Avino Silver & Gold Mines Ltd. (TSX VENTURE:ASM)(NYSE MKT:ASM)(FRANKFURT:GV6)
("Avino" or the "Company") is pleased to report the following summary of
significant events from 2012 and outlook for 2013.
Avino Achieves Production
On October 1st, 2012, the Company achieved production at the San Gonzalo Mine.
This is a significant milestone for the Company reflecting 7 years of planning,
determination and hard work from our teams in Canada and Mexico.
2012 Production Highlights
-- Metal production increased for the year by 42% over 2011 to 253,451
silver equivalent ounces (Calculated)(i)
-- Silver production for the year increased by 44% over 2011 to 191,635
silver ounces (Calculated)
-- Gold production for the year increased by 80% over 2011 to 1,236 gold
ounces (Calculated)
Approximate production numbers from each quarter of 2012 are presented below:(ii)
Feed Concen- Au oz
Material trate Ag oz Produced Ag Eq oz
Source of Processed Produced Produced (calcu- Produced(i)
Quarter Mill Feed (tonnes) (tonnes) (calculated) lated) (calculated)
Q1 Historic
ET
Stockpiles 14,600 176 17,875 220 28,875
Q2 Historic
ET
Stockpiles 16,900 134 14,129 180 23,129
Q3 Historic
ET
Stockpiles 20,015 323 31,024 381 50,074
Subtotal Historic
ET
Stockpiles 51,515 633 63,028 781 102,078(iii)
Q4 San
Gonzalo
Mine 19,538 538 128,607 455 151,373
Total 71,053 1,171 191,635 1,236 253,451
(i) Silver equivalent ounces in 2011 and 2012 were calculated using prices
of US$1,700 per oz and US$34.00 per oz for gold and silver respectively and
applied to the recovered metal content of the concentrates that were
produced from the ET stockpiles and San Gonzalo mine.
(ii) Approximate production numbers, have not been reconciled to shipped
tonnage.
(iii) In Quarters 1 through 3 the Company produced and sold all of the bulk
concentrate generated from processing old ET stockpiles. During the first 3
quarters of 2012, the Company was considered an exploration stage company,
therefore the proceeds from the sale of this concentrate was charged as a
reduction of mineral properties and exploration costs. On October 1, 2012,
the Company transitioned to commercial production with respect to the San
Gonzalo mine, therefore revenues and related costs will be reflected in the
statement of comprehensive income and loss going forward. The revenues and
costs for Q4 will be reflected in the annual audited financial statements.
"2012 was a very exciting and productive year for Avino and we hope to report
even better news in 2013. We have made, and will continue to make, improvements
that we believe will have a positive impact going forward. As we concentrate on
improving efficiencies of the operations, our focus in 2013 will be to reduce
costs, increase production at San Gonzalo and prepare for development and
production at Avino's main mine in 2014." - David Wolfin, President & CEO.
During the first three quarters of 2012, Avino processed material left over from
past mining of the main Avino vein. The old ET stockpiles had been left on the
surface in various locations across the property making delivery for processing
easy and cost efficient. The stockpiles provided Avino an opportunity to
generate cash flow while tuning the mill and continuing underground advancement
and mining at San Gonzalo.
On October 1st, Avino began processing high-grade material from the San Gonzalo
Mine with plans to accommodate a sustained 250 tonne per day ("tpd") operation.
As expected, production numbers surged and in the fourth quarter more silver
equivalent was produced than in the first three-quarters combined; results were
also consistent with the data from the 2010 bulk sample program. During the
fourth quarter, silver and gold feed grades from the San Gonzalo Mine averaged
258 g/t and 1.04 g/t respectively; recoveries averaged 79% for silver and 69%
for gold.
Avino expects grades and recoveries will improve at lower levels because silver
assay results from the 2007 drilling at levels 4 and 5 of the mine produced a
number of core intercept samples (down hole) greater than 1,000 g/t Ag, some
reaching as high as 5,265 g/t Ag, over 0.65 metres. In addition, independently
verified metallurgical test work on the deeper level core samples yielded
recoveries of 89%-90% for silver and 92%-93% for gold.
SG Underground Advancement
After the completion of the bulk sample taken in the spring of 2011, which was
comprised of material from levels 1 and 2, mine advancement at San Gonzalo has
been ongoing. In 2012, the remaining material from the stopes on level 2 was
mined and brought to the surface. Level 3 was the main focus of mining
activities with two stopes having been developed and partially extracted by the
end of the year. By the end of July, a decline from level 3 to level 4 had been
completed and work on the ramp to level 5 had commenced. Subsequent drifting on
level 4 produced samples that assayed as high as 14,768 g/t Ag over 0.4 metres
or 1,380 g/t over 2.22 metres. These assay results represented the highest grade
Avino has sampled at San Gonzalo in 6 years of exploration. By year-end, level 5
had nearly been reached and stope development on level 4 was underway.
Underground advancement for 2012 totalled 2,558 metres.
Main Avino Mine - Royalty Agreement
In February 2012, a new long-term royalty agreement was signed to grant Avino
mining rights to the main Avino vein. Mining activities were suspended on the
Avino vein in 2001 due to low metals prices and the closure of a key smelter.
Avino plans to re-open the old Avino mine once de-watering and all necessary
modifications to the processing plant have been completed. When operations
resume, Avino will use its existing 1,000 tpd circuit to process the material.
Between 1998 and 2000, leading up to the mines closure, annual output averaged
933,240 oz/Ag, 7,537 oz/Au and 9,305,347 lbs/Cu. When the mine re-opens in 2014,
Avino expects to process similar material at a similar rate as it did prior to
closure in 2001 and expects similar output levels.
Exploration - Avino Mine
Shortly after signing the new royalty agreement, the Company embarked on an
exploration program to further define remaining resources. The 2012 drill
program, which totalled 3,263 metres through 9 holes was intended to form the
basis for a current mineral resource estimate below level 12 to be included in a
forthcoming NI 43-101 compliant resource report. The results were consistent
with results from drilling conducted between 2006 and 2008 and demonstrated the
thickness and consistency of the vein. Full results from the drill program can
be viewed in Avino's third quarter MD&A on Avino's website or on SEDAR.
Preliminary Economic Assessment - Oxide Tailings Resource
In July 2012, the Company filed an independent updated technical report on the
Avino property focused on the oxide tailings resource. The report outlined a
1,370 tpd cyanide heap leach operation using two metal price scenarios. Details
of a preliminary economic assessment are outlined below:
Metal Production
---------------------------------------------------
Total Tonnes to Mill 2,340,000
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Annual Tonnes to Mill 500,000
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Mine Life 5 years
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Average Silver Grade (g/t) 91.30 g/t
---------------------------------------------------
Average Gold Grade (g/t) 0.54 g/t
---------------------------------------------------
Total Silver Production (oz) 4,814,000
---------------------------------------------------
Total Gold Production (oz) 31,000
---------------------------------------------------
Average Annual Silver Production (oz) 1,028,860
---------------------------------------------------
Average Annual Gold Production (oz) 6,580
---------------------------------------------------
Economics
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Base Case Spot Price Case
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Gold Value (US$) $ 1,256 $ 1,622
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Silver Value (US$) $ 20.38 $ 28.36
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IRR 54.4% 92%
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Payback period 1.6 years 1.1 years
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NPV (US$'000) 8% discount rate $ 38,647 $ 74,186
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A preliminary economic assessment should not be considered a prefeasibility or
feasibility study, as the economics and technical viability of the Project have
not been demonstrated at this time. The above preliminary economic assessment is
preliminary in nature and includes inferred mineral resources that are
considered too speculative geologically to apply economic considerations that
would allow for categorization as mineral reserves. Furthermore, there is no
certainty that the preliminary economic assessment will be realized. Mineral
resources that are not mineral reserves do not have demonstrated economic
viability.
Data disclosed in July 25th, 2012 technical report by Tetra Tech: A Technical
Report on the Avino Property. Michael O'Brian, M.Sc., Pr.Sci.Nat, FGSSA,
FAusIIM, FSAIIM, Hassan Ghaffari, P.Eng., Jacques Ouellet, P.Eng., Ph.D., Monica
Danon-Schaffer, Ph.D, P.Eng., Sabry Abdel Hafex, Ph.D., P.Eng and Wayne Stoyko,
P.Eng., are the Qualified Persons, as defined under National Instrument 43-101,
who supervised and are responsible for the Techncial Report on the Avino
Property.
Management/Personnel
In 2012, the operation at Avino grew considerably. Key appointments were made
including the promotions of Mr. Carlos Rodriguez, Mine Manager to Chief
Operating Officer and Mr. Malcolm Davidson, Senior Accountant to Chief Financial
Officer. Avino also re-hired Mr. Gerardo Mejia as the mine superintendent. Mr.
Mejia is very familiar with the underground workings at the Avino Mine as he was
superintendent at Avino before the operation ceased in 2001. Two new experienced
field geologists were also added to help with both surface and underground
exploration.
Property Option Agreements
During the year, Avino entered into two separate option agreements. Avino
optioned its Laberinto property in Durango, Mexico to Endeavour Silver Corp.
(See news release dated July 31, 2012) and its Eagle property located in the
prolific Keno Hill Mining district in the Yukon Territory, Canada to Benz
Capital Corp. (see news release dated January 6, 2012) Avino feels that both
properties are of merit and hold significant potential.
Financing
In December, the Company entered into a credit facility with Caterpillar Finance
for up to US $5 million. The financing will help Avino advance its current
operations at San Gonzalo and reopen the old Avino Mine (for more information
please see the news release dated December 20, 2012). With the credit facility
in place, the Company has acquired several key pieces of mining equipment
including: a new Caterpillar 420F Backhoe loader, Caterpillar R1600 Scoop tram
and an Oldenburg underground rock drill. This equipment represents roughly one
third of the credit facility.
Outlook
The focus for 2013 is to improve and strengthen operational efficiency at the
Avino operation and reconfigure the plant in anticipation of higher throughput
for 2014.
Key objectives for 2013 include:
1. Increase cash flow from mine operations by reducing costs and improving
operational efficiency;
2. Aggressively drive the development of the main Avino Mine with the goal
of production in 2014;
3. Resume exploration drilling across the property;
4. Review acquisition opportunities; and
5. Publish a new NI 43-101 complaint resource estimate covering the San
Gonzalo and Avino Mines.
Qualified Person(s)
Avino's projects are under the supervision of Chris Sampson, P.Eng, BSc, ARSM
Avino consultant and Mr. Jasman Yee, P.Eng, Avino director, who are both
qualified persons within the context of National Instrument 43-101. Both have
reviewed and approved the technical data in this news release.
ON BEHALF OF THE BOARD
David Wolfin, President & CEO
Safe Harbor Statement - This news release contains "forward-looking information"
and "forward-looking statements" (together, the "forward-looking statements")
within the meaning of applicable securities laws and the United States Private
Securities Litigation Reform Act of 1995, including our belief as to the extent
and timing of various studies including the PEA, and exploration results, the
potential tonnage, grades and content of deposits, timing and establishment and
extent of resources estimates. These forward-looking statements are made as of
the date of this news release and the dates of technical reports, as applicable.
Readers are cautioned not to place undue reliance on forward-looking statements,
as there can be no assurance that the future circumstances, outcomes or results
anticipated in or implied by such forward-looking statements will occur or that
plans, intentions or expectations upon which the forward-looking statements are
based will occur. While we have based these forward-looking statements on our
expectations about future events as at the date that such statements were
prepared, the statements are not a guarantee that such future events will occur
and are subject to risks, uncertainties, assumptions and other factors which
could cause events or outcomes to differ materially from those expressed or
implied by such forward-looking statements.
Such factors and assumptions include, among others, the effects of general
economic conditions, the price of gold, silver and copper, changing foreign
exchange rates and actions by government authorities, uncertainties associated
with legal proceedings and negotiations and misjudgments in the course of
preparing forward-looking information. In addition, there are known and unknown
risk factors which could cause our actual results, performance or achievements
to differ materially from any future results, performance or achievements
expressed or implied by the forward-looking statements. Known risk factors
include risks associated with project development; the need for additional
financing; operational risks associated with mining and mineral processing;
fluctuations in metal prices; title matters; uncertainties and risks related to
carrying on business in foreign countries; environmental liability claims and
insurance; reliance on key personnel; the potential for conflicts of interest
among certain of our officers, directors or promoters of with certain other
projects; the absence of dividends; currency fluctuations; competition;
dilution; the volatility of the our common share price and volume; tax
consequences to U.S. investors; and other risks and uncertainties. Although we
have attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results not
to be as anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. We are under no obligation to update or alter any forward-looking
statements except as required under applicable securities laws.
Cautionary Note to United States Investors - The information contained herein
and incorporated by reference herein has been prepared in accordance with the
requirements of Canadian securities laws, which differ from the requirements of
United States securities laws. In particular, the term "resource" does not
equate to the term "reserve". The Securities Exchange Commission's (the "SEC")
disclosure standards normally do not permit the inclusion of information
concerning "measured mineral resources", "indicated mineral resources" or
"inferred mineral resources" or other descriptions of the amount of
mineralization in mineral deposits that do not constitute "reserves" by SEC
standards, unless such information is required to be disclosed by the law of the
Company's jurisdiction of incorporation or of a jurisdiction in which its
securities are traded. U.S. investors should also understand that "inferred
mineral resources" have a great amount of uncertainty as to their existence and
great uncertainty as to their economic and legal feasibility. Disclosure of
"contained ounces" is permitted disclosure under Canadian regulations; however,
the SEC normally only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and grade without
reference to unit measures.
FOR FURTHER INFORMATION PLEASE CONTACT:
Avino Silver & Gold Mines Ltd.
David Wolfin
President & CEO
604.682.3701
604.682.3600 (FAX)
ir@avino.com
www.avino.com
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