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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 September 30, 2020, and for the periods ended |
September 30, 2020 and 2019, 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 |
November 9, 2020 | | | | | | | | | | | | November 9, 2020 | | |
| | |
AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Financial Position |
(Expressed in thousands of US dollars) |
|
| | | | September 30, |
| | | | | 2020 | | December 31, |
| | | Note | | | (unaudited) | | 2019 |
| | | | | | | | | | |
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | | | | |
Cash | | | | | | | | | | | | $ | 12,493 | | $ | 9,625 |
Amounts receivable | | | | | | | | | | | | | 1,044 | | | 1,477 |
Taxes recoverable | | | 4 | | 6,404 | | | 5,483 |
Prepaid expenses and other assets | | | | | | | | | | | | | 775 | | | 594 |
Inventory | | | 5 | | 2,223 | | | 5,592 |
Total current assets | | | | | | | | | | | | | 22,939 | | | 22,771 |
Exploration and evaluation assets | | | 7 | | 10,010 | | | 9,827 |
Plant, equipment and mining properties | | | 9 | | 34,758 | | | 35,658 |
Long-term investments | | | 6 | | 3,927 | | | 4,311 |
Other assets | | | | | | | | | | | | | 4 | | | 4 |
Total assets | | | | | | | | | | | | $ | 71,638 | | $ | 72,571 |
| | | | | | | | | | | |
LIABILITIES | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities | | | | | | | | | | | | $ | 2,182 | | $ | 4,907 |
Amounts due to related parties | | | 10(b) | | 147 | | | 156 |
Taxes payable | | | | | | | | | | | | | 4 | | | 46 |
Current portion of term facility | | | 11 | | 3,355 | | | 3,384 |
Current portion of equipment loans | | | | | | | | | | | | | 127 | | | 199 |
Current portion of finance lease obligations | | | | | | | | | | | | | 265 | | | 692 |
Other liabilities | | | | | | | | | | | | | - | | | 178 |
Total current liabilities | | | | | | | | | | | | | 6,080 | | | 9,562 |
Term facility | | | 11 | | - | | | 2,513 |
Equipment loans | | | | | | | | | | | | | - | | | 90 |
Finance lease obligations | | | | | | | | | | | | | 284 | | | 442 |
Warrant liability | | | 12 | | 1,550 | | | 1,579 |
Reclamation provision | | | 13 | | 1,350 | | | 1,524 |
Deferred income tax liabilities | | | | | | | | | | | | | 2,451 | | | 2,938 |
Total liabilities | | | | | | | | | | | | | 11,715 | | | 18,648 |
| | | | | | | |
EQUITY | | | | | | | | | |
Share capital | | | 14 | | 108,304 | | | 96,396 |
Equity reserves | | | | | | | | | | | | | 9,239 | | | 9,391 |
Treasury shares (14,180 shares, at cost) | | | | | | | | | | | | | (97) | | | (97) |
Accumulated other comprehensive loss | | | | | | | | | | | | | (4,655) | | | (4,563) |
Accumulated deficit | | | | | | | | | | | | | (52,868) | | | (47,204) |
Total equity | | | | | | | | | | | | | 59,923 | | | 53,923 |
Total liabilities and equity | | | | | | | | | | | | $ | 71,638 | | $ | 72,571 |
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Commitments – Note 17 |
|
Subsequent Event – Note 21 |
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|
Approved by the Board of Directors on November 9, 2020: |
| Gary Robertson Director | | David Wolfin Director |
| The accompanying notes are an integral part of the condensed consolidated interim financial statements |
| | |
| | - 2 - |
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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) |
|
| | | | Three months ended | | Nine months ended |
| | | | | September 30, | | September 30, |
| | | Note | 2020 | | | | | | 2019 | 2020 | | | 2019 |
Revenue from mining operations | | | 15 | $ | 2,659 $ | | | | | | 6,796 $ | 14,615 $ | | | 21,320 |
Cost of sales | | | 15 | | 2,848 | | | | | | 6,973 | 13,174 | | | 21,145 |
Mine operating income (loss) | | | | | (189) | | | | | | (177) | 1,441 | | | 175 |
| | | | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | | | |
General and administrative expenses | | | 16 | | | 693 | | | | 770 | 2,063 | | | 2,242 |
Share-based payments | | | 14 | | | 692 | | | | 230 | 1,062 | | | 643 |
Loss before other items | | | | | (1,574) | | | | | | (1,177) | (1,684) | | | (2,710) |
Other items | | | | | | | | | | | | | | | | | | |
Interest and other income | | | | | | 8 | | | | 150 | 232 | | | 385 |
Gain (loss) on long-term investments | | | | | (1,231) | | | | | | 16 | (181) | | | 17 |
Fair value adjustment on warrant |
liability | | | 12 | | 1,136 | | | | | | (230) | (13) | | | 346 |
Realized loss on exercise of warrants | | | | | (2,708) | | | | | | - | (2,708) | | | - |
Foreign exchange loss | | | | | (446) | | | | | | (706) | (1,701) | | | (562) |
Finance costs | | | | | | (41) | | | | (6) | (175) | | | (2) |
Accretion of reclamation provision | | | 13 | | | (26) | | | | (25) | (75) | | | (78) |
Interest expense | | | | | | (4) | | | | (13) | (22) | | | (53) |
Loss from continuing operations before |
income taxes | | | (4,886) | | | | | | (1,991) | (6,327) | | | (2,657) |
Income taxes: | | | | | | | | | | | | | | | | | | |
Current income tax expense | | | | | | (28) | | | | (63) | (90) | | | (246) |
Deferred income tax recovery | | | | | | 327 | | | | 509 | 487 | | | 694 |
Income tax recovery (expense) | | | | | | 299 | | | | 446 | 397 | | | 448 |
Net loss from continuing operations | | | | | (4,587) | | | | | | (1,545) | (5,930) | | | (2,209) |
Loss from discontinued operations and |
on disposal | | | | | | | | | | | | | 3 | | | (2) | | | | (97) | (167) | | | (209) |
Net loss | | | | | (4,589) | | | | | | (1,642) | (6,097) | | | (2,418) |
| | | | | | | | | | | | | | | | | | |
Other comprehensive income (loss) | | | | | | | | | | | | | | | | | | |
Items that may be reclassified subsequently to income or loss: | | | | | | | | | | | | | | | | |
Currency translation differences | | | | | | 455 | | | | (318) | (92) | | | 857 |
Total comprehensive loss | | | | | | | | | | | | | $ | (4,134) $ | | | | | | (1,960) $ | (6,189) $ | | | (1,561) |
Loss per share from continuing |
operations | | | 14(e) | | | | | | | | | | | | | |
Basic & diluted | | | | | | | | | | | | | | | | | $(0.05) | | | | | | $(0.02) | $(0.07) | | | $(0.03) |
Loss per share | | | 14(e) | | | | | | | | | | | |
Basic & diluted | | | | | $(0.05) | | | | | | $(0.02) | $(0.08) | | | $(0.04) |
Weighted average number of |
common shares outstanding | | | 14(e) | | | | | | | | | | | |
Basic & Diluted | | | | 87,093,054 73,428,820 81,027,129 67,743,695 |
| The accompanying notes are an integral part of the condensed consolidated interim financial statements |
| | |
| | - 3 - |
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AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Changes in Equity |
(Expressed in thousands of US dollars - Unaudited) | |
|
EQUITY STATEMENT |
| | | | | Number of | Share | | Accumulated Other |
| | | | | Common | Capital | Equity | | | | Treasury | Comprehensive | Accumulated |
| | | | Note | Shares | Amount | Reserves | | | | Shares | Income (Loss) | Deficit | Total Equity |
Balance, January 1, 2019 | | | | | 63,337,769 | $ 88,045 | $ 9,849 | | | | $ (97) | | | $ (6,124) | $ (16,505) | $ 75,168 |
Common shares issued for cash: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Brokered public offerings | 14 | 7,735,360 | 4,877 | | | | | | | | | | - | - | - | | | | - | 4,877 |
| | | | | | | | | | | | | | | Less: Issuance costs | 14 | | | | | | | - | (476) | | | | | | | | | | - | - | - | | | | - | (476) |
| | | | | | | | | | | | | | | At the market issuances | 14 | 4,954,000 | 2,924 | | | | | | | | | | - | - | - | | | | - | 2,924 |
| | | | | | | | | | | | | | | Less: Issuance costs | 14 | | | | | | | - | (112) | | | | | | | | | | - | - | - | | | | - | (112) |
Options cancelled or expired | | | | | | | | | | | - | - | (739) | | | | | - | - | | | | 739 | - |
Carrying value of RSUs exercised | | | | | 565,259 | | | | | | | 835 | (835) | | | | | - | - | | | | - | - |
Fair value of warrants issued | | | | | | | | | | | - | - | 116 | | | | | - | - | | | | - | 116 |
Share-based payments | | | | 14 | | | | | | | - | - | 729 | | | | | - | - | | | | - | 729 |
Net loss for the period | | | | | | | | | | | - | - | | | | - | - | - | | | | | | | | (2,418) | (2,418) |
Currency translation differences | | | | | | | | | | | - | - | | | | - | - | | | | | | | | | | 857 | - | 857 |
Balance, September 30, 2019 | | | | | 76,592,388 | $ 96,093 | $ 9,120 | | | | $ (97) | | | $ (5,267) | $ (18,184) | $ 81,665 |
Balance, January 1, 2020 | | | | | 76,592,388 | $ 96,396 | $ 9,391 | | | | | $ (97) | | | | $ (4,563) | $ (47,204) | $ 53,923 |
Common shares issued for cash: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | At the market issuances | 14 | 6,730,054 | 4,940 | | | | | | | | | | - | - | - | | | | - | 4,940 |
| | | | | | | | | | | | | | | Exercise of warrants | 14 | 4,659,194 | 6,528 | (116) | | | | | - | - | | | | - | 6,412 |
| | | | | | | | | | | | | | | Exercise of options | 14 | 48,000 | | | | | | | 44 | (15) | | | | | - | - | | | | - | 29 |
Common shares issued for services | | | | 14 | 675,145 | | | | | | | - | | | | - | - | - | | | | - | - |
Issuance costs | | | | 14 | | | | | | | - | (254) | | | | | | | | | | - | - | - | | | | - | (254) |
Options cancelled or expired | | | | | | | | | | | - | - | (433) | | | | | - | - | | | | 433 | - |
Carrying value of RSUs exercised | | | | | 863,901 | | | | | | | 650 | (650) | | | | | - | - | | | | - | - |
Share-based payments | | | | 14 | | | | | | | - | - | 1,062 | | | | | - | - | | | | - | 1,062 |
Net loss for the period | | | | | | | | | | | - | - | | | | - | - | - | | | | | | | | (6,097) | (6,097) |
Currency translation differences | | | | | | | | | | | - | - | | | | - | - | | | | | | | | | | (92) | - | (92) |
Balance, September 30, 2020 | | | | | 89,568,682 | $ 108,304 | $ 9,239 | | | | $ (97) | | | $ (4,655) | $ (52,868) | $ 59,923 |
|
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| | The accompanying notes are an integral part of the condensed consolidated interim financial statements |
| | | |
| | | - 4 - |
AVINO SILVER & GOLD MINES LTD. |
Condensed Consolidated Interim Statements of Cash Flows |
(Expressed in thousands of US dollars - Unaudited) |
|
|
| | | | Nine months ended September 30, |
| | | Note | | 2020 | 2019 |
| | | | | | | | |
Cash generated by (used in): | | | | | | | | |
| | | | | | | | |
Operating Activities | | | | | | | | |
Net loss | | | | $ (6,097) | | | | | $ (2,418) |
Adjustments for non-cash items: | | | | | | | | |
Deferred income tax recovery | | | | | (487) | (694) |
Depreciation and depletion | | | | | 1,779 | 2,029 |
Inventory net realizable adjustment | | | | | - | 387 |
Accretion of reclamation provision | | | | | 75 | 250 |
Unrealized (gain) loss on investments | | | | | 181 | (17) |
Foreign exchange loss | | | | | 528 | 581 |
Unwinding of fair value adjustment | | | | | (42) | (153) |
Fair value adjustment on warrant liability | | | | | 13 | (346) |
Realized loss on exercise of warrants | | | | | 2,708 | - |
Share-based payments | | | | | 1,062 | 643 |
| | | | | | | | |
| | | | | (280) | 262 |
| | | | | | | | |
Net change in non-cash working capital items | | | 18 | | (953) | 382 |
| | | | | | | | |
| | | | | (1,233) | 644 |
| | | | | | | | |
| | | | | | | | |
Financing Activities | | | | | | | | |
Shares and units issued for cash, net of issuance costs | | | | | 4,686 | 7,329 |
Proceeds from option exercise | | | | | 29 | - |
Proceeds from warrant exercise | | | | | 3,705 | - |
Term facility payments | | | | | (2,500) | - |
Finance lease payments | | | | | (596) | (643) |
Equipment loan payments | | | | | (163) | (434) |
| | | | | | | | |
| | | | | 5,161 | 6,252 |
| | | | | | | | |
Investing Activities | | | | | | | | |
Exploration and evaluation expenditures | | | | | (180) | (4,715) |
Additions to plant, equipment and mining properties | | | | | (889) | (2,553) |
Proceeds from sale of long-term investments | | | | | 1,255 | - |
Purchase of long-term investments | | | | | (1,177) | - |
Redemption of reclamation bonds | | | | | - | 87 |
| | | | | | | | |
| | | | | (991) | (7,181) |
| | | | | | | | |
Change in cash | | | | | 2,937 | (285) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | | | (69) | (86) |
| | | | | | | | |
Cash, Beginning | | | | | 9,625 | 3,252 |
| | | | | | | | |
Cash, Ending | | | | $ 12,493 | | | | | $ 2,881 |
| | | | | | | | |
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| | | | | | | | | | |
| 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 nine months ended September 30, 2020 and 2019 |
(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 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. |
|
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 |
| | condensed consolidated interim financial statements follow the same accounting policies and methods of |
| | application as the most recent annual consolidated financial statements of the Company. These condensed |
| | consolidated interim financial statements do not contain all of the information required for full annual financial |
| | statements. Accordingly, these unaudited condensed consolidated interim financial statements should be read |
| | in conjunction with the Company’s December 31, 2019, 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 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 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 nine months ended September 30, 2020, are consistent with |
| | those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the year |
| | ended December 31, 2019. |
| | | |
| - 6 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Basis of Consolidation |
|
| | The condensed consolidated interim financial statements include the accounts of the Company and its |
| | Canadian and 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. DISPOSITION OF DISCONTINUED OPERATIONS – BRALORNE GOLD MINES LTD. |
|
| | On December 13, 2019, the Company completed the sale of its 100% wholly-owned subsidiary Bralorne Gold |
| | Mines Ltd. (“Bralorne”) to Talisker Resources Ltd. (“Talisker”). The sale was record in the further quarter of |
| | fiscal 2019 and includes the Bralorne Gold Mine and is part of the Company’s plan to focus on its core mining |
| | operations in Mexico. |
| | |
| | The consideration included: |
| | • | | | | C$8.7 million (translated to $6,599) in cash |
| | • | | | | The issuance of 12,580,000 common shares of Talisker, representing 9.9% on a pro-forma basis |
| | | | | | following the close of the transaction and subsequent financing by Talisker; |
| | • | | | | The issuance of 6,290,000 share purchase warrants exercisable at C$0.25 per share for a period of |
| | | | | | three years after the closing, subject to acceleration in the event the closing price of Talisker’s common |
| | | | | | shares is great than C$0.35 per share for 20 or more consecutive trading days at any time following |
| | | | | | April 14, 2020; |
|
| | The sale includes the Bralorne claims, as well as nine mineral claims covering approximately 2,114 hectares |
| | in the Lillooet Mining Division of British Columbia, known as the BRX Property. |
|
| | As a result of the sale, net loss for the comparative nine months ended September 30, 2019, have been |
| | reclassified from continuing operations to discontinued operations: |
| | | | | | | |
| - 7 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | | | Three months ended | | Nine months ended |
| | | | | September 30, | | September 30, |
| | | | 2020 | | | | 2019 | 2020 | | | 2019 |
| | Revenue from mining operations | $ | - $ - $ - $ - |
| | Cost of sales | | - | | | | - | - | | | - |
| | Mine operating income (loss) | | - | | | | - | - | | | - |
| | | | | | | | | | | | | |
| | Operating expenses | | - | | | | (40) | - | | | (35) |
| | Accretion of reclamation provision | | - | | | | (57) | - | | | (172) |
| | Gain on sale of assets | | - | | | | - | - | | | (3) |
| | Other items | | - | | | | - | - | | | 1 |
| | Loss on disposition | | (2) | | | | - | (167) | | | - |
| | Net loss before income taxes | | (2) | | | | (97) | (167) | | | (209) |
| | Income taxes | | - | | | | - | - | | | - |
| | Net loss from discontinued operations |
| | and on disposal | $ | | | (2) $ (97) $ (167) $ (209) |
| | |
| | The results of discontinued operations included in the consolidated statements of cash flows for the nine |
| | months ended September 30, 2020 and 2019, are as follows: |
| | |
| | | | | | | | Nine months ended September 30, |
| | Cash used in: | | | | | | | | | 2020 | 2019 |
| | | | | | | | | |
| | Cash flow provided by operating activities | | | | | | $ | - | $ (35) |
| | Cash flow used in financing activities | | | | | | | - | | | (198) |
| | Cash flow used in investing activities | | | | | | | - | | | (4,566) |
| | Net cash decrease from discontinued operations | | | | | | $ | - | $ (4,799) |
|
4. TAXES RECOVERABLE |
|
| | The Company’s taxes recoverable consist of the Mexican I.V.A. (“VAT”) and income taxes recoverable and |
| | Canadian sales taxes (“GST/HST”) recoverable. |
| | | | | | | | September 30, | December 31, |
| | | | | | | | | | | 2020 | 2019 |
| | VAT recoverable | | | | | | $ | | | 3,941 | $ | | | 2,652 |
| | GST recoverable | | | | 15 | | | 42 |
| | Income taxes recoverable | | | | | | | | | 2,448 | 2,789 |
| | | | | | | | $ | | | 6,404 | $ | | | 5,483 |
|
5. INVENTORY |
|
| | | | | | | | September 30, | December 31, |
| | | | | | | | | | | 2020 | 2019 |
| | Process material stockpiles | | | | | | $ | 368 | $ | | | 1,079 |
| | Concentrate inventory | | | | 581 | | | 3,055 |
| | Materials and supplies | | | | | | | | | 1,274 | 1,458 |
| | | | | | | | $ | | | 2,223 | $ | | | 5,592 |
| | |
| | The amount of inventory recognized as an expense for the nine months ended September 30, 2020 totalled |
| | $12,299 (September 30, 2019 – $21,145), and includes production costs and depreciation and depletion |
| | directly attributable to the inventory production process. |
| | | | | | | | | | | | |
| - 8 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
6. LONG-TERM INVESTMENTS |
|
| | The Company classifies its long-term investments as designated at fair value through profit and loss under |
| | IFRS 9. Long-term investments are summarized as follows: |
| | |
| | | Fair Value | Net Additions | | | | Movements in | | Fair value | Fair Value |
| | | December 31, | and | | foreign | adjustments | September 30, |
| | | | | | | | | | 2019 | (Warrants | | | | exchange for the period | | | | | | 2020 |
| | | | | | | | | | Exercised) |
| | Talisker Resources Common |
| | Shares | $ | 3,197 | $ | | | 1,184 | $ | (76) | $ | (378) | $ | 3,927 |
| | Talisker Resources Warrants | 1,114 | (1,114) | | | | | | | | - | - | - |
| | Other | - | | | (1) | | | | | | | | - | 1 | - |
| | | $ | 4,311 | $ | | | 69 | $ | (76) | $ (377) | $ 3,927 |
|
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, 2019 | $ | | | 9,692 $ | | | 37,089 $ | 46,781 |
| | | | | | | | | | | | | | | | |
| | Costs incurred during 2019: | | | | | | | | | | | | | | |
| | Mine and camp costs | | | | | - | | 2,537 | | | | | | | 2,537 |
| | Drilling and exploration | | | | | 50 | | 2,333 | | | | | | | 2,383 |
| | Depreciation of plant and equipment | | | | | - | | 317 | | | | | | | 317 |
| | Interest and other costs | | | | | - | | 325 | | | | | | | 325 |
| | Provision for reclamation | | | | | - | | 1,338 | | | | | | | 1,338 |
| | Assessments and taxes | | | | | 90 | | 31 | | | | | | | 121 |
| | Geological and related services | | | - | | 116 | | | | | | | 116 |
| | Assays | | | - | | 130 | | | | | | | 130 |
| | Water treatment and tailing storage facility costs | | | - | | 112 | | | | | | | 112 |
| | Effect of movements in exchange rates | | | | | (6) | | 1,286 | | | | | | | 1,280 |
| | Disposition of Bralorne Mine (Note 3) | | | | | - | | | | | | | (45,613) | | (45,613) |
| | | | | | | | | | | | | | | | |
| | Balance, December 31, 2019 | $ | | | 9,826 $ | | | 1 $ | 9,827 |
| | Costs incurred during 2020: | | | | | | | | | | | | | | |
| | Drilling and exploration | | | | | 98 | | - | | | | | | | 98 |
| | Assessments and taxes | | | | | 82 | | - | | | | | | | 82 |
| | Effect of movements in exchange rates | | | 3 | | - | | | | | | | 3 |
| | | | | | | | | | | | | | | | |
| | Balance, September 30, 2020 | $ | | | 10,009 $ | | | 1 $ | 10,010 |
|
| | | | | | | | | |
| - 9 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(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”) |
| | | |
| | | During the nine months ended September 30, 2020, the Company announced an option agreement in |
| | | which Silver Wolf was granted the exclusive right to acquire an 100% interest in the Ana Maria and El |
| | | Laberinto properties in Mexico (the “Option”), in consideration of the issuance to Avino of share |
| | | purchase warrants to acquire 300,000 common shares of Silver Wolf at an exercise price of $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 $600,000 in cash or common shares of Silver Wolf as follows: |
| | | |
| | | a. $50,000 in common shares of Silver Wolf within 30 days of the Approval Date; |
| | | b. A further $50,000 in cash or shares of Silver Wolf at Avino’s discretion on or before the first |
| | | | anniversary of the Approval Date; |
| | | c. A further $100,000 in cash or shares of Silver Wolf at Avino’s discretion on or before the second |
| | | | anniversary of the Approval Date; |
| | | d. A further $200,000 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 $200,000 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 $750,000 in exploration expenditures on the properties, as follows: |
| | | |
| | | a. $50,000 on or before the first anniversary of the Approval Date; |
| | | b. A further $100,000 on or before the second anniversary of the Approval Date; and |
| | | c. A further $600,000 on or before the fourth anniversary of the Approval Date. |
| | | |
| | | Under the Option Agreement, the parties intend that the first two year’s payments ($200,000 in cash or |
| | | shares), and first $150,000 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 |
| | | 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 is subject to the acceptance for filing |
| | | on behalf of Silver Wolf by the TSX Venture Exchange |
| - 10 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | (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 September 30, 2020, the Company had an effective 99.67% (December 31, 2019 - 99.67%) interest in its |
| | subsidiary Avino Mexico and the remaining 0.33% (December 31, 2019 - 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 condensed consolidated interim |
| | financial statements. |
| - 11 - |
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(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, 2019 | 12,962 | | 149 | 358 | | | | | | | | 17,257 | | | | 17,603 | 6,710 | 55,039 |
| | Additions / Transfers | 644 | | 381 | (6) | | | | | | | | (648) | | | | 148 | 2,770 | 3,289 |
| | Disposals | - | | (6) | (12) | | | | | | | | (3,723) | | | | (231) | (206) | (4,178) |
| | Effect of movements in |
| | exchange rates | | | | | | | | | | | | | | | | | 31 | | - | 1 | | | | | | | | 33 | | | | 34 | 13 | 112 |
| | Balance at December 31, 2019 | 13,637 | | 524 | 341 | | | | | | | | 12,919 | | | | 17,554 | 9,287 | 54,262 |
| | Additions / Transfers | 28 | | 33 | 5 | | | | | | | | 23 | | | | (71) | 878 | 896 |
| | Effect of movements in |
| | exchange rates | (15) | | (10) | - | | | | | | | | (1) | | | | - | 9 | (17) |
| | Balance at September 30, 2020 | 13,650 | | 547 | 346 | | | | | | | | 12,941 | | | | 17,483 | 10,174 | 55,141 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACCUMULATED DEPLETION |
| | AND DEPRECIATION | | | | | | | | | | | | | | | |
| | Balance at January 1, 2019 | 6,102 | | 65 | 175 | | | | | | | | 6,830 | | | | 2,416 | 708 | 16,296 |
| | Additions / Transfers | 1,952 | | 22 | 49 | | | | | | | | 51 | | | | 1,619 | 714 | 4,407 |
| | Disposals | - | | (3) | (11) | | | | | | | | (2,040) | | | | (27) | (49) | (2,130) |
| | Effect of movements in |
| | exchange rates | 12 | | - | - | | | | | | | | 13 | | | | 5 | 1 | 31 |
| | Balance at December 31, 2019 | 8,066 | | 84 | 213 | | | | | | | | 4,854 | | | | 4,013 | 1,374 | 18,604 |
| | Additions / Transfers | 484 | | 75 | 32 | | | | | | | | 41 | | | | 962 | 185 | 1,779 |
| | Effect of movements in |
| | exchange rates | - | | - | - | | | | | | | | | | | | | | | | | | - | - | - | | | | | | - |
| | Balance at September 30, 2020 | 8,550 | | 159 | 245 | | | | | | | | 4,895 | | | | 4,975 | 1,559 | 20,383 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | NET BOOK VALUE | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At September 30, 2020 | 5,100 | | 388 | 101 | | | | | | | | 8,046 | | | | 12,508 | 8,615 | 34,758 |
| | At December 31, 2019 | 5,571 | | 440 | 128 | | | | | | | | 8,065 | | | | 13,541 | 7,913 | 35,658 |
| | At January 1, 2019 | 6,860 | | 84 | 183 | | | | | | | | 10,427 | | | | 15,187 | 6,002 | 38,743 |
|
| - 12 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Included in buildings and construction in process above are assets under construction of $4,186 as at |
| | September 30, 2020 (December 31, 2019 - $3,746) 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 September 30, 2020, plant, equipment and mining properties included a net carrying amount of $451 |
| | (December 31, 2019 - $559) for mining equipment under equipment loan, and $1,121 (December 31, 2019 - |
| | $2,697) for mining equipment under lease. |
|
10. RELATED PARTY TRANSACTIONS AND BALANCES |
|
| | All related party transactions are recorded at the exchange amount which is the amount agreed to by the |
| | Company and the related party. |
|
| | (a) Key management personnel |
| | |
| | The Company has identified its directors and certain senior officers as its key management personnel. |
| | The compensation costs for key management personnel for the three and nine months ended September |
| | 30, 2020 and 2019 were as follows: |
| Three months ended | | | | Nine months ended |
| | | | September 30, | | September 30, |
| | | | | | | | 2020 | | | | | | | 2019 | 2020 | | | | 2019 |
| | | Salaries, benefits, and |
| | | consulting fees | $ 190 | | | | | | | $ 176 | | $ 523 | $ 527 |
| | | Share-based payments | 249 | | | | | | | 196 | 625 | | | | 545 |
| | | | | | | | | | | | $ 439 | | | | | | | $ 372 | | $ 1,148 | $ 1,072 |
|
| | (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: |
| | |
| | | | | | | | | September 30, | December 31, |
| | | | | | | | | 2020 | | | | 2019 |
| | Oniva International Services Corp. | | | | | | $ | 102 | $ | | | 105 |
| | Directors | | | 45 | | | | | | | 51 |
| | | | | | | | $ | 147 | $ | | | 156 |
|
(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. |
|
| | | | | | | | | | | | | |
| - 13 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The transactions with Oniva during the three and nine months ended September 30, 2020 and 2019, are |
| | summarized below: |
| Three months ended | | | Nine months ended |
| | | September 30, | | September 30, |
| | | | | | | 2020 | | | | | | 2019 | 2020 | | | | 2019 |
| | Salaries and benefits | $ 143 $ 125 | | | $ 461 | | | | $ 506 |
| | Office and miscellaneous | 43 | | | | 57 | 208 | | | | 207 |
| | Exploration and evaluation assets | - | | | | 51 | - | | | | 169 |
| | | | | | | | | | $ 186 | | | | | | $ 233 | $ 669 | | | | $ 882 |
|
| | For services provided to the Company as President and Chief Executive Officer, the Company pays |
| | Intermark Capital Corporation (“ICC”), a company controlled by David Wolfin, the Company’s president |
| | and CEO and also a director, for consulting services. For the nine months ended September 30, 2020, |
| | the Company paid $166 (September 30, 2019 - $169) 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 |
| | Company is currently repaying the remaining balance in 23 equal monthly instalments of $278 ending August |
| | 2021, with 12 remaining payments as at September 30, 2020. 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: |
| | |
| | | | | | | September 30, | December 31, |
| | | | | | | | | | | 2020 | 2019 |
| | Balance at beginning of the period | | | | | $ | | | | 5,897 | $ | | | | 6,901 |
| | Repayments | | | | | | | | | (2,500) | | | | | (834) |
| | Unwinding of fair value adjustment | | | | | | | | | (42) | | | | | (170) |
| | Balance at end of the period | | | | | | | | | 3,355 | | | | | 5,897 |
| | Less: Current portion | | | | | | | | | (3,355) | | | | | (3,384) |
| | Non-current portion | | | | | $ | | | | - | $ | | | | 2,513 |
|
| | | | | | | | | | |
| - 14 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(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: |
| | |
| | | | September 30, | | December 31, |
| | | | | 2020 | | 2019 |
| | Balance at beginning of the period | | $ | 1,579 | $ | 2,009 |
| | Fair value adjustment | | | 13 | | (520) |
| | Effect of movement in exchange rates | | | (42) | | 90 |
| | Balance at end of the period | | $ | 1,550 | $ | 1,579 |
| | |
| | Continuity of warrants during the periods is as follows: |
| | | | Underlying | | | | Weighted Average |
| | | | Shares | | Exercise Price |
| | Warrants outstanding and exercisable, January 1, 2019 | | 10,778,061 | | | $1.20 |
| | Issued | | 464,122 | | | C$0.85 |
| | Expired | | (3,602,215) | | | $1.99 |
| | Warrants outstanding and exercisable, December 31, 2019 | | 7,639,968 | | | $0.79 |
| | Exercised | | (4,195,072) | | | $0.80 |
| | Exercised | | (464,122) | | | C$0.85 |
| | Warrants outstanding and exercisable, September 30, 2020 | | 2,980,774 | | | $0.80 |
| | |
| | | | | | All Warrants |
| | | | | | | | | | Outstanding and Exercisable |
| Exercise Price | | | September 30, | | December 31, |
| | Expiry Date | | | | | | | | | per Share | 2020 | | 2019 |
| | July 30, 2020 | | | | | | | | | C$0.85 | - | | 464,122 |
| | September 25, 2023 | | | | | | | $0.80 | 2,980,774 | 7,175,846 |
| | | | | | | | | | 2,980,774 | 7,639,968 |
| | |
| | As at September 30, 2020, the weighted average remaining contractual life of warrants outstanding was 2.99 |
| | years (December 31, 2019 – 3.55 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: |
| | |
| | | | September 30, | | December 31, |
| | | | | 2020 | | 2019 |
| | Weighted average assumptions: | | | | | | | | | | |
| | Risk-free interest rate | | | 0.31% | | 1.68% |
| | Expected dividend yield | | | 0% | | 0% |
| | Expected warrant life (years) | | | 2.99 | | 3.57 |
| | Expected stock price volatility | | | 71.14% | | 61.61% |
| | Weighted average fair value | | | $0.52 | | $0.22 |
|
| | | | | | | | | | | | | |
| - 15 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
13. RECLAMATION PROVISION |
| | |
| | Management’s estimate of the reclamation provision at September 30, 2020, is $1,350 (December 31, 2019 |
| | – $1,524), and the undiscounted value of the obligation is $1,655 (December 31, 2019 – $1,985). |
| | |
| | The present value of the obligation was calculated using a risk-free interest rate of 5.55% (December 31, |
| | 2019 – 6.86%) and an inflation rate of 2.06% (December 31, 2019 – 3.54%). Reclamation activities are |
| | estimated to begin at the end of 2021 for the San Gonzalo Mine and in 2028 for the Avino Mine. |
| | |
| | A reconciliation of the changes in the Company’s reclamation provision is as follows: |
|
| | | | September 30, | | December 31, |
| | | | | 2020 | | 2019 |
| | | | | | | | | | | | |
| | Balance at beginning of the period | | $ | 1,524 $ | | 10,799 |
| | Changes in estimates | | | - | | 840 |
| | Disposition of Bralorne (Note 3) | | | - | | (10,828) |
| | Unwinding of discount related to Bralorne | | | - | | 217 |
| | Unwinding of discount related to continuing operations | | | 75 | | 104 |
| | Effect of movements in exchange rates | | | (249) | | 392 |
| | Balance at end of the period | | $ | 1,350 $ | | 1,524 |
|
14. SHARE CAPITAL AND SHARE-BASED PAYMENTS |
|
| | (a) Authorized: Unlimited common shares without par value. |
|
| | (b) Issued: |
| | |
| | (i) | | | | | | During the nine months ended September 30, 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 and incurred an additional |
| | | | | | | | $106 in issuance costs during the period. |
| | | | | | | | |
| | | | | | | | During the nine months ended September 30, 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 $2,708, and |
| | | | | | | | movements in foreign exchange of $48. |
|
| | | | | | | | During the nine months ended September 30, 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. |
|
| | | | | | | | During the nine months ended September 30, 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 nine months ended September 30, 2020, the Company issued 48,000 common shares |
| | | | | | | | following the exercise of 48,000 options. As a result, $44 was recorded to share capital, |
| | | | | | | | representing cash proceeds of $29 and the fair value upon issuance of $15. |
| | | | | | | | |
| | | | | | | | During the nine months ended September 30, 2020, the Company issued 863,901 common |
| | | | | | | | shares upon exercise of RSUs. As a result, $650 was recorded to share capital. |
| | | | | | | | |
| - 16 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | (ii) | During the year ended December 31, 2019, the Company closed a bought-deal financing, issuing |
| | | 5,411,900 common shares at the price of C$0.85, as well as 2,323,460 flow-through shares at |
| | | the price of C$0.99 for gross proceeds of $5,240 (C$6,900). The financing was made by way of |
| | | prospectus supplement in July 2019, so the Company’s existing Canadian short-form base shelf |
| | | prospectus dated December 21, 2018. |
| | |
| | | Of the $5,240 total aggregate proceeds raised, $116 was attributed to 464,122 warrants issued |
| | | as commission, leaving a residual amount of $5,124. This amount includes a flow-through |
| | | premium, which represents the difference between the C$0.85 price in which the common shares |
| | | were issued, and the offering price of C$0.99 per share. Based on the C$ to US$ exchange rate |
| | | on the date of the transaction, $247 was recorded as the flow-through premium, for a net share |
| | | capital allocation of $4,877. This premium is presented in “Other liabilities” on the condensed |
| | | consolidated interim statements of financial position as at December 31, 2019. |
| | | |
| | | The Company paid a 7% cash commission on the gross proceeds in the amount of $367, and |
| | | incurred additional legal and professional costs of $115. Costs of $10 were allocated to the fair |
| | | value of the warrants and have been reflected in the condensed consolidated interim statements |
| | | of operations as a finance cost, and costs of $472 have been reflected as share issuance costs |
| | | in the condensed consolidated interim statements of changes in equity. |
| | | |
| | | During the year ended December 31, 2019, the Company issued 4,954,000 common shares in |
| | | an at-the-market offering under prospectus supplement for gross proceeds of $2,924. The |
| | | Company paid a 3% cash commission of $87 on gross proceeds and incurred an additional $75 |
| | | in issuance costs during the period, |
| | | |
| | | During the year ended December 31, 2019, the Company issued 565,259 common shares upon |
| | | exercise of RSUs. As a result, $835 was recorded to share capital. |
| | | |
| | (c) Stock options: |
|
| | The Company has a stock option plan to purchase the Company’s common shares, under which it may |
| | grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a |
| | non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, |
| | and employees, and to persons providing investor relations or consulting services, the limits being based |
| | on the Company’s total number of issued and outstanding shares per year. The stock options vest on the |
| | date of grant, except for those issued to persons providing investor relations services, which vest over a |
| | period of one year. The option price must be greater than or equal to the discounted market price on the |
| | grant date, and the option term cannot exceed ten years from the grant date. |
| | |
| | Continuity of stock options is as follows: |
|
| | | | | Underlying | Weighted Average |
| | | | | Shares | Exercise Price (C$) |
| | | | | | | | |
Stock options outstanding, January 1, 2019 | | | | | 2,917,500 | | | | $2.04 |
| | Granted | | | 526,000 | | | | $0.79 |
| | Cancelled / Forfeited | | | (255,000) | | | | $2.09 |
| | Expired | | | (550,000) | | | | $1.90 |
Stock options outstanding, December 31, 2019 | | | | | 2,638,500 | | | | $1.82 |
| | Granted | | | 1,700,000 | | | | $1.64 |
| | Exercised | | | (48,000) | | | | $0.79 |
| | Cancelled / Forfeited | | | (678,500) | | | | $1.73 |
Stock options outstanding, September 30, 2020 | | | | 3,612,000 | | | | | $1.76 |
Stock options exercisable, September 30, 2020 | | | | | 1,912,000 | | | | $1.87 |
|
| - 17 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | The following table summarizes information about the stock options outstanding and exercisable at |
| | September 30, 2020: |
|
| | | | Outstanding | | | Exercisable |
| | | | | | | | | Weighted | | Weighted |
| | | | | | | | | Average | | Average |
| | | | | | | | | Remaining | | Remaining |
| | | | | | | | Number of | Contractual | Number of | | Contractual Life |
| | Expiry Date | | | | Price (C$) | | Options | Life (Years) | Options | | | | | | | (Years) |
| | September 2, 2021 | $2.95 | | | | | 370,000 | | | | | 0.92 | 370,000 | | | | | | | | | | 0.92 |
| | September 20, 2022 | $1.98 | | | | | 930,000 | | | | | 1.97 | 930,000 | | | | | | | | | | 1.97 |
| | August 28, 2023 | $1.30 | | | | | 325,000 | | | | | 2.91 | 325,000 | | | | | | | | | | 2.91 |
| | August 21, 2024 | $0.79 | | | | | 287,000 | | | | | 3.89 | 287,000 | | | | | | | | | | 3.89 |
| | August 4, 2025 | $1.64 | | | | | 1,700,000 | | | | | 4.85 | - | | | | | | | | | | 4.85 |
| | | | | | | | | | | | 3,612,000 | | | | | 3.45 | 1,912,000 | | | | 2.22 |
| | |
| | Option pricing 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 options granted during the nine months ended September 30, 2020, was calculated |
| | using the Black-Scholes model with the following weighted average assumptions and resulting grant date |
| | fair value: |
| | |
| | | | | | | | | | | 2020 | | | | | | | | | | 2019 |
Weighted average assumptions: | | | | | | | | | | | |
| | Risk-free interest rate | | | | | | | | | 0.30% | | | | | | | | 1.27% |
| | Expected dividend yield | | | | | | | | | 0% | | | | | | | | | | 0% |
| | Expected option life (years) | | | | | | | | | 5.00 | | | | | | | | | | 5.00 |
| | Expected stock price volatility | | | | | | | | | | | | | | 66.09% | | | | | | | 59.01% |
Weighted average fair value at grant date | | | | | | | | | | | C$0.89 | | | | | | | | C$0.40 |
| | |
| | During the nine months ended September 30, 2020, the Company charged $361 (September 30, 2019 - |
| | $79) to operations as share-based payments and capitalized $Nil (September 30, 2019 - $37) to |
| | exploration and evaluation assets for the fair value of stock options vested during the period. |
|
(d) Restricted Share Units: |
|
| | On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its shareholders. |
| | The RSU Plan is administered by the Compensation Committee under the supervision of the Board of |
| | Directors as compensation to officers, directors, consultants, and employees. The Compensation |
| | Committee determines the terms and conditions upon which a grant is made, including any performance |
| | criteria or vesting period. |
| | |
| | Upon vesting, each RSU entitles the participant to receive one common share, provided that the |
| | participant is continuously employed with or providing services to the Company. RSUs track the value of |
| | the underlying common shares, but do not entitle the recipient to the underlying common shares until |
| | such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to |
| | ownership or control of the common shares, until the RSU vests and the RSU participant receives |
| | common shares. |
| | |
| | | |
| - 18 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | Continuity of RSUs is as follows: |
| | | | Underlying | Weighted Average |
| | | | Shares | Exercise Price (C$) |
| | | | | | | |
RSUs outstanding, January 1, 2019 | | | | 1,235,300 | | | | $1.62 |
| | Granted | | 1,730,500 | | | | $0.79 |
| | Exercised | | (565,259) | | | | $1.96 |
| | Cancelled / Forfeited | | (27,666) | | | | $1.35 |
RSUs outstanding, December 31, 2019 | | | | 2,372,875 | | | | $0.94 |
| | Granted | | 1,481,000 | | | | $1.64 |
| | Exercised | | (863,901) | | | | $0.79 |
| | Cancelled / Forfeited | | (115,974) | | | | $1.00 |
RSUs outstanding, September 30, 2020 | | | | 2,874,000 | | | | $1.28 |
| | |
| | The following table summarizes information about the RSUs outstanding at September 30, 2020: |
|
| | Issuance Date | | | | | | | | Price (C$) | | | | | | | | | | Number of RSUs Outstanding |
| | August 23, 2018 | $1.31 | | | | | | | 288,000 |
| | August 21, 2019 | $0.79 | | | | | | | 1,105,000 |
| | August 4, 2020 | $1.64 | | | | | | | 1,481,000 |
| | | | | | | | | | | | | | | | | 2,874,000 |
| | |
| | For the RSUs issued during nine months ended September 30, 2020, the weighted average fair value at |
| | the measurement date was C$1.64 (for year ended December 31, 2019 was C$0.79), based on the TSX |
| | market price of the Company’s shares on the date the RSUs were granted. |
| | |
| | During the nine months ended September 30, 2020, the Company charged $701 (September 30, 2019 - |
| | $564) to operations as share-based payments and capitalized $Nil (September 30, 2019 - $48) to |
| | exploration and evaluation assets 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. |
|
(e) Loss per share: |
|
| | The calculations for basic loss per share and diluted loss per share are as follows: |
| | |
| | | Three months ended | | | | | Nine months ended |
| | | | | | | | | | September 30, | September 30, |
| | | 2020 | | 2019 | | | 2020 | | 2019 |
| | Net loss from continuing operations |
| | for the period | | | | | | | | | | $ (4,587) | $ (1,545) | $ (5,930) | $ (2,209) |
| | Net loss for the period | | | | | | | | | | $ (4,589) | $ (1,642) | $ (6,097) | $ (2,418) |
| | Basic weighted average number of |
| | shares outstanding | | | | | | | | | | 87,093,054 | 73,428,820 | | | 81,027,129 | 67,743,695 |
| | Effect of dilutive share options, |
| | warrants, and RSUs | | | | | | | | - | - | | - | | - |
| | Diluted weighted average number of |
| | shares outstanding | | | | | | | | | | 87,093,054 | 73,428,820 | | | 81,027,129 | 67,743,695 |
| | Basic and diluted loss from |
| | continuing operations per share | | | | | | | | | | $ | (0.05) | | | | | | | | | $ | (0.02) | $ | | (0.07) | $ | | | (0.03) |
| | Basic and diluted loss per share | | | | | | | | | | $ | (0.05) | | | | | | | | | $ | (0.02) | $ | | (0.08) | $ | | | (0.04) |
| - 19 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
15. REVENUE AND COST OF SALES |
|
| | Revenue reflects the sale of silver, gold and copper concentrate from the Avino Mine and from the sale of |
| | silver and gold concentrate from the San Gonzalo Mine for the three and nine months ended September 30, |
| | 2020 and 2019. |
| | | | Three months ended | | | | Nine months ended |
| | | | September 30, | | September 30, |
| | | |
| 2020 | | | | | | 2019 | 2020 | | | 2019 |
| | Concentrate sales | | | | | | | $ | 2,157 $ | | | | | | 6,600 $ | 13,964 $ | | | 20,914 |
| | Provisional pricing adjustments | 502 | | | | | | 196 | 651 | | | 406 |
| | | | | | | | | $ | 2,659 $ | | | | | | 6,796 $ | 14,615 $ | | | 21,320 |
|
| | 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 and nine months ended |
| | September 30, 2020. |
| | |
| | Cost of sales is based on the weighted average cost of inventory sold for the periods and consists of the |
| | following: |
| | | | Three months ended | | | | Nine months ended |
| | | | September 30, | | September 30, |
| | | |
| 2020 | | | | | | 2019 | 2020 | | | 2019 |
| | Production costs | | | | | | | $ | 1,428 $ | | | | | | 6,144 $ | 10,607 $ | | | 18,750 |
| | Stand-by costs | 875 | | | | | | - | 875 | | | - |
| | Inventory net realizable adjustment | | - | | | 273 | - | | | 387 |
| | Depreciation and depletion | 545 | | | | | | 556 | 1,692 | | | 2,008 |
| | |
| | | | | | | | | $ | 2,848 $ | | | | | | 6,973 $ | 13,174 $ | | | 21,145 |
|
| | During the three months ended September 30, 2020, production costs consisted of costs incurred in |
| | converting process material stockpiles that were in inventory at June 30, 2020, into concentrate sold during |
| | the three months ended September 30, 2020. |
|
16. GENERAL AND ADMINISTRATIVE EXPENSES |
|
| | General and administrative expenses on the condensed consolidated interim statements of operations |
| | consist of the following: |
| | | | Three months ended | | | | Nine months ended |
| | | | September 30, | | September 30, |
| | | | 2020 | | | | | | 2019 | 2020 | | | 2019 |
| | Salaries and benefits | | | | | | | $ | 269 $ | | | | | | 297 $ | 921 $ | | | 954 |
| | Office and miscellaneous | 78 | | | | | | 36 | 137 | | | 134 |
| | Management and consulting fees | 88 | | | | | | 108 | 294 | | | 303 |
| | Investor relations | 60 | | | | | | 67 | 140 | | | 149 |
| | Travel and promotion | 5 | | | | | | 21 | 41 | | | 63 |
| | Professional fees | 69 | | | | | | 166 | 211 | | | 406 |
| | Directors fees | 53 | | | | | | 43 | 126 | | | 113 |
| | Regulatory and compliance fees | 41 | | | | | | 26 | 106 | | | 99 |
| | Depreciation | 30 | | | | | | 6 | 87 | | | 21 |
| | | | | | | | | $ | 693 $ | | | | | | 770 $ | 2,063 $ | | | 2,242 |
| - 20 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
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: |
| | |
| | | September 30, | | December 31, |
| | | | 2020 | | 2019 |
| | Not later than one year | $ | 7 $ | | 1,269 |
| | Later than one year and not later than five years | | 16 | | 20 |
| | Later than five years | | 3 | | 5 |
| | | $ | 26 $ | | 1,294 |
| | |
Included in the above amount as at September 30, 2020, is the Company’s commitment to incur flow-through |
eligible expenditures of $Nil (December 31, 2019 - $1,262 (C$1,639)) that must be incurred in Canada. |
|
18. SUPPLEMENTARY CASH FLOW INFORMATION |
|
| | | September 30, | | September 30, |
| | | | 2020 | | 2019 |
| | Net change in non-cash working capital items: | | | | | | |
| | | | | | | | | Inventory | $ | 3,399 | $ | 1,041 |
| | | | | | | | | Prepaid expenses and other assets | (187) | | 33 |
| | | | | | | | | Taxes recoverable | (1,266) | | 680 |
| | | | | | | | | Taxes payable | (42) | | (150) |
| | | | | | | | | Accounts payable and accrued liabilities | (2,890) | | (389) |
| | | | | | | | | Amounts receivable | 224 | | (266) |
| | | | | | | | | Other liabilities | (178) | | (3) |
| | | | | | | | | Deferred revenues | - | | (573) |
| | | | | | | | | Amounts due to related parties | (13) | | 9 |
| | | $ | (953) $ | | 382 |
|
| | | September 30, | | September 30, |
| | | | 2020 | | 2019 |
| | Interest paid | $ | 256 | $ | 472 |
| | Taxes paid | $ | 407 $ | | 2,585 |
| | Equipment acquired under finance leases and |
| | equipment loans | $ | - | $ | 116 |
| | |
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. |
|
| - 21 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | (a) Credit Risk |
| | |
| | Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party |
| | by failing to discharge an obligation. The Company has exposure to credit risk through its cash, long-term |
| | investments and amounts receivable. The Company manages credit risk, in respect of cash and short- |
| | term investments, by maintaining the majority of cash and short-term investments at highly rated financial |
| | institutions. |
| | The Company is exposed to a significant concentration of credit risk with respect to its trade accounts |
| | receivable balance because all of its concentrate sales are with four (December 31, 2019 – six) |
| | counterparties (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 consolidated statement of financial position. At September 30, |
| | 2020, no amounts were held as collateral. |
|
| | (b) Liquidity Risk |
|
| | Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they |
| | become due. The Company manages its liquidity risk by forecasting cash flows required by its operating, |
| | investing and financing activities. The Company had cash at September 30, 2020, in the amount of |
| | $12,493 and working capital of $16,859 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. |
|
| | The maturity profiles of the Company’s contractual obligations and commitments as at September 30, |
| | 2020, are summarized as follows: |
| | | | Less Than | | More Than 5 |
| | | | Total | | | 1 Year | 1-5 years | | Years |
| | | Accounts payable and |
| | | accrued liabilities | | | | | $ 2,182 | $ 2,182 | $ - | $ - |
| | | Amounts due to related |
| | | parties | 147 | | | | | | | | 147 | - | - |
| | | Minimum rental and lease |
| | | payments | 26 | | | | | | | | 7 | 16 | 3 |
| | | Term facility | 3,423 | | | 3,423 | | | | | | - | - |
| | | Equipment loans | 129 | | | | | | | | 129 | - | - |
| | | Finance lease obligations | 597 | | | | | | | | 288 | 309 | - |
| | | Total | $ 6,504 | | | $ 6,176 | $ 325 | $ 3 |
|
| | | | | | | | | | | | |
| - 22 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | (c) Market Risk |
|
| | Market risk consists of interest rate risk, foreign currency risk and price risk. These are discussed further |
| | below. |
|
| | Interest Rate Risk Interest rate risk consists of two components: (i) To the extent that payments made or received on the Company’s monetary assets and liabilities are |
| | | affected by changes in the prevailing market interest rates, the Company is exposed to interest rate |
| | | cash flow risk. |
| | (ii) To the extent that changes in prevailing market rates differ from the interest rates on the Company’s |
| | | monetary assets and liabilities, the Company is exposed to interest rate price risk. |
| | |
| | In management’s opinion, the Company is 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: |
| | |
| | | | September 30, 2020 | December 31, 2019 |
| | | | MXN | | CDN | MXN | | CDN |
| | Cash | | | | | | $ | 863 $ | | | | | 3,611 $ | 2,780 $ | | 5,902 |
| | Long-term investments | - | | | | | 5,238 | | | - | 5,599 |
| | Reclamation bonds | - | | | | | | | | | 6 | - | | 6 |
| | Amounts receivable | - | | | | | | | | | 20 | - | | 54 |
| | Accounts payable and |
| | accrued liabilities | | (43,027) | | | | | | (234) | (51,307) | | | | | | (442) |
| | Due to related parties | - | | | | | | | | | (196) | - | | (202) |
| | Finance lease obligations | (545) | | | | | | | | | (471) | (1,037) | | | | | | (522) |
| | Net exposure | | (42,709) | | 7,974 | (49,564) | | 10,395 |
| | US dollar equivalent | | | | | | $ | (1,901) $ | | 5,978 $ | (2,627) $ | | 8,004 |
| | |
| | Based on the net US dollar denominated asset and liability exposures as at September 30, 2020, a 10% |
| | fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings |
| | for the nine months ended September 30, 2020, by approximately $353 (year ended December 31, 2019 |
| | - $465). The Company has not entered into any foreign currency contracts to mitigate this risk. |
| | |
| | Price Risk |
| | |
| | Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to |
| | changes in market prices, other than those arising from interest rate risk or foreign currency risk. |
| | |
| | The Company is exposed to price risk with respect to its amounts receivable, as certain trade accounts |
| | receivable are recorded based on provisional terms that are subsequently adjusted according to quoted |
| | metal prices at the date of final settlement. Quoted metal prices are affected by numerous factors beyond |
| | the Company’s control and are subject to volatility, and the Company does not employ hedging strategies |
| | to limit its exposure to price risk. At September 30, 2020, based on outstanding accounts receivable that |
| - 23 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
| | were subject to pricing adjustments, a 10% change in metals prices would have an impact on net earnings |
| | (loss) of approximately $42 (December 31, 2019 - $70). |
| | |
| | The Company is exposed to price risk with respect to its long-term investments, as these investments are |
| | carried at fair value based on quoted market prices. Changes in market prices result in gains or losses |
| | being recognized in net income (loss). At September 30, 2020, a 10% change in market prices would |
| | have an impact on net earnings (loss) of approximately $393 (December 31, 2019 - $467). |
| | |
| | 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 September 30, 2020: |
| | |
| | | Level 1 | Level 2 | Level 3 |
| | Financial assets | | | | | | |
| | Cash | $ | | 12,493 $ | | | | - $ | - |
| | Amounts receivable | | | | | | - | 1,044 | | | | - |
| | Long-term investments | | | 3,927 | | | | - | - |
| | Total financial assets | $ 16,420 $ 1,044 $ | | | | | | | - |
| | Financial liabilities | | | | | | | | |
| | Warrant liability | | | | | | - | - | (1,550) |
| | Total financial liabilities | $ - $ | | | | | | - $ | (1,550) |
|
|
| | | | | | | | | |
| - 24 - |
|
AVINO SILVER & GOLD MINES LTD. |
Notes to the unaudited condensed consolidated interim financial statements |
For the nine months ended September 30, 2020 and 2019 |
(Expressed in thousands of US dollars, except where otherwise noted) |
|
20. SEGMENTED INFORMATION |
|
| | The Company’s revenues for the three and nine months ended September 30, 2020 of $2,659 and $14,615 |
| | (September 30, 2019 - $6,796 and $21,320) are all attributable to Mexico, from shipments of concentrate |
| | produced by the Avino Mine and the San Gonzalo Mine. |
| | |
| | On the condensed consolidated interim statements of operations, the Company had revenue from the |
| | following product mixes: |
| | |
| Three months ended | | | Nine months ended |
| | | September 30, | | September 30, |
| 2020 | | | | | 2019 | 2020 | | | 2019 |
| | Silver | $ 924 | | | | | $ 2,958 | | $ 5,668 | $ 9,376 |
| | Copper | 1,344 | | | | | 2,814 | 7,823 | | | 8,997 |
| | Gold | 768 | | | | | 2,562 | 4,506 | | | 7,307 |
| | Penalties, treatment costs and refining |
| | charges | (377) | | | | | (1,538) | (3,382) | | | (4,360) |
| | Total revenue from mining operations | $ 2,659 | | | | | $ 6,796 | | $ 14,615 | $ 21,320 |
| | | | | | | | | | | | | | | | |
|
| | For nine months ended September 30, 2020, the Company had four customers (September 30, 2019 – six |
| | customers) that accounted for total revenues as follows: |
|
| Three months ended | | | Nine months ended |
| | | September 30, | | September 30, |
| 2020 | | | | | 2019 | 2020 | | | 2019 |
| | Customer #1 | $ 2,310 | | | | | $ 5,439 | | $ 11,194 | $ 16,091 |
| | Customer #2 | - | | | 370 | (18) | | | 3,086 |
| | Customer #3 | 314 | | | | | 655 | 3,179 | | | 661 |
| | Customer #4 | 35 | | | | | 313 | 260 | | | 1,003 |
| | Customer #5 | - | | | 19 | - | | | 469 |
| | Customer #6 | - | | | - | - | | | 10 |
| | Total revenue from mining operations | $ 2,659 | | | | | $ 6,796 | | $ 14,615 | $ 21,320 |
| | | | | | | | | | | | | | | | |
| | Geographical information relating to the Company’s non-current assets (other than financial instruments) is |
| | as follows: |
|
| | | | | | September 30, | December 31, |
| | | | | | | | 2020 | 2019 |
| | Exploration and evaluation assets - Mexico | | | | $ | | | 10,009 | $ | | | 9,826 |
| | Exploration and evaluation assets - Canada | | | | | | 1 | 1 |
| | Total exploration and evaluation assets | | | | $ | | | 10,010 | $ | | | 9,827 |
|
| | | | | | September 30, | December 31, |
| | | | | | | | 2020 | 2019 |
| | Plant, equipment, and mining properties - Mexico | | | | $ | | | 34,384 | $ | | | 35,239 |
| | Plant, equipment, and mining properties - Canada | | | | | | 374 | 419 |
| | Total plant, equipment, and mining properties | | | | $ | | | 34,758 | $ | | | 35,658 |
|
| | | | | | | | | | | |
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