|
AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Financial Position - Unaudited |
(Expressed in thousands of US dollars) |
|
| | | | | March 31, | | December 31, |
| | | Note | | | 2023 | | 2022 |
| | | | | | | | | | |
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | | | | |
Cash | | | | | | | | | | | | $ | | 2,697 | $ | 11,245 |
Amounts receivable | | | | | | | | | | | | | | 2,015 | | 2,672 |
Taxes recoverable | | | 5 | | | 4,363 | | 3,737 |
Prepaid expenses and other assets | | | | | | | | | | | | | | 1,689 | | 1,671 |
Inventory | | | 6 | | | 7,670 | | 6,260 |
Total current assets | | | | | | | | | | | | | 18,434 | | | 25,585 |
Exploration and evaluation assets | | | 8 | | 50,094 | | | 49,804 |
Plant, equipment and mining properties | | | 10 | | 48,608 | | | 44,056 |
Long-term investments | | | 7 | | | 1,466 | | 1,746 |
Other assets | | | | | | | | | | | | | | 4 | | 5 |
Total assets | | | | | | | | | | | | $ | 118,606 | | $ | 121,196 |
| | | | | | | | | | | |
LIABILITIES | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities | | | | | | | | | | | | $ | 10,922 | | $ | | 9,469 |
Amounts due to related parties | | | 11(b) | | | 67 | | 28 |
Taxes payable | | | | | | | | | | | | | | 28 | | 895 |
Note payable | | | 12 | | | - | | 4,926 |
Warrant liability | | | 13 | | | 771 | | 475 |
Current portion of equipment loans | | | | | | | | | | | | | | 165 | | - |
Current portion of finance lease obligations | | | | | | | | | | | | | | 1,372 | | 971 |
Total current liabilities | | | | | | | | | | | | | 13,325 | | | 16,764 |
Equipment loans | | | | | | | | | | | | | | 316 | | - |
Finance lease obligations | | | | | | | | | | | | | | 1,306 | | 745 |
Reclamation provision | | | 14 | | | 505 | | 445 |
Deferred income tax liabilities | | | | | | | | | | | | | | 5,207 | | 5,221 |
Total liabilities | | | | | | | | | | | | | 20,659 | | | 23,175 |
| | | | | | | |
EQUITY | | | | | | | | | |
Share capital | | | 15 | | 146,229 | | | 145,515 |
Equity reserves | | | | | | | | | | | | | | 9,679 | | 9,852 |
Treasury shares (14,180 shares, at cost) | | | | | | | | | | | | | | (97) | | (97) |
Accumulated other comprehensive loss | | | | | | | | | | | | | (5,486) | | | (5,223) |
Accumulated deficit | | | | | | | | | | | | | (52,378) | | | (52,026) |
Total equity | | | | | | | | | | | | | 97,947 | | | 98,021 |
Total liabilities and equity | | | | | | | | | | | | $ | 118,606 | | $ | 121,196 |
|
Commitments – Note 18 |
|
|
|
|
|
|
Approved by the Board of Directors on May 10, 2023: |
| | | | | | | | | | | | Peter Bojtos Director | | David Wolfin Director |
| The accompanying notes are an integral part of the condensed consolidated interim financial statements |
| | |
| | - 2 - |
|
AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss) |
(Expressed in thousands of US dollars, except per share amounts - Unaudited) |
INCOME STATEMENT |
| | | | Three months ended March 31, |
| | | Note | | | 2023 | 2022 |
Revenue from mining operations | | | 16 | | | | $ | 9,825 | | | $ | 11,050 |
Cost of sales | | | 16 | | 7,974 | | | | 6,306 |
Mine operating income | | | | | 1,851 | | | | 4,744 |
| | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | |
General and administrative expenses | | | 17 | | 1,184 | | | | 1,116 |
Share-based payments | | | 15 | | 339 | | | | 200 |
Income before other items | | | | | 328 | | | | 3,428 |
| | | | | | | | | | | |
Other items: | | | | | | | | | | | |
Interest and other income (loss) | | | | | 209 | | | | (7) |
Loss on long-term investments | | | | | | | | | | | | | (319) | | | | (686) |
Fair value adjustment on warrant liability | | | 13 | | (293) | | | | 233 |
Unrealized foreign exchange loss | | | | | (136) | | | | (605) |
Project evaluation expenses | | | | | - | | | | (81) |
Finance cost | | | | | (74) | | | | (13) |
Accretion of reclamation provision | | | 14 | | (11) | | | | (10) |
Interest expense | | | | | (45) | | | | (21) |
Income (loss) before income taxes | | | | | (341) | | | | 2,238 |
| | | | | | | | | | | |
Income taxes: | | | | | | | | | | | |
Current income tax expense | | | | | (25) | | | | (140) |
Deferred income tax recovery (expense) | | | | | 14 | | | | (1,452) |
Income tax expense | | | | | (11) | | | | (1,592) |
Net income (loss) | | | | | (352) | | | | 646 |
| | | | | | | | | | | |
Other comprehensive income (loss): | | | | | | | | | | | |
Currency translation differences | | | | | (263) | | | | 357 |
Total comprehensive income (loss) | | | | | | | $ | (615) | | | $ | 1,003 |
Income (loss) per share | | | 15(e) | | | | | | | |
Basic | | | | | | | $ | (0.00) | | | $ | 0.01 |
Diluted | | | | | | | $ | (0.00) | | | $ | 0.01 |
Weighted average number of common |
shares outstanding | | | 15(e) | | | | | | | |
Basic | | | | 118,572,700 | | | | 103,819,481 |
Diluted | | | | 122,602,929 | | | | 107,234,957 |
| 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) |
|
|
| | | | Three months ended March 31, |
| | | Note | | 2023 | 2022 |
| | | | | | | | |
Cash generated by (used in): | | | | | | | | |
| | | | | | | | |
Operating Activities | | | | | | | | |
Net income (loss) | | | | $ (352) | | | | | $ 646 |
Adjustments for non-cash items: | | | | | | | | |
Deferred income tax recovery | | | | (14) 1,452 |
Depreciation and depletion | | | | 705 | | | 490 |
Accretion of reclamation provision | | | | 11 | | | 10 |
Loss on investments | | | | 319 686 |
Unrealized foreign exchange loss (gain) | | | | (161) | | | | | 392 |
Unwinding of fair value adjustment | | | | 74 | | | | | 9 |
Fair value adjustment on warrant liability | | | | 293 | | | (233) |
Share-based payments | | | | 339 | | | 200 |
| | | | 1,214 | | | | | 3,652 |
| | | | | | | | |
Net change in non-cash working capital items | | | 19 | (766) (202) |
Cash provided by operating activities | | | | 448 | | | | | 3,450 |
| | | | | | | | |
Financing Activities | | | | | | | | |
Shares and units issued for cash, net of issuance costs | | | | 202 | | | | | 30 |
Finance lease payments | | | | | (280) | (320) |
Equipment loan payments | | | | | (88) | - |
Cash used in financing activities | | | | (166) | | | | | (290) |
| | | | | | | | |
Investing Activities | | | | | | | | |
Exploration and evaluation expenditures | | | | | (389) | (85) |
Additions to plant, equipment and mining properties | | | | | (3,450) | (853) |
Acquisition of La Preciosa | | | 4, 12 | (5,000) | | (15,308) |
Cash used in investing activities | | | | | (8,839) | (16,246) |
| | | | | | | | |
Change in cash | | | | | (8,557) | (13,086) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | | | 9 | 7 |
| | | | | | | | |
Cash, Beginning | | | | | 11,245 | 24,765 |
| | | | | | | | |
Cash, Ending | | | | $ 2,697 | | | | | $ 11,686 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | |
| Supplementary Cash Flow Information (Note 19) |
|
| The accompanying notes are an integral part of the condensed consolidated interim financial statements |
| | |
| | - 5 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
1. NATURE OF OPERATIONS |
|
| | Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) was incorporated in 1968 under the laws of the |
| | Province of British Columbia, Canada. The Company is engaged in the production and sale of silver, gold, |
| | and copper and the acquisition, exploration, and advancement of mineral properties. The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, |
| | BC, Canada. The Company is a reporting issuer in Canada and the United States, and trades on the Toronto |
| | Stock Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges. The Company operates the Avino Mine which produces copper, silver and gold at the historic Avino property |
| | in the state of Durango, Mexico. The Company also 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, |
| | 2022, 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, 2022, 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. |
|
| | Significant Accounting Judgments and Estimates |
|
| | The Company’s management makes judgments in its process of applying the Company’s accounting policies |
| | to the preparation of its unaudited condensed consolidated interim financial statements. In addition, the |
| | preparation of financial data requires that the Company’s management make assumptions and estimates of |
| | the impacts on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period |
| | from uncertain future events and on the reported amounts of revenues and expenses during the reporting |
| | period. Actual results may differ from those estimates as the estimation process is inherently uncertain. |
| | Estimates are reviewed on an ongoing basis based on historical experience and other factors that are |
| | considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the |
| | carrying amounts of the Company’s assets and liabilities are accounted for prospectively. |
|
| | The critical judgments and estimates applied in the preparation of the Company’s unaudited condensed |
| | consolidated interim financial statements for the three months ended March 31, 2023, are consistent with |
| | those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the |
| | year ended December 31, 2022. |
| | | |
| - 6 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
| | Basis of Consolidation |
|
| | The unaudited condensed consolidated interim financial statements include the accounts of the Company |
| | and its Mexican subsidiaries as follows: |
|
| | | | | Nature of |
| | Subsidiary | Ownership Interest | Jurisdiction | Operations |
| | Oniva Silver and Gold Mines S.A. | 100% | Mexico | Mexican |
| | de C.V. | | | operations and |
| | | | | administration |
| | | | | |
| | Nueva Vizcaya Mining, S.A. de | 100% | Mexico | Mexican |
| | C.V. | | | administration |
| | | | | |
| | Promotora Avino, S.A. de C.V. | 79.09% | Mexico | Holding |
| | (“Promotora”) | | | company |
| | |
| | Compañía Minera Mexicana de | 98.45% direct | Mexico | Mining and |
| | Avino, S.A. de C.V. | 1.22% indirect (Promotora) | | exploration |
| | (“Avino Mexico”) | 99.67% effective |
| | |
| | La Luna Silver & Gold Mines Ltd. | 100% | Canada | Holding |
| | | | | company |
| | La Preciosa Silver & Gold Mines | 100% | Canada | Holding |
| | Ltd. | | | company |
| | Proyectos Mineros La Preciosa | 100% | Mexico | Mining and |
| | S.A. de C.V. | | | 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 unaudited condensed consolidated interim |
| | financial statements. |
|
3. RECENT ACCOUNTING PRONOUNCEMENTS |
|
| | Future Changes in Accounting Policies Not Yet Effective as at March 31, 2023: |
| | Certain new accounting standards and interpretations have been published that are not mandatory for the |
| | current period and have not been early adopted. These standards are not expected to have a material |
| | impact on the Company in the current or future reporting periods. | | | | |
| | | | | | | |
| - 7 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
4. ACQUISITION OF LA PRECIOSA |
|
On March 21, 2022, the Company closed the acquisition with Coeur Mining Inc. (“Coeur”) of all of the issued and |
outstanding shares of Proyectos Mineros La Preciosa S.A de C.V, a Mexican corporation, and Cervantes LLC, a |
Delaware LLC, that together hold the La Preciosa property in Mexico (“La Preciosa”). |
|
Total consideration paid to Coeur was comprised of: |
a) Cash consideration of $15.3 million paid; |
b) A promissory note for $5 million in favour of Coeur, payable without interest on or before March 21, 2023; |
c) 14,000,000 common shares of Avino, with a value of 13.65 million on issuance; |
d) 7,000,000 share purchase warrants with a total value at $2.24 million exercisable at $1.09 per share until |
| | September 21, 2023, representing a 25% premium to Avino’s 20-day volume weighted average trading |
| | price as of October 26, 2021; |
| | |
Additionally, Avino issued the following consideration for which payment is contingent on a future event and due |
to acquisition date uncertainty these are valued at Nil. A liability for these contingent payments will be recognized |
when related activity and events occur. |
|
e) An additional cash payment of $8.75 million, to be paid no later than 12 months after initial production at La |
| | Preciosa, up to one-half of which may be paid in common shares of Avino (provided Coeur’s total |
| | shareholdings cannot exceed 19.9% of the Company’s total issued and outstanding shares); |
f) A 1.25% net smelter returns royalty on the Gloria and Abundancia areas of La Preciosa, and a 2.00% |
| | gross value royalty on all other areas of La Preciosa; and |
g) A payment of $0.25 per silver equivalent ounce (subject to inflationary adjustment) of new mineral reserves |
| | (as defined by NI 43-101) discovered and declared outside of the current mineral resource area at La |
| | Preciosa, subject to a cap of $50 million, and any such payments will be credited against any existing or |
| | future payments owing on the gross value royalty. |
|
The transaction has been accounted for as an asset acquisition as La Preciosa is in the exploration and |
evaluation stage and had not demonstrated technical feasibility, commercial viability, or the ability to provide |
economic benefits. La Preciosa did not have the workforce, resources and/or reserves, mine plan, or financial |
resources to the meet the definition of a business for accounting purposes. |
| | | |
| - 8 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
The purchase consideration has been assigned based on the relative fair values of the assets acquired and |
liabilities assumed and is summarized as follows: |
|
| | | | | |
| | Cash paid | | | | | | | | | | $ | | | | 15,301 |
| | Note payable | | | | | | 4,665 |
| | Common shares | | | | | | 14,630 |
| | Share purchase warrants | | | | | | 2,240 |
| | Total purchase consideration | | | | | | 36,836 |
| | Transaction costs | | | 270 |
| | Total acquisition cost | | | | | | | | | | $ | | | | 37,106 |
| | | | | | | | | | | | | |
| | Cash | | | | | | | | | | $ | 168 |
| | Other current assets | | | | | | | | | | | 471 |
| | Plant and equipment | | | | | | | | | | | | | | 1,621 |
| | Exploration and evaluation assets | | | | | | | | | | | | | | 37,618 |
| | Accounts payable | | | | | | | | | | | | | | (2,772) |
| | Net assets acquired | | | | | | | | | | $ | | | | 37,106 |
|
5. TAXES RECOVERABLE |
|
| | The Company’s taxes recoverable consist of the Mexican I.V.A. (“VAT”) and income taxes recoverable and |
| | Canadian sales taxes (“GST/HST”) recoverable. |
| | |
| | | | | | | March 31, | December 31, |
| | | | | | | | | 2023 | 2022 |
| | VAT recoverable | $ | | | | | | 1,826 $ | 1,385 |
| | GST recoverable | | 39 | 25 |
| | Income taxes recoverable | | | | | | | 2,498 | 2,327 |
| | | $ | | | | | | 4,363 $ | 3,737 |
|
6. INVENTORY |
|
| | | | | | | March 31, | December 31, |
| | | | 2023 | | | | 2022 |
| | Process material stockpiles | $ | | | | | | 2,662 $ | 2,788 |
| | Concentrate inventory | | | | | | | 2,654 | 1,617 |
| | Materials and supplies | | | | | | | 2,354 | 1,855 |
| | | $ | | | | | | 7,670 $ | 6,260 |
|
| | The amount of inventory recognized as an expense for the three months ended March 31, 2023 totalled |
| | $7,794 (March 31, 2022 – $6,598). See Note 16 for further details. |
|
| | | | | | | | | | |
| - 9 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
7. LONG-TERM INVESTMENTS |
|
| | The Company classifies its long-term investments as designated at fair value through profit and loss under |
| | IFRS 9. Long-term investments are summarized as follows: |
| | |
| | For the three months ended March 31, 2023: |
| | |
| | | Fair Value | Movements | Fair value | Fair Value |
| | | January 1, Net Additions | in foreign | adjustments | March 31, |
| | | | |
| | | | | | | | 2023 | exchange for the period | | | | | 2023 |
Talisker Resources Common |
Shares | | | $ | | | | | 1,640 | $ | | | | | | | | | - | $ | | | | | | | 2 | $ | | | | | | | (293) | $ | 1,349 |
Silver Wolf Exploration Ltd. |
Common Shares | | | | | | | | 51 | | 41 | (3) | (10) | 79 |
Endurance Gold Corp | | | | | | | | 55 | | - | (1) | (16) | 38 |
| | | $ | | | | | 1,746 | $ 41 | | | $ | | | | | | | (2) | $ (319) | $ 1,466 |
|
| | Silver Wolf Exploration Ltd |
| | |
| | During the three months ended March 31, 2023, the Company received 500,000 common shares as part of |
| | the terms in the Option Agreement with Silver Wolf Exploration Ltd.. Upon acquisition, the fair value of these |
| | common shares and share purchase warrants were recorded as “Option Income” as a credit to exploration |
| | and evaluation assets (see Note 8). 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. |
|
| | For the year ended December 31, 2022: |
|
| | | Fair Value | Movements | Fair value | Fair Value |
| | | January 1, Net Additions | in foreign | adjustments | December 31, |
| | | | |
| | | | | | | | 2022 | Exchange for the period | | | | | 2022 |
Talisker Resources Common |
Shares | | | $ | | | | | 3,880 | $ | | | | | | | | | - | $ | | | | | | | (134) | $ | (2,106) | $ | 1,640 |
Silver Wolf Exploration Ltd. |
Common Shares | | | 59 | | | | | | | 30 | (35) | (3) | 51 |
Endurance Gold Corp | | | - | | | | | | | 53 | (4) | 6 | 55 |
| | | $ | | | | | 3,939 | $ 83 | | | $ | | | | | | | (173) | $ | (2,103) | $ 1,746 |
| | |
| | During the year ended December 31, 2022, the Company received 250,000 common shares as part of the |
| | terms in the Option Agreement with Silver Wolf Exploration Ltd. Upon acquisition, the fair value of these |
| | common shares and share purchase warrants were recorded as “Option Income” as a credit to exploration |
| | and evaluation assets (see Note 8). 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. |
| | |
| | Endurance Gold Corp. |
| | |
| | During the year ended December 31, 2022, the Company received 200,000 common shares as part of the |
| | terms of the Option Agreement with Endurance Gold Corp. Upon acquisition, the fair value of these common |
| | shares were recorded as “Other Income” on the statement of profit and loss. 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. See Note 8 for full details of the Option Agreement. | | | | |
| - 10 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
8. EXPLORATION AND EVALUATION ASSETS |
|
| | The Company has accumulated the following acquisition, exploration and evaluation costs which are not |
| | subject to depletion: |
| | | | | British |
| | | | | | Columbia & | |
| Avino, | | La Preciosa, | | Yukon, | |
| Mexico | | | Mexico | Canada | | Total |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balance, January 1, 2022 | | | | | | $ 11,052 | $ | | | | | | - | $ | | | | 1 | $ | 11,053 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Costs incurred during 2022: | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Acquisition costs – Note 4 | | | | | | | - | | 37,618 | | | | | | | - | | 37,618 |
| | Drilling and exploration | | | | | | | 719 | | | 296 | | | | | | - | | 1,015 |
| | Assessments and taxes | | | | | | | 94 | | | | | | | | 61 | | | | | | - | | 155 |
| | Effect of movements in exchange rates | (30) | | | | | | | | - | | | | | | - | | (30) |
| | | | | | | | | | | | | |
| | Option income – Note 9(a)(ii) | | | | | | | (7) | | | | | | | | - | | | | | | - | | (7) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balance, December 31, 2022 | | | | | | $ 11,828 | $ 37,975 | | | $ | | | | 1 | $ | 49,804 |
| | | | | | | | | |
| | Costs incurred during 2023: | | | | | | | | | | | | | | | | | | |
| | Drilling and exploration | | | | | | | 168 | | | 183 | | | | | | - | | 351 |
| | Assessments and taxes | | | | | | | 56 | | | | | | | | 23 | | | | | | - | | 79 |
| | Effect of movements in exchange rates | 10 | | | (109) | | | | | | - | | (99) |
| | Option income – Note 9(a)(ii) | (41) | | | | | | | | - | | | | | | - | | (41) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balance, March 31, 2023 | | | | | | $ 12,021 | $ 38,072 | | | $ | | | | 1 | $ | 50,094 |
|
(a) Avino, Mexico |
|
Option Agreement – Silver Wolf Exploration Ltd. (formerly Gray Rock Resources Ltd.) (“Silver Wolf”) |
| | |
On March 11, 2021, the Company was informed that Silver Wolf received TSX Venture Exchange approval on |
the previously-announced entrance into an option agreement to grant Silver Wolf the exclusive right to acquire a |
100% interest in the Ana Maria and El Laberinto properties in Mexico (the “Option Agreement”). In exchange, |
Avino received Silver Wolf share purchase warrants to acquire 300,000 common shares of Silver Wolf at an |
exercise price of C$0.20 per share for a period of 36 months from the date of the TSX Venture Exchange’s final |
acceptance of the Option Agreement (the “Approval Date”). In order to exercise the option, Silver Wolf will: |
| | | | | | | | | | | | | |
1. Issue to Avino a total of C$600 in cash or common shares of Silver Wolf as follows: |
| | | | | | | | | | | | | |
| | a. C$50 in common shares of Silver Wolf within 30 days of March 8, 2021 (received on March 26, 2021 – |
| | see Note 7 for details); |
| | b. A further C$50 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2022 |
| | (received on March 30, 2022 – See Note 7 for details); |
| | c. A further C$100 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2023 |
| | (received on March 13, 2023 – See Note 7 for details); |
| | d. A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2024; and |
| | e. A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2025; and |
| | | | | | | | | | | | | | |
| - 11 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
2. Incur a total of C$750 in exploration expenditures on the properties, as follows: |
| | |
| | | a. C$50 on or before March 8, 2022; |
| | | b. A further C$100 on or before March 8, 2023; and |
| | | c. A further C$600 on or before March 8, 2025. |
| | |
All exploration expenditure requirements on the properties have been met as of March 31, 2023 |
|
Under the Option Agreement, all share issuances will be based on the average volume weighted trading price of |
Silver Wolf’s shares on the TSX Venture Exchange for the ten (10) trading days immediately preceding the date |
of issuance of the shares, and the shares will be subject to resale restrictions under applicable securities |
legislation for 4 months and a day from their date of issue. |
| | |
The Option Agreement between the Company and Silver Wolf is considered a related party transaction as the |
two companies have directors in common. |
| | |
Unification La Platosa properties |
| | |
The Unification La Platosa properties, consisting of three leased concessions in addition to the leased |
concession described in note (i) above, are situated within the Avino mine area property near the towns of |
Panuco de Coronado and San Jose de Avino and surrounding the Avino Mine. |
|
In February 2012, the Company’s wholly-owned Mexican subsidiary entered into a new agreement with |
Minerales de Avino, S.A. de C.V. (“Minerales”) whereby Minerales has indirectly granted to the Company the |
exclusive right to explore and mine the La Platosa property known as the “ET zone”. The ET zone includes the |
Avino Mine, where production at levels intended by management was achieved on July 1, 2015. |
|
Under the agreement, 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. |
|
(b) La Preciosa, Mexico |
|
On March 21, 2022, the Company received approval for the closing of the acquisition of the La Preciosa |
property from Coeur Mining Inc. (“Coeur”). See Note 4 for further details |
|
(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 three months ended March 31, 2023, the Company sold to a subsidiary of Hecla Mining Company |
(“Hecla”) the Eagle Property for cash consideration of C$250. The claims were transferred on March 28, 2023, |
and subsequent to March 31, 2023, cash proceeds were received. |
| - 12 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
Minto and Olympic-Kelvin properties – British Columbia |
|
On May 2, 2022, the Company has 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”). |
|
Under the terms of the letter agreement, Endurance can earn a 100% interest in the Olympic Claims if they pay |
Avino a total cash consideration in the aggregate amount of C$100, issue up to a total of 1,500,000 common |
shares (“Shares”) of Endurance and incur exploration expenditures in the aggregate amount of C$300; all of |
which is to be incurred by December 31, 2024. In the event that Endurance earns the 100% interest, the |
Olympic Claims will be subject to a 2% net smelter return royalty (“NSR”), of which 1% NSR can be purchased |
by the Endurance for C$750 and the remaining balance of the NSR can be purchased for C$1,000. |
|
As part of the final requirement to earn its interest, Endurance agreed to grant to Avino 750,000 share purchase |
warrants (“Warrants”) by December 31, 2024, that offer Avino the option to purchase additional shares in the |
Company for a period of three years from the date of issuance. The exercise price of the Warrants will be set at |
a 25% premium to the 20-day VWAP share price at the issuance date. During the Option, if Endurance is |
successful in defining a compliant mineral resource of at least 500,000 gold-equivalent ounces on the Olympic |
Claims then Endurance will be obliged to pay Avino a C$1,000 discovery bonus. |
|
The Option agreement is subject to the TSX Venture Exchange acceptance, and any Shares or Warrants to be |
issued will be subject to a four-month hold period on issuance as per the policies of the TSX Venture Exchange. |
|
During the year ended December 31, 2022, Endurance granted 200,000 common shares and paid C$25 |
as per the terms of the agreement, which required payment upon signing of a letter agreement between |
the two parties. |
|
As of March 31, 2023, Endurance was in compliance with all terms of the Option agreement. |
|
9. NON-CONTROLLING INTEREST |
|
| | At March 31, 2023, the Company had an effective 99.67% (December 31, 2022 - 99.67%) interest in its |
| | subsidiary Avino Mexico and the remaining 0.33% (December 31, 2022 - 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 recognized in the unaudited condensed consolidated |
| | interim financial statements. |
| - 13 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted - Unaudited) |
|
10. PLANT, EQUIPMENT AND MINING PROPERTIES |
|
| | | | | | | Mine machinery |
| | | | | Office equipment, | | | and | Mill machinery | Buildings and |
| | Mining | | | furniture, and | Computer | transportation | | and processing | construction in |
| | | properties | fixtures | | equipment | equipment | | equipment | process | Total |
| | $ | | $ | | $ | | $ | | | | $ | $ | $ |
COST | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2022 | | 13,038 | | 595 | 335 | | | | | | | 14,240 | | | | 18,613 | 11,778 | 58,599 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 1,649 | | 185 | 441 | | | | | | | 2,383 | | | | 4,781 | 2,907 | 12,346 |
| | | | | | | | | | | | | | | | | Writedowns Effect of |
| | | | | | | | | | | | | | | | | movements in | | | | | | | | | | | | | | | | | | | | | (1,692) | | | | (100) | - | (1,792) |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | | - | | (17) | (2) | | | | | | | (1) | | | | - | 8 | (12) |
Balance at December 31, 2022 | | 14,687 | | 763 | 774 | | | | | | | 14,930 | | | | 23,294 | 14,693 | 69,141 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 698 | | 46 | 12 | | | | | | | 1,998 | | | | 2,429 | 62 | 5,245 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | - | | - | - | | | | | | | | | | | | | | | | | | - | - | 4 | | | | | | | 4 |
Balance at March 31, 2023 | | 15,385 | | 809 | 786 | | | | | | | 16,928 | | | | 25,723 | 14,759 | 74,390 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACCUMULATED DEPLETION |
AND DEPRECIATION | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2022 | | 8,856 | | 294 | 267 | | | | | | | 4,944 | | | | 6,667 | 1,896 | 22,924 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 250 | | 147 | 331 | | | | | | | 1,616 | | | | 146 | 1,133 | 3,623 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | - | | - | - | | | | | | | (1,382) | | | | (80) | - | (1,462) |
Balance at December 31, 2022 | | 9,106 | | 441 | 598 | | | | | | | 5,178 | | | | 6,733 | 3,029 | 25,085 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 85 | | 29 | 14 | | | | | | | 24 | | | | 475 | 70 | 697 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | - | | - | - | | | | | | | | | | | | | | | | | | - | - | - | | | | | | | - |
Balance at March 31, 2023 | | 9,191 | | 470 | 612 | | | | | | | 5,202 | | | | 7,208 | 3,099 | 25,782 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET BOOK VALUE | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At March 31, 2023 | | 6,194 | | 339 | 174 | | | | | | | 11,726 | | | | 18,515 | 11,660 | 48,608 |
At December 31, 2022 | | 5,581 | | 322 | 176 | | | | | | | 9,752 | | | | 16,561 | 11,664 | 44,056 |
At January 1, 2022 | | 4,182 | | 301 | 68 | | | | | | | 9,296 | | | | 11,946 | 9,882 | 35,675 |
| - 14 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Included in Buildings above are assets under construction of $3,966 as at March 31, 2023 (December 31, |
| | 2022 - $3,817) 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 at March 31, 2023, plant, equipment and mining properties included a net carrying amount of $4,507 |
| | (December 31, 2022 - $2,417) for mining equipment and right of use assets under finance lease and |
| | equipment loan. |
|
11. RELATED PARTY TRANSACTIONS AND BALANCES |
|
| | All related party transactions are recorded at the exchange amount which is the amount agreed to by the |
| | Company and the related party. |
|
| | (a) Key management personnel |
| | |
| | The Company has identified its directors and certain senior officers as its key management personnel. |
| | The compensation costs for key management personnel for the three months ended March 31, 2023 |
| | and 2022 is as follows: |
| | | Three months ended March 31, |
| | | | 2023 | 2022 |
| | Salaries, benefits, and consulting fees | | | | $ | 284 | | | $ | 439 |
| | Share‐based payments | | 321 | 157 |
| | | | | | $ | 605 | | | $ | 596 |
|
| | (b) Amounts due to/from related parties |
| | |
| | In the normal course of operations the Company transacts with companies related to Avino’s directors |
| | or officers. All amounts payable and receivable are non-interest bearing, unsecured and due on |
| | demand. The following table summarizes the amounts were due to related parties: |
| | |
| | | March 31, | | | | December 31, |
| | | | | | | 2023 | 2022 |
| | Oniva International Services Corp. | | | | $ | 100 | | | $ | 100 |
| | Silver Wolf Exploration Ltd. | | (77) | | | | (72) |
| | Directors Fees | | 44 | - |
| | | | | | $ | 67 | | | $ | 28 |
|
| | For services provided to the Company as President and Chief Executive Officer, the Company pays |
| | Intermark Capital Corporation (“ICC”), a company controlled by David Wolfin, the Company’s president |
| | and CEO and also a director, for consulting services. For the three months ended March 31, 2023, the |
| | Company paid $71 (March 31, 2022 - $126) 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. 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. |
|
| | | | | | | | |
| - 15 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The transactions with Oniva during the three months ended March 31, 2023 and 2022 are summarized |
| | below: |
| | |
| | | March 31, | | March 31, |
| | | | 2023 | | 2022 |
| | Salaries and benefits | | | | | $ | 245 | | | | $ | 220 |
| | Office and miscellaneous | | 133 | | 97 |
| | | | | | | $ | 378 | | | | $ | 317 |
| | |
12. NOTE PAYABLE |
| | |
| | On March 21, 2022, the Company closed the acquisition of the La Preciosa property from Coeur Mining |
| | Inc. (see Note 4 for further details). As part of the agreement, the Company issued a promissory note |
| | payable of $5 million due on or before March 21, 2023. The present value of $4,665 of the note payable |
| | was calculated using a discount interest rate of 6.71%. |
| | |
| | Prior to March 21, 2023, the Company repaid the promissory note payable in full. |
|
| | The continuity of the note payable is as follows: |
| | |
| | | | | | | March 31, | December 31, |
| | | | | | | | | | 2023 | | 2022 |
| | Balance at beginning of the period | | | | | | | | $ | 4,926 | | | | | $ | - |
| | Additions | | | | | | | | | - | | | | | | 4,665 |
| | Repayments | | | | | | | | | (5,000) | | | | | | - |
| | Unwinding of fair value adjustment | | | | | | | | | 74 | | | | | | 261 |
| | Balance at end of the period | | | | | | | | | - | | | | | | 4,926 |
| | Less: Current portion | | | | | | | | | - | | | | | | (4,926) |
| | Non-current portion | | | | | | | | $ | - | | | | | $ | - |
|
| | | | | | | | | |
| - 16 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
13. WARRANT LIABILITY |
|
| | The Company’s warrant liability arises as a result of the issuance of warrants exercisable in US dollars. As |
| | the denomination is different from the Canadian dollar functional currency of the entity issuing the |
| | underlying shares, the Company recognizes a derivative liability for these warrants and re-measures the |
| | liability at the end of each reporting period using the Black-Scholes model. Changes in respect of the |
| | Company’s warrant liability are as follows: |
| | |
| | | | March 31, | | December 31, |
| | | | | 2023 | | 2022 |
| | Balance at beginning of the period | | $ | 475 | $ | 741 |
| | Warrants issued | | | - | | 2,240 |
| | Fair value adjustment | | | 293 | | (2,935) |
| | Effect of movement in exchange rates | | | 3 | | (111) |
| | Balance at end of the period | | $ | 771 | $ | 475 |
| | |
| | Continuity of warrants during the periods is as follows: |
| | | | | | | | Underlying | Weighted Average |
| | | | | | | | Shares | Exercise Price |
| | Warrants outstanding and exercisable, January 1, 2022 | | | | | | 1,950,412 | $0.80 |
| | Granted | | | | | | 7,000,000 | $1.09 |
| | Warrants outstanding and exercisable, December 31, 2022, |
| | and March 31, 2023 | | | | | | 8,950,412 | $1.03 |
| | |
| | | | | | All Warrants |
| | | | | | | | | Outstanding and Exercisable |
| | | | | | | | | Exercise Price | March 31, | | December 31, |
| | Expiry Date | | | | | | | per Share | 2023 | | 2022 |
| | September 21, 2023 | | | | | | | | $1.09 | 7,000,000 | | 7,000,000 |
| | September 25, 2023 | | | | | | | | $0.80 | 1,950,412 | | 1,950,412 |
| | | | | | | | | 8,950,412 | | 8,950,412 |
| | |
| | As at March 31, 2023, the weighted average remaining contractual life of warrants outstanding was 0.48 |
| | years (December 31, 2022 – 0.73 years). |
|
| | Valuation of the warrant liability requires the use of highly subjective estimates and assumptions including |
| | the expected stock price volatility. The expected volatility used in valuing warrants is based on volatility |
| | observed in historical periods. Changes in the underlying assumptions can materially affect the fair value |
| | estimates. The fair value of the warrant liability was calculated using the Black-Scholes model with the |
| | following weighted average assumptions and resulting fair values: |
| | |
| | | | March 31, | | December 31, |
| | | | 2023 | | | 2022 |
| | Weighted average assumptions: | | | | | | | | | |
| | Risk-free interest rate | | 3.78% | | | 4.07% |
| | Expected dividend yield | | | 0% | | 0% |
| | Expected warrant life (years) | | 0.48 | | | 0.73 |
| | Expected stock price volatility | | 49.96% | | | 56.80% |
| | Weighted average fair value | | $0.09 | | | $0.05 |
|
14. RECLAMATION PROVISION |
| | |
| | Management’s estimate of the reclamation provision at March 31, 2023, is $505 (December 31, 2022 – |
| | $445), and the undiscounted value of the obligation is $1,598 (December 31, 2022 – $1,454). |
| | |
| - 17 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The present value of the obligation was calculated using a risk-free interest rate of 9.09% (December 31, |
| | 2022 – 9.65%) and an annual inflation rate of 6.04% (December 31, 2022 – 7.82%). Reclamation activities |
| | are estimated to begin in 2025 for the San Gonzalo Mine and in 2041 for the Avino Mine. |
| | |
| | A reconciliation of the changes in the Company’s reclamation provision is as follows: |
|
| | | | March 31, | | December 31, |
| | | | | 2023 | | 2022 |
| | | | | | | | | | | | |
| | Balance at beginning of the period | | | | | | | | $ | 445 $ | | 726 |
| | Changes in estimates | | | - | | (364) |
| | Unwinding of discount related to continuing operations | | | 11 | | 44 |
| | Effect of movements in exchange rates | | | 49 | | 39 |
| | Balance at end of the period | | | | | | | | $ | 505 $ | | 445 |
|
15. SHARE CAPITAL AND SHARE-BASED PAYMENTS |
|
| | (a) Authorized: Unlimited common shares without par value. |
|
| | (b) Issued: |
| | |
| | (i) During the three months ended March 31, 2023, the Company issued 253,700 common shares in an |
| | | | | | | | at-the-market offering under prospectus supplement for gross proceeds of $207. The Company paid |
| | | | | | | | a 2.75% cash commission of $5 on gross proceeds, for net proceeds of $202. |
| | |
| | | | | | | | During the three months ended March 31, 2023, the Company issued 592,667 common shares upon |
| | | | | | | | exercise of RSUs. As a result, $512 was recorded to share capital. |
| | |
| | (ii) During the year ended December 31, 2022, the Company issued 14,000,000 common shares as part |
| | | | | | | | of the acquisition of La Preciosa from Coeur Mining Inc.. As a result, $13,650 was recorded to share |
| | | | | | | | capital, and exploration and evaluation assets as acquisition costs, representing the closing price on |
| | | | | | | | the Toronto Stock Exchange on March 21, 2022, the date of the issuance and closing. |
| | | | | | | | |
| | | | | | | | The Company further issued 1,075,000 common shares as payment for services provided during the |
| | | | | | | | acquisition, and as a result $980 was recorded to share capital and exploration and evaluation |
| | | | | | | | assets as acquisition costs. |
| | | | | | | | |
| | | | | | | | During the year ended December 31, 2022, the Company issued 48,000 common shares following |
| | | | | | | | the exercise of 48,000 options. As a result, $46 was recorded to share capital, representing cash |
| | | | | | | | proceeds of $31 and the fair value upon issuance of $15. |
| | | | | | | | |
| | | | | | | | During the year ended December 31, 2022, the Company issued 982,879 common shares upon |
| | | | | | | | exercise of RSUs. As a result, $899 was recorded to share capital. |
| | | | | | | | |
| | (c) Stock options: |
|
| | The Company has a stock option plan to purchase the Company’s common shares, under which it may |
| | grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a |
| | non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, |
| | and employees, and to persons providing investor relations or consulting services, the limits being |
| | based on the Company’s total number of issued and outstanding shares per year. The stock options |
| | vest on the date of grant, except for those issued to persons providing investor relations services, which |
| | vest over a period of one year. The option price must be greater than or equal to the discounted market |
| | price on the grant date, and the option term cannot exceed ten years from the grant date. |
| | |
| | | | | | | | | | | |
| - 18 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Continuity of stock options is as follows: |
|
| | | | Underlying | Weighted Average |
| | | | Shares | Exercise Price (C$) |
| | | | | | | |
Stock options outstanding, January 1, 2022 | | | 2,839,000 | | | | | $1.68 |
| | Granted | 2,390,000 | | | | | $1.20 |
| | Exercised | | (48,000) | | | | $0.79 |
| | Expired | | (880,000) | | | | $1.98 |
| | Cancelled / Forfeited | | (45,000) | | | | $1.40 |
Stock options outstanding, December 31, 2022 | | | | 4,256,000 | | | | $1.36 |
| | Granted | | 2,395,000 | | | | $1.12 |
Stock options outstanding, March 31, 2023 | | | | 6,651,000 | | | | $1.27 |
Stock options exercisable, March 31, 2023 | | | | 4,249,750 | | | | $1.36 |
|
| | The following table summarizes information about the stock options outstanding and exercisable at |
| | March 31, 2023: |
|
| | | | | | | | | | | Outstanding | | | | | Exercisable |
| | | | | | | | | | | | | | Weighted | Weighted |
| | | | | | | | | | | | | | Average | Average |
| | | | | | | | | | | | | | Remaining | Remaining |
| | | | | | | | | | | | | Number of | Contractual | Number of | Contractual Life |
| Expiry Date | | | | | | | | | | | Price (C$) | | Options | Life (Years) | Options | | (Years) |
August 28, 2023 | | | | | | | | | $1.30 | | | | 105,000 | 0.41 | | | 105,000 | 1.41 |
August 21, 2024 | | | | | | | | | $0.79 | | | | 126,000 | 1.39 | | | 126,000 | 2.39 |
August 4, 2025 | | | | | | | | | $1.64 | | | | 1,660,000 | 2.35 | | | 1,660,000 | 3.35 |
March 25, 2027 | | | | | | | | | $1.20 | | | | 2,340,000 | 3.99 | | | 2,340,000 | 3.99 |
May 4, 2027 | | | | | | | | | $0.92 | | | | 25,000 | 4.10 | | | 18,750 | 4.10 |
March 29, 2028 | | | | | | | | | $1.12 | | | | 2,395,000 | 5.00 | | - | | 4.99 |
| | | | | | | | | | | | | | | | 6,651,000 | 3.84 | | | 4,249,750 | 3.18 |
|
| | Valuation of stock options requires the use of highly subjective estimates and assumptions including the |
| | expected stock price volatility. The expected volatility used in valuing stock options is based on volatility |
| | observed in historical periods. Changes in the underlying assumptions can materially affect the fair value |
| | estimates. The fair value of the stock options was calculated using the Black-Scholes model with the |
| | following weighted average assumptions and resulting fair values: |
| | |
| | | | | | March 31, | December 31, |
| | | | | | 2023 | | 2022 |
| | Weighted average assumptions: | | | | | |
| | Risk-free interest rate | | | | 3.05% | | 2.49% |
| | Expected dividend yield | | | 0% | | 0.0% |
| | Expected option life (years) | | | | 5.00 | | 5.00 |
| | Expected stock price volatility | | | | 61.05% | | 59.98% |
| | Expected forfeiture rate | | | | 17% | 20% |
| | Weighted average fair value | | | | $0.61 | | $0.63 |
| | |
| | During the three months ended March 31, 2023, the Company charged $62 (three months ended March |
| | 31, 2022 - $32) to operations as share-based payments for the fair value of stock options granted. | | | | | | |
|
|
| - 19 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
(d) Restricted Share Units: |
|
| | On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its |
| | shareholders. The RSU Plan is administered by the Compensation Committee under the supervision of |
| | the Board of Directors as compensation to officers, directors, consultants, and employees. The |
| | Compensation Committee determines the terms and conditions upon which a grant is made, including |
| | any performance criteria or vesting period. |
| | |
| | Upon vesting, each RSU entitles the participant to receive one common share, provided that the |
| | participant is continuously employed with or providing services to the Company. RSUs track the value of |
| | the underlying common shares, but do not entitle the recipient to the underlying common shares until |
| | such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to |
| | ownership or control of the common shares, until the RSU vests and the RSU participant receives |
| | common shares. |
| | |
| | Continuity of RSUs is as follows: |
| | | | Underlying | Weighted Average |
| | | | Shares | | Price (C$) |
| | | | | | | | |
RSUs outstanding, January 1, 2022 | | | | 1,439,477 | | $1.32 |
| | Granted | 1,799,000 | | | | | 1.19 |
| | Exercised | | (982,879) | | $1.18 |
| | Cancelled / Forfeited | | (64,932) | | $1.40 |
RSUs outstanding, December 31, 2022 | | | | 2,190,666 | | $1.27 |
| | Granted | | 1,809,000 | | $1.12 |
| | Exercised | | (592,667) | | $1.19 |
RSUs outstanding, March 31, 2023 | | | | 3,406,999 | | $1.21 |
| | |
| | The following table summarizes information about the RSUs outstanding at March 31, 2023: |
|
| | Issuance Date | | | | | | | | Price (C$) | | Number of RSUs Outstanding |
| | August 4, 2020 | $1.64 | | | | | 412,666 |
| | March 25, 2022 | $1.19 | | | | | 1,185,333 |
| | March 29, 2023 | $1.12 | | | | | 1,809,000 |
| | | | | | | | | | | | | | | | 3,238,477 |
| | |
| | During the three months ended March 31, 2023, 1,809,000 RSUs (year ended December 31, 2022, |
| | 1,799,000) were granted. The weighted average fair value at the measurement date was C$1.12 |
| | (December 31, 2022 – C$1.19), based on the TSX market price of the Company’s shares on the date |
| | the RSUs were granted. |
| | |
| | During the three months ended March 31, 2023, the Company charged $277 (March 31, 2022 - $168) 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. |
|
| | | | | | | | | | | | |
| - 20 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
(e) Earnings (loss) per share: |
|
| | The calculations for basic earnings (loss) per share and diluted earnings (loss) per share are as follows: |
|
| | | Three months ended March 31, |
| | | | 2023 | 2022 |
| | Net income (loss) for the period | | | | $ (352) $ 646 |
| | | | | | | |
| | Basic weighted average number of shares outstanding | 118,572,700 | | | | | 103,819,481 |
| | Effect of dilutive share options, warrants, and RSUs | 4,030,229 | | 3,415,476 |
| | Diluted weighted average number of shares outstanding 122,602,929 107,234,957 |
| | Basic loss per share | | | | $ (0.00) $ | | 0.01 |
| | Diluted loss per share | | | | $ (0.00) $ | | 0.01 |
|
16. REVENUE AND COST OF SALES |
|
| | The Company’s revenues for the three months ended March 31, 2023 and 2022, are all attributable to |
| | Mexico, from shipments of concentrate from the Avino Mine. |
| | | March 31, | | | | | March 31, |
| | | | 2023 | 2022 |
| | Concentrate sales | | | | $ | 9,992 | | | | | $ | 9,789 |
| | Provisional pricing adjustments | | | | (167) 1,261 |
| | | | | | $ | 9,825 | | | | | $ | 11,050 |
|
| | Cost of sales consists of changes in inventories, direct costs including personnel costs, mine site costs, |
| | energy costs (principally diesel fuel and electricity), maintenance and repair costs, operating supplies, |
| | external services, third party transport fees, depreciation and depletion, and other expenses for the periods. |
| | Direct costs include the costs of extracting co-products. |
| | |
| | Cost of sales is based on the weighted average cost of inventory sold for the periods and consists of the |
| | following: |
| | | March 31, | | | | | March 31, |
| | | | 2023 | 2022 |
| | Production costs | | | | $ | 7,304 | | | | | $ | 5,847 |
| | Depreciation and depletion | | 670 | 459 |
| | | | | | $ | 7,974 | | | | | $ | 6,306 |
|
17. GENERAL AND ADMINISTRATIVE EXPENSES |
|
| | General and administrative expenses on the condensed consolidated interim statements of operations |
| | consist of the following: |
| | | March 31, | | | | | March 31, |
| | | | 2023 | 2022 |
| | Salaries and benefits | | | | $ | 395 | | | | $ | 438 |
| | Professional fees | | 239 | 208 |
| | Office and miscellaneous | | 192 | 174 |
| | Management and consulting fees | | 106 | 116 |
| | Investor relations | | 81 | 52 |
| | Travel and promotion | | 54 | 10 |
| | Directors fees | | 44 | 41 |
| | Regulatory and compliance fees | | 38 | 47 |
| | Depreciation | | 35 | 30 |
| | | | | | $ | 1,184 | | | | $ | 1,116 |
| - 21 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
18. COMMITMENTS |
|
The Company has a cost sharing agreement to reimburse Oniva for a percentage of its overhead expenses, |
to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a |
percentage fee based on Oniva’s total overhead and corporate expenses. The agreement may be |
terminated with one-month notice by either party. Transactions and balances with Oniva are disclosed in |
Note 11. |
|
The Company and its subsidiaries have various operating lease agreements for their office premises, use of |
land, and equipment. Commitments in respect of these lease agreements are as follows: |
| | |
| | | March 31, | | December 31, |
| | | | 2023 | | 2022 |
| | Not later than one year | | | | | $ | 103 $ | | 105 |
| | Later than one year and not later than five years | | 347 | | 347 |
| | Later than five years | | 375 | | 398 |
| | | | | | | $ | 825 $ | | 850 |
| | |
Office lease payments recognized as an expense during the three months ended March 31, 2023, totalled |
$4 (March 31, 2022 - $16). |
|
19. SUPPLEMENTARY CASH FLOW INFORMATION |
|
| | | | March 31, | | March 31, |
| | | | | 2023 | 2022 |
| | Net change in non-cash working capital items: | | | |
| | Inventory | $ | (1,419) $ | | 339 |
| | Prepaid expenses and other assets | (18) | | | (327) |
| | Taxes recoverable | (625) | | | 210 |
| | Taxes payable | (867) | | | (28) |
| | Accounts payable and accrued liabilities | 1,466 (1,013) |
| | Amounts receivable | 843 | | | (1,394) |
| | Amounts due to related parties | 39 | | | (15) |
| | | $ (582) $ (202) |
|
| | | | March 31, | | March 31, |
| | | | | 2023 | 2022 |
| | Other non-cash supplementary information: | | | | | | |
| | Interest paid | $ | | 42 $ | | | 20 |
| | Taxes paid | | | 5 | | | - |
| | | $ | | 47 $ | | | 20 |
| | | | | |
| | | | March 31, | | March 31, |
| | | | | 2023 | 2022 |
| | Non-cash investing and financing activities: | | | |
| | Acquisition of La Preciosa, net of cash & transaction costs | $ | | - $ | 21,535 |
| | Shares acquired under terms of option agreements | | | 41 | | | 31 |
| | Transfer of share-based payments reserve upon exercise of RSUs | | | 512 | | | - |
| | Transfer of share-based payments reserve upon option exercise | | | - | | | 15 |
| | Equipment acquired under finance leases and equipment loans | | | 1,808 | 1,101 |
| | | $ | | 2,361 $ | 22,682 |
| | |
| - 22 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
20. FINANCIAL INSTRUMENTS |
|
| | The fair values of the Company’s amounts due to related parties and accounts payable approximate their |
| | carrying values because of the short-term nature of these instruments. Cash, amounts receivable, long- |
| | term investments, and warrant liability are recorded at fair value. The carrying amounts of the Company’s |
| | term facility, equipment loans, and finance lease obligations are a reasonable approximation of their fair |
| | values based on current market rates for similar financial instruments. |
| | |
| | The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity |
| | risk, and market risk. |
|
| | (a) Credit Risk |
| | |
| | Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party |
| | by failing to discharge an obligation. The Company has exposure to credit risk through its cash, long- |
| | term investments and amounts receivable. The Company manages credit risk, in respect of cash and |
| | short-term investments, by maintaining the majority of cash and short-term investments at highly rated |
| | financial institutions. |
| | |
| | The Company is exposed to a significant concentration of credit risk with respect to its trade accounts |
| | receivable balance because all of its concentrate sales are with two (December 31, 2022 – two) |
| | counterparty (see Note 21). However, the Company has not recorded any allowance against its trade |
| | receivables because to-date all balances owed have been settled in full when due (typically within 60 |
| | days of submission) and because of the nature of the counterparties. |
| | |
| | The Company’s maximum exposure to credit risk at the end of any period is equal to the carrying |
| | amount of these financial assets as recorded in the unaudited condensed consolidated interim |
| | statement of financial position. At March 31, 2023 and December 31, 2022, no amounts were held as |
| | collateral. |
|
| | (b) Liquidity Risk |
|
| | Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as |
| | they become due. The Company manages its liquidity risk by forecasting cash flows required by its |
| | operating, investing and financing activities. The Company had cash at March 31, 2023, in the amount |
| | of $2,697 and working capital of $5,109 in order to meet short-term business requirements. Accounts |
| | payable have contractual maturities of approximately 30 to 90 days, or are due on demand and are |
| | subject to normal trade terms. The current portions of note payable and finance lease obligations are |
| | due within 12 months of the condensed consolidated interim statement of financial position date. |
| | Amounts due to related parties are without stated terms of interest or repayment. |
| | |
| | The maturity profiles of the Company’s contractual obligations and commitments as at March 31, 2023, |
| | are summarized as follows: |
| | | Less Than | | More Than 5 |
| | | Total | | 1 Year | 1-5 years | | Years |
| | Accounts payable and |
| | accrued liabilities | | | | | $ 10,922 | $ 10,922 | $ - | $ - |
| | Amounts due to related |
| | parties | 67 | | | | | | | 67 | - | - |
| | Minimum rental and lease |
| | payments | 849 | | | | | | | 105 | 346 | 398 |
| | Equipment Loans | 481 | | | | | | | 165 | 316 | - |
| | Finance lease obligations | 2,925 | | 1,523 | 1,402 | | - |
| | Total | | | | | $ 15,244 | $ 12,782 | $ 2,064 | $ 398 |
|
| | (c) Market Risk |
|
| - 23 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Market risk consists of interest rate risk, foreign currency risk and price risk. These are discussed further |
| | below. |
|
| | Interest Rate Risk Interest rate risk consists of two components: (i) To the extent that payments made or received on the Company’s monetary assets and liabilities are |
| | affected by changes in the prevailing market interest rates, the Company is exposed to interest rate |
| | cash flow risk. |
| | (ii) To the extent that changes in prevailing market rates differ from the interest rates on the Company’s |
| | monetary assets and liabilities, the Company is exposed to interest rate price risk. |
| | |
| | In management’s opinion, the Company is exposed to interest rate risk primarily on its outstanding term |
| | facility, as the interest rate is subject to floating rates of interest. A 10% change in the interest rate |
| | would not a result in a material impact on the Company’s operations. |
| | |
| | Foreign Currency Risk |
| | |
| | Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will |
| | fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to |
| | the extent that the following monetary assets and liabilities are denominated in Mexican pesos and |
| | Canadian dollars: |
| | |
| | | March 31, 2023 | December 31, 2022 |
| | | MXN | | CDN | MXN | | CDN |
| | Cash | | | | | $ | 5,063 $ | | | | | 219 $ | 4,097 $ | | | | | 250 |
| | Due from related parties | 1,402 | | | | | - 1,402 | - |
| | Long-term investments | - | | | | 1,984 | | | | | - | 2,365 |
| | Reclamation bonds | - | | | | | | | 6 | | - | 4 |
| | Amounts receivable | 1,549 | | | | | 302 | | - | 34 |
| | Accounts payable and |
| | accrued liabilities | (76,052) | | | | | (54) | (85,486) | | | | | (108) |
| | Due to related parties | - | | | | | | | (195) | | - | (135) |
| | Finance lease obligations | (880) | | | | | (331) | (161) | | | | | (343) |
| | Net exposure | (68,918) | | 1,931 | (80,148) | | 2,067 |
| | US dollar equivalent | | | | | $ | (3,811) $ | | 1,426 $ | (4,136) $ | | 1,526 |
| | |
| | Based on the net US dollar denominated asset and liability exposures as at March 31, 2023, a 10% |
| | fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings |
| | for the three months ended March 31, 2023, by approximately $251 (year ended December 31, 2022 - |
| | $275). The Company has not entered into any foreign currency contracts to mitigate this risk. |
| | |
| | Price Risk |
| | |
| | Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to |
| | changes in market prices, other than those arising from interest rate risk or foreign currency risk. |
| | |
| | The Company is exposed to price risk with respect to its amounts receivable, as certain trade accounts |
| | receivable are recorded based on provisional terms that are subsequently adjusted according to quoted |
| | metal prices at the date of final settlement. Quoted metal prices are affected by numerous factors |
| | beyond the Company’s control and are subject to volatility, and the Company does not employ hedging |
| | strategies to limit its exposure to price risk. At March 31, 2023, 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 $17 (December 31, 2022 - $65). |
| - 24 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The Company is exposed to price risk with respect to its long-term investments, as these investments |
| | are carried at fair value based on quoted market prices. Changes in market prices result in gains or |
| | losses being recognized in net income (loss). At March 31, 2023, a 10% change in market prices would |
| | have an impact on net earnings (loss) of approximately $143 (December 31, 2022 - $175). |
| | |
| | The Company’s profitability and ability to raise capital to fund exploration, evaluation and production |
| | activities is subject to risks associated with fluctuations in mineral prices. Management closely monitors |
| | commodity prices, individual equity movements, and the stock market to determine the appropriate |
| | course of action to be taken by the Company. |
| | |
| | (d) Classification of Financial Instruments |
|
| | IFRS 7 Financial Instruments: Disclosures establishes a fair value hierarchy that prioritizes the inputs to |
| | valuation techniques used to measure fair value as follows: |
| | |
| | Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| | Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, |
| | either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
| | Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable |
| | inputs). |
| | |
| | The following table sets forth the Company’s financial assets and financial liabilities measured at fair |
| | value on a recurring basis by level within the fair value hierarchy as at March 31, 2023: |
| | |
| | | Level 1 | Level 2 | Level 3 |
| | Financial assets | | | | | | |
| | Cash | $ | | 2,697 $ | | | | - $ | - |
| | Amounts receivable | | | | | | - | 2,015 | | | | - |
| | Long-term investments | | | 1,466 | | | | - | - |
| | Total financial assets | $ 4,163 $ 2,015 $ | | | | | | | - |
| | Financial liabilities | | | | | | | | |
| | Warrant liability | | | | | | - | - | (771) |
| | Total financial liabilities | $ - $ | | | | | | - $ | (771) |
|
| | | | | | | | | |
| - 25 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at March 31, |
| | 2023, the Company’s Level 3 financial instruments consisted of the warrant liability. |
| | |
| | For the Company’s warrant liability valuation and fair value adjustments during the three months ended |
| | March 31, 2023 and the year ended December 31, 2022, see Note 13. |
| | |
21. SEGMENTED INFORMATION |
|
| | The Company reviews its segment reporting to ensure it reflects the operational structure of the Company |
| | and enables the Company's Chief Operating Decision Maker (the Company’s CEO) to review operating |
| | segment performance. We have determined that each producing mine represents an operating segment, of |
| | which there is one as of March 31, 2023. |
| | |
| | The Company’s revenues for the three months ended March 31, 2023 of $9,825 (March 31, 2022 - |
| | $11,050) are all attributable to Mexico, from shipments of concentrate produced by the Avino Mine. |
| | |
| | On the condensed consolidated interim statements of operations, the Company had revenue from the |
| | following product mixes: |
| | |
| | | March 31, | | March 31, |
| | | | 2023 | | 2022 |
| | | | | | | | |
| | Silver | | | | | | | $ 3,608 | $ 3,896 |
| | Gold | | | | | | | | | 3,135 2,442 |
| | Copper | | | | | | | | | 4,689 7,053 |
| | Penalties, treatment costs and refining charges | | | | | | | | | (1,607) (2,344) |
| | | | | | | | |
| | Total revenue from mining operations | | | | | | | $ 9,825 | $ 11,050 |
| | | | | | | | |
| | |
| | For the three months ended March 31, 2023, the Company had two customers (March 31, 2022 – four |
| | customer) that accounted for total revenues as follows: |
|
| | | March 31, | | March 31, |
| | | | 2023 | | 2022 |
| | | | | | | | |
| | Customer #1 | | | | | | | $ | 9,225 | | | | | | | $ | 8,985 |
| | Customer #2 | | 600 | | - |
| | Other customers | | - | 2,065 |
| | | | | | | | |
| | Total revenue from mining operations | | | | | | | $ | 9,825 | | | | | | | $ | 11,050 |
| | | | | | | | |
| | |
| | | | | | | | | | | | |
| - 26 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2023 and 2022 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Geographical information relating to the Company’s non-current assets (other than financial instruments) is |
| | as follows: |
|
| | | | March 31, | | December 31, |
| | | | | 2023 | | 2022 |
| | Exploration and evaluation assets - Mexico | | | | | | $ | 50,093 | | $ | 49,803 |
| | Exploration and evaluation assets - Canada | | | 1 | | 1 |
| | Total exploration and evaluation assets | | | | | | $ | 50,094 | | $ | 49,804 |
|
| | | | March 31, | | December 31, |
| | | | | 2023 | | 2022 |
| | Plant, equipment, and mining properties - Mexico | | | | | | $ | 48,368 | | $ | 43,812 |
| | Plant, equipment, and mining properties - Canada | | | 240 | | 244 |
| | Total plant, equipment, and mining properties | | | | | | $ | 48,608 | | $ | 44,056 |
|
| | |
| - 27 - |