Enhanced Investments - Financial Portal

Published: 2022-03-16












			AVINO SILVER & GOLD MINES LTD.


				Consolidated Financial Statements

			For the years ended December 31, 2021, 2020 and 2019

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements of Avino Silver & Gold Mines Ltd. (the “Company”) are the responsibility of

the Company’s management. The consolidated 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 fulfil s its responsibilities. The Audit

Committee reviews the results of the annual audit and reviews the consolidated financial statements prior to their

submission to the Board of Directors for approval.

The consolidated financial statements as at December 31, 2021 and 2020, and for the years ended December

31, 2021, 2020 and 2019, have been audited by Manning El iott LLP, an independent registered public accounting

firm, and their report outlines the scope of their examination, and gives their opinion on the consolidated financial

statements.

“David Wolfin”

“Nathan Harte”

David Wolfin

Nathan Harte, CPA

President & CEO

Chief Financial Officer

March 16, 2022




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of
Avino Silver & Gold Mines Ltd.

Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Avino Silver & Gold Mines Ltd. and
its subsidiaries (together, the “Company”), which comprise the consolidated statements of financial position
as at December 31, 2021 and 2020, and the consolidated statements of operations and comprehensive
income (loss), consolidated statements of changes in equity and consolidated statements of cash flows for
the years ended December 31, 2021, 2020 and 2019, and the related notes, including a summary of
significant accounting policies and other explanatory information (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in al material
respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial
performance and its cash flows for the years ended December 31, 2021, 2020 and 2019 in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2022, expressed an
unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement, whether due to fraud or error. Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, and performing procedures that respond to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overal presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
reasonable basis for our audit opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (1) relates to accounts or disclosures that are material to the consolidated financial
statements and (2) involved challenging, subjective, or complex judgments. The communication of a critical
audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.


Assessment of the Existence of Impairment Indicators for the Avino Mine As described in Note 11 to the consolidated financial statements the carrying amount of the plant, equipment
and Avino mining properties is $35,675,000 as at December 31, 2021. Management applies significant
judgement to assess plant, equipment and Avino mining properties (collectively the “Avino Mine”) for the
existence of impairment indicators that could give rise to the requirement to conduct a formal impairment test.
Management considers both external and internal sources of information in assessing whether there are any
indictors of impairment as disclosed in Note 2 (iv). External sources of information considered by
management include changes in the market, economic and legal environments, in which the Company
operates, that are not within its control and that affect the recoverable amount of the Avino Mine. Internal
sources of information that management considers include the manner in which the Avino Mine is being used,
or is expected to be used, and indications of economic performance of the assets.

We have determined that performing procedures relating to the assessment of the existence of impairment
indicators for the Avino Mine is a critical audit matter primarily due to the application of judgment by
management in assessing specific factors such as (a) significant adverse changes in the economic or legal
environment of operations, (b) significant changes with an adverse effect on the use of the asset, (c) current
period cash flow or operating losses, combined with a history of losses or a forecast of continuing losses
associated with the use of the assets. This in turn led to a high degree of auditor judgment, subjectivity and
effort in performing procedures to evaluate audit evidence relating to the judgements made by management
in their assessment of indicators of impairment that could give rise to the requirement to conduct a formal
impairment test.

Addressing the critical audit matter involved performing procedures and evaluating audit evidence in
connection with forming our overall opinion on the consolidated financial statements. Our audit procedures
included amongst others, (a) a review of management’s assessment of the existence of impairment indicators
of the Avino Mine (b) completion of our own assessment of impairment indicators in accordance with IAS 36
Impairment of Assets, (c) a review of matters that impact the Company’s ability to continue mining operations,
(d) evaluated whether there were adverse economic changes in metal prices by considering external
observable market prices, (e) compared the current performance to the Company’s historical mining results
associated with the assets, (f) compared management’s mine plans to data in the Company’s resource
estimate which was prepared by a specialist.
/s/ Manning El iott LLP CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, British Columbia, Canada March 16, 2022 We have served as the Company’s auditor since 2007.




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of
Avino Silver & Gold Mines Ltd.

Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Avino Silver & Gold Mines Ltd. and
subsidiaries (the “Company") as of December 31, 2021, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2021, based on criteria established in Internal Control -
Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as at and for the year ended December 31,
2021, of the Company and our report dated March 16, 2022, expressed an unqualified opinion on those
financial statements.

Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in al material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with general y accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with general y accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

/s/ Manning El iott LLP CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, British Columbia, Canada March 16, 2022



AVINO SILVER & GOLD MINES LTD.
Consolidated Statements of Financial Position
(Expressed in thousands of US dollars)

				December 31,		December 31,
			Note		2021		2020

ASSETS
Current assets
Cash								$	24,765	$	11,713
Amounts receivable									1,208		529
Taxes recoverable			6		3,364		5,044
Prepaid expenses and other assets									962		757
Inventory			7		5,179		1,659
Total current assets									35,478		19,702
Exploration and evaluation assets			9		11,053		10,052
Plant, equipment and mining properties			11		35,675		34,846
Long-term investments			8		3,939		4,176
Other assets									133		4
Total assets								$	86,278	$	68,780

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities								$	3,260	$	2,068
Amounts due to related parties			12(b)		163		154
Taxes payable									31		7
Current portion of term facility			13		-		2,513
Current portion of equipment loans									-		72
Current portion of finance lease obligations									389		208
Total current liabilities									3,843		5,022
Finance lease obligations									680		278
Warrant liability			14		741		2,295
Reclamation provision			15		726		808
Deferred income tax liabilities									1,781		1,369
Total liabilities									7,771		9,772

EQUITY
Share capital			16		129,953		108,303
Equity reserves									9,573		9,951
Treasury shares (14,180 shares, at cost)									(97)		(97)
Accumulated other comprehensive loss									(4,969)		(4,810)
Accumulated deficit									(55,953)		(54,339)
Total equity									78,507		59,008
Total liabilities and equity								$	86,278	$	68,780


Commitments – Note 19



Approved by the Board of Directors on March 16, 2022:
								Gary Robertson Director		David Wolfin Director
	The accompanying notes are an integral part of the consolidated financial statements

		- 1 -



AVINO SILVER & GOLD MINES LTD.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in thousands of US dollars)

		Note	2021	2020				2019
Revenue from mining operations		17			$	11,228 $			16,022 $	31,746
Cost of sales		17				7,681			15,832	32,016
Mine operating income (loss)						3,547	190				(270)

Operating expenses
General and administrative expenses		19				3,566	2,902				3,193
Share-based payments		16				1,469	1,857				937
Loss before other items						(1,488)			(4,569)	(4,400)

Other items
Interest and other income						178	332				545
Unrealized gain (loss) on long-term investments						(423)	(124)				1,282
Fair value adjustment on warrant liability		14				1,581	(650)				520
Realized loss on warrants exercised						(1,106)			(2,733)	-
Foreign exchange loss						(61)	(811)				(663)
Project evaluation expenses						(176)	-				-
Finance cost						(52)	(211)				(84)
Accretion of reclamation provision		15				(47)	(99)				(104)
Interest expense						(24)	(25)				(64)
Loss from continuing operations before income taxes						(1,618)			(8,890)	(2,968)
Income taxes:
Current income tax expense						(27)	(161)				(327)
Deferred income tax (expense) recovery											(412)	1,569		960
Income tax (expense) recovery						(439)	1,408				633
Net loss from continuing operations						(2,057)			(7,482)	(2,335)
Loss from discontinued operations and on disposal											5		-	(169)		(29,126)
Net loss						(2,057)			(7,651)	(31,461)

Other comprehensive income (loss)
Currency translation differences						(159)	(247)				1,603
Reclassification of foreign exchange on translation
into net loss on sale of discontinued operations						-	-				(42)
Total comprehensive loss					$	(2,216) $			(7,898) $	(29,900)
Loss per share from continuing operations		16(e)
Basic														$(0.02)	$(0.09)	$(0.03)
Diluted														$(0.02)	$(0.09)	$(0.03)
Loss per share		16(e)
Basic						$(0.02)			$(0.09)	$(0.45)
Diluted						$(0.02)			$(0.09)	$(0.45)
Weighted average number of common shares
outstanding		16(e)
Basic					100,161,357 83,180,069							69,980,178
Diluted					100,161,357 83,180,069							69,980,178
	The accompanying notes are an integral part of the consolidated financial statements

		- 2 -



AVINO SILVER & GOLD MINES LTD.
Consolidated Statements of Changes in Equity
(Expressed in thousands of US dollars)
EQUITY ST
			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		7,735,360	4,877												-	-											-					-						4,877
														Less: Issuance costs					-	(472)													-	-										-						-	(472)
														At the market issuances		4,954,000	2,924												-	-											-					-	2,924
														Less: Issuance costs					-	(162)													-	-										-						-	(162)
														Options cancelled or expired					-	-			(762)	-													-						762	-
Carrying value of RSUs exercised								565,259	835											(835)	-												-							-									-
Fair value of warrants issued											-	-			116	-											-									-									116
Shares to be issued											-	349											-	-													-						-	349
Share-based payments											-	-	1,023			-											-									-									1,023
Net loss for the year											-	-			-	-											-												(31,461)	(31,461)
Currency translation differences											-	-			-	-				1,561			-	1,561
Balance, January 31, 2019								76,592,388 $ 96,396 $	9,391 $					(97)	$	(4,563) $ (47,204) $	53,923
Common shares issued for cash:
														At the market issuances		6,730,054	4,940												-	-											-					-	4,940
														Exercise of warrants		4,659,194	6,528												(116)	-											-					-	6,412
														Exercise of options												48,000	43				(15)	-										-						-	28
														Common shares issued for services		675,145									-				-	-											-					-	-
Issuance costs											-	(254)											-	-													-						-	(254)
Options cancelled or expired											-	-			(516)	-											-									516	-
Carrying value of RSUs exercised								863,901	650											(650)	-												-							-	-
Share-based payments											-	-	1,857			-											-									-	1,857
Net loss for the year											-	-			-	-											-												(7,651)	(7,651)
Currency translation differences											-	-			-	-				(247)			-													(247)
Balance, December 31, 2020								89,568,682 $ 108,303 $	9,951 $					(97)	$	(4,810) $ (54,339) $	59,008
Common shares issued for cash:
														At the market issuances	16		10,050,000	18,497												-	-	-						-	18,497
														Exercise of warrants	16		1,030,362	1,911												-	-	-						-	1,911
														Exercise of options	16		264,000									364				(126)	-	-						-	238
Issuance costs	16										-	(400)											-	-	-								- (400)
Options cancelled or expired	16										-	-			(443)	-	-						443	-
Carrying value of RSUs exercised																				1,330,167	1,278	(1,278)			-	-								-	-
Share-based payments	16										-	-	1,469			-	-						-	1,469
Net loss for the year	16										-	-			-	-	-											(2,057)	(2,057)
Currency translation differences											-	-			-	-				(159)			-	(159)
Balance, December 31, 2021								102,243,211	$ 129,953 $	9,573 $					(97)	$	(4,969) $ (55,953) $	78,507



	The accompanying notes are an integral part of the consolidated financial statements

		- 3 -

AVINO SILVER & GOLD MINES LTD.
Consolidated Statements of Cash Flows
(Expressed in thousands of US dollars)


		Note	2021	2020	2019

Cash generated by (used in):

Operating Activities
Net loss							$ (2,057) $ (7,651) $ (31,461)
Adjustments for non-cash items:
Deferred income tax expense (recovery)			412	(1,569)	(960)
Depreciation and depletion			2,116	1,917	3,723
Inventory net realizable value adjustment						-	-	387
Accretion of reclamation provision			47	99	104
Unrealized loss (gain) on investments			423	124	(1,282)
Unrealized foreign exchange loss (gain)			(265)	(588)	1,461
Unwinding of fair value adjustment on term facility			(13)	(51)	(170)
Fair value adjustment on warrant liability			(1,581)	650	(520)
Realized loss on warrants exercised			1,106	2,733	2,708
Loss from discontinued operations and on disposal						-	-	29,126
Share-based payments			1,469	1,857	937

			1,657	(2,479)	1,345

Net change in non-cash working capital items		20	(1,548)	2,551	4,162

			109	72	5,507


Financing Activities
Shares and units issued for cash, net of issuance costs			18,098	4,685	7,283
Proceeds from option exercise			238	29	-
Proceeds from warrant exercise			805	3,679	-
Term facility payments			(2,500)	(3,333)	(833)
Finance lease payments			(477)	(640)	(956)
Equipment loan payments			(72)	(217)	(524)

			16,092	4,203	4,970

Investing Activities
Exploration and evaluation expenditures			(1,294)	(231)	(5,273)
Additions to plant, equipment and mining properties			(1,913)	(2,014)	(3,276)
Proceeds from sale of long-term investments						-	78	23
Cash proceeds from sale of discontinued operations						-	-	6,599
Cash disposed of in discontinued operations						-	-	(1,459)
Redemption of reclamation bonds						-	-	102

			(3,207)	(2,167)	(3,734)

Change in cash			12,994	2,108	6,743

Effect of exchange rate changes on cash			58	(20)	(370)

Cash, Beginning			11,713	9,625	3,252

Cash, Ending							$ 24,765		$ 11,713	$ 9,625



	Supplementary Cash Flow Information (Note 20)

	The accompanying notes are an integral part of the consolidated financial statements

		- 4 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 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 Granvil e Street, Vancouver, BC,
		Canada. The Company is a reporting issuer in Canada and the United States, and trades on the Toronto Stock
		Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges. The Company operates the Avino Mine which produces copper, silver and gold at the historic Avino property
		in the state of Durango, Mexico. The Company also owns interests in mineral properties located in British
		Columbia and Yukon, Canada.

		Risks associated with Public Health Crises, including COVID-19

		The Company's business, operations and financial condition could be material y 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 consolidated financial statements, the duration of the business disruptions international y
		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 il ness that has the
		potential to spread rapidly, this could place the Company's workforce at risk.


	- 5 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

2. BASIS OF PRESENTATION

		Statement of Compliance

		These consolidated financial statements have been prepared in accordance with International Financial
		Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

		Basis of Presentation

		These consolidated financial statements are expressed in US dol ars and have been prepared on a historical
		cost basis except for financial instruments that have been measured at fair value. In addition, these
		consolidated 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 al periods presented
		in these consolidated financial statements as if the policies have always been in effect.

		Foreign Currency Translation

		Functional & presentation currencies

		The functional currency of the Company is the Canadian dollar. The functional currency of the Company’s
		Mexican subsidiaries is the US dollar, which is determined to be the currency of the primary economic
		environment in which the subsidiaries operate.

		Foreign currency transactions

		Transactions in currencies other than the functional currency are recorded at the rates of exchange
		prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and
		liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the
		statement of financial position. Non-monetary items that are measured in terms of historical cost in a
		foreign currency are not re-translated.

		Foreign operations

		Subsidiaries that have functional currencies other than the US dol ar translate their statement of operations
		items at the average rate during the year. Assets and liabilities are translated at exchange rates prevailing
		at the end of each reporting period. Exchange rate variations resulting from the retranslation at the closing
		rate of the net investment in these subsidiaries, together with differences between their statement of
		operations items translated at actual and average rates, are recognized in accumulated other
		comprehensive income (loss). On disposition or partial disposition of a foreign operation, the cumulative
		amount of related exchange difference is recognized in the statement of operations.

		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 consolidated 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.
		a) Critical judgments exercised by management in applying accounting policies that have the most significant
		effect on the amounts presented in these consolidated financial statements are as follows:
	- 6 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		i. Economic recoverability and probability of future economic benefits from exploration and
		evaluation costs

		Management has determined that mine and camp, exploratory dril ing, and other exploration and
		evaluation-related costs that were capitalized have future economic benefits and are economical y
		recoverable. Management uses several criteria in its assessments of economic recoverability and
		probability of future economic benefits including geologic and metal urgic information, scoping studies,
		accessible facilities, existing permits, and mine plans.

		ii. Commencement of production at levels intended by management

		Prior to reaching production levels intended by management, costs incurred are capitalized as part of
		the costs of related exploration and evaluation assets, and proceeds from concentrate sales are offset
		against costs capitalized. Depletion of capitalized costs for mining properties and depreciation of plant
		and equipment begin when operating levels intended by management have been reached. Management
		considers several factors in determining when a mining property has reached the intended production
		levels, including production capacity, recoveries, and number of uninterrupted production days.

		The basis for achievement of production levels intended by management as indicated by technical
		feasibility and commercial viability is general y established with proven reserves based on a NI 43-101-
		compliant technical report or a comparable resource statement and feasibility study, combined with pre-
		production operating statistics and other factors. In cases where the Company does not have a 43-101-
		compliant reserve report, on which to base a production decision, the technical feasibility and
		commercial viability of extracting a mineral resource are considered in light of additional factors including
		but not limited to:
			•	Acquisition and installation of al critical capital components to achieve desired mining and
			processing results has been completed. Capital components have been acquired directly and
			are also available on an as-needed basis from the underground mining contractor;
			•	The necessary labour force, including mining contractors, has been secured to mine and
			process at planned levels of output;
			•	The mil has consistently processed at levels above design capacity and budgeted production
			levels with consistent recoveries and grades; and,
			•	Establishing sales agreements with respect to the sale of concentrates.

		When technical feasibility and commercial viability are considered demonstrable according to the above
		criteria and other factors, the Company performs an impairment assessment and records an impairment
		loss, if any, before reclassifying exploration and evaluation costs to plant, equipment, and mining
		properties.
		iii. Functional currency

		The functional currency for the Company and its subsidiaries is the currency of the primary economic
		environment, in which the entity operates. The Company has determined the functional currency of the
		Company to be the Canadian dol ar. The Company has determined the functional currency of its
		Mexican subsidiaries to be the US dollar. Determination of functional currency may involve certain
		judgments to determine the primary economic environment. The Company reconsiders the functional
		currency of its entities, if there is a change in events and conditions, which determine the primary
		economic environment.

		b) Significant assumptions about the future and other sources of estimation uncertainty that management has
		made at the consolidated statement of financial position date that could result in a material adjustment to
		the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made
		relate to, but are not limited to, the fol owing:

	- 7 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		i. Stockpile and concentrate inventory valuations
		Concentrate and stockpile mineralized material are valued at the lower of average cost or net realizable
		value. The assumptions used in the valuation of concentrate and stockpile mineralized material include
		estimates of copper, silver, and gold contained in the stockpiles and finished goods assumptions for the
		amount of copper, silver, and gold that is expected to be recovered from the concentrate. If these
		estimates or assumptions prove to be inaccurate, the Company could be required to write down the
		recorded value of its concentrate and stockpile mineralized material inventory, which would result in an
		increase in the Company’s expenses and a reduction in its working capital.

		ii. Estimated reclamation provisions

		The Company’s provision for reclamation represents management’s best estimate of the present value
		of the future cash outflows required to settle estimated reclamation and closure costs at the Avino and
		San Gonzalo properties. The provision reflects estimates of future costs, inflation, foreign exchange
		rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free
		interest rates for discounting the future cash outflows. Changes in the above factors could result in a
		change to the provision recognized by the Company.

		Changes to reclamation and closure cost obligations are recorded with a corresponding change to the
		carrying amounts of the related exploration and evaluation assets or mining properties. Adjustments to
		the carrying amounts of related mining properties result in a change to future depletion expense.

		iii. Valuation of share-based payments and warrants

		The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments and
		warrants. Option pricing models require the input of subjective assumptions including expected price
		volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect fair
		value estimates and the Company’s net income or loss and its equity reserves. Warrant liabilities are
		accounting for as derivate liabilities (see Note 16).

		iv. Impairment of plant, equipment and mining properties, and exploration and evaluation assets

		Management considers both external and internal sources of information in assessing whether there
		are any indications that the Company’s plant, equipment, and mining properties, and exploration and
		evaluation assets are impaired. External sources of information management considers include
		changes in the market, economic and legal environments, in which the Company operates, that are not
		within its control and that affect the recoverable amount of its plant, equipment, and mining properties.
		Internal sources of information that management considers include the manner in which mining
		properties and plant and equipment are being used, or are expected to be used, and indications of
		economic performance of the assets.

		In determining the recoverable amounts of the Company’s plant, equipment and mining properties,
		management makes estimates of the undiscounted future pre-tax cash flows expected to be derived
		from the Company’s mining properties, and the appropriate discount rate. Reductions in metal price
		forecasts, increases in estimated future costs of production, increases in estimated future non
		expansionary capital expenditures, reductions in the amount of recoverable resources and exploration
		potential, and adverse current economic conditions are examples of factors that could result in a write
		down of the carrying amounts of the Company’s plant, equipment and mining properties, and exploration
		and evaluation assets.


	- 8 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Impairment

		Based on the Company’s assessment with respect to possible indicators of impairment of its mineral
		properties, including the impact of COVID-19 on our operations and the prevailing market metals prices,
		the Company concluded that as of December 31, 2021, no impairment indicators were identified.

		v. Depreciation rate for plant and equipment and depletion rate for mining properties
		Depreciation and depletion expenses are al ocated based on estimates for useful lives of assets. Should
		the asset life, depletion rates, or depreciation rates differ from the initial estimate, the revised life or rate
		would be reflected prospectively through income or loss. A change in the mineral resource estimate
		may impact depletion expense on a prospective basis.
		vi. Recognition and measurement of deferred tax assets and liabilities

		Actual amounts of income tax expense are not final until tax returns are filed and accepted by the
		relevant authorities. This occurs subsequent to the issuance of the consolidated financial statements
		and the final determination of actual amounts may not be completed for a number of years. Therefore,
		tax assets and liabilities and net income in subsequent periods wil be affected by the amount that
		estimates differ from the final tax return. Estimates of future taxable income are based on forecasted
		cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash
		flows from operations are based on projections internally developed and reviewed by management.
		Weight is attached to tax planning opportunities that are within the Company’s control, and are feasible
		and implementable without significant obstacles. The likelihood that tax positions taken wil be sustained
		upon examination by applicable tax authorities is assessed based on individual facts and circumstances
		of the relevant tax position evaluated in light of al available evidence. Where applicable tax laws and
		regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that
		changes in these estimates can occur that could materially affect the amounts of deferred tax assets
		and liabilities.
			Basis of Consolidation

			The audited consolidated 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.			administration

			Nueva Vizcaya Mining, S.A. de	100%	Mexico	Mexican
			C.V.			administration

			Promotora Avino, S.A. de C.V.	79.09%	Mexico	Holding
			(“Promotora”)			company

			Compañía Minera Mexicana de	98.45% direct	Mexico	Mining and
			Avino, S.A. de C.V.	1.22% indirect (Promotora)		exploration
			(“Avino Mexico”)	99.67% effective

			La Luna Silver & Gold Mines Ltd.	100%	Canada	Holding
						company
			La Preciosa Silver & Gold Mines	100%	Canada	Holding
			Ltd.			company
	- 9 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Intercompany balances and transactions, including unrealized income and expenses arising from
		intercompany transactions, are eliminated in preparing the audited consolidated financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

		Exploration and evaluation assets and development costs

		(i) Exploration and evaluation expenditures

		The Company capitalizes all costs relating to the acquisition, exploration and evaluation of mineral claims.
		Expenditures incurred before the Company has obtained the legal rights to explore a specific area are
		expensed. The Company’s capitalized exploration and evaluation costs are classified as intangible assets.
		Such costs include, but are not limited to, certain camp costs, geophysical studies, exploratory dril ing,
		geological and sampling expenditures, and depreciation of plant and equipment during the exploration stage.
		Costs not directly attributable to exploration and evaluation activities, including general administrative
		overhead costs, are expensed in the period in which they occur. Proceeds from the sale of mineral products
		or farm outs during the exploration and evaluation stage are deducted from the related capitalized costs.

		The carrying values of capitalized amounts are reviewed annually, or when indicators of impairment are
		present. In the case of undeveloped properties, there may be only inferred resources to allow management to
		form a basis for the impairment review. The review is based on the Company’s intentions for the development
		of such properties. If a mineral property does not prove to be viable, all unrecoverable costs associated with
		the property are charged to the consolidated statement of comprehensive income (loss) at the time the
		determination is made.

		When the technical feasibility and commercial viability of extracting mineral resources have been
		demonstrated, exploration and evaluation costs are assessed for impairment, reclassified to mining properties
		and become subject to depletion. Management considers the technical feasibility and commercial viability of
		extracting a mineral resource to be demonstrable upon the completion of a positive feasibility study and the
		establishment of mineral reserves. For certain mineral projects, management may determine the completion
		of a feasibility study to be cost prohibitive, unnecessary or to present undue risk to the structural integrity of
		the ore body. Under such circumstances, management considers technical feasibility to be demonstrable when
		the Company has obtained the necessary environmental and mining permits, land surface and mineral access
		rights, and the mineral project can be physically constructed and operated in a technically sound manner to
		produce a saleable mineral product. In assessing whether commercial viability is demonstrable, management
		considers if its internal economic assessment indicates that the mineral project can be mined to generate a
		reasonable return on investment for the risk undertaken, and markets or long-term contracts for the product
		exist.

		(ii) Development expenditures

		Mine development costs are capitalized until the mineral property is capable of operating in the manner
		intended by management. The Company evaluates the following factors in determining whether a mining
		property is capable of operating in the manner intended by management:

		•	The completion and assessment of a reasonable commissioning period of the mil and mining facilities;
		•	Consistent operating results are achieved during the test period;
		•	Existence of clear indicators that operating levels intended by management wil be sustainable for the
		foreseeable future;
		•	Plant / mil has reached a pre-determined percentage of design capacity;
		•	Adequate funding is available and can be al ocated to the operating activities; and,
		•	Long term sales arrangements have been secured.

		The carrying values of capitalized development costs are reviewed annually, or when indicators are present,
		for impairment.

	- 10 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Plant, equipment and mining properties

		Upon demonstrating the technical feasibility and commercial viability of extracting mineral resources, al
		expenditures incurred to that date for the mine are reclassified to mining properties. Expenditures capitalized
		to mining properties include all costs related to obtaining or expanding access to resources including
		extensions of the haulage ramp and instal ation of underground infrastructure, and the estimated reclamation
		provision. Expenditures incurred with respect to a mining property are capitalized when it is probable that
		additional future economic benefits wil flow to the Company. Otherwise, such expenditures are classified as
		a cost of sales.

		Plant and equipment are recorded at historical cost less accumulated depreciation and any accumulated
		impairment losses. Historical costs include expenditures that are directly attributable to bringing the asset to a
		location and condition necessary to operate in a manner intended by management. Such costs are
		accumulated as construction in progress until the asset is available for use, at which point the asset is classified
		as plant, equipment and mining properties and depreciation commences.

		After the date that management’s intended production levels have been achieved, mining properties are
		depleted using the straight-line method over the estimated remaining life of the mine. The Company estimates
		the remaining life of its producing mineral properties on an annual basis using a combination of quantitative
		and qualitative factors including historical results, mineral resource estimates, and management’s intent to
		operate the property.

		The Company does not have sufficient reserve information to form a basis for the application of the units-of-
		production method for depreciation and depletion.

		As at December 31, 2021 and 2020, the Company estimated a remaining mine life for the Avino Mine of 20
		and 20.4 years, respectively.

		Accumulated mil , machinery, plant facilities, and certain equipment are depreciated using the straight-line
		method over their estimated useful lives, not to exceed the life of the mine for any assets that are inseparable
		from the mine. When parts of an item of plant and equipment have different useful lives, they are accounted
		for as separate items (or components) of plant and equipment.


	- 11 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Plant and equipment are depreciated using the fol owing annual rates and methods:

		Office equipment, furniture, and fixtures	3 years straight line balance
		Computer equipment	5 years straight line balance
		Mine machinery and transportation equipment	5 years straight line balance
		Mil machinery and processing equipment		5 - 20 years straight line
		Buildings		5 - 20 years straight line

		Impairment

		At each financial position reporting date, the carrying amounts of the Company’s assets are reviewed to
		determine whether there is any indication that those assets are impaired. If any such indication exists, the
		recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where
		the asset does not generate cash flows that are independent from other assets, the Company estimates the
		recoverable amount of the cash-generating unit to which the asset belongs.

		An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is
		determined as the price that would be received to sel an asset or paid to transfer a liability in an orderly
		transaction between market participants at the measurement date. In assessing value in use, the estimated
		future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
		assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an
		asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
		is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period.

		Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit)
		is increased to the revised estimate of its recoverable amount, provided the increased carrying amount does
		not exceed the carrying amount that would have been determined had no impairment loss been recognized
		for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized
		immediately in profit or loss.
		Leases Leases in which the Company assumes substantially all risks and rewards of ownership are classified as
		finance leases. Assets held under finance leases are recognized at the lower of the fair value and present
		value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment
		losses. The corresponding liability is recognized as a finance lease obligation. Lease payments are
		apportioned between finance charges and reduction of the lease obligation to achieve a constant rate of
		interest on the remaining liability. Finance charges are recorded as a finance expense within profit and loss,
		unless they are attributable to qualifying assets, in which case they are capitalized.

		Operating lease payments are recognized on a straight-line basis over the lease term, except where another
		systematic basis is more representative of the time pattern in which economic benefits from the leased asset
		are consumed, in which case that systematic basis is used. Operating lease payments are recorded within
		profit and loss unless they are attributable to qualifying assets, in which case they are capitalized.

		Inventory

		Material extracted from the Company's mine is classified as either process material or waste. Process material
		represents mineralized material that, at the time of extraction, the Company expects to process into a saleable
		form and sell at a profit, while waste is considered uneconomic to process and its extraction cost is included
		in direct mining costs. Raw materials are comprised of process material stockpiles. Process material is
		accumulated in stockpiles that are subsequently processed into bulk copper, silver, and gold concentrate in a
		saleable form. The Company has bulk copper, silver, and gold concentrate inventory in saleable form that has
		not yet been sold. Mine operating supplies represent commodity consumables and other raw materials used
		in the production process, as well as spare parts and other maintenance supplies that are not classified as
		capital items.
	- 12 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Inventories are valued at the lower of cost and net realizable value (“NRV”). Cost is determined on a weighted
		average basis and includes all costs incurred, based on normal production capacity, in bringing each product
		to its present location and condition. Cost of inventories comprises direct labor, materials and contractor
		expenses, depletion and depreciation on mining properties, plant and equipment, and an allocation of mine
		site costs. As mineralized material is removed for processing, costs are removed based on the average cost
		per tonne in the stockpile. Stockpiled process material tonnages are verified by periodic surveys.

		NRV of mineralized material is determined with reference to relevant market prices less applicable variable
		selling expenses and costs to bring the inventory into its saleable form. NRV of materials and supplies is
		generally calculated by reference to salvage or scrap values when it is determined that the supplies are
		obsolete. NRV provisions are recorded within cost of sales in the consolidated statement of operations, and
		are reversed to reflect subsequent recoveries where the inventory is stil on hand.

		Revenue from Contracts with Customers

		Revenue is recognized to the extent that it is probable that the economic benefits wil flow to the Company and
		the revenue and costs to sell can be reliably measured. Revenue is measured at the fair value of the
		consideration received, excluding discounts, rebates, and other sales tax or duty.

		Performance Obligations

		Based on the criteria outlined in IFRS 15, the Company applied significant judgment in determining that the
		primary performance obligation relating to its sales contracts is the delivery of concentrates. Shipping and
		insurance services arranged by the Company for concentrate sales that occur after the transfer of control are
		also considered performance obligations.

		Transfer of Control

		Based on the criteria outlined in IFRS 15, the Company applied significant judgment in determining when the
		transfer of control occurs. Management based its assessment on a number of indicators of control, which
		include but are not limited to, whether the Company has the present right of payment and whether the physical
		possession of the goods, significant risks and rewards, and legal title have been transferred to the customer.

		Provisional Pricing

		Based on the criteria outlined in IFRS 15, the Company applied significant judgment in determining variable
		consideration. The Company identified two provisional pricing components in concentrate sales, represents
		variable consideration in the form of a) adjustments between original and final assay results relating to the
		quantity and quality of concentrate shipments, as well as b) pricing adjustments between provisional and final
		invoicing based on market prices for base and precious metals.

		Based on the Company’s historical accuracy in the assay process, as evidenced by the negligible historical
		adjustments relating to assay differences, the Company concluded the variability in consideration caused by
		the assaying results is negligible. The Company does not expect a significant amount of reversal related to
		assaying differences. The Company records revenues based on provisional invoices based on quoted market
		prices of the London Bul ion Market Association and the London Metal Exchange during the quotation period
		outlined in the concentrate sales agreement. The Company applied judgment to determine the amount of
		variable consideration to be recognized during the period for which the likelihood of significant reversal is low.


	- 13 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Financial Instruments

		Measurement – initial recognition

		All financial assets and financial liabilities are initially recorded on the Company’s consolidated statement of
		financial position when the Company becomes a party to the contractual provisions of the instrument. All
		financial asset and liabilities are initial y recorded at fair value, net of attributable transaction costs, except for
		those classified as fair value through profit or loss (“FVTPL”). Subsequent measurement of financial assets
		and financial liabilities depends on the classifications of such assets and liabilities.
		Classification – financial assets

		Amortized cost:

		Financial assets that are held within a business model whose objective is to hold financial assets in order to
		collect contractual cash flows, and that the contractual terms of the financial assets give rise on specified date
		to cash flows that are solely payments of principal and interest on the principal amount outstanding, are
		measured subsequent to initial recognition at amortized cost.

		The amortized cost of a financial asset is the amount at which the financial asset is measured at initial
		recognition minus the principal repayments, plus the cumulative amortization using the effective interest
		method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.
		Interest income is recognized using the effect interest method, and is recognized in Interest and other income,
		on the consolidated statements of operations and comprehensive income (loss)

		The Company financial assets at amortized costs include its cash, amounts receivable not related to sales of
		concentrate, investments (short-term), and reclamation bonds.

		Fair value through other comprehensive income (“FVTOCI”)

		Financial assets that are held within a business model whose objective is to hold financial assets in order to
		both collect contractual cash flows and selling financial assets, and that the contractual terms of the financial
		assets give rise on specified date to cash flows that are solely payments of principal and interest on the
		principal amount outstanding.

		Upon initial recognition of equity securities, the Company may make an irrevocable election (on an instrument-
		by-instrument basis) to designate its equity securities that would otherwise be measured at FVTPL to present
		subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if
		the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a
		business combination. Investments in equity instruments at FVTOCI are initially measured at fair value plus
		transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes
		in fair value recognized in other OCI. The cumulative gain or loss is not reclassified to profit or loss on disposal
		of the instrument; instead, it is transferred to retained earnings.

		The Company currently has no financial assets designated as FVTOCI.

		Fair value through profit or loss (“FVTPL”)

		By default, all other financial assets are measured subsequently at FVTPL, which includes amounts receivable
		from concentrate sales.

		Classification – financial liabilities

		Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for
		trading or designated as at FVTPL, are measured at amortized cost using the effective interest method.

	- 14 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Financial liabilities at amortized cost include accounts payable, amounts due to related parties, term facility,
		equipment loans, and finance lease obligations.

		Financial liabilities classified FVTPL include financial liabilities held for trading and financial liabilities
		designated upon initial recognition as FVTPL. Fair value changes on financial liabilities classified as FVTPL
		are recognized in the consolidated statements of operations. The Company has classified share purchase
		warrants with an exercise price in US dol ars (see Note 16) as financial liabilities at FVTPL. As these warrants
		are exercised, the fair value of the recorded warrant liability on date of exercise is included in share capital
		along with the proceeds from the exercise. If these warrants expire, the related decrease in warrant liability is
		recognized in the consolidated statements of operations and comprehensive income (loss).

		The Company has no hedging arrangements and does not apply hedge accounting.

		Impairment

		The Company recognizes a loss allowance for expected credit losses on its financial assets when necessary.
		The amount of expected credit losses is updated at each reporting period to reflect changes in credit risk since
		initial recognition of the respective financial instruments.

		Share capital

		a) Common shares

		Common shares are classified as equity. Transaction costs directly attributable to the issuance of common
		shares and equity warrants are recognized as a deduction from equity, net of any tax effects. Transaction
		costs directly attributable to derivative warrants are charged to operations as a finance cost.
		b) Repurchase of share capital (treasury shares)

		When share capital recognized as equity is repurchased, the amount of the consideration paid, which
		includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity.
		Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.
		When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase
		in equity, and the resulting surplus or deficit on the transaction is transferred to accumulated deficit.

		Share-based payment transactions

		The Company’s share option plan and restricted share unit (“RSU”) plan al ows directors, officers, employees,
		and consultants to acquire common shares of the Company.

		The fair value of options granted is measured at fair value at the grant date based on the market value of the
		Company’s common shares on that date.

		The fair value of equity-settled RSUs is measured at the grant date based on the market value of the
		Company’s common shares on that date, and each tranche is recognized using the graded vesting method
		over the period during which the RSUs vest. At each financial position reporting date, the amount recognized
		as an expense is adjusted to reflect the actual number of RSUs that are expected to vest.

		Al options and RSUs are recognized in the consolidated statements of operations and comprehensive income
		(loss) as an expense or in the consolidated statements of financial position as exploration and evaluation
		assets over the vesting period with a corresponding increase in equity reserves in the consolidated statements
		of financial position.


	- 15 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Reclamation and other provisions

		Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events,
		it is probable that an outflow of resources embodying economic benefit wil be required to settle the obligation,
		and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at
		the present value of the expenditures expected to be required to settle the obligation. The increase in any
		provision due to the passage of time is recognized as accretion expense.

		The Company records the present value of estimated costs of legal and constructive obligations required to
		restore properties in the period in which the obligation is incurred. The nature of these restoration activities
		includes dismantling and removing structures, rehabilitating mines and restoration, reclamation, and re-
		vegetation of affected areas.

		The fair value of the liability for a rehabilitation provision is recorded when it is incurred. When the liability is
		initial y recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of
		the related mining property or exploration and evaluation asset. Over time, the discounted liability is increased
		for the change in present value based on the discount rates that reflect current market assessments and the
		risks specific to the liability, which is accreted over time through periodic charges to income or loss. A revision
		in estimates or new disturbance wil result in an adjustment to the provision with an offsetting adjustment to
		the mineral property or the exploration and evaluation asset. Additional disturbances, changes in costs, or
		changes in assumptions are recognized as adjustments to the corresponding assets and reclamation liabilities
		when they occur.

		Earnings per share

		The Company presents basic and diluted earnings per share data for its common shares, calculated by dividing
		the earnings attributable to common shareholders of the Company by the weighted average number of
		common shares outstanding during the year. Diluted earnings per share is determined by adjusting the
		earnings attributable to common shareholders and the weighted average number of common shares
		outstanding for the effects of al potentially dilutive common shares.

		Income taxes

		Income taxes in the years presented are comprised of current and deferred tax. Income tax is recognized in
		profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is
		recognized as equity.

		Deferred tax is recognized using the statement of financial position asset and liability method, which provides
		for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
		and the amounts used for taxation purposes. The amount of deferred tax recognized is based on the expected
		manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
		substantively enacted at the consolidated statement of financial position date. A deferred tax asset is
		recognized only to the extent that it is probable that future taxable profits wil be available against which the
		asset can be utilized.

		Deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial
		recognition of goodwil or an asset or liability in a transaction other than a business combination that affects
		neither accounting profit nor taxable profit.


	- 16 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

4. 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 al ow 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 December 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 wil recognize the cumulative 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 wil impact the Company’s future accounting for proceeds from mineral
		sales prior to reaching commercial production at levels intended by management, however there is no impact
		upon adoption on January 1, 2022.
		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 potential y 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.

	- 17 -

AVINO SILVER & GOLD MINES LTD.

Notes to the consolidated financial statements

For the years ended December 31, 2021, 2020 and 2019

(Expressed in thousands of US dollars, except where otherwise noted)

5. 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 fourth 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 mil ion (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 fol owing

April 14, 2020;

The sale includes the Bralorne claims, as well as nine mineral claims covering approximately 2,114 hectares

in the Lil ooet Mining Division of British Columbia, known as the BRX Property.

The Company also received future consideration of a $2.5 mil ion cash payment, contingent upon the

commencement of commercial production at the Bralorne Mine, for which a fair value has been determined to

be Nil at this time.

The Company recognized a loss on disposition, net of tax, calculated as follows:

Cash proceeds

6,599

Talisker shares

2,243

Talisker warrants

716

Total proceeds

9,558

Net assets sold and derecognized:

Cash

1,495

Other current assets

242

Exploration and evaluation assets

45,613

Plant and equipment

1,745

Other long-term assets

Current portion of finance lease obligations and equipment loans

(175)

Non-current portion of finance lease obligations and equipment loans

(111)

Site restoration obligation

(10,828)

Foreign currency translation adjustments

(42)

37,958

Loss on disposition before selling costs

(28,400)

Selling costs

(490)

Loss on disposition, net

(28,890)

- 18 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		As a result of the sale, the comparative net income (loss) for the current period, as well as previous two years,
		have been reclassified from continuing operations to discontinued operations:

			2021	2020	2019
		Revenue from mining operations				$ -	$	-		$	-
		Cost of sales	-	-	-
		Mine operating income (loss)	-	-	-

		Operating expenses (income)	-					-			16
		Accretion of reclamation provision	-					-			217
		Gain on sale of assets	-					-			2
		Other items	-					-			1
		Loss on disposition	-					169			28,890
		Net loss before income taxes	-					(169)			(29,126)
		Income taxes	-					-			-
		Net loss from discontinued operations and
		on disposal				$ -	$	(169)		$	(29,126)

		The results of discontinued operations included in the consolidated statements of cash flows for the years
		ended December 31, 2020, 2019 and 2018, are as follows:

		Cash generated by (used in):	2021	2020	2019

		Cash flow used in operating activities				$ -	$	-		$	(19)
		Cash flow used in financing activities	-					-			(258)
		Cash flow used in investing activities	-					-			(5,583)
		Net cash decrease from discontinued
		operations				$ -	$	-		$	(5,860)

6. 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.

							December 31,	December 31,
				2021	2020
		VAT recoverable					$	790 $	2,328
		GST recoverable		26	16
		Income taxes recoverable		2,548	2,700
							$	3,364 $	5,044


	- 19 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

7. INVENTORY

			December 31,		December 31,
				2021		2020
		Process material stockpiles	$	1,083 $		373
		Concentrate inventory		2,467		64
		Materials and supplies		1,629		1,222
			$	5,179 $		1,659

		The amount of inventory recognized as an expense for the year ended December 31, 2021 totalled $7,282
		(2020 – $15,832, 2019 – $32,016). See Note 17 for further details.

8. 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		December 31,

										2020	Exchange for the period	2021
		Talisker Resources Common
		Shares					$	4,176	$						-	$	21	$	(317)	$	3,880
		Silver Wolf Exploration Ltd.
		Common Shares	-										109	2	(52)						59
							$	4,176	$ 109						$	23	$ (369)		$ 3,939

		On March 26, 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. On October 21, 2021 the company exercised the 300,000 share purchase warrants. 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 9). Any subsequent revaluation under IFRS
		9 at fair value through profit and loss wil be recorded as a gain or loss on long-term investments.

		See Note 9 for full details of the Option Agreement, and Note 21(d) for valuation methodology for the share
		purchase warrants.


	- 20 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

9. EXPLORATION AND EVALUATION ASSETS

		The Company has accumulated the fol owing 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					1,047			-	1,047
		Assessments and taxes					68			-	698
		Effect of movements in exchange rates			3			-		3
		Option income			(117)			-		(117)

		Balance, December 31, 2021	$				11,052 $	1 $	11,053

		Additional information on the Company’s exploration and evaluation properties by region is as fol ows:

		(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.


	- 21 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		(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, Avino received Silver Wolf share purchase warrants to acquire
		300,000 common shares of Silver Wolf at an exercise price of C$0.20 per share for a period of 36
		months from the date of the TSX Venture Exchange’s final acceptance of the Option Agreement (the
		“Approval Date”). In order to exercise the option, Silver Wolf wil :

		1. Issue to Avino a total of C$600 in cash or common shares of Silver Wolf as fol ows:

			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 fol ows:

			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 wil be firm commitments by Silver Wolf. Al share issuances
		wil 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 wil be subject to resale restrictions under applicable securities legislation for 4 months and
		a day from their date of issue.

		The Option Agreement between the Company and Silver Wolf is considered a related party transaction
		as the two companies have directors in common.

		(i i) Santiago Papasquiaro property

		The Santiago Papasquiaro property is located near the vil age of Santiago Papasquiaro, and consists
		of four exploration concessions covering 2,552.6 hectares and one exploitation concession covering
		602.9 hectares.

	- 22 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		(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 whol y-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
		mil ion 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
		Lil ooet 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 col ectively comprise the Eagle property.

10. NON-CONTROLLING INTEREST

		At December 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-control ing
		interest are insignificant and accordingly have not been recognized in the consolidated financial statements.
	- 23 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

11. PLANT, EQUIPMENT AND MINING PROPERTIES
								Mine machinery
						Office equipment,			and	Mil 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	(113)		31	(12)							1,285	1,130	508	2,829
		Effect of movements in
		exchange rates	2		1	-													-	-	7	10
		Balance at December 31, 2021	13,038		595	335							14,240	18,613	11,778	58,599


		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	213		107	11							37	1,370	272	2,010
		Effect of movements in
		exchange rates	-		-	-													-	-	-		-
		Balance at December 31, 2021	8,856		294	267							4,944	6,667	1,896	22,924

		NET BOOK VALUE
		At December 31, 2021	4,182		301	68							9,296	11,946	9,882	35,675
		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
	- 24 -

AVINO SILVER & GOLD MINES LTD.

Notes to the consolidated financial statements

For the years ended December 31, 2021, 2020 and 2019

(Expressed in thousands of US dollars, except where otherwise noted)

Included in Buildings above are assets under construction of $6,348 as at December 31, 2021 (2020 -

$5,327) on which no depreciation was charged in the periods then ended. Once the assets are put into

service, they wil be transferred to the appropriate class of plant, equipment and mining properties.

As at December 31, 2021, plant, equipment and mining properties included a net carrying amount of $Nil

(2020 - $442) for mining equipment under equipment loan, and $1,306 (2020 - $1,087) for mining equipment

and right of use assets under finance lease.

12. RELATED PARTY TRANSACTIONS AND BALANCES

Al 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 years ended December 31, 2021, 2020

and 2019 is as follows:

2021

2020

2019

Salaries, benefits, and

consulting fees

$ 1,021

$ 757

$ 723

Share-based payments

1,188

1,468

659

$ 2,209

$ 2,225

$ 1,382

(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. Al amounts payable and receivable are non-interest bearing, unsecured and due on demand.

The fol owing table summarizes the amounts due to / (from) related parties:

December 31,

2021

2020

Oniva International Services Corp.

107

106

Directors

163

154

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 year ended December 31, 2021, 2020 and

2019, the Company paid $239, $224 and $226, respectively, to ICC.

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.

The transactions with Oniva during the year ended December 31, 2021, 2020 and 2019 are summarized

below:

- 25 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)


			2021	2020	2019
		Salaries and benefits	$ 766 $ 636		$ 665
		Office and miscellaneous	403	290	322
		Exploration and evaluation assets	-	-	206
						$ 1,169	$ 926	$ 1,193

13. TERM FACILITY

		In July 2015, the Company entered into a ten mil ion dollar term facility with Samsung C&T U.K. Limited
		(“Samsung”). Interest is charged on the facility at a rate of US dol ar 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 paid the remaining balance in
		monthly instalments of $278 ending September 2021. The Company is committed to sel ing 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 for the year ended December 31, 2021, and the year ended
		December 31, 2020, is as follows:

			December 31,	December 31,
						2021	2020
		Balance at beginning of the period						$	2,513	$		5,897
		Repayments							(2,500)			(3,333)
		Unwinding of fair value adjustment							(13)		(51)
		Balance at end of the period							-			2,513
		Less: Current portion							-			(2,513)
		Non-current portion						$	-	$	-


	- 26 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

14. 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 dol ar 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:

			December 31,		December 31,
				2021		2020
		Balance at beginning of the period	$	2,295	$	1,579
		Fair value adjustment		(1,581)		650
		Effect of movement in exchange rates		27		66
		Balance at end of the period	$	741	$	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	(1,030,362)			$0.80
		Warrants outstanding and exercisable, December 31, 2021	1,950,412			$0.80

					All Warrants
									Outstanding and Exercisable
	Exercise Price		December 31,		December 31,
		Expiry Date							per Share	2021		2020
		September 25, 2023						$0.80	1,950,412		2,980,774
									1,950,412		2,980,774

		As at December 31, 2021, the weighted average remaining contractual life of warrants outstanding was 1.73
		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:

			December 31,		December 31,
				2021		2020
		Weighted average assumptions:
		Risk-free interest rate		0.91%		0.20%
		Expected dividend yield		0%		0%
		Expected warrant life (years)		1.73		2.73
		Expected stock price volatility		83.13%		73.93%
		Weighted average fair value		$0.38		$0.77

		During the year ended December 31, 2021, the Company recorded a realized loss on the exercise of warrants
		of $1,106 as result of the exercise of 1,030,362 warrants for the issuance of 1,030,362 common shares.

	- 27 -

AVINO SILVER & GOLD MINES LTD.

Notes to the consolidated financial statements

For the years ended December 31, 2021, 2020 and 2019

(Expressed in thousands of US dollars, except where otherwise noted)

15. RECLAMATION PROVISION

Management’s estimate of the reclamation provision at December 31, 2021, is $726 (December 31, 2020 –

$808), and the undiscounted value of the obligation is $1,252 (December 31, 2020 – $1,275).

The present value of the obligation was calculated using a risk-free interest rate of 7.78% (December 31,

2020 – 5.96%) and an inflation rate of 7.36% (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 for the year ended December 31,

2021, and the year ended December 31, 2020, is as follows:

December 31,

2021

2020

Balance at beginning of the period

808 $

1,524

Changes in estimates

(105)

(737)

Unwinding of discount related to continuing operations

Effect of movements in exchange rates

(24)

(78)

Balance at end of the period

726 $

808

16. SHARE CAPITAL AND SHARE-BASED PAYMENTS

(a) Authorized: Unlimited common shares without par value.

(b) Issued:

(i) During the year ended December 31, 2021, the Company issued 10,050,000 common shares in an

at-the-market offering under prospectus supplement for gross proceeds of $19,020. The Company

paid a 2.75% cash commission of $523 on gross proceeds, for net proceeds of $18,497, and incurred

additional $400 in issuance costs during the period.

During the year ended December 31, 2021, the Company issued 1,030,362 common shares following

the exercise of 1,030,362 warrants. As a result, $1,911 was recorded to share capital, representing

cash proceeds of $824, fair value of the warrants on the date of exercise (see Note 14 for valuation

methodology of $US denominated warrants) of $1,106, and movements in foreign exchange of $(19).

During the year ended December 31, 2021, the Company issued 264,000 common shares fol owing

the exercise of 264,000 options. As a result, $364 was recorded to share capital, representing cash

proceeds of $237 and the fair value upon issuance of $127.

During the year ended December 31, 2021, the Company issued 1,330,167 common shares upon

exercise of RSUs. As a result, $1,278 was recorded to share capital.

(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 14 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,

- 28 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		representing cash proceeds of $300 and the amount attributed to the warrants upon issuance in 2019,
		representing $116.

		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
			Expired		(360,000)		$2.95
			Cancelled / Forfeited		(20,000)		$1.64
Stock options outstanding, December 31, 2021					2,839,000		$1.68
Stock options exercisable, December 31, 2021					2,839,000		$1.68


	- 29 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		The fol owing table summarizes information about the stock options outstanding and exercisable at
		December 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 20, 2022	$1.98				880,000					0.72	880,000						0.72
		August 28, 2023	$1.30				105,000					1.66	105,000						1.66
		August 21, 2024	$0.79				174,000					2.64	174,000						2.64
		August 4, 2025	$1.64				1,680,000					3.59	1,680,000				3.59
											2,839,000					2.57	2,839,000	2.57

		During the year ended December 31, 2021, the Company charged $362 (year ended December 31, 2020
		- $777) 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 fol ows:
												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
		Exercised												(1,330,167)	$1.22
		Cancelled / Forfeited												(104,356)	$1.54
RSUs outstanding, December 31, 2021														1,439,477	$1.32

		The fol owing table summarizes information about the RSUs outstanding at December 31, 2021:

		Issuance Date			Price (C$)													Number of RSUs Outstanding
		August 21, 2019	$0.79									539,733
		August 4, 2020	$1.64									899,744
										1,439,477

	- 30 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		During the year ended December 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 year ended December 31, 2021, the Company charged $1,107 (December 31, 2020 - $1,080)
		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.

(e) Earnings (loss) per share:

		The calculations for basic earnings (loss) per share and diluted earnings (loss) per share are as follows:


			2021	2020	2019
		Net loss from continuing operations for the period				$ (2,057)	$ (7,482)	$ (2,335)
		Net loss for the period				$ (2,057)	$ (7,651)	$ (31,461)
		Basic weighted average number of shares outstanding				100,161,357	83,180,069	69,980,178
		Effect of dilutive share options, warrants, and RSUs
		(‘000)	-	-			-
		Diluted weighted average number of shares
		outstanding				100,161,357	83,180,069	69,980,178
		Basic loss from continuing operations per share				$	(0.02)			$	(0.09)	$	(0.03)
		Diluted loss from continuing operations per share				$	(0.02)			$	(0.09)	$	(0.03)
		Basic loss per share				$	(0.02)			$	(0.09)	$	(0.45)
		Diluted loss per share				$	(0.02)			$	(0.09)	$	(0.45)

17. REVENUE AND COST OF SALES

		The Company’s revenues for the year ended December 31, 2021, 2020 and 2019 are all attributable to
		Mexico, from shipments of concentrate from the Avino Mine, and processing of Historical Above Ground
		Stockpiles.

			2021	2020	2019
		Concentrate sales				$	11,208 $	15,304 $	31,417
		Provisional pricing adjustments	20	718			329
						$	11,228 $	16,022 $	31,746

		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 consist of care and maintenance
		costs incurred during the work stoppages at the Avino Mine during the year ended December 31, 2021 and
		2020.


	- 31 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Cost of sales is based on the weighted average cost of inventory sold for the periods and consists of the
		following:

			2021	2020	2019
		Production costs				$	4,905 $	11,443 $	27,949
		Stand-by costs	800	2,394	-
		Inventory net realizable adjustment	-	-	387
		Depreciation and depletion	1,976	1,995	3,680
						$	7,681 $	15,832 $	32,016

18. GENERAL AND ADMINISTRATIVE EXPENSES

		General and administrative expenses on the consolidated statements of operations consist of the following:

			2021	2020	2019
		Salaries and benefits				$	1,277 $	1,361 $	1,347
		Office and miscellaneous	647	117	286
		Management and consulting fees	451	406	461
		Professional fees	402	380	470
		Investor relations	227	166	171
		Directors fees	182	171	162
		Regulatory and compliance fees	170	139	143
		Depreciation	140	116	43
		Travel and promotion	70	46	110
						$	3,566 $	2,902 $	3,193

19. 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 12.

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:

			December 31,	December 31,
							2021	2020
		Not later than one year				$	96 $	20
		Later than one year and not later than five years					330	14
		Later than five years					462	3
						$	888 $	37

Office lease payments recognized as an expense during the year ended December 31, 2021, total ed $16
(December 31, 2020 - $40).

	- 32 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

20. SUPPLEMENTARY CASH FLOW INFORMATION

			2021	2020	2019
		Net change in non-cash working capital items:
		Deferred revenues	$		- $	- $	(573)
		Accounts payable and accrued liabilities			1,240	(2,877)	(941)
		Prepaid expenses and other assets			(203)	(157)	287
		Amounts receivable			(680)	1,211	2,615
		Taxes payable			25	(39)	(121)
		Amounts due to related parties			8	1	6
		Taxes recoverable	1,727	440	(193)
		Other liabilities	-	(178)	(100)
		Inventory			(3,664)	4,150	3,182
			$		(1,547) $	2,551 $	4,162

			2020	2019	2018
		Interest paid	$		92 $	264 $	618
		Taxes paid	$		589 $	279 $	2,373
		Equipment acquired under finance leases
		and equipment loans	$		1,058 $	- $	122

21. 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 wil cause a financial loss for the other party
		by failing to discharge an obligation. The Company has exposure to credit risk through its cash, long-term
		investments and amounts receivable. The Company manages credit risk, in respect of cash and short-
		term investments, by maintaining the majority of cash and short-term investments at highly rated financial
		institutions.

		The Company is exposed to a significant concentration of credit risk with respect to its trade accounts
		receivable balance because all of its concentrate sales are with two (December 31, 2020 – three)
		counterparty (see Note 23). However, the Company has not recorded any al owance against its trade
		receivables because to-date all balances owed have been settled in ful when due (typically within 60
		days of submission) and because of the highly-rated 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 audited consolidated statement of financial position. At
		December 31, 2021, no amounts were held as collateral.




	- 33 -

AVINO SILVER & GOLD MINES LTD.

Notes to the consolidated financial statements

For the years ended December 31, 2021, 2020 and 2019

(Expressed in thousands of US dollars, except where otherwise noted)

(b) Liquidity Risk

Liquidity risk is the risk that the Company wil 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 December 31, 2021, in the amount of

$24,765 and working capital of $31,635 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 consolidated statement of financial position date. Amounts due to related

parties are without stated terms of interest or repayment.

The maturity profiles of the Company’s contractual obligations and commitments as at December 31,

2021, are summarized as follows:

Less Than

More Than 5

Total

1 Year

1-5 years

Years

Accounts payable and

accrued liabilities

$ 3,260

$ -

Amounts due to related

parties

163

Minimum rental and lease

payments

889

331

462

Finance lease obligations

1,152

438

714

Total

$ 5,464

$ 3,957

$ 1,045

$ 462

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 result in a material impact on the Company’s operations.

- 34 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Foreign Currency Risk

		Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument wil 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 dol ars:

			December 31, 2021	December 31, 2020
			MXN		CDN	MXN		CDN
		Cash					$	3,576 $		1,450 $	36,896 $		2,831
		Long-term investments	-				4,976			-	5,317
		Reclamation bonds	-								6	-		6
		Amounts receivable	-								33	-		20
		Accounts payable and
		accrued liabilities	(57,604)						(211)	(22,972)					(157)
		Due to related parties	-								(206)				-	(196)
		Finance lease obligations	(1)								(394)	(1,543)				(448)
		Net exposure	(54,029)		5,654	12,381		7,373
		US dollar equivalent					$	(2,363) $		(4,054) $			620 $	5,791

		Based on the net US dol ar denominated asset and liability exposures as at December 31, 2021, a 10%
		fluctuation in the US/Mexican and Canadian/US exchange rates would impact the Company’s earnings
		for the year ended December 31, 2021, by approximately $143 (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 wil 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 December 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 $26 (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 December 31, 2021, a 10% change in market prices would have
		an impact on net earnings (loss) of approximately $330 (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.


	- 35 -

AVINO SILVER & GOLD MINES LTD.

Notes to the consolidated financial statements

For the years ended December 31, 2021, 2020 and 2019

(Expressed in thousands of US dollars, except where otherwise noted)

(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 December 31, 2021:

Level 1

Level 2

Level 3

Financial assets

Cash

24,765 $

- $

Amounts receivable

1,208

Long-term investments

3,939

Total financial assets

$ 28,704 $ 1,208 $

Financial liabilities

Warrant liability

(741)

Total financial liabilities

$ - $

- $

(741)

The Company uses Black-Scholes model to measure its Level 3 financial instruments. As at December

31, 2021, the Company’s Level 3 financial instruments consisted of the warrant liability.

For the Company’s warrant liability valuation and fair value adjustments during the years ended December

31, 2021 and 2020, see Note 14 of the consolidated financial statements.

- 36 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

22. CAPITAL MANAGEMENT

		The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
		going concern in order to pursue the exploration and expansion of its properties and to maintain a flexible
		capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company
		includes equity (comprising of all issued share capital, equity reserves, retained earnings or accumulated
		deficit, and other comprehensive income (loss)), the term facility, equipment loan obligations, and finance
		lease, are listed as follows:

			December 31,	December 31,
					2021	2020
		Equity	$		78,507 $	59,008
		Term Facility			-	2,513
		Finance Lease Obligations			1,069	486
		Equipment Loans			-	72
			$		79,576 $	62,079

		The Company manages its capital structure and makes adjustments to it in light of changes in economic
		conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the
		Company may attempt to incur new debt or issue new shares. Management reviews the Company’s capital
		structure on an ongoing basis and believes that this approach, given the relative size of the Company, is
		reasonable. At December 31, 2021, the Company expects its capital resources and projected future cash
		flows from operations to support its normal operating requirements on an ongoing basis, and planned
		development and exploration of its mineral properties and other expansionary plans. At December 31, 2021,
		there was no external y imposed capital requirement to which the Company was subject and with which the
		Company did not comply.

23. SEGMENTED INFORMATION

		The Company’s revenues for the year ended December 31, 2021, of $11,228 (2020 - $16,022, 2019 - $3,746)
		are al attributable to Mexico, from shipments of concentrate produced by the Avino Mine and processed
		material from the Avino Historic Above Ground stockpiles.

		On the consolidated statements of operations, the Company had revenue from the fol owing product mixes:

			2021		2020	2019
		Silver					$	3,421 $	6,318 $	14,030
		Copper						5,566	4,662	13,953
		Gold						4,344	8,517	10,326
		Penalties, treatment costs and refining charges						(2,103)	(3,475)	(6,563)
		Total revenue from mining operations					$ 11,228 $	16,022 $	31,746



	- 37 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		For the year ended December 31, 2021, the Company had three customers (2020 – three customers, 2019
		– six customers) that accounted for total revenues as follows:

			2021	2020	2019
		Customer #1				$	5,521 $	- $	-
		Customer #2					3,045	12,573	21,810
		Customer #3					2,662	3,206	4,861
		Customer #4	-	(19)	3,350
		Customer #5	-	262	1,246
		Customer #6					-	-	469
		Customer #7					-	-	10
		Customer #8					-	-	-
		Total revenue from mining operations				$ 11,228 $	16,022 $	31,746


		Geographical information relating to the Company’s non-current assets (other than financial instruments) is
		as follows:

			December 31,					December 31,
							2021	2020
		Exploration and evaluation assets - Mexico	$				11,052	$	10,051
		Exploration and evaluation assets - Canada		1	1
		Total exploration and evaluation assets	$				11,053	$	10,052

			December 31,					December 31,
							2021	2020
		Plant, equipment, and mining properties - Mexico	$				35,390	$	34,475
		Plant, equipment, and mining properties - Canada					285	371
		Total plant, equipment, and mining properties	$				35,675	$	34,846


	- 38 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

24. INCOME TAXES

		(a) Income tax expense

		Income tax expense included in the consolidated statements of operations and comprehensive income
		(loss) is as follows:

			2021	2020	2019


		Current income tax expense	$		27 $	161 $					327
		Deferred income tax expense (recovery)			412	(1,569)					(960)
		Total income tax expense (recovery)	$		439 $	(1,408) $					(633)


		The reconciliation of income taxes calculated at the Canadian statutory tax rate to the income tax expense
		recognized in the year is as follows:

			2021	2020					2019

		Net income (loss) before income taxes	$		(1,618) $	(8,890) $	(2,968)
		Net loss from discontinued operations before
		income taxes			-	(169)	(29,126)
		Net income (loss) before income taxes	$		(1,618) $	(9,059) $	(32,094)
		Combined statutory tax rate			27.00%	27.00%	27.00%

		Income tax expense (recovery) at the Canadian
		statutory rate			(437)	(2,446)	(8,665)

		Reconciling items:
		Effect of difference in foreign tax rates			11	(86)					(120)
		Non-deductible/non-taxable items			675	1,467	6,449
		Change in unrecognized deductible temporary
		differences			122	332	1,263
		Impact of foreign exchange			75	(112)					222
		Special mining duties			17	(185)					231
		Revisions to estimates			313	(297)				58
		Share issue costs			(249)	(73)					(174)
		Other items			(88)	(8)					103

		Income tax expense (recovery) recognized in the
		year	$		439 $	(1,408) $					(633)

		The Company recognized a non-cash recovery of $Nil for the year ended December 31, 2021 (2020 –
		expense of $164; 2019 – expense of $235) related to the deferred tax impact of the special mining duty.
		The Canadian income tax rate increased from 26% to 27% effective January 1, 2018, with a statutory
		impact prior to year-end. The impact of this change has been reflected in the consolidated financial
		statements.
						December 31, December 31,
				2021	2020


		Deferred income tax assets				$	4,341 $	4,249
		Deferred income tax liabilities					(6,122)	(5,618)

						$	(1,781) $	(1,369)


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AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		The approximate tax effects of each type of temporary difference that gives rise to potential deferred
		income tax assets and liabilities are as follows:

			December 31,		December 31,
				2021		2020

		Reclamation provision	$	272 $		304
		Non-capital losses		3,525		3,383
		Other deductible temporary differences		543		562
		Inventory			-	(2)
		Exploration and evaluation assets		(3,326)		(3,349)
		Plant, equipment and mining properties		(2,795)		(2,267)

		Net deferred income tax liabilities	$	(1,781) $		(1,369)

		The net deferred tax liability presented in these consolidated financial statements is due to the difference
		in the carrying amounts and tax bases of the Mexican plant, equipment and mining properties which were
		acquired in the purchase of Avino Mexico. The carrying values of the Mexican plant, equipment and
		mining properties includes an estimated fair value adjustment recorded upon the July 17, 2006, acquisition
		of control of Avino Mexico that was based on a share exchange, while the tax bases of these assets are
		historical undeducted tax amounts that were nil on acquisition. The deferred tax liability is attributable to
		assets in the tax jurisdiction of Mexico.

		(b) Unrecognized deductible temporary differences:

		Temporary differences and tax losses arising in Canada have not been recognized as deferred income
		tax assets due to the fact that management has determined it is not probable that sufficient future taxable
		profits wil be earned in Canada to recover such assets. Unrecognized deductible temporary differences
		are summarized as fol ows:

			December 31,		December 31,
				2021		2020

		Tax losses carried forward	$	17,968 $		18,974
		Share issue costs		1,478		1,144
		Plant, equipment and mining properties		341		263
		Exploration and evaluation assets		1,244		1,248
		Investments		(15)		(400)
		Reclamation provision and other		-		-

		Unrecognized deductible temporary differences	$	21,016 $		21,229

		The Company has capital losses of $10,361 carried forward and $7,607 in non-capital tax losses carried
		forward available to reduce future Canadian taxable income. The capital losses can be carried forward
		indefinitely until used. The non-capital losses have an expiry date range of 2027 to 2041.

25. PENDING TRANSACTION

		Pending acquisition of La Preciosa					– On October 27, 2021, the Company announced it has entered into a
		share purchase agreement (the “Transaction”) to indirectly acquire through the purchase of the shares of
		certain holding companies, the La Preciosa Property (“La Preciosa”) from Coeur Mining, Inc. (“Coeur”).

		Consideration of $20 mil ion, of which $15 mil ion is payable at the closing of the Transaction from Avino’s
		cash on hand and the remaining $5 mil ion is payable before the first anniversary of the closing date.

		Additionally, Avino wil issue 14.0 mil ion units (the “Units”), each comprising one common share and one-
		half of a common share purchase warrant (each full warrant, a “Warrant”).

	- 40 -

AVINO SILVER & GOLD MINES LTD.
Notes to the consolidated financial statements
For the years ended December 31, 2021, 2020 and 2019
(Expressed in thousands of US dollars, except where otherwise noted)

		Contingent cash consideration of US$8.75 mil ion wil be payable by Avino to Coeur within 12 months of initial
		production at La Preciosa. Avino may elect to pay up to half of the contingent cash consideration in Avino
		shares. Coeur wil retain ownership of a 1.25% net smelter return royalty on the Gloria and Abundancia areas
		of La Preciosa, and a 2.00% gross value royalty on all areas of La Preciosa other than the Gloria and
		Abundancia areas.

		So long as Coeur holds 10% or more of the outstanding shares of Avino, Coeur has the option to nominate
		one director for election to the Avino board or designate a board observer. At closing, Coeur has also been
		granted pre-emptive rights to maintain its equity ownership position in Avino and has entered into a voting
		agreement with Avino.

		The completion of the proposed Transaction is subject to a number of customary conditions precedent, as
		well as, the authorization of the Mexican Federal Economic Competition Commission, approval of the
		issuance of the Unit consideration and contingent payment amount by the NYSE American, the Toronto
		Stock Exchange, and any other necessary third party approvals. The Closing of the Transaction is expected
		to occur during Q1 2022.

	- 41 -