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| MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING |
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The condensed consolidated interim financial statements of Avino Silver & Gold Mines Ltd. (the “Company”) are |
the responsibility of the Company’s management. The condensed consolidated interim financial statements are |
prepared in accordance with International Financial Reporting Standards as issued by the International |
Accounting Standards Board, and reflect management’s best estimates and judgments based on information |
currently available. |
|
Management has developed and is maintaining a system of internal controls to ensure that the Company’s |
assets are safeguarded, transactions are authorized and properly recorded, and financial information is reliable. |
|
The Board of Directors is responsible for ensuring that management fulfills its responsibilities. The Audit |
Committee reviews the results of the annual audit and reviews the condensed consolidated interim financial |
statements prior to their submission to the Board of Directors for approval. |
|
The condensed consolidated interim financial statements as at March 31, 2021, and for the periods ended |
March 31, 2021 and 2020, have not been audited by the Company’s independent auditors. |
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“David Wolfin” | | | | | | | | | | | | | | | | “Nathan Harte” |
| | | | | | | | | | | |
David Wolfin | | | | | | | | | | | | Nathan Harte, CPA |
President & CEO | | | | | | | | | | | | Chief Financial Officer |
May 12, 2021 | | | | | | | | | | | | May 12, 2021 | | |
| | |
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AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Financial Position |
(Expressed in thousands of US dollars) |
|
| | | | March 31, 2021 | | December 31, |
| | | Note | | (unaudited) | | 2020 |
| | | | | | | | | |
ASSETS | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | | |
Cash | | | | | | | | | | | $ | | | | | | 27,030 | $ | 11,713 |
Amounts receivable | | | | | | | | | | | | | | | | | 668 | | 529 |
Taxes recoverable | | | 4 | | | | | | | 5,196 | | 5,044 |
Prepaid expenses and other assets | | | | | | | | | | | | | | | | | 832 | | 757 |
Inventory | | | 5 | | | | | | | 1,734 | | 1,659 |
Total current assets | | | | | | | | | | | | | | | | | 35,460 | | 19,702 |
Exploration and evaluation assets | | | 7 | | | | | | | 10,270 | | 10,052 |
Plant, equipment and mining properties | | | 9 | | | | | | | 34,539 | | 34,846 |
Long-term investments | | | 6 | | | | | | | 4,277 | | 4,176 |
Other assets | | | | | | | | | | | | | | | | 4 | | 4 |
Total assets | | | | | | | | | | | $ | | | | | | 84,550 | $ | 68,780 |
| | | | | | | | | | | |
LIABILITIES | | | | | | | | |
Current liabilities | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities | | | | | | | | | | | $ | | | | | | 2,262 | $ | 2,068 |
Amounts due to related parties | | | 10(b) | | | | | | | 150 | | 154 |
Taxes payable | | | | | | | | | | | | | | | | - | | 7 |
Current portion of term facility | | | 11 | | | | | | | 1,673 | | 2,513 |
Current portion of equipment loans | | | | | | | | | | | | | | | | | 18 | | 72 |
Current portion of finance lease obligations | | | | | | | | | | | | | | | | | 137 | | 208 |
Total current liabilities | | | | | | | | | | | | | | | | | 4,240 | | 5,022 |
Finance lease obligations | | | | | | | | | | | | | | | | | 262 | | 278 |
Warrant liability | | | 12 | | | | | | | 1,530 | | 2,295 |
Reclamation provision | | | 13 | | | | | | | 791 | | 808 |
Deferred income tax liabilities | | | | | | | | | | | | | | | | | 931 | | 1,369 |
Total liabilities | | | | | | | | | | | | | | | | | 7,754 | | 9,772 |
| | | | | | |
EQUITY | | | | | | | | |
Share capital | | | 14 | | 127,325 | | 108,303 |
Equity reserves | | | | | | | | | | | | | | | | | 10,441 | | 9,951 |
Treasury shares (14,180 shares, at cost) | | | | | | | | | | | | | | | | | (97) | | (97) |
Accumulated other comprehensive loss | | | | | | | | | | | | | | | | | (4,716) | | (4,810) |
Accumulated deficit | | | | | | | | | | | | (56,157) | | (54,339) |
Total equity | | | | | | | | | | | | | | | | | 76,796 | | 59,008 |
Total liabilities and equity | | | | | | | | | | | $ | | | | | | 84,550 | $ | 68,780 |
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Commitments – Note 17 |
|
Subsequent Events – Note 21 |
|
Approved by the Board of Directors on May 12, 2021: |
| Gary Robertson 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 Loss |
(Expressed in thousands of US dollars, except per share amounts - Unaudited) |
INCOME STATEMENT |
| | | | Three months ended March 31, |
| | | Note | | | 2021 | 2020 |
Revenue from mining operations | | | 15 | | | | $ | 29 | | | $ | 7,116 |
Cost of sales | | | 15 | | 709 | | | | 6,273 |
Mine operating income (loss) | | | | | (680) | | | | 843 |
| | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | |
General and administrative expenses | | | 16 | | 934 | | | | 808 |
Share-based payments | | | 14 | | 616 | | | | 168 |
Loss before other items | | | | | (2,230) | | | | (133) |
| | | | | | | | | | | |
Other items: | | | | | | | | | | | |
Interest and other income | | | | | 22 | | | | 173 |
Loss on long-term investments | | | | | | | | | | | | | (68) | | | | (293) |
Fair value adjustment on warrant liability | | | 12 | | 788 | | | | 919 |
Realized loss on warrants exercised | | | | | (1,005) | | | | - |
Unrealized foreign exchange gain (loss) | | | | | 283 | | | | (770) |
Finance cost | | | | | (21) | | | | (87) |
Accretion of reclamation provision | | | 13 | | (11) | | | | (27) |
Interest expense | | | | | (2) | | | | (10) |
Loss from continuing operations before income taxes | | | | | (2,244) | | | | (228) |
| | | | | | | | | | | |
Income taxes: | | | | | | | | | | | |
Current income tax expense | | | | | (12) | | | | (51) |
Deferred income tax recovery | | | | | 438 | | | | 47 |
Income tax recovery (expense) | | | | | 426 | | | | (4) |
Net loss | | | | | (1,818) | | | | (232) |
| | | | | | | | | | | |
Other comprehensive income (loss): | | | | | | | | | | | |
Currency translation differences | | | | | 94 | | | | (898) |
Total comprehensive loss | | | | | | | $ | (1,724) | | | $ | (1,130) |
Loss per share | | | 14(e) | | | | | | | |
Basic | | | | | | | $ | (0.02) | | | $ | (0.00) |
Diluted | | | | | | | $ | (0.02) | | | $ | (0.00) |
Weighted average number of common |
shares outstanding | | | 14(e) | | | | | | | |
Basic | | | | 96,204,148 | | | | | | | | 77,267,533 |
Diluted | | | | 96,204,148 | | | | | | | | 77,267,533 |
| 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 | | 2021 | 2020 |
| | | | | | | | |
Cash generated by (used in): | | | | | | | | |
| | | | | | | | |
Operating Activities | | | | | | | | |
Net loss | | | | $ (1,818) | | | | | $ (232) |
Adjustments for non-cash items: | | | | | | | | |
Deferred income tax recovery | | | | (438) (47) |
Depreciation and depletion | | | | 492 | | | 649 |
Accretion of reclamation provision | | | | 11 | | | 27 |
Loss on investments | | | | 68 | | | 293 |
Unrealized foreign exchange loss (gain) | | | | (234) 375 |
Unwinding of fair value adjustment | | | | (7) (17) |
Fair value adjustment on warrant liability | | | | (788) (919) |
Realized loss on warrants exercised | | | | 1,005 | | - |
Share-based payments | | | | 616 | | | 168 |
| | | | | | | | |
| | | | (1,093) 297 |
| | | | | | | | |
Net change in non-cash working capital items | | | 18 | (152) (870) |
| | | | | | | | |
| | | | (1,245) (573) |
| | | | | | | | |
| | | | | | | | |
Financing Activities | | | | | | | | |
Shares and units issued for cash, net of issuance costs | | | | 17,892 | | (84) |
Term facility payments | | | | (833) | | (833) |
Finance lease payments | | | | | (91) | (310) |
Equipment loan payments | | | | | (54) | (54) |
| | | | | | | | |
| | | | 16,914 | | (1,281) |
| | | | | | | | |
Investing Activities | | | | | | | | |
Exploration and evaluation expenditures | | | | | (219) | (64) |
Additions to plant, equipment and mining properties | | | | | (185) | (399) |
Proceeds from sale of long-term investments | | | | - | | | 1,255 |
Purchase of long-term investments | | | | - | | (1,177) |
| | | | | | | | |
| | | | | (404) | (385) |
| | | | | | | | |
Change in cash | | | | | 15,265 | (2,239) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | | | 52 | (688) |
| | | | | | | | |
Cash, Beginning | | | | | 11,713 | 9,625 |
| | | | | | | | |
Cash, Ending | | | | $ 27,030 | | | | | $ 6,698 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | |
| Supplementary Cash Flow Information (Note 18) |
|
| 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, 2021 and 2020 |
(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 and the United States, and trades on the Toronto |
| | Stock Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges. The Company owns interests in mineral properties located in Durango, Mexico, as well as in British |
| | Columbia and the Yukon, Canada. On October 1, 2012, the Company commenced production of silver and |
| | gold at levels intended by management at its San Gonzalo Mine, and on July 1, 2015, the Company |
| | commenced production of copper, silver, and gold at levels intended by management at its Avino Mine; both |
| | mines are located on the historic Avino property in the state of Durango, Mexico. |
|
| | Risks associated with Public Health Crises, including COVID-19 |
| | |
| | The Company's business, operations and financial condition could be materially adversely affected by the |
| | outbreak of epidemics, pandemics or other health crises, such as the outbreak of COVID-19 that was |
| | designated as a pandemic by the World Health Organization on March 11, 2020. The international response |
| | to the spread of COVID-19 has led to significant restrictions on travel, temporary business closures, |
| | quarantines, global stock market volatility and a general reduction in consumer activity. Such public health |
| | crises can result in operating, supply chain and project development delays and disruptions, global stock |
| | market and financial market volatility, declining trade and market sentiment, reduced movement of people |
| | and labour shortages, and travel and shipping disruption and shutdowns, including as a result of government |
| | regulation and prevention measures, or a fear of any of the foregoing, all of which could affect commodity |
| | prices, interest rates, credit risk and inflation. In addition, the current COVID-19 pandemic, and any future |
| | emergence and spread of similar pathogens could have an adverse impact on global economic conditions |
| | which may adversely impact the Company's operations, and the operations of suppliers, contractors and |
| | service providers, including smelter and refining service providers, and the demand for the Company's |
| | production. |
| | |
| | The Company may experience business interruptions, including suspended (whether government mandated |
| | or otherwise) or reduced operations relating to COVID-19 and other such events outside of the Company's |
| | control, which could have a material adverse impact on its business, operations and operating results, |
| | financial condition and liquidity. |
| | |
| | As at the date of the condensed consolidated interim financial statements, the duration of the business |
| | disruptions internationally and related financial impact of COVID-19 cannot be reasonably estimated. It is |
| | unknown whether and how the Company may be affected if the pandemic persists for an extended period of |
| | time. In particular, the region in which we operate may not have sufficient public infrastructure to adequately |
| | respond or efficiently and quickly recover from such event, which could have a materially adverse effect on |
| | the Company's operations. The Company's exposure to such public health crises also includes risks to |
| | employee health and safety. Should an employee, contractor, community member or visitor become infected |
| | with a serious illness that has the potential to spread rapidly, this could place the Company's workforce at |
| | risk. |
|
| | | |
| - 6 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
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, |
| | 2020, annual consolidated financial statements, which were prepared in accordance with IFRS as issued by |
| | the IASB. |
|
| | These unaudited condensed consolidated interim financial statements are expressed in US dollars and have |
| | been prepared on a historical cost basis except for financial instruments that have been measured at fair |
| | value. In addition, these unaudited condensed consolidated interim financial statements have been |
| | prepared using the accrual basis of accounting on a going concern basis. The accounting policies set out |
| | below have been applied consistently to all periods presented in these unaudited condensed consolidated |
| | interim financial statements as if the policies have always been in effect. |
|
| | Significant Accounting Judgments and Estimates |
|
| | The Company’s management makes judgments in its process of applying the Company’s accounting policies |
| | to the preparation of its unaudited condensed consolidated interim financial statements. In addition, the |
| | preparation of financial data requires that the Company’s management make assumptions and estimates of |
| | the impacts on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period |
| | from uncertain future events and on the reported amounts of revenues and expenses during the reporting |
| | period. Actual results may differ from those estimates as the estimation process is inherently uncertain. |
| | Estimates are reviewed on an ongoing basis based on historical experience and other factors that are |
| | considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the |
| | carrying amounts of the Company’s assets and liabilities are accounted for prospectively. |
|
| | The critical judgments and estimates applied in the preparation of the Company’s unaudited condensed |
| | consolidated interim financial statements for the three months ended March 31, 2021, are consistent with |
| | those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the |
| | year ended December 31, 2020. |
| | | |
| - 7 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | 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 |
| | |
|
| | Intercompany balances and transactions, including unrealized income and expenses arising from |
| | intercompany transactions, are eliminated in preparing the unaudited condensed consolidated interim |
| | financial statements. |
|
3. RECENT ACCOUNTING PRONOUNCEMENTS |
|
| | Application of new and revised accounting standards: |
| | Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS |
| | 16) |
| | The amendments in Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, |
| | IFRS 4 and IFRS 16) introduce a practical expedient for modifications required by the reform, clarify that |
| | hedge accounting is not discontinued solely because of the IBOR reform, and introduce disclosures that |
| | allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is |
| | exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from |
| | IBORs to alternative benchmark rates, and how the entity is managing this transition. |
| | The amendments were applied effective January 1, 2021, and did not have a material impact on the |
| | Company’s financial statements. |
| | Future Changes in Accounting Policies Not Yet Effective as at March 31, 2021: |
| | Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) |
| | The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds |
| | from selling items produced while bringing that asset to the location and condition necessary for it to be |
| | capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds |
| | from selling such items, and the cost of producing those items, in profit or loss. The amendments are applied |
| | on or after the first annual reporting period beginning on or after January 1, 2022, with early application |
| | permitted. The amendments are applied retrospectively, but only to items of property, plant and equipment |
| | that are brought to the location and condition necessary for them to be capable of operating in the manner |
| | intended by management on or after the beginning of the earliest period presented in the financial |
| | statements in which the Company first applies the amendments. The Company will recognize the cumulative |
| - 8 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | effect of initially applying the amendments as an adjustment to the opening balance of retained earnings at |
| | the beginning of that earliest period presented. This amendment will impact the Company’s accounting for |
| | proceeds from mineral sales prior to reaching commercial production at levels intended by management. |
| | Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) |
| | The amendments aim to promote consistency in applying the requirements by helping companies determine |
| | whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date |
| | should be classified as current (due or potentially due to be settled within one year) or non-current. The |
| | amendments are applied on or after the first annual reporting period beginning on or after January 1, 2023, |
| | with early adoption permitted. This amendment is not expected to have a material impact on the Company’s |
| | financial statements. |
4. TAXES RECOVERABLE |
|
| | The Company’s taxes recoverable consist of the Mexican I.V.A. (“VAT”) and income taxes recoverable and |
| | Canadian sales taxes (“GST/HST”) recoverable. |
| | |
| | | March 31, | | December 31, |
| | | | 2021 | | 2020 |
| | VAT recoverable | | | | | $ | 2,596 $ | | | 2,328 |
| | GST recoverable | | 26 | | 16 |
| | Income taxes recoverable | 2,574 | | | 2,700 |
| | | | | | | $ | 5,196 $ | | | 5,044 |
|
5. INVENTORY |
|
| | | March 31, | | December 31, |
| | | | 2021 | | 2020 |
| | Process material stockpiles | | | | | $ | 394 $ | | 373 |
| | Concentrate inventory | | 36 | | 64 |
| | Materials and supplies | 1,304 | | | 1,222 |
| | | | | | | $ | 1,734 $ | | | 1,659 |
|
| | The amount of inventory recognized as an expense for the three months ended March 31, 2021 totalled |
| | $709 (March 31, 2020 – $6,273). See Note 15 for further details. |
| | |
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 | Movements in | Fair value | | | Fair Value |
| | | | | | | | December 31, Net Additions | foreign | adjustments | | | March 31, |
| | | | | | | | | |
| | | | | | | | | | | 2020 | exchange for the period | 2021 |
Talisker Resources Common |
Shares | | | | | | | | $ | 4,176 | $ | | | | | | | | - | $ | 49 | $ | (60) | $ | 4,165 |
Silver Wolf Exploration Ltd. |
Common Shares | | | | | | | | | | | - | 41 | - | | (3) | | | | | | | | 38 |
Silver Wolf Exploration Ltd. |
Warrants | | | | | | | | | | | - | 76 | - | | (2) | | | | | | | | 74 |
| | | | | | | | $ | 4,176 | $ 117 | | | | | | | | $ | 49 | $ (65) | | $ 4,277 |
|
| - 9 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | During the three months ended March 31, 2021, the Company received 131,718 common shares as part of |
| | the terms in the Option Agreement with Silver Wolf Exploration Ltd,, as well as 300,000 share purchase |
| | warrants at an exercise price of C$0.20. 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 7). 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 7 for full details of the Option Agreement, and Note 19(d) for valuation methodology for the share |
| | purchase warrants. |
|
7. EXPLORATION AND EVALUATION ASSETS |
|
| | The Company has accumulated the following acquisition, exploration and evaluation costs which are not |
| | subject to depletion: |
|
|
| | | British Columbia | |
| Durango, Mexico | | & Yukon, Canada | Total | |
| | | | | | | | |
| | Balance, January 1, 2020 | $ | | | | | | | 9,826 $ | 1 $ | 9,827 |
| | | | | | | | | | |
| | Costs incurred during 2020: | | | | | | | | |
| | Drilling and exploration | | | | | | | | 146 | | | - | | 146 |
| | Assessments and taxes | | | | | | | | 83 | | | - | | 83 |
| | Effect of movements in exchange rates | | | | | | | | (4) | | | - | | (4) |
| | | | | | | | | | |
| | Balance, December 31, 2020 | $ | | | | | | | 10,051 $ | 1 $ | 10,052 |
| | Costs incurred during 2021: | | | | | | | | |
| | Drilling and exploration | | | | | | | | 289 | | | - | | 289 |
| | Assessments and taxes | | | | | | | | 45 | | | - | | 45 |
| | Effect of movements in exchange rates | | | | | | 1 | | | - | | 1 |
| | Option income | | | | | | (117) | | | - | | (117) |
| | | | | | | | | | |
| | Balance, March 31, 2021 | $ | | | | | | | 10,269 $ | 1 $ | 10,270 |
|
| | | | | | | | | |
| - 10 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Additional information on the Company’s exploration and evaluation properties by region is as follows: |
|
| | (a) Durango, 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 four |
| | 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. Within the Avino mine site area is the Company’s San Gonzalo |
| | | Mine, which achieved production at levels intended by management as of October 1, 2012, and on |
| | | this date accumulated exploration and evaluation costs were transferred to mining properties. |
| | | |
| | (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 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, Silver Wolf received Avino 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 the Approval Date (received on March |
| | | | 26, 2021 – see Note 6 for details); |
| | | b. A further C$50 in cash or shares of Silver Wolf at Avino’s discretion on or before the first |
| | | | anniversary of the Approval Date; |
| | | c. A further C$100 in cash or shares of Silver Wolf at Avino’s discretion on or before the second |
| | | | anniversary of the Approval Date; |
| | | d. A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before the third |
| | | | anniversary of the Approval Date; and |
| | | e. A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before the fourth |
| | | | anniversary of the Approval Date; and |
| | | |
| | | 2. Incur a total of C$750 in exploration expenditures on the properties, as follows: |
| | | |
| | | a. C$50 on or before the first anniversary of the Approval Date; |
| | | b. A further C$100 on or before the second anniversary of the Approval Date; and |
| | | c. A further C$600 on or before the fourth anniversary of the Approval Date. |
| | | |
| | | Under the Option Agreement, the parties intend that the first two year’s payments (C$200 in cash or |
| | | shares), and first C$150 in exploration work will be firm commitments by Silver Wolf. 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 |
| - 11 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | 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. |
| | |
| | (iii) Santiago Papasquiaro property |
| | |
| | The Santiago Papasquiaro property is located near the village of Santiago Papasquiaro, and consists |
| | of four exploration concessions covering 2,552.6 hectares and one exploitation concession covering |
| | 602.9 hectares. |
|
| | (iv) Unification La Platosa properties |
| | |
| | The Unification La Platosa properties, consisting of three leased concessions in addition to the leased |
| | concession described in note (i) above, are situated within the Avino mine area property near the |
| | towns of Panuco de Coronado and San Jose de Avino and surrounding the Avino Mine. |
| | In February 2012, the Company’s wholly-owned Mexican subsidiary entered into a new agreement |
| | with Minerales de Avino, S.A. de C.V. (“Minerales”) whereby Minerales has indirectly granted to the |
| | Company the exclusive right to explore and mine the La Platosa property known as the “ET zone”. |
| | The ET zone includes the Avino Mine, where production at levels intended by management was |
| | achieved on July 1, 2015. |
| | |
| | Under the agreement, 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) British Columbia, Canada | |
|
| | (i) Minto and Olympic-Kelvin properties |
| | |
| | The Company’s mineral claims in British Columbia encompass two additional properties, Minto and |
| | Olympic-Kelvin, each of which consists of 100% owned Crown-granted mineral claims located in the |
| | Lillooet Mining Division. |
| | | (c) Yukon, Canada |
| | | |
| | 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. |
| | |
8. NON-CONTROLLING INTEREST |
|
| | | At March 31, 2021, the Company had an effective 99.67% (December 31, 2020 - 99.67%) interest in its |
| | | subsidiary Avino Mexico and the remaining 0.33% (December 31, 2020 - 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. |
| - 12 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
9. 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, 2020 | | 13,637 | | 524 | 341 | | | | | | | 12,919 | | | | 17,554 | 9,287 | 54,262 |
| | | | | | | | | | | | | | | | | Additions / Transfers | (493) | | 34 | 6 | | | | | | | 36 | | | | (71) | 1,976 | 1,488 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | | 5 | | 5 | - | | | | | | | | | | | | | | | | | | - | - | - | 10 |
Balance at December 31, 2020 | | 13,149 | | 563 | 347 | | | | | | | 12,955 | | | | 17,483 | 11,263 | 55,760 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 53 | | 7 | 3 | | | | | | | | | | | | | | | | | | - | - | 103 | 166 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | 3 | | 4 | - | | | | | | | | | | | | | | | | | | - | - | 14 | 21 |
Balance at March 31, 2021 | | 13,205 | | 574 | 350 | | | | | | | 12,955 | | | | 17,483 | 11,380 | 55,947 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ACCUMULATED DEPLETION |
AND DEPRECIATION | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2020 | | 8,066 | | 84 | 213 | | | | | | | 4,854 | | | | 4,013 | 1,374 | 18,604 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 577 | | 103 | 43 | | | | | | | 53 | | | | 1,284 | 250 | 2,310 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | - | | - | - | | | | | | | | | | | | | | | | | | - | - | - | | | | | | | - |
Balance at December 31, 2020 | | 8,643 | | 187 | 256 | | | | | | | 4,907 | | | | 5,297 | 1,624 | 20,914 |
| | | | | | | | | | | | | | | | | Additions / Transfers | 55 | | 26 | 10 | | | | | | | 13 | | | | 324 | 66 | 494 |
| | | | | | | | | | | | | | | | | Effect of movements in |
| | | | | | | | | | | | | | | | | exchange rates | - | | - | - | | | | | | | | | | | | | | | | | | - | - | - | | | | | | | - |
Balance at March 31, 2021 | | 8,698 | | 213 | 266 | | | | | | | 4,920 | | | | 5,621 | 1,690 | 21,408 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET BOOK VALUE | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At March 31, 2021 | | 4,507 | | 361 | 84 | | | | | | | 8,035 | | | | 11,862 | 9,690 | 34,539 |
At December 31, 2020 | | 4,506 | | 376 | 91 | | | | | | | 8,048 | | | | 12,186 | 9,639 | 34,846 |
At January 1, 2020 | | 5,571 | | 440 | 128 | | | | | | | 8,065 | | | | 13,541 | 7,913 | 35,658 |
| - 13 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Included in Buildings above are assets under construction of $5,739 as at March 31, 2021 (December 31, |
| | 2020 - $5,327) on which no depreciation was charged in the periods then ended. Once the assets are put |
| | into service, they will be transferred to the appropriate class of plant, equipment and mining properties. |
| | |
| | As at March 31, 2021, plant, equipment and mining properties included a net carrying amount of $442 |
| | (December 31, 2020 - $442) for mining equipment under equipment loan, and $1,007 (December 31, 2020 |
| | - $1,087 for mining equipment and right of use assets under finance 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 months ended March 31, 2021 |
| | and 2020 is as follows: |
| | | Three months ended March 31, |
| | | | 2021 | 2020 |
| | Salaries, benefits, and consulting fees | | | | $ | 235 | | | $ | 170 |
| | Share‐based payments | | 488 | 187 |
| | | | | | $ | 723 | | | $ | 357 |
|
| | (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, |
| | | | | | | 2021 | 2020 |
| | Oniva International Services Corp. | | | | $ | 108 | | | $ | 106 |
| | Directors | | 42 | 48 |
| | | | | | $ | 150 | | | $ | 154 |
|
(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. |
|
| | | | | | | | |
| - 14 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The transactions with Oniva during the three months ended March 31, 2021 and 2020 are summarized |
| | below: |
| | |
| | | March 31, | | March 31, |
| | | | 2021 | | 2020 |
| | Salaries and benefits | | | | | $ | 191 | | | | $ | 181 |
| | Office and miscellaneous | | 105 | | 96 |
| | | | | | | $ | 296 | | | | $ | 277 |
|
| | 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, 2021, the |
| | Company paid $59 (March 31, 2020 - $56) to ICC. |
| | |
11. TERM FACILITY |
| | |
| | In July 2015, the Company entered into a ten million dollar term facility with Samsung C&T U.K. Limited |
| | (“Samsung”). Interest is charged on the facility at a rate of US dollar LIBOR (3 month) plus 4.75%. The |
| | agreement was later amended in 2018 to extend the repayment period and modify the monthly payments. |
| | Other material terms of the facility remained unchanged. The Company is currently repaying the remaining |
| | balance in monthly instalments of $278 ending September 2021, with 6 remaining payments as at March |
| | 31, 2021. The Company is committed to selling Avino Mine concentrate on an exclusive basis to Samsung |
| | until December 31, 2024. |
| | |
| | The facility is secured by the concentrates produced under the agreement and by 33% of the common |
| | shares of the Company’s wholly-owned subsidiary Compañía Minera Mexicana de Avino, S.A. de C.V.. The |
| | facility with Samsung relates to the sale of concentrates produced from the Avino Mine only. |
|
| | The continuity of the term facility with Samsung is as follows: |
| | |
| | | | | | | March 31, | December 31, |
| | | | | | | | | | 2021 | | 2020 |
| | Balance at beginning of the period | | | | | | | | $ | 2,513 | | | | | $ | 5,897 |
| | Repayments | | | | | | | | | (833) | | | | | | (3,333) |
| | Unwinding of fair value adjustment | | | | | | | | | (7) | | | | | | (51) |
| | Balance at end of the period | | | | | | | | | 1,673 | | | | | | 2,513 |
| | Less: Current portion | | | | | | | | | (1,673) | | | | | | (2,513) |
| | Non-current portion | | | | | | | | $ | - | | | | | $ | - |
|
| | | | | | | | | |
| - 15 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
12. 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, |
| | | | | 2021 | | 2020 |
| | Balance at beginning of the period | | $ | 2,295 | | $ | 1,579 |
| | Fair value adjustment | | | (788) | | 650 |
| | Effect of movement in exchange rates | | | 23 | | 66 |
| | Balance at end of the period | | $ | 1,530 | | $ | 2,295 |
| | |
| | Continuity of warrants during the periods is as follows: |
| | | | | | | | Underlying | Weighted Average |
| | | | | | | | Shares | Exercise Price |
| | Warrants outstanding and exercisable, January 1, 2020 | | | | | | 7,639,968 | $0.79 |
| | Exercised | | | | | | (4,195,072) | $0.80 |
| | Exercised | | | | | | (464,122) | C$0.85 |
| | Warrants outstanding and exercisable, December 31, 2020 | | | | | | 2,980,774 | $0.80 |
| | Exercised | | | | | | (912,562) | $0.80 |
| | Warrants outstanding and exercisable, March 31, 2021 | | | | | | 2,068,212 | $0.80 |
| | |
| | | | | | All Warrants |
| | | | | | | | | Outstanding and Exercisable |
| | | | | | | | | Exercise Price | March 31, | | December 31, |
| | Expiry Date | | | | | | | per Share | 2021 | | 2020 |
| | September 25, 2023 | | | | | | | | $0.80 | 2,068,212 | | 2,980,774 |
| | | | | | | | | 2,068,212 | | 2,980,774 |
| | |
| | As at March 31, 2021, the weighted average remaining contractual life of warrants outstanding was 2.48 |
| | years (December 31, 2020 – 2.73 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, |
| | | | 2021 | | | 2020 |
| | Weighted average assumptions: | | | | | | | | | |
| | Risk-free interest rate | | 0.23% | | | 0.20% |
| | Expected dividend yield | | | 0% | | 0% |
| | Expected warrant life (years) | | 2.49 | | | 2.73 |
| | Expected stock price volatility | | 83.12% | | | 73.93% |
| | Weighted average fair value | | $0.74 | | | $0.77 |
|
| | During the three months ended March 31, 2021, the Company recorded a realized loss on the exercise of |
| | warrants of $1,005, as result of the exercise of 912,562 warrants for the issuance of 912,562 common |
| | shares. | | | | | | | | | | |
| - 16 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
13. RECLAMATION PROVISION |
| | |
| | Management’s estimate of the reclamation provision at March 31, 2021, is $791 (December 31, 2020 – |
| | $808), and the undiscounted value of the obligation is $1,234 (December 31, 2020 – $1,275). |
| | |
| | The present value of the obligation was calculated using a risk-free interest rate of 5.96% (December 31, |
| | 2020 – 5.96%) and an inflation rate of 3.15% (December 31, 2020 – 3.15%). Reclamation activities are |
| | estimated to begin in 2023 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, |
| | | | | 2021 | | 2020 |
| | | | | | | | | | | | |
| | Balance at beginning of the period | | | | | | | | $ | 808 $ | | 1,524 |
| | Changes in estimates | | | - | | (737) |
| | Unwinding of discount related to continuing operations | | | 11 | | 99 |
| | Effect of movements in exchange rates | | | (28) | | (78) |
| | Balance at end of the period | | | | | | | | $ | 791 $ | | 808 |
|
14. SHARE CAPITAL AND SHARE-BASED PAYMENTS |
|
| | (a) Authorized: Unlimited common shares without par value. |
|
| | (b) Issued: |
| | |
| | (i) During the three months ended March 31, 2021, the Company issued 9,050,000 common shares in |
| | | | | | | | in at-the-market offering under prospectus supplement for gross proceeds of $17,732. The Company |
| | | | | | | | paid a 2.75% cash commission of $488 on gross proceeds, for net proceeds of $17,244, and |
| | | | | | | | incurred additional $310 in issuance costs during the period. |
| | | | | | | | |
| | | | | | | | During the three months ended March 31, 2021, the Company issued 912,562 common shares |
| | | | | | | | following the exercise of 912,562 warrants. As a result, $1,724 was recorded to share capital, |
| | | | | | | | representing cash proceeds of $730, fair value of the warrants on the date of exercise (see Note 12 |
| | | | | | | | for valuation methodology of $US denominated warrants) of $1,005, and movements in foreign |
| | | | | | | | exchange of $(11). |
| | | | | | | | |
| | | | | | | | During the three months ended March 31, 2021, the Company issued 264,000 common shares |
| | | | | | | | following the exercise of 264,000 options. As a result, $364 was recorded to share capital, |
| | | | | | | | representing cash proceeds of $238 and the fair value upon issuance of $126. |
| | |
| | (ii) During the year ended December 31, 2020, the Company issued 6,730,054 common shares in an at- |
| | | | | | | | the-market offering under prospectus supplement for gross proceeds of $4,940. The Company paid |
| | | | | | | | a 3% cash commission of $148 on gross proceeds, for net proceeds of $4,792, and incurred an |
| | | | | | | | additional $106 in issuance costs during the period. |
| | |
| | | | | | | | During the year ended December 31, 2020, the Company issued 4,195,072 common shares |
| | | | | | | | following the exercise of 4,195,072 warrants. As a result, $6,112 was recorded to share capital, |
| | | | | | | | representing cash proceeds of $3,356, fair value of the warrants on the date of exercise (see Note |
| | | | | | | | 12 for valuation methodology for $US denominated warrants) of $2,733, and movements in foreign |
| | | | | | | | exchange of $69. |
| | | | | | | | |
| | | | | | | | During the year ended December 31, 2020, the Company also issued 464,122 common shares |
| | | | | | | | following the exercise of 464,122 broker warrants. As a result, $416 was recorded to share capital, |
| | | | | | | | representing cash proceeds of $300 and the amount attributed to the warrants upon issuance in |
| | | | | | | | 2019, representing $116. |
| | | | | | | | |
| - 17 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | During the year ended December 31, 2020, the Company issued 675,145 common shares as |
| | settlement of accrued advisory services provided by Cantor Fitzgerald Canada Corporate (“Cantor”) |
| | for the completion of the sale of Bralorne. The value of these shares was accrued at December 31, |
| | 2019; however, the shares were not issued until January 2020. |
| | |
| | During the year ended December 31, 2020, the Company issued 48,000 common shares following |
| | the exercise of 48,000 options. As a result, $43 was recorded to share capital, representing cash |
| | proceeds of $28 and the fair value upon issuance of $15. |
| | |
| | During the year ended December 31, 2020, the Company issued 863,901 common shares upon |
| | exercise of RSUs. As a result, $650 was recorded to share capital. |
| | |
| | | (c) Stock options: |
|
| | The Company has a stock option plan to purchase the Company’s common shares, under which it may |
| | grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a |
| | non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, |
| | and employees, and to persons providing investor relations or consulting services, the limits being |
| | based on the Company’s total number of issued and outstanding shares per year. The stock options |
| | vest on the date of grant, except for those issued to persons providing investor relations services, which |
| | vest over a period of one year. The option price must be greater than or equal to the discounted market |
| | price on the grant date, and the option term cannot exceed ten years from the grant date. |
| | |
| | Continuity of stock options is as follows: |
|
| | | | | Underlying | Weighted Average |
| | | | | Shares | Exercise Price (C$) |
| | | | | | | | |
Stock options outstanding, January 1, 2020 | | | | | 2,638,500 | | | | $1.82 |
| | | Granted | | 1,700,000 | | | | $1.64 |
| | | Exercised | | (48,000) | | | | $0.79 |
| | | Cancelled / Forfeited | | (807,500) | | | | $1.70 |
Stock options outstanding, December 31, 2020 | | | | 3,483,000 | | | | | $1.77 |
| | | Exercised | | (264,000) | | | | $1.16 |
Stock options outstanding, March 31, 2021 | | | | | 3,219,000 | | | | $1.82 |
Stock options exercisable, March 31, 2021 | | | | | 2,369,000 | | | | $1.89 |
|
| | The following table summarizes information about the stock options outstanding and exercisable at |
| | March 31, 2021: |
|
| | | | | | | | | | | | Outstanding | | | | | | Exercisable |
| | | | | | | | | | | | | | | Weighted | Weighted |
| | | | | | | | | | | | | | | Average | Average |
| | | | | | | | | | | | | | | Remaining | Remaining |
| | | | | | | | | | | | | | Number of | Contractual | Number of | Contractual Life |
| Expiry Date | | | | | | | | | | | | Price (C$) | | Options | Life (Years) | Options | | (Years) |
September 2, 2021 | | | | | | | | | | $2.95 | | | | 360,000 | 0.42 | | | 360,000 | 0.42 |
September 20, 2022 | | | | | | | | | | $1.98 | | | | 880,000 | 1.47 | | | 880,000 | 1.47 |
August 28, 2023 | | | | | | | | | | $1.30 | | | | 105,000 | 2.41 | | | 105,000 | 2.41 |
August 21, 2024 | | | | | | | | | | $0.79 | | | | 174,000 | 3.39 | | | 174,000 | 3.39 |
August 4, 2025 | | | | | | | | | | $1.64 | | | | 1,700,000 | 4.35 | | | 850,000 | 4.35 |
| | | | | | | | | | | | | | | | | 3,219,000 | 3.01 | | | 2,369,000 | 2.53 |
|
| - 18 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | During the three months ended March 31, 2021, the Company charged $231 (three months ended |
| | March 31, 2020 - $(11)) to operations as share-based payments for the fair value of stock options |
| | granted. | |
|
(d) Restricted Share Units: |
|
| | On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its |
| | shareholders. The RSU Plan is administered by the Compensation Committee under the supervision of |
| | the Board of Directors as compensation to officers, directors, consultants, and employees. The |
| | Compensation Committee determines the terms and conditions upon which a grant is made, including |
| | any performance criteria or vesting period. |
| | |
| | Upon vesting, each RSU entitles the participant to receive one common share, provided that the |
| | participant is continuously employed with or providing services to the Company. RSUs track the value of |
| | the underlying common shares, but do not entitle the recipient to the underlying common shares until |
| | such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to |
| | ownership or control of the common shares, until the RSU vests and the RSU participant receives |
| | common shares. |
| | |
| | Continuity of RSUs is as follows: |
| | | | | Underlying | Weighted Average |
| | | | | Shares | | Price (C$) |
| | | | | | | | | |
RSUs outstanding, January 1, 2020 | | | | | 2,372,875 | | $0.94 |
| | Granted | | | 1,481,000 | | $1.64 |
| | Exercised | | | (863,901) | | $0.99 |
| | Cancelled / Forfeited | | | (115,974) | | $1.00 |
RSUs outstanding, December 31, 2020 | | | | | 2,874,000 | | $1.28 |
RSUs outstanding, March 31, 2021 | | | | | 2,874,000 | | $1.28 |
| | |
| | The following table summarizes information about the RSUs outstanding at March 31, 2021: |
|
| | Issuance Date | | | | | | | | Price (C$) | | Number of RSUs Outstanding |
| | August 28, 2018 | $1.31 | | | | | | 288,000 |
| | August 21, 2019 | $0.79 | | | | | | 1,105,000 |
| | August 4, 2020 | $1.64 | | | | | | 1,481,000 |
| | | | | | | | | | | | | | | | 2,874,000 |
| | |
| | During the three months ended March 31, 2021, no RSUs (year ended December 31, 2020 – |
| | 1,481,000) were granted. For the RSUs issued in the year ended December 31, 2020, the weighted |
| | average fair value at the measurement date was C$1.64, 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, 2021, the Company charged $385 (March 31, 2020 - $179) 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. |
|
| | | | | | | | | | | | |
| - 19 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(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, |
| | | | 2021 | 2020 |
| | Net loss for the period | | | | $ (1,818) $ (232) |
| | Basic weighted average number of shares outstanding 96,204,148 77,267,533 Effect of dilutive share options, warrants, and RSUs |
| | | | | | | - | - |
| | Diluted weighted average number of shares outstanding 96,204,148 77,267,533 |
| | Basic loss per share | | | | $ (0.02) $ (0.00) |
| | Diluted loss per share | | | | $ (0.02) $ (0.00) |
|
15. REVENUE AND COST OF SALES |
|
| | The Company’s revenues for the three months ended March 31, 2021 and 2020 are all attributable to |
| | Mexico, from shipments of concentrate from the Avino Mine, and processing of Historical Above Ground |
| | Stockpiles. |
| | | March 31, | | | | | | March 31, |
| | | | 2021 | 2020 |
| | Concentrate sales | | | | $ | - | | | | | | $ | 7,570 |
| | Provisional pricing adjustments | | | | 29 (454) |
| | | | | | $ | 29 | | | | | | $ | 7,116 |
|
| | Cost of sales consists of changes in inventories, direct costs including personnel costs, mine site costs, |
| | energy costs (principally diesel fuel and electricity), maintenance and repair costs, operating supplies, |
| | external services, third party transport fees, depreciation and depletion, and other expenses for the periods. |
| | Direct costs include the costs of extracting co-products. Stand-by costs consists of care and maintenance |
| | costs incurred during the work stoppage at the Avino Mine during the three months ended March 31, 2021. |
| | |
| | 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, |
| | | | 2021 | 2020 |
| | Production costs | | | | $ | - | | | | | | $ | 5,654 |
| | Stand-by costs | | 246 | - |
| | Depreciation and depletion | | 463 | 619 |
| | | | | | $ | 709 | | | | | | $ | 6,273 |
|
| | | | | | | | | | | |
| - 20 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
16. GENERAL AND ADMINISTRATIVE EXPENSES |
|
| | General and administrative expenses on the condensed consolidated interim statements of operations |
| | consist of the following: |
|
| | | March 31, | | March 31, |
| | | | 2021 | | 2020 |
| | Salaries and benefits | | | | | $ | 337 | | | | $ | 370 |
| | Office and miscellaneous | | 156 | | 49 |
| | Management and consulting fees | | 155 | | 122 |
| | Investor relations | | 24 | | 50 |
| | Travel and promotion | | 8 | | 32 |
| | Professional fees | | 143 | | 86 |
| | Directors fees | | 42 | | 39 |
| | Regulatory and compliance fees | | 40 | | 30 |
| | Depreciation | | 29 | | 30 |
| | | | | | | $ | 934 | | | | $ | 808 |
|
17. COMMITMENTS |
|
The Company has a cost sharing agreement to reimburse Oniva for a percentage of its overhead expenses, |
to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a |
percentage fee based on Oniva’s total overhead and corporate expenses. The agreement may be |
terminated with one-month notice by either party. Transactions and balances with Oniva are disclosed in |
Note 10. |
|
The Company and its subsidiaries have various operating lease agreements for their office premises, use of |
land, and equipment. Commitments in respect of these lease agreements are as follows: |
| | |
| | | March 31, | | December 31, |
| | | 2021 | | | 2020 |
| | Not later than one year | | | | | $ | 245 $ | | 20 |
| | Later than one year and not later than five years | | 13 | | 14 |
| | Later than five years | | 2 | | 3 |
| | | | | | | $ | 260 $ | | 37 |
| | |
Office lease payments recognized as an expense during the three months ended March 31, 2021, totalled |
$12 (March 31, 2020 - $11). |
|
18. SUPPLEMENTARY CASH FLOW INFORMATION |
|
| | | March 31, | | March 31, |
| | | 2021 | | | 2020 |
| | Net change in non-cash working capital items: | | | | | | | | |
| | Inventory | | | | | $ | (74) $ | 141 |
| | Prepaid expenses and other assets | | | | | | | (68) 81 |
| | Taxes recoverable | | | | | | | (165) (62) |
| | Taxes payable | | | | | | | (7) (46) |
| | Accounts payable and accrued liabilities | | | | | | | 308 | (1,578) |
| | Amounts receivable | | | | | | | (140) 709 |
| | Other liabilities | | | | | | | - (140) |
| | Amounts due to related parties | | | | | | | (6) (25) |
| | | | | | | $ (152) $ | (870) |
|
| | | | | | | | | | |
| - 21 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | | March 31, | | March 31, |
| | | | 2021 | | 2020 |
| | Interest paid | | | | | $ | 34 $ | | 129 |
| | Taxes paid | | | | | $ | 136 $ | | 188 |
| | Equipment acquired under finance leases and |
| | equipment loans | | | | | $ | - | | | | $ | - |
| | |
19. 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 one (December 31, 2020 – three) |
| | counterparty (see Note 20). 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, 2021, 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, 2021, in the amount |
| | of $27,030 and working capital of $31,220 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 term facility, equipment loans, 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. |
|
| | | | | | | | | |
| - 22 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The maturity profiles of the Company’s contractual obligations and commitments as at March 31, 2021, |
| | are summarized as follows: |
| | | Less Than | | More Than 5 |
| | | Total | | 1 Year | 1-5 years | | Years |
| | Accounts payable and |
| | accrued liabilities | | | | | $ 2,262 | $ 2,262 | $ - | $ - |
| | Amounts due to related |
| | parties | 150 | | | | | | | 150 | - | - |
| | Minimum rental and lease |
| | payments | 30 | | | | | | | 15 | 13 | 2 |
| | Term facility | 1,691 | | 1,691 | | | | | | - | - |
| | Equipment loans | 19 | | | | | | | 19 | - | - |
| | Finance lease obligations | 430 | | | | | | | 151 | 279 | - |
| | Total | | | | | $ 4,582 | $ 4,288 | $ 292 | $ 2 |
|
| | (c) Market Risk |
|
| | Market risk consists of interest rate risk, foreign currency risk and price risk. These are discussed further |
| | below. |
|
| | Interest Rate Risk Interest rate risk consists of two components: (i) To the extent that payments made or received on the Company’s monetary assets and liabilities are |
| | affected by changes in the prevailing market interest rates, the Company is exposed to interest rate |
| | cash flow risk. |
| | (ii) To the extent that changes in prevailing market rates differ from the interest rates on the Company’s |
| | monetary assets and liabilities, the Company is exposed to interest rate price risk. |
| | |
| | In management’s opinion, the Company is exposed to interest rate risk primarily on its outstanding term |
| | facility, as the interest rate is subject to floating rates of interest. 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, 2021 | December 31, 2020 |
| | | | | | | MXN | CDN | MXN | CDN |
| | Cash | | | | | | | | | $ | 9,230 $ | 2,402 $ | 36,896 $ | | 2,831 |
| | Long-term investments | - | | 5,379 | | | | | | - | 5,317 |
| | Reclamation bonds | - | | | | | | | 6 | - | 6 |
| | Amounts receivable | - | | | | | | | 33 | - | 20 |
| | Accounts payable and |
| | accrued liabilities | | | | | (28,547) | (396) | (22,972) | | (157) |
| | Due to related parties | - | | (189) | | | | | | - | (196) |
| | Finance lease obligations | (77) | | (421) | (1,543) | | (448) |
| | Net exposure | | | | | (19,394) | 6,814 | 12,381 | | 7,373 |
| | US dollar equivalent | | | | | | | | | $ | (941) $ | 5,418 $ | 620 $ | | 5,791 |
| | |
| - 23 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Based on the net US dollar denominated asset and liability exposures as at March 31, 2021, 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, 2021, by approximately $398 (year ended December 31, 2020 - |
| | $589). 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, 2021, 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 $1 (December 31, 2020 - $2). |
| | |
| | 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, 2021, a 10% change in market prices would |
| | have an impact on net earnings (loss) of approximately $428 (December 31, 2020 - $418). |
| | |
| | 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, 2021: |
| | |
| | | Level 1 | Level 2 | Level 3 |
| | Financial assets | | | | | | |
| | Cash | $ | | 27,030 $ | | | | - $ | - |
| | Amounts receivable | | | | | | - | 668 | | | | - |
| | Long-term investments | | | 4,203 | | | | - | 74 |
| | Total financial assets | $ 31,233 $ 668 $ | | | | | | | 74 |
| | Financial liabilities | | | | | | | | |
| | Warrant liability | | | | | | - | - | (1,530) |
| | Total financial liabilities | $ - $ | | | | | | - $ | (1,530) |
|
| | | | | | | | | |
| - 24 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(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, |
| | 2021, the Company’s Level 3 financial instruments consisted of the Silver Wolf warrants and the warrant |
| | liability. |
| | |
| | For the Company’s warrant liability valuation and fair value adjustments during the years ended |
| | December 31, 2020 and 2019, see Note 16 of the consolidated financial statements. |
| | |
| | The Company’s Level 3 financial assets, which consists of warrants of Silver Wolf that were acquired |
| | during the three months ended March 31, 2021 (see Note 6 for long-term investments details and Note |
| | 7 for details of the acquisition). The warrants are measured on acquisition and at March 31, 2021, using |
| | the following assumptions: |
| | |
| | | March 31, 2021 March 11, 2021 |
| | Weighted average assumptions: | | | | | |
| | Risk-free interest rate | | | | | | 0.23% | | | 0.26% |
| | Expected dividend yield | | | | | | 0% | | | 0% |
| | Expected life (years) | | | | | | 2.95 | | | 3.00 |
| | Expected stock price volatility | | | | | | 139.99% | 129.51% |
| | Weighted average fair value at grant date | | | | | | C$0.31 | | | C$0.32 |
| | |
20. SEGMENTED INFORMATION |
|
| | The Company’s revenues for the three months ended March 31, 2021 of $29 (March 31, 2020 - $7,116) |
| | are all attributable to Mexico, from shipments of concentrate produced by the Avino Mine and processed |
| | material from the Avino Historic Above Ground stockpiles. |
| | |
| | On the condensed consolidated interim statements of operations, the Company had revenue from the |
| | following product mixes: |
| | |
| | | March 31, | | March 31, |
| | | | | | 2021 | 2020 |
| | | | | | | | |
| | Silver | $ 15 | | $ 2,852 |
| | Gold | | | | | | | 5 2,254 |
| | Copper | | | | | | | 9 3,803 |
| | Penalties, treatment costs and refining charges | | | | | | | - (1,793) |
| | | | | | | | |
| | Total revenue from mining operations | $ 29 | | $ 7,116 |
| | | | | | | | |
| | |
| | For the three months ended March 31, 2021, the Company had one customer (March 31, 2020 – three |
| | customers) that accounted for total revenues as follows: |
|
| | | March 31, | | March 31, |
| | | | | | 2021 | 2020 |
| | | | | | | | |
| | Customer #1 | $ | | | 29 | $ | | 3,969 |
| | Customer #2 | | | | - | 3,165 |
| | Customer #3 | | | | - | | - |
| | Customer #4 | | | | - | | - |
| | Customer #5 | | | | - | (18) |
| | | | | | | | |
| | Total revenue from mining operations | $ | | | 29 | $ | | 7,116 |
| | | | | | | | |
| | |
| | | | | | | | | | |
| - 25 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the three months ended March 31, 2021 and 2020 |
(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, |
| | | | | 2021 | | 2020 |
| | Exploration and evaluation assets - Mexico | | | | | | $ | 10,269 | | $ | 10,051 |
| | Exploration and evaluation assets - Canada | | | 1 | | 1 |
| | Total exploration and evaluation assets | | | | | | $ | 10,270 | | $ | 10,052 |
|
| | | | March 31, | | December 31, |
| | | | | 2021 | | 2020 |
| | Plant, equipment, and mining properties - Mexico | | | | | | $ | 34,184 | | $ | 34,475 |
| | Plant, equipment, and mining properties - Canada | | | 355 | | 371 |
| | Total plant, equipment, and mining properties | | | | | | $ | 34,539 | | $ | 34,846 |
|
21. SUBSEQUENT EVENTS |
|
| | Warrant Exercises – Subsequent to March 31, 2021, the Company issued 72,800 common shares |
| | through the early exercise of share purchase warrants for proceeds of $58 at an average price per share of |
| | $0.80. |
| | |
| | At-The-Market Sales – Subsequent to March 31, 2021, the Company issued 1,000,000 common shares in |
| | at-the-market offerings under prospectus supplement for gross proceeds of $1,289. The Company paid a |
| | 2.75% cash commission of $35 on gross proceeds, for net proceeds of $1,254. |
| | |
| - 26 - |