, $1,927 per ounce of gold, and $8,372 per tonne of copper.
Cost of Sales & Mine Operating Income
Cost of sales was $8.9 million, compared to $10.0 million in Q3 2023, a decrease of $1.1 million. The decrease in cost of sales is mainly attributable to the Mexican peso which depreciated by approximately 11% compared to the US dollar in the prior year quarter. The ratio had an average of 18.90 Mexican Pesos to 1 US dollar in Q3 2024 compared to an average of 17.05 Mexican Pesos to 1 US dollar in Q3 2023.
Mine operating income was $5.7 million, compared to $2.4 million in Q3 2023. The increase in mine operating income is a result of the items noted above.
General and Administrative Expenses & Share-Based Payments
General and administrative expenses was $1.5 million, compared to $1.3 million in Q3 2023. The increase is a result of higher salaries and benefits, primarily as a result of increased profit-sharing provisions for employees in Mexico from improved financial performance.
Share-based payments was $0.5 million, compared to $0.6 million in Q3 2023, with the decrease being a result of the vesting of previously issued options and restricted share units at lower prices compared to Q3 2023.
Other Items
Unrealized loss on long-term investments was $0.3 million compared to a loss of $0.3 million in Q3 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.
Foreign exchange gain for the period was $0.2 million, a change of $0.4 million compared to a loss of $0.2 million in Q3 2023. Foreign exchange gains or losses result from transactions in currencies other than the Canadian dollar functional currency. During the three months ended September 30, 2024, the US dollar appreciated in relation to the Mexican peso during the quarter, resulting in higher unrealized foreign exchange gain. During the three months ended September 30, 2023, the US dollar remained constant in relation to the Canadian dollar.
| 5 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Current and Deferred Income Taxes
Current income tax expense of $1.3 million in Q3 2024, a change of $1.4 million compared to an income tax recovery $0.1 million for Q3 2023. The movement relates primarily to higher profits generated in 2024 resulting in increased income tax expense, whereas in 2023, the Company was in recovery position as a result of less profitable mining operations.
Deferred income tax expense was $0.4 million, a change of $0.3 million compared to an expense of $0.7 million in Q3 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
Net income was $1.2 million for the period, or $0.01 per share, compared to net loss of $0.8 million, or $0.01 per share during Q3 2023. The changes are a result of the items noted above, which are primarily increases in revenues, mine operating income and movements in the fair value adjustment of the long-term investments and unrealized foreign exchange, as well as decreases in cost of sales. The positive movements were partially offset by increases to current and deferred income tax expenses. The remaining items were consistent, showing no significant variances as noted above.
EBITDA & Adjusted Income/Loss (see “Non-IFRS Measures”)
EBITDA was $3.8 million, an increase of $3.1 million when compared to $0.7 million for Q3 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 $5.0 million, an increase of $3.4 million when compared to adjusted earnings of $1.6 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, write-downs of equipment 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 $14.94, compared to $16.90 for Q3 2023. The decrease of 12% is attributable to lower cash production costs from improved operational performance. This was partially offset by lower ounces sold of 3% in Q3 2024 when compared to Q3 2023.
All-in sustaining cash costs per silver equivalent payable ounce was $22.06, compared to $22.69 for Q3 2023. The decreases mentioned from the items above, with no significant difference between the comparable quarter in sustaining capital and exploration costs, and an increase to penalties.
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 NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Financial Results - Nine months ended September 30, 2024, compared to the nine months ended September 30, 2023:
|
|
| 2024 |
|
| 2023 |
| ||
| Revenue from mining operations |
| $ | 41,796 |
|
| $ | 31,359 |
|
| Cost of sales |
|
| 29,051 |
|
|
| 26,101 |
|
| Mine operating income |
|
| 12,745 |
|
|
| 5,258 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| General and administrative expenses |
|
| 4,518 |
|
|
| 3,999 |
|
| Share-based payments |
|
| 1,601 |
|
|
| 1,809 |
|
| Income (loss) before other items |
|
| 6,626 |
|
|
| (550 | ) |
|
|
|
|
|
|
|
|
|
|
| Other items: |
|
|
|
|
|
|
|
|
| Interest and other income |
|
| 77 |
|
|
| 234 |
|
| Gain (Loss) on long-term investments |
|
| 87 |
|
|
| (899 | ) |
| Fair value adjustment on warrant liability |
|
| - |
|
|
| 478 |
|
| Unrealized foreign exchange gain |
|
| 342 |
|
|
| 182 |
|
| Finance cost |
|
| (10 | ) |
|
| (80 | ) |
| Accretion of reclamation provision |
|
| (151 | ) |
|
| (36 | ) |
| Write-down of uncollectible account |
|
| (621 | ) |
|
| - |
|
| Interest expense |
|
| (248 | ) |
|
| (275 | ) |
| Income (loss) before income taxes |
|
| 6,102 |
|
|
| (946 | ) |
|
|
|
|
|
|
|
|
|
|
| Income taxes: |
|
|
|
|
|
|
|
|
| Current income tax (expense) recovery |
|
| (2,033 | ) |
|
| 645 |
|
| Deferred income tax (expense) recovery |
|
| (1,061 | ) |
|
| 280 |
|
| Income tax (expense) recovery |
|
| (3,094 | ) |
|
| 925 |
|
| Net income (loss) |
|
| 3,008 |
|
|
| (21 | ) |
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
| Currency translation differences |
|
| (123 | ) |
|
| (346 | ) |
| Total comprehensive income (loss) |
| $ | 2,885 |
|
| $ | (367 | ) |
| Income (loss) per share |
|
|
|
|
|
|
|
|
| Basic |
| $ | 0.02 |
|
| $ | (0.00 | ) |
| Diluted |
| $ | 0.02 |
|
| $ | (0.00 | ) |
| Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
| Basic |
|
| 132,925,193 |
|
|
| 120,093,760 |
|
| Diluted |
|
| 138,723,903 |
|
|
| 120,093,760 |
|
| 7 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Revenues
The Company recognized revenues net of penalties, treatment costs and refining charges, of $41.8 million on the sale of Avino Mine bulk copper/silver/gold concentrate, compared to revenues of $31.4 million for 2023, an increase of $10.4 million.
The increase in revenues is a result of better average metal prices as described below, and 11% higher silver equivalent payable ounces sold in the current period.
Metal prices for revenues recognized during the period were $27.82 per ounce of silver, $2,321 per ounce of gold, and $9,222 per tonne of copper, with comparable prices for the nine months ended September 30, 2023, were $23.46 per ounce of silver, $1,942 per ounce of gold, and $8,539 per tonne of copper.
Cost of Sales & Mine Operating Income
Cost of sales was $29.1 million, compared to $26.1 million in 2023, an increase of $3.0 million. The increase in cost of sales is partially attributable to the higher ounces sold mentioned above, which resulted in higher overall costs. The increase is also attributed to a stronger average Mexican peso during the first half of the year, which directly impacted labour and contractor costs. Partly offset by the weakening of the Mexican peso in the third quarter of 2024 by approximately 11%, which was favorable to the Company's cost structure.
Mine operating income was $12.7 million, compared to $5.3 million in 2023. The increase in mine operating income is a result of the increased revenues, with offsetting increases in cost of sales, when compared to the comparative period, as noted above.
General and Administrative Expenses & Share-Based Payments
General and administrative expenses was $4.5 million, compared to $4.0 million in the comparable period, with any increases coming from salaries and benefits, primarily as a result of increased profit-sharing provisions for employees in Mexico from improved financial performance.
Share-based payments was $1.6 million, compared to $1.8 million in the comparable period, a decrease of $0.2 million. The decrease is a direct result of the timing of option and RSU grants, and fluctuations in share price from period to period.
Other Items
Unrealized gain on long-term investments was $0.1 million, a positive movement of $1.0 million compared to a loss of $0.9 million in the comparable period. This is a direct result of fluctuations in the Company’s investment in shares of Talisker Resources from period to period, as well as the Company’s investment in shares of Silver Wolf Exploration and Endurance Gold.
Fair value adjustment on warrant liability was Nil, a negative movement of $0.5 million compared to a gain of $0.5 million in the comparable period in 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 Q3 2024
Unrealized foreign exchange gain for the period was $0.3 million, a positive movement of $0.1 million compared to a gain of $0.2 million in the comparable period in 2023. Foreign exchange gains or losses result from transactions in currencies other than the Canadian dollar functional currency. During the period, the Canadian dollar and the US dollar remained constant in relation to the Mexican peso except for the third quarter 2024 where the Mexican peso depreciated against both currencies, resulting in an overall foreign exchange gain for the period. During the nine months ended September 30, 2023, the US dollar appreciated in relation to the Mexican peso and Canadian dollar, resulting in a foreign exchange gain.
| 8 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Current and Deferred Income Taxes
Current income tax expense was $2.0 million, compared to a current income tax recovery of $0.6 million in the comparable period. The movements are a result of higher profits generated in 2024, resulting in increased income tax expense, whereas in 2023, the Company was in a recovery position.
Deferred income tax expense was $1.1 million, a change of $1.4 million compared to a recovery of $0.3 million in 2023. Deferred income tax fluctuates due to movements in taxable and deductible temporary differences related to the special mining duty in Mexico and 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
Net income was $3.0 million for the period, or $0.02 per share, compared to net loss of $0.02 million, or $0.00 per share during the comparable period in 2023. The changes are a result of the items noted above, which are primarily increases in revenues, mine operating income, and general and administrative expenses, as well as decreases in share-based payments, between the two comparable periods. Net income was further impacted by movements in unrealized foreign exchange, fair value adjustments on the warrant liability, and an improved long-term investment performance as noted above.
EBITDA & Adjusted Income/Loss (see “Non-IFRS Measures”)
EBITDA was $8.9 million, an increase of $7.5 million when compared to $1.4 million for the comparable period. The changes in EBITDA are primarily a factor of the items above, excluding any changes in depreciation and depletion, and any changes in income taxes. See Non-IFRS Measures for a reconciliation for EBITDA.
Adjusted earnings for the period was $11.4 million, an increase of $8.8 million when compared to adjusted earnings of $2.6 million in the corresponding period 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 $15.35, compared to $15.83 for the comparable period in 2023. The cost per ounce remained constant with prior year period with a minor increase primarily driven by foreign exchange movements between the US dollar and Mexican peso, with the peso being stronger on average throughout the nine months ended September 30, 2024 compared to the nine months ended September 2023.
All-in sustaining cash costs per silver equivalent payable ounce was $21.61, compared to $21.95 for the comparable period in 2023. The decrease is a result of the items noted above, as well as movements in penalties, treatment and refining charges, exploration expenses and sustaining capital expenditures.
See Non-IFRS Measures for a reconciliation for cash costs and all-in sustaining cash costs.
| 9 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Consolidated Production Highlights
| Q3 2024 | |||||
| Production by Mine | Tonnes Processed | Silver Oz | Gold Oz | Copper Lbs | AgEq |
| Avino | 156,512 | 281,831 | 1,625 | 1,771,250 | 670,887 |
| La Preciosa Stockpiles | - | - | - | - | - |
| Consolidated | 156,512 | 281,831 | 1,625 | 1,771,250 | 670,887 |
| YTD 2024 | |||||
| Production by Mine | Tonnes Processed | Silver Oz | Gold Oz | Copper Lbs | AgEq |
| Avino | 457,090 | 795,334 | 4,859 | 4,423,909 | 1,882,118 |
| La Preciosa Stockpiles | 9,951 | 30,085 | 58 | - | 34,822 |
| Consolidated | 467,041 | 825,420 | 4,917 | 4,423,909 | 1,916,940 |
| Q3 2024 | ||||||
| Grade & Recovery by Mine | Grade Ag g/t | Grade Au g/t | Grade Cu % | Recovery Ag % | Recovery Au % | Recovery Cu % |
| Avino | 63 | 0.46 | 0.58 | 89% | 69% | 88% |
| La Preciosa Stockpiles | - | - | - | - | - | - |
| Consolidated | 63 | 0.46 | 0.58 | 89% | 69% | 88% |
| YTD 2024 | ||||||
| Grade & Recovery by Mine | Grade Ag g/t | Grade Au g/t | Grade Cu % | Recovery Ag % | Recovery Au % | Recovery Cu % |
| Avino | 61 | 0.47 | 0.50 | 88% | 70% | 87% |
| La Preciosa Stockpiles | 133 | 0.29 | - | 71% | 63% | - |
| Consolidated | 63 | 0.47 | 0.50 | 88% | 70% | 87% |
The silver equivalent production in Q3 2024 increased by 13% compared to Q3 2023. The increase was due to overall grade increases, coupled with mill performance and availability.
| 10 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Avino Mine Production Highlights
| Q3 2024 | Q3 2023 | Change % |
| YTD 2024 | YTD 2023 | Change % |
| 156,512 | 154,507 | 1% | Total Mill Feed (dry tonnes) | 467,041 | 471,635 | -1% |
| 63 | 56 | 13% | Feed Grade Silver (g/t) | 63 | 53 | 19% |
| 0.46 | 0.58 | -20% | Feed Grade Gold (g/t) | 0.47 | 0.53 | -11% |
| 0.58 | 0.42 | 37% | Feed Grade Copper (%) | 0.50 | 0.46 | 9% |
| 89% | 86% | 3% | Recovery Silver (%) | 88% | 87% | 1% |
| 69% | 72% | -4% | Recovery Gold (%) | 70% | 73% | -4% |
| 88% | 80% | 11% | Recovery Copper (%) | 87% | 83% | 5% |
| 281,831 | 237,165 | 19% | Total Silver Produced (oz) | 825,420 | 703,920 | 17% |
| 1,625 | 2,077 | -22% | Total Gold Produced (oz) | 4,917 | 5,883 | -16% |
| 1,771,250 | 1,143,827 | 55% | Total Copper Produced (lbs) | 4,423,909 | 3,987,016 | 11% |
| 670,887 | 591,208 | 13% | Total Silver Equivalent Produced (oz)1 | 1,916,940 | 1,856,772 | 3% |
In Q3 2024, AgEq was calculated using metal prices of $29.42 per oz Ag, $2,476 per oz Au and $4.18 per lb Cu. In Q3 2023, AgEq was calculated using metals prices of $23.57 oz Ag, $1,929 oz Au and $3.79 lb Cu. For YTD 2024, AgEq was calculated using metal prices of $27.21 per oz Ag, $2,295 per oz Au and $4.15 per lb Cu. For YTD 2023, AgEq was calculated using metal prices of $23.44 oz Ag, $1,932 oz Au and $3.90 lb Cu. Calculated figures may not add up due to rounding.
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, 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 costs |
|
| · | 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 |
| 11 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
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 and are indicative of the Company’s financial performance. 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.
Adjusted earnings excludes share-based payments, and non-operating or recurring items such as foreign exchange gains and losses, writedown of equipment or supplies and materials inventory, 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 |
| Q3 2024 |
|
| Q3 2023 |
|
| YTD 2024 |
|
| YTD 2023 |
| ||||
| Net income for the period |
| $ | 1,169 |
|
| $ | (803 | ) |
| $ | 3,008 |
|
| $ | (21 | ) |
| Depreciation and depletion |
|
| 812 |
|
|
| 758 |
|
|
| 2,504 |
|
|
| 2,175 |
|
| Interest income and other |
|
| 77 |
|
|
| (5 | ) |
|
| (77 | ) |
|
| (234 | ) |
| Interest expense |
|
| 77 |
|
|
| 158 |
|
|
| 248 |
|
|
| 275 |
|
| Finance cost |
|
| 5 |
|
|
| 3 |
|
|
| 10 |
|
|
| 80 |
|
| Accretion of reclamation provision |
|
| 49 |
|
|
| 13 |
|
|
| 151 |
|
|
| 36 |
|
| Current income tax expense (recovery) |
|
| 1,258 |
|
|
| (111 | ) |
|
| 2,033 |
|
|
| (645 | ) |
| Deferred income tax expense (recovery) |
|
| 369 |
|
|
| 693 |
|
|
| 1,061 |
|
|
| (280 | ) |
| EBITDA |
| $ | 3,816 |
|
| $ | 706 |
|
| $ | 8,938 |
|
| $ | 1,386 |
|
| Fair value adjustment on warrant liability |
|
| - |
|
|
| (20 | ) |
|
| - |
|
|
| (478 | ) |
| Share-based payments |
|
| 531 |
|
|
| 627 |
|
|
| 1,601 |
|
|
| 1,809 |
|
| Write-down of uncollectible asset |
|
| 621 |
|
|
| - |
|
|
| 621 |
|
|
| - |
|
| Write down of equipment and supplies and materials inventory |
|
| 182 |
|
|
| 4 |
|
|
| 566 |
|
|
| 95 |
|
| Unrealized foreign exchange (gain) loss |
|
| (170 | ) |
|
| 234 |
|
|
| (342 | ) |
|
| (182 | ) |
| Adjusted earnings |
| $ | 4,980 |
|
| $ | 1,551 |
|
| $ | 11,384 |
|
| $ | 2,630 |
|
| Shares outstanding (diluted) |
|
| 140,429,861 |
|
|
| 122,433,272 |
|
|
| 138,723,903 |
|
|
| 120,093,760 |
|
| Adjusted earnings per share |
| $ | 0.04 |
|
| $ | 0.01 |
|
| $ | 0.08 |
|
| $ | 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.
| 12 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Cash cost per silver equivalent payable ounce
Management believes that the Company’s ability to control the cash cost per silver equivalent payable 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 $978 for the nine months ended September 30, 2024 (September 30, 2023 - $723) and all of which is attributable to the Avino Mine.
To facilitate a better understanding of these measures as calculated by the Company, detailed reconciliations between the non-IFRS measures and the Company’s consolidated financial statements are provided below. The non-IFRS measures presented are intended to provide additional information, and should not be considered in isolation nor should they be considered substitutes for IFRS measures. Calculated figures may not add up accurately due to rounding.
The following table reconciles cost of sales to cash cost per payable AgEq oz and all-in sustaining cash cost per payable AgEq oz for the preceding quarters:
| Expressed in 000’s of US$, unless otherwise noted |
| Avino – Consolidated |
| |||||||||||||||||||||||||||||
|
|
| Q3 2024 |
|
| Q2 2024 |
|
| Q1 2024 |
|
| Q4 2023 |
|
| Q3 2023 |
|
| Q2 2023 |
|
| Q1 2023 |
|
| Q4 2022 |
| ||||||||
| Cost of sales |
| $ | 8,907 |
|
| $ | 10,090 |
|
| $ | 10,054 |
|
| $ | 9,969 |
|
| $ | 9,952 |
|
| $ | 8,175 |
|
| $ | 7,974 |
|
| $ | 10,293 |
|
| Exploration expenses |
|
| (111 | ) |
|
| (163 | ) |
|
| (135 | ) |
|
| (148 | ) |
|
| (41 | ) |
|
| (27 | ) |
|
| (95 | ) |
|
| (472 | ) |
| Write down of equipment and supplies and materials inventory |
|
| (182 | ) |
|
| (384 | ) |
|
| - |
|
|
| (319 | ) |
|
| (4 | ) |
|
| (91 | ) |
|
| - |
|
|
| (330 | ) |
| Depletion and depreciation |
|
| (773 | ) |
|
| (796 | ) |
|
| (821 | ) |
|
| (717 | ) |
|
| (720 | ) |
|
| (677 | ) |
|
| (670 | ) |
|
| (592 | ) |
| Cash production cost |
|
| 7,841 |
|
|
| 8,747 |
|
|
| 9,098 |
|
|
| 8,785 |
|
|
| 9,187 |
|
|
| 7,380 |
|
|
| 7,209 |
|
|
| 8,899 |
|
| Payable silver equivalent ounces sold |
|
| 525,003 |
|
|
| 537,037 |
|
|
| 610,877 |
|
|
| 584,061 |
|
|
| 543,686 |
|
|
| 452,011 |
|
|
| 506,727 |
|
|
| 756,536 |
|
| Cash cost per silver equivalent ounce |
| $ | 14.94 |
|
| $ | 16.29 |
|
| $ | 14.89 |
|
| $ | 15.04 |
|
| $ | 16.90 |
|
| $ | 16.33 |
|
| $ | 14.23 |
|
| $ | 11.76 |
|
| General and administrative expenses |
|
| 1,986 |
|
|
| 2,439 |
|
|
| 1,695 |
|
|
| 2,080 |
|
|
| 1,907 |
|
|
| 2,338 |
|
|
| 1,523 |
|
|
| 2,094 |
|
| Treatment & refining charges |
|
| 787 |
|
|
| 763 |
|
|
| 890 |
|
|
| 978 |
|
|
| 1,001 |
|
|
| 651 |
|
|
| 709 |
|
|
| 784 |
|
| Penalties |
|
| 915 |
|
|
| 626 |
|
|
| 692 |
|
|
| 834 |
|
|
| 535 |
|
|
| 634 |
|
|
| 898 |
|
|
| 1,649 |
|
| Sustaining capital expenditures |
|
| 510 |
|
|
| 162 |
|
|
| 306 |
|
|
| 318 |
|
|
| 289 |
|
|
| 270 |
|
|
| 163 |
|
|
| 639 |
|
| Exploration expenses |
|
| 111 |
|
|
| 163 |
|
|
| 135 |
|
|
| 148 |
|
|
| 41 |
|
|
| 27 |
|
|
| 95 |
|
|
| 472 |
|
| Share-based payments and G&A depreciation |
|
| (570 | ) |
|
| (687 | ) |
|
| (459 | ) |
|
| (487 | ) |
|
| (665 | ) |
|
| (878 | ) |
|
| (374 | ) |
|
| (442 | ) |
| Cash operating cost |
| $ | 11,580 |
|
| $ | 12,214 |
|
| $ | 12,357 |
|
| $ | 12,656 |
|
| $ | 12,295 |
|
| $ | 10,422 |
|
| $ | 10,223 |
|
| $ | 14,095 |
|
| AISC per silver equivalent ounce |
| $ | 22.06 |
|
| $ | 22.74 |
|
| $ | 20.23 |
|
| $ | 21.67 |
|
| $ | 22.61 |
|
| $ | 23.06 |
|
| $ | 20.17 |
|
| $ | 18.63 |
|
*Certain amounts shown may not add exactly to the total due to rounding differences
| 13 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
The following table reconciles cash cost per AgEq oz production cost to all-in sustaining cash cost per AgEq oz for the nine months ended September 30, 2024, and 2023:
| Expressed in 000’s of US$, unless otherwise noted |
| Avino - Consolidated |
| |||||
|
|
| YTD 2024 |
|
| YTD 2023 |
| ||
| Cost of sales |
| $ | 29,051 |
|
| $ | 26,101 |
|
| Exploration expenses |
|
| (409 | ) |
|
| (163 | ) |
| Write down of equipment and supplies and materials inventory |
|
| (566 | ) |
|
| (95 | ) |
| Depletion and depreciation |
|
| (2,390 | ) |
|
| (2,067 | ) |
| Cash production cost |
|
| 25,686 |
|
|
| 23,776 |
|
| Payable silver equivalent ounces sold |
|
| 1,672,917 |
|
|
| 1,502,424 |
|
| Cash cost per silver equivalent ounce |
| $ | 15.35 |
|
| $ | 15.83 |
|
| General and administrative expenses |
|
| 6,120 |
|
|
| 5,808 |
|
| Treatment & refining charges |
|
| 2,440 |
|
|
| 2,361 |
|
| Penalties |
|
| 2,233 |
|
|
| 2,066 |
|
| Sustaining capital expenditures |
|
| 978 |
|
|
| 723 |
|
| Exploration expenses |
|
| 409 |
|
|
| 163 |
|
| Share-based payments and G&A depreciation |
|
| (1,715 | ) |
|
| (1,917 | ) |
| Cash operating cost |
| $ | 36,151 |
|
| $ | 32,981 |
|
| AISC per silver equivalent ounce |
| $ | 21.61 |
|
| $ | 21.95 |
|
Included in the consolidated figures for 2024 were 13,454 silver equivalent ounces sold from the historical La Preciosa stockpiles as part of our ongoing test work.
Mine Operating Cash Flow Before Taxes
Mine operating cash flow before taxes is a non-IFRS measure that does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Mine operating cash flow before taxes is calculated as mine operating income less depreciation and depletion in cost of sales and write down or reversals of equipment and supplies and materials inventory. Mine operating cash flow before taxes is used by management to assess the performance of the mine operations, excluding corporate activities and is provided to investors as a measure of the Company’s operating performance.
| Expressed in 000’s of US$, unless otherwise noted |
| Q3 2024 |
|
| Q3 2023 |
|
| YTD 2024 |
|
| YTD 2023 |
| ||||
| Mine operating income – per financial statements |
| $ | 5,709 |
|
| $ | 2,364 |
|
| $ | 12,745 |
|
| $ | 5,258 |
|
| Depreciation and depletion included in cost of sales |
|
| 773 |
|
|
| 720 |
|
|
| 2,390 |
|
|
| 2,067 |
|
| Write down of equipment and supplies and materials inventory |
|
| 182 |
|
|
| 4 |
|
|
| 566 |
|
|
| 95 |
|
| Mine operating cash flow before taxes |
| $ | 6,664 |
|
| $ | 3,088 |
|
| $ | 15,701 |
|
| $ | 7.420 |
|
| 14 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Current assets |
| $ | 27,566 |
|
| $ | 23,535 |
|
| Current liabilities |
|
| (11,688 | ) |
|
| (13,808 | ) |
| Working capital |
| $ | 15,878 |
|
| $ | 9,727 |
|
Results of Operations - Summary of Quarterly Results
|
|
| 2024 |
|
| 2024 |
|
| 2024 |
|
| 2023 |
|
| 2023 |
|
| 2023 |
|
| 2023 |
|
| 2022 |
| ||||||||
| (000’s) Quarter ended |
| Sep 30 Q3 |
|
| Jun 30 Q2 |
|
| Mar 31 Q1 |
|
| Dec 31 Q4 |
|
| Sep 30 Q3 |
|
| Jun 30 Q2 |
|
| Mar 31 Q1 |
|
| Dec 31 Q4 |
| ||||||||
| Revenue |
| $ | 14,616 |
|
| $ | 14,787 |
|
| $ | 12,393 |
|
| $ | 12,530 |
|
| $ | 12,316 |
|
| $ | 9,218 |
|
| $ | 9,825 |
|
| $ | 14,649 |
|
| Net income (loss) |
|
| 1,169 |
|
|
| 1,240 |
|
|
| 599 |
|
|
| 563 |
|
|
| (803 | ) |
|
| 1,134 |
|
|
| (352 | ) |
|
| 1,296 |
|
| Earnings (loss) per share - basic |
| $ | 0.01 |
|
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.01 |
|
| Earnings (loss) per share - diluted |
| $ | 0.01 |
|
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | 0.00 |
|
| $ | 0.01 |
|
| Total Assets |
| $ | 135,366 |
|
| $ | 133,702 |
|
| $ | 128,644 |
|
| $ | 128,340 |
|
| $ | 123,493 |
|
| $ | 120,469 |
|
| $ | 118,606 |
|
| $ | 121,196 |
|
During Q3 2024, revenue was higher when compared to previous, primarily as a result of higher realized silver and gold metal prices.
Net income and earnings per share in Q3 2024 were positive, with results similar to Q2 2024. Both figures were higher than prior quarters mainly due to better metal realized prices as noted above. For further details see “Financial Results” section.
Total assets have increased overall when compared to previous quarters, as result of 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.
Cash Flow
|
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
| Cash generated by operating activities |
| $ | 7,573 |
|
| $ | 867 |
|
| Cash generated by (used in) financing activities |
|
| 2,505 |
|
|
| 2,125 |
|
| Cash used in investing activities |
|
| (5,032 | ) |
|
| (12,384 | ) |
| Change in cash |
|
| 5,046 |
|
|
| (9,392 | ) |
| Effect of exchange rate changes on cash |
|
| 33 |
|
|
| 3 |
|
| Cash, beginning of period |
|
| 2,688 |
|
|
| 11,245 |
|
| Cash, end of period |
| $ | 7,767 |
|
| $ | 1,856 |
|
| 15 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Operating Activities
Cash generated by operating activities for the nine months ended September 30, 2024, was $7.6 million, an increase of $6.7 million compared to $0.9 million generated for the nine months ended September 30, 2023. Cash movements from operating activities can fluctuate with changes in net income and working capital movements. In Q3 2024, cash generated from operating activities increased primarily due to higher mine operating income as a result of higher levels of production activities, better realized metal prices and ounces sold. Other movements are primarily a result of working capital changes between the two periods.
Financing Activities
Cash generated by financing activities was $2.5 million for the nine months ended September 30, 2024, compared to $2.1 million generated for the nine months ended September 30, 2023. The movement is a result of proceeds from shares issued on the ATM and option exercises, partially offset by higher payments of lease and equipment loan. During the nine months ended September 30, 2024, the Company received net proceeds from issuance of shares for cash and from options exercise of $4.0 million (September 30, 2023 – $3.2 million). The Company also made lease and equipment loan payments totalling $1.5 million (September 30, 2023 - $1.1 million).
Investing Activities
Cash used in investing activities for the nine months ended September 30, 2024, was $5.0 million compared to $12.4 million for the nine months ended September 30, 2023. Cash used in investing activities included $5.03 million (September 30, 2023 - $7.4 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. If required to fund ongoing exploration activities, and meet its objectives, including ongoing advancement at the Avino Mine further financing may be required. 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.
| 16 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 $3.6 million in connection with a brokered at-the-market offering issued under prospectus supplements and $0.4 million in connection with stock options exercised.
| 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 for the three and nine months ended September 30, 2024 and 2023 is as follows:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Salaries, benefits, and consulting fees |
| $ | 273 |
|
| $ | 289 |
|
| $ | 886 |
|
| $ | 869 |
|
| Share-based payments |
|
| 424 |
|
|
| 502 |
|
|
| 1,318 |
|
|
| 1,472 |
|
|
|
| $ | 697 |
|
| $ | 791 |
|
| $ | 2,203 |
|
| $ | 2,341 |
|
| 17 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
(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:
|
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
| Oniva International Services Corp. |
| $ | 100 |
|
| $ | 102 |
|
| Silver Wolf Exploration Ltd. |
|
| (39 | ) |
|
| (269 | ) |
|
|
| $ | 61 |
|
| $ | (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 nine months ended September 30, 2024, the Company paid $212 (September 30, 2023 - $215) 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 during the three and nine months ended September 30, 2024 and 2023 are summarized below:
|
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
|
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| ||||
| Salaries and benefits |
| $ | 235 |
|
| $ | 240 |
|
| $ | 731 |
|
| $ | 729 |
|
| Office and miscellaneous |
|
| 95 |
|
|
| 107 |
|
|
| 342 |
|
|
| 364 |
|
|
|
| $ | 330 |
|
| $ | 347 |
|
| $ | 1,073 |
|
| $ | 1,093 |
|
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.
| 18 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
(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, 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 September 30, 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 September 30, 2024, in the amount of $7,767 and working capital of $15,878 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 September 30, 2024, are summarized as follows:
|
|
| Total |
|
| Less Than 1 Year |
|
| 1-5 years |
|
| More Than 5 Years |
| ||||
| Accounts payable and accrued liabilities |
| $ | 9,243 |
|
| $ | 9,243 |
|
| $ | - |
|
| $ | - |
|
| Due to related parties |
|
| 61 |
|
|
| 61 |
|
|
|
|
|
|
|
|
|
| Minimum rental and lease payments |
|
| 5,072 |
|
|
| 189 |
|
|
| 1,173 |
|
|
| 3,710 |
|
| Equipment loans |
|
| 248 |
|
|
| 178 |
|
|
| 70 |
|
|
| - |
|
| Finance lease obligations |
|
| 3,148 |
|
|
| 1,743 |
|
|
| 1,405 |
|
|
| - |
|
| Total |
| $ | 17,772 |
|
| $ | 11,414 |
|
| $ | 2,648 |
|
| $ | 3,710 |
|
| 19 | Page |
|
| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
(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:
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| (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. |
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| (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. 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:
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| September 30, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
|
| MXN |
|
| CDN |
|
| MXN |
|
| CDN |
| ||||
| Cash |
| $ | 5,060 |
|
| $ | 518 |
|
| $ | 13,338 |
|
| $ | 70 |
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| Due from related parties |
|
| 764 |
|
|
| - |
|
|
| 4,558 |
|
|
| - |
|
| Long-term investments |
|
| - |
|
|
| 1,979 |
|
|
| - |
|
|
| 1,236 |
|
| Reclamation bonds |
|
| - |
|
|
| 6 |
|
|
| - |
|
|
| 6 |
|
| Amounts receivable |
|
| 463 |
|
|
| 29 |
|
|
| 18,644 |
|
|
| 26 |
|
| Accounts payable and accrued liabilities |
|
| (64,581 | ) |
|
| (44 | ) |
|
| (95,662 | ) |
|
| (150 | ) |
| Due to related parties |
|
| - |
|
|
| (136 | ) |
|
| - |
|
|
| (135 | ) |
| Finance lease obligations |
|
| (2,413 | ) |
|
| (584 | ) |
|
| (1,129 | ) |
|
| (217 | ) |
| Net exposure |
|
| (60,707 | ) |
|
| 1,768 |
|
|
| (60,251 | ) |
|
| 836 |
|
| US dollar equivalent |
| $ | (3,084 | ) |
| $ | 1,310 |
|
| $ | (3,567 | ) |
| $ | 577 |
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Based on the net US dollar denominated asset and liability exposures as at September 30, 2024, a 10% fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings for the nine months ended September 30, 2024, by approximately $189. 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 September 30, 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 $212.
| 20 | Page |
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| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
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 September 30, 2024, a 10% change in market prices would have an impact on net earnings (loss) of approximately $147.
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
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 September 30, 2024:
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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 |
| $ | 7,767 |
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| $ | - |
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| $ | - |
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| Amounts receivable |
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| - |
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|
| 3,030 |
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|
| - |
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| Long-term investments |
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| 1,439 |
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|
| - |
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|
| 27 |
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| Total financial assets |
| $ | 9,206 |
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| $ | 3,030 |
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| $ | 27 |
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The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at September 30, 2024 the Company’s Level 3 financial instruments consisted of share purchase warrants in Silver Wolf Exploration Ltd..
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:
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| September 30, 2024 |
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| December 31, 2023 |
| ||
| Not later than one year |
| $ | 189 |
|
| $ | 714 |
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| Later than one year and not later than five years |
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| 1,173 |
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|
| 1,241 |
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| Later than five years |
|
| 3,710 |
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|
| 3,965 |
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|
|
| $ | 5,072 |
|
| $ | 5,920 |
|
Office lease payments recognized as an expense during the nine months ended September 30, 2024, totalled $30 (September 30, 2023 - $27).
| 21 | Page |
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| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
Due to the nature of the Company’s activities, the Company is from time to time involved in various claims and legal proceedings arising in the conduct of its business. At the reporting date, none of such claims and legal proceedings are considered probable of resulting in a material loss or judgment against the Company.
Subsequent Events
Subsequent to September 30, 2024, the Company issued 702,500 common shares through the exercise of 702,500 stock options at an average exercise price of C$1.15 for proceeds of C$806
Subsequent to September 30, 2024, the Company issued 4,288,100 common shares in at-the-market offerings under prospectus supplement for gross proceeds of $5,827.
Outstanding Share Data
The Company’s authorized share capital consists of an unlimited number of common shares without par value.
As at November 12, 2024 the following common shares, warrants, and stock options were outstanding:
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| Number of shares |
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| Exercise price |
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| Remaining life (years) |
| |||
| Share capital |
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| 140,528,142 |
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|
| - |
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|
| - |
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| Restricted Share Units (“RSUs”) |
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| 3,540,868 |
|
|
| - |
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| 0.36 – 2.38 |
| |
| Stock options |
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| 7,812,500 |
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| C$0.78 - C$1.64 |
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| 0.73 – 4.37 |
| ||
| Fully diluted |
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| 151,881,510 |
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The following are details of outstanding stock options as at September 30, 2024 and November 12, 2024:
| Expiry Date | Exercise Price Per Share | Number of Shares Remaining Subject to Options (September 30, 2024) | Number of Shares Remaining Subject to Options (November 12, 2024) |
| August 4, 2025 | C$1.64 | 1,620,000 | 1,570,000 |
| March 25, 2027 | C$1.20 | 2,195,000 | 2,005,000 |
| May 4, 2027 | C$0.92 | 25,000 | 25,000 |
| March 29, 2028 | C$1.12 | 2,180,000 | 1,905,000 |
| July 10, 2028 | C$1.12 | 150,000 | 150,000 |
| March 25, 2029 | C$0.78 | 2,245,000 | 2,157,500 |
| Total: |
| 8,415,000 | 7,812,500 |
The following are details of outstanding RSUs as at September 30, 2024 and November 12, 2024:
| Expiry Date | Number of Shares Remaining Subject to RSUs (September 30, 2024) | Number of Shares Remaining Subject to RSUs (November 12, 2024) |
| March 25, 2025 | 556,539 | 556,539 |
| March 29, 2026 | 1,174,288 | 1,174,288 |
| April 1, 2027 | 1,810,041 | 1,810,041 |
| Total: | 3,540,868 | 3,540,868 |
| 22 | Page |
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| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
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.
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 nine months ended September 30, 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 nine months ended September 30, 2024, is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.avino.com.
| 23 | Page |
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| MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 |
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 November 12, 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. |
| 24 | Page |