Earnings call transcript: Avino Silver & Gold Mines Q4 2024 reports record revenue, stock surges

Avino Silver & Gold Mines Ltd. (ASM) reported record revenues of $24.4 million for Q4 2024, surpassing the revenue forecast of $16.7 million. The company also exceeded earnings expectations with an EPS of $0.03 compared to the forecast of $0.02. Following the announcement, Avino’s stock surged by 14.89%, closing at $1.41. This performance was driven by increased production and favorable market conditions in the mining sector.

Key Takeaways

• Avino Silver & Gold Mines achieved record revenues of $24.4 million in Q4 2024.
• The company reported an EPS of $0.03, beating the forecast by $0.01.
• Stock price rose by 14.89% following the earnings announcement.
• Silver equivalent production increased by 32% in the quarter.
• The company maintained a strong cash position with $27.3 million, up 916% from 2023.

Company Performance

Avino Silver & Gold Mines reported significant growth in Q4 2024, with a 32% increase in silver equivalent production and a 76% rise in gold production. The company achieved an annual revenue of CAD $66.2 million, marking a 51% increase from 2023. This growth was supported by improved operational efficiencies and a favorable market environment for precious metals.

Financial Highlights

• Revenue: $24.4 million in Q4 2024, a substantial increase from the forecast of $16.7 million.
• Earnings per share: $0.03, exceeding the forecast of $0.02.
• Net income: $8.1 million, translating to $0.06 per share.
• Adjusted earnings: $21.3 million or $0.15 per share.
• Cash position: $27.3 million, up 916% from the previous year.
• Free cash flow: $14.1 million or $0.10 per share.

Earnings vs. Forecast

Avino Silver & Gold Mines reported an EPS of $0.03, surpassing the forecasted $0.02 by 50%. This marks a positive earnings surprise, reflecting the company’s strong operational performance and favorable market conditions. The revenue of $24.4 million also exceeded expectations by 46%, indicating robust demand and effective cost management.

Market Reaction

Following the earnings announcement, Avino’s stock price increased by 14.89%, closing at $1.41. This surge reflects investor confidence in the company’s strong financial performance and growth prospects. The stock’s performance is notable compared to its 52-week range, with a high of $1.65 and a low of $0.53.

Outlook & Guidance

Avino Silver & Gold Mines outlined a five-year growth plan targeting scaled production by 2029. The La Preciosa project is expected to contribute to production in late 2024 or early 2025, with a long-term goal of achieving 1,500 tonnes per day. The company has allocated $5-6 million for the development of La Preciosa.

Executive Commentary

"This record-breaking year would not have been possible without the dedication, expertise, and hard work of our operational teams," stated David Wolfen, CEO. He added, "With a solid financial foundation, strong operational performance, and positive market trends, Avino is well-positioned for continued growth."

Risks and Challenges

• Potential economic impacts of U.S. border closure could affect operations.
• Market volatility in metal prices may impact revenue.
• Regulatory changes in the mining sector could pose challenges.
• Currency fluctuations, particularly the Mexican peso, could affect financial results.

Q&A

During the earnings call, analysts inquired about the potential for mill expansion without additional permits and the financial reporting for the La Preciosa project. The company also addressed its hedging strategy for the Mexican peso, highlighting efforts to mitigate currency risks.

Full transcript - Avino Silver & Gold Mines Ltd (ASM) Q4 2024:

Conference Operator: Silver and Gold Mines Fourth Quarter and Year End twenty twenty four Financial Results Conference Call and Webcast. As a reminder, all participants are in a listen only mode and I’d now like to turn the conference over to Jennifer North, Head of Investor Relations. Please go ahead.

Jennifer North, Head of Investor Relations, Avino Silver and Gold Mines: Thank you, operator. Good morning, everyone, and welcome to the Avanos Silver and Gold Mines Limited fourth quarter and year end twenty twenty four financial results conference call and webcast. To join this webcasting call, there is a link in our news release dated March 4 and in yesterday’s news release, which can be found on our website under News 2025. In addition, a link can be found on the homepage of the Avino website. On the call today, we have the company’s President and CEO, David Wolfen our Chief Financial Officer, Nathan Hart our Chief Operating Officer, Carlos Rodriguez and our VP, Technical Services, Peter Latta.

Before we get started, please note that certain statements made today by the management team may include forward looking information within the meaning of applicable securities laws. Forward looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different than those expressed by or implied by such forward looking statements. The company does not intend to and does not assume any obligation to update such forward looking statements or information other than as required by applicable law. For more information, we refer you to our detailed cautionary note in the presentation related to this call or on our press release of yesterday’s date. The full financial statements and MD and A are now available on our website under the Investors tab and then click on Financial Statements.

In addition, the full statements are available on Avino’s profile on SEDAR Plus and on EDGAR. I would like to remind everyone that this conference call is being recorded and will be available for replay later today. Replay information and the presentation slides from this conference call and webcast will be available on our website. Also, please note that all figures stated are in U. S.

Dollars unless otherwise noted. Thank you. I will now hand the call over to Avino’s President and CEO, David Wolfen. David?

David Wolfen, President and CEO, Avino Silver and Gold Mines: Thanks, Jen. Good morning, everyone, and welcome to Avino’s Q4 and year end twenty twenty four financial results conference call and webcast. We will cover the highlights of our financial and operating performance, and then we will go over the work that we are currently doing followed by a Q and A. I will start with a discussion on operations, and then I will turn it over to Nathan Hart, Avino’s CFO, to discuss the financial performance for the period and then Jennifer North, our Head of Investor Relations, will present an overview of Q4 CSREESG initiatives. Please turn to Slide five for Q4 and full year 2024 highlights.

Avino and the entire team delivered an exceptional performance in 2024, achieving record financial results and a strong operational execution with full year guidance being realized after a very strong Q4. The company posted record revenues and significant growth across key financial metrics, reflecting higher production, cost efficiencies and strong metal prices. Nathan will provide an overview of the financials, but I want to take a moment to recognize that our success in 2024 is a result of years of strategic focus and dedication to our growth plan. Seeing these positive outcomes is truly inspiring, and I reflect on the many individuals who have contributed to guiding us along the way. The outstanding year is not just a milestone, it’s a stepping stone towards even greater achievements for Avino.

Our balance sheet is currently at a record high of CAD $27,300,000 which is 916% higher than 2023 and represents the highest in company history. At the start of the year, we shared fantastic news that the underground development at La Preciosa had commenced following the receipt of all necessary permits for mining operations. This milestone is a significant step forward in our growth plan and a clear demonstration of our commitment to delivering on our goals. On the topic of permits and the regulatory environment, just last week at the Mexico Mining Forum at PDEC, there appeared to be fresh optimism for the mining industry under President, Claudia Sheinbaum’s administration. We view this as a positive step for existing and future mining in Mexico.

Moving on to Slide six, we turn to our Q4 and year end production results that were released in mid January and were as follows: silver equivalent production increased by 32% Avino produced almost 736,000 silver equivalent ounces in Q4 twenty twenty four, representing a 32 increase from Q4 twenty twenty three. The increase was driven by improved gold grades and increased mill throughput. Mill throughput increased 26%. We processed 182,000 tonnes in Q4 twenty twenty four, a 26% increase compared to Q4 twenty twenty three and the highest quarter in the company’s history. Mill availability and performance is a result of considerable efforts from our operations team in Durango, allowing for meaningful improvements in operational metrics, as well as improving the company’s cash and working capital positions.

Gold production increased by 76%. Q4 twenty twenty four production of 2,560 gold ounces represented 76% increase compared to Q4 twenty twenty three and was our highest quarter of gold production in 2024. Improved feed grade accounted for the majority of the increase alongside the mill availability noted above. Slide seven. Turning to Slide seven, you will see on a yearly basis, silver equivalent production increased 10%.

Avino produced 2,600,000 silver equivalent ounces in 2024, representing a 10% increase from 2023. The positive movement was primarily due to the improved copper and silver grades, improved copper recoveries and higher mill feed compared to 2023. In addition, the company also had improvement in its health and safety performance and reports a reduction in lost time incident frequency rate of 32% for 2024, down to 3.39 per one million hours worked, while seeing an increase in hours worked by 47% at the Avino operations. Reportable loss time and incident frequency rate also point zero seven, down over 90% from 2023. Now moving on to Slide eight, we’ll review our Q4 operational updates beginning with the Avino mine.

The Avino mine achieved its guidance target of between 2,500,000 to 2,800,000 silver equivalent ounces at 2,650,000 ounces for 2024. Higher realized metal prices for silver, gold and copper in Q4 assisted in the strong financial and operating margins with records in most financial metrics and significant free cash flow generation. 2025 has begun positively with consistent production in the first months of the year. Moving on to La Preciosa. As mentioned earlier, in January, we announced the receipt of necessary approvals to move ahead with the underground development at La Precioso, 1 of the largest undeveloped silver deposits in Mexico and the world.

Equipment mobilization and surface works have been ongoing with underground development getting underway. La Preciosa is an integral piece to our five year plan and will deliver economic growth and benefit to the local communities in Durango. Please turn to Slide nine, where we have photos of recent development activities and surface works and delivery of equipment. We are very pleased with the swift advancement at La Preciosa. At this time, I will now hand it over to Nathan Hart, Avino’s CFO, to present our record breaking Q4 and year end 2024 financial results.

Nathan?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Thank you, David. It’s my pleasure to be presenting our fourth quarter and year end twenty twenty four financial and operating results to everyone who has joined us on the call and is viewing our presentation today. Turning to Slide 10 now for a snapshot of these record breaking financial highlights for the fourth quarter and year followed by the full table on Slide 11. The fourth quarter results were what can only be described as our best in company history. We generated a record $24,400,000 in revenues over the quarter with gross profit margin of 43%.

On a cash basis, our gross profit margin was 49%, our highest in recent history and up from 45% in the last quarter. We generated $14,100,000 in free cash flow, which translate to $0.1 per share. Our all in sustaining cash cost per silver equivalent ounce was CAD18.62, representing our lowest since 2022. This amount puts us in the lower quartile of junior producing peers and in the mid range with intermediate producers in Mexico. Moving over to our full year results, I want to highlight the annual revenue of CAD66.2 million, which is a record high for Raveno and represents 51% increase from 2023, primarily driven by the growth we saw in our fourth quarter.

Net income after taxes and all expenses was $8,100,000 or $0.06 per share. After adjusting for non recurring and non cash expenses, adjusted earnings was $21,300,000 on the year or $0.15 per share. And mine operating cash flows before taxes was $27,600,000 All in sustaining cash costs per silver equivalent ounce was $20.57 which represents a deduction of 6 percent from 2023. Now on to the balance sheet. Our cash position was $27,300,000 at the end of the 2024, driven by improved operational performance and sales in the fourth quarter.

To put this in perspective, we had under $8,000,000 in the treasury at the end of the third quarter, representing an almost $20,000,000 increase in our cash position during Q4. As highlighted in previous calls, balance sheet strength will be very key over the coming months as La Preciosa development gets underway. With no debt excluding operating equipment, we are well positioned to execute on our five year organic growth plan. Coming to Slide 11, we see all other financial metrics and the significant increases both quarter over quarter and year over year. Highlighting the increases in cash provided by operating activities in both periods as well as the free cash flow numbers, These figures are both are materially higher than prior year periods.

Capital expenditures in Q4 and for the year were $1,500,000 and $6,600,000 respectively. We came in below our 2024 guidance range of $7,300,000 to $9,000,000 primarily due to the deferral of certain expenditures to 2025 as we were awaiting the operating permits for La Preciosa. With these permits received in January 2025, we expect to be within our previously released capital expenditure guidance for the year. Reminding everyone that approximately $5,000,000 to $6,000,000 are allocated for equipment and mine development at La Preciosa, which should give us access to over 1,000,000 tonnes of mineralized material. Here on Slide 12, you can see our cash cost per ounce figures for the fourth quarter improved from Q4 of last year and were well below previous quarters in 2024 as well, even with lower ounces sold than expected.

We highlighted our expectations for a reduction in cost on our previous earnings call and we remain pleased with the improvements as costs in Q4 were down 8% on a cash basis to $13.88 per ounce and 14% on an all in cash basis to $18.62 per ounce. These reductions were primarily a result of increased mill availability and ounces sold further aided by the Mexican peso showing some further weakness against the U. S. Dollar in Q4. The jump in ounces sold is partially a result of increased inventory sales solely due to the timing of shipments with no intentional strategy to hold back sales in previous quarters.

On a full year basis, our cash cost per ounce came in at $14.84 representing a 5% reduction from 2023. All in sustaining cash cost per ounce came in at $20.57 a 6% decrease in 2023. The full year cost per annals reductions were driven by higher grades and production through the mill as well as the overall weakness of the Mexican peso to the U. S. Dollar on average basis in 2024 compared to 2023.

Coming to Slide 13, you can see our cost per tonne process for the quarter came down fairly significantly, especially from a quarter over quarter perspective. We saw a meaningful drop compared to Q4 twenty twenty three with cash cost per tonne coming in at $51.11 representing a 17% reduction. On the all in cost side for the quarter, the trend was similar as our cost per tonne was $74.29 a 16% decrease compared with Q4 of last year. Both metrics for 2024 were lower compared to the year to date numbers at Q3 and we did see reductions compared to the full year 2023 results. Cash cost per tonne processed was reduced by 2% and all in cash cost per tonne processed by 5% when compared with 2023 figures.

As shown by our profit margins, these improvements had meaningful impacts on our bottom line. With the Mexican peso weakening in Q4 and into 2025, the pressure on our cost structure has eased. We have been implementing measures to protect our cost structure for 2025. Tariff discussions continue to put uncertainty in the currencies in which we operate in and reducing our risk associated with costs will be key throughout the year. With metal prices remaining elevated and permits received at La Preciosa, we are excited to be shifting focus to growth in the coming quarters.

At this point, I will now turn it over to Jennifer North, Head of Investor Relations for an overview of our recent ESG and CSR initiatives.

Jennifer North, Head of Investor Relations, Avino Silver and Gold Mines: Thank you, Nathan. Moving on to Slide 14, we have listed the ESG CSR initiatives that were completed in the fourth quarter. As we have mentioned, the Vino follows the ESG standards and the United Nations Sustainable Development Goals or the SDGs that work together to address the most pressing challenges facing the world. Fourth quarter activities were focused on SDG three, Good Health and Well-being four, Quality Education five, Gender Equality and six, Environment or Clean Water and Sanitation. During the quarter, the following support was provided.

Materials were donated for general upkeep of the community’s elementary and secondary schools. A talk called Cafe Rosa was sponsored and supported by Avino personnel on breast cancer awareness and prevention. A vibration analysis was carried out and supported by Avino mine supervisors. Monthly maintenance of the community landfills was carried out. Avino supported traditional Day of the Dead celebrations with a unique mandate that all costumes were to be made from recycled paper.

This initiative aimed to promote the reuse of materials contributing to the conservation care and protection of the environment, while also raising awareness among future generations. Samsung tablets were awarded for first place with backpacks with school supplies awarded for second and third place. An important initiative called the Orange Campaign was launched to educate both community members and Avino employees about the prevention and eradication of violence against individuals regardless of gender, sexual identity, age or any other factor. As part of this campaign, self defense workshops have been offered along with educational materials and awareness posters that have been distributed throughout the community. Waste materials such as wood, tires and plastics were donated to community members giving a second life to items that would otherwise be discarded.

This initiative helps reduce the mine’s ecological footprint. Our CS team has collaborated with an external company to obtain solar boilers with subsidized prices for our workers and community members for their homes. The CSR team works tirelessly to bridge gaps and address diverse needs whether economic, educational or otherwise by responding to requests, providing support and sharing valuable information. Finally, I’m pleased to share that we’ve been working on our inaugural sustainability report, which reflects our commitment to transparency, accountability and responsible business practices. By sharing our environmental, social and governance efforts, we aim to build trust with our stakeholders, demonstrate our positive impact and continuously improve our sustainability performance.

We look forward to making available on our website very soon. I will now turn it back over to David to continue on with the presentation, providing our plans for the coming quarter. David?

David Wolfen, President and CEO, Avino Silver and Gold Mines: Thanks, Jan. Moving to Slide 15. We were thrilled to see metal prices continue their rally into the fourth quarter and maintain their strength. Coupled with their solid production results, this positions us favorably as we advance towards our transformational growth objectives, particularly with the development of La Preciosa. We are currently mining at levels 13.514 at Elena Tolosa and exploration drilling has commenced on the Avino vein below the ET mine, where we previously hit the highest grade hole in company history.

The vein is open along strike and at depth following the previous successful drill program. As outlined on Slide 16, we want to reemphasize the company’s growth plans. We have three assets within a 20 kilometer footprint totaling three seventy one million silver equivalent ounces. In the same area, we have an operating mill complex, which is currently producing from our Avino mine and additional access to water, power and tailing storage. As you can see on this slide, our goal is to scale up by 2029 through production from these three assets.

By capitalizing on our existing assets and resources, we can execute our growth plans efficiently and effectively. This approach not only mitigates risks associated with new project development, but also positions us for the long success and value creation. In conclusion, this record breaking year would not have been possible without the dedication, expertise and hard work of our operational teams and employees across the company. Their commitment to excellence, teamwork and innovation has been instrumental in achieving these milestones. On behalf of our leadership, thank you for your efforts and contributions.

Your work continues to drive Avino’s success. We would also like to thank our shareholders for their continued support. We are pleased for Avino’s shareholders who have stayed the course with us. Throughout the year, I’ve had the opportunity to connect with many of you and we truly appreciate your trust, confidence and ongoing commitment to Avino. With a solid financial foundation, strong operational performance and positive market trends, Avino is well positioned for continued growth and value creation in 2025 and beyond.

We’d now like to move the call to the question and answer portion. Operator?

Conference Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys.

Thank you. Your first question is coming from Heiko Ihle from H. C. Wainwright. Your line is live.

Heiko Ihle, Analyst, H.C. Wainwright: Hi, David, Nate and team. Hi, Colton. Hi. Hi. Hello.

Nice to see the stock price performance today. Well done. Can you give a quarter by quarter breakdown for what you expect to spend in CapEx above Preciosa this year? I mean, I assume it’s going to taper off by Q3 a little bit, right? But maybe just on an actual cash basis, what do you expect to spend in Q1, Q2, Q3 and maybe even Q4 if you want to be so kind?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Thanks, Heiko. Nathan here. I can break it down a little bit. Obviously, we’re almost all the way through Q1. So we spend a little bit of money, but again, nothing out of line with if you smooth it across the year.

We expect a lot of the development expenditures to be Q2 and Q3 for those and then in Q4, taper off a little bit and then we’ll be looking for the future for OpEx or operating costs.

Heiko Ihle, Analyst, H.C. Wainwright: But quantifying it?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Sure. Sorry. So we did put out in our guidance about $5,000,000 million dollars to $6,000,000 total and that’s what we’re sticking with. So say, yes, little light for Q1 and then Q2 and Q3 will be heavier and then tapering off at the end of the year.

Heiko Ihle, Analyst, H.C. Wainwright: Okay. So call it 12/21?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Sure.

Heiko Ihle, Analyst, H.C. Wainwright: Okay, cool. You processed almost 182,000 tons in the quarter, highest throughput you ever had, very fancy headlines. Can you provide some color on what bottlenecks, if any, you’re starting to see at the plant? And I should know this, but I don’t. Can you expand the plant from here without additional permits?

Because obviously, El Paracios is going to start to kick in as well.

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Yes. Peter here, Heiko. Thanks for the question. As far as bottlenecks we’re seeing now, we’re getting pretty close to the maximum throughput of the mill now. And keeping in mind why this process took a little bit of time is this last year was the first year we ran full ET material, which is a little bit coarser and a little bit more abrasive.

So it took us a little while to get our operating practices to the point where we can get the mill on plane. And that’s really what we showed in 2024 is that we were able to understand the maintenance practices and the upgrades needed to get to that kind of nameplate 2,500 tonne per day capacity, which we’re getting very, very close to. So with regards to expanding the plant, we don’t need any permit, but we will need another a few pieces of equipment in order to add an additional fifth circuit. And that’s experience that we’ve done in the past. Obviously, you’re familiar with adding circuit four and circuit three before that.

So that’s something we could entertain certainly.

Heiko Ihle, Analyst, H.C. Wainwright: Okay. So this is, I don’t want to say rubber stamp, but this is easy to do?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Say that again?

Heiko Ihle, Analyst, H.C. Wainwright: So getting an additional circuit would be easy to do if need be?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: It would be straightforward to do it as a practice that we’ve done in the past, yes.

Heiko Ihle, Analyst, H.C. Wainwright: Perfect. I’ll get back to queue.

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Thanks, Heiko. Thank you.

Conference Operator: Thank you. Your next question is coming from Jake Sekelsky from Alliance Global Partners. Your line is live.

Jake Sekelsky, Analyst, Alliance Global Partners: Hey, David, Nathan, thanks for taking my questions. Nathan, you touched on the decline in costs in Q4, which is good to see. I’m just curious, are these levels that we should expect to see in 2025 on the back of a week or so? Or do you feel there might be some more low hanging fruit on the cost side to capitalize on?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Yes, it’s a fair question. So on the tonnage side, the cost per tonn side, we expect it to be fairly level. Obviously, we’ve taken a risk reduction approach by hedging compared to the Mexican peso from the U. S. Dollar given some of the uncertainty.

On a cost per ounce side, I mean, that is partially driven by mill feed and grade and the recoveries we get. So it’s hard to say 100%, but we expect to be similar to potentially a little bit lower from where our yearly all in cost numbers were. So we were right around 20%, twenty point five % on the year. The goal is to be around that same level, if not lower, but the goal is about the same level.

Jake Sekelsky, Analyst, Alliance Global Partners: Okay. That’s helpful. And then just back to La Preciosa, you have to provide a bit more color on the cadence of the ramp up there and the delivery of fresh ore to the mill. Do you think we’ll start to see those benefits in Q4? Or do you think it’s more of a Q1 twenty twenty six type event?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Yes, fair question. I think we are on track with the guidance we put out, which did include some material from La Preciosa. We were hoping to start blasting very soon and obviously all the operating permits as we’ve already announced are in place. So I think we’re looking at Q4 more so where before any time we should potentially hit the mill. But again, we are taking a conservative approach and it’s possible that we do stop out for a little bit to make sure we can run at full capacity in the smaller circuits and then start processing later in the year or even potentially in Q1 of twenty twenty six.

But the goal is for later in Q4.

Jake Sekelsky, Analyst, Alliance Global Partners: Understood. Okay. That’s all for me. Congrats again on the quarter.

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Thanks, Jake.

Conference Operator: Thank you. Your next question is coming from Joseph Reagor from Roth Capital Partners. Your line is live.

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Hey guys, can you hear me all right? Hey Joe, we hear you. Hey Joe.

Joseph Reagor, Analyst, Roth Capital Partners: Hey. So kind of just following on what Jake was just asking. So are you guys planning to do like a PEA or a resource update on La Preciosa that’s kind of a more accurate view of how you guys plan to mine it because like the old resource is kind of more of like bulk tonnage resource?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Yes. No, very fair question, Joe. We will be doing a resource update that will go out next year. So there’ll be a cutoff later this year. And we are looking at all options here to look at how we would justify some of the economics.

Joseph Reagor, Analyst, Roth Capital Partners: Okay. And then as far as reporting goes, would you guys treat this kind of like you used to treat San Gonzalo where we’ll get it broken out as essentially like a separate mine, even though it’s being processed at one mill?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Hey Joe, Nathan here. So that’s correct. Yes, I mean, I hope it’s a separate we’re treating it a bit like a satellite deposit, but it will be a separate operation with separate financial and operating metrics.

Joseph Reagor, Analyst, Roth Capital Partners: Okay. And then on that basis, what do you think the tonnage will be on kind of an annual basis that you guys have as a goal to process from there?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Are you referring to this year or future years?

Joseph Reagor, Analyst, Roth Capital Partners: Future, like once you get it ramped up?

David Wolfen, President and CEO, Avino Silver and Gold Mines: I think, yes, so this year, obviously, it’s yes,

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: it’s all ramped up. I think 2026, we’re hoping for close to 400 to 500 tons per day. And long term, I mean, based on the current permit, we can go quite high. But I think we’re targeting about, I think, 1,500 and there’s options to increase that depending on what we do with Martha. Sorry, that’s the Martha thing.

Joseph Reagor, Analyst, Roth Capital Partners: Okay. All right. That’s helpful, guys. Thanks. I’ll turn it over.

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Thank you.

Conference Operator: Your next question is coming from John Tounazos from John Tounazos Very Independent. Your line is live.

John Tounazos, Independent Analyst: Hello, David. Could you give us a flavor of the conditions on the ground socially in the neighborhood of your mines and mills given the closing of The U. S. Border? And I guess the off the books revenues from human trafficking or narcotics etcetera or less and the on the books revenues from auto and other legitimate exports are challenging.

So I just wonder what those people do if they stop being coyotes, etcetera. Are they going to be minors? Or are they going to be active in illicit activities, some other thing? And is there any visible change to the neighborhood?

David Wolfen, President and CEO, Avino Silver and Gold Mines: No, we employ four fifty people directly. We impact probably three times that in the local communities. When we go to the mine site, the parking lot is full of cars with license plates from The U. S. So they’re all coming back home to work for us because we pay a good dollar rate there.

And as Jen had mentioned earlier, we do a lot in the communities. We hand out galaxy tablets and televisions at the schools and we do a lot for the community and there’s going to be a sustainability report that comes out here very soon, which will lay out a lot of that information. We’re nowhere near the border. So we’re in the state of Durango, it’s a safe place. There’s no human trafficking or anything like that, that I’m aware of going on in our jurisdiction.

It’s just a farming and cattle ranching community. It’s a safe jurisdiction. Yes, like eleven hours away from the border. So it’s a long way away from the border.

John Tounazos, Independent Analyst: You mentioned hedging the peso in your presentation. Given the GDP impacts to Mexico from closing the border, It’s very possible the peso could weaken a lot. Could you elaborate on the amount of hedging you have, etcetera?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: Sure, John. Nathan here. So we had knowing what our budget rate is and knowing that we want to beat that for 2025, understanding that it could go weaker, it could go stronger, largely depending on what the U. S. Government decides to do.

Having said that, all of our contracts are in place to basically provide us with a lot of upside and just limit any downside exposure. So I won’t get into too much of the details on each individual contract, but it allows for a lot of upside and to follow with the spot market if needed. But generally, we

John Tounazos, Independent Analyst: What percent hedged are you for this year?

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: What percent hedged on our OpEx? I mean, we can take this call offline if

Jake Sekelsky, Analyst, Alliance Global Partners: you prefer,

Nathan Hart, Chief Financial Officer, Avino Silver and Gold Mines: but nowhere near 50%.

John Tounazos, Independent Analyst: Thank you very much. Thank you.

Conference Operator: Thank you. That concludes our Q and A session. I’ll now hand the conference back to David Wolfen, President and CEO for closing remarks. Please go ahead.

David Wolfen, President and CEO, Avino Silver and Gold Mines: Thank you all for joining us today. This is a very exciting time for the company with the high metal prices, new mine being developed. We appreciate your patience in getting to the point to this point and look forward to delivering on our five year growth plan. Thanks again and have a great day.

Conference Operator: Thank you. Everyone, this concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

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