Avino Silver & Gold Mines .(ASM) - 2023 Q1 - Quarterly Report

Summary Introduction This report updates the Mineral Resource estimate for Avino's Durango, Mexico property, consolidating Avino and La Preciosa data - The report updates the Mineral Resource estimate for the Avino Property, including Avino Veins, San Gonzalo Veins, oxide tailings, La Potosina, Guadalupe veins, and the consolidated La Preciosa area[29] - Avino holds a 99.67% interest in the property, with mining operations resuming in 2010 after a 2001 closure due to low metal prices[30] - In 2022, the mine produced approximately 28 tonnes of silver, 0.16 tonnes of gold, and 2,950 tonnes of copper[30] Property Description and Location The Avino Property, 85 km northeast of Durango, Mexico, consists of 41 mineral concessions totaling 7,943 hectares with secured surface rights - The property is located in Durango, Mexico, approximately 85 km northeast of the city of Victoria de Durango[34] - Avino holds a total of 41 mineral concessions covering 7,943.01 hectares, split between the Avino and La Preciosa areas[37][41][43] - Surface rights are not included with mineral concessions in Mexico; Avino has entered into temporary occupation agreements with local communal landowners (Ejidos)[43] Geology and Mineralization The property hosts low-sulphidation epithermal veins within a caldera, with distinct silver-gold mineralization styles in the Avino and La Preciosa areas Avino Area The Avino concession is within a caldera hosting low-sulphidation epithermal veins in andesitic rocks, with key deposits including the Avino and San Gonzalo Veins - The Avino concession is situated within a 12 km by 8.5 km caldera hosting numerous low-sulphidation epithermal veins, breccias, and stockwork in a window of andesitic pyroclastic rocks[46] - Key deposits include the Avino Vein (1.6 km long, up to 60 m wide), the San Gonzalo Vein system (over 25 m across), the Guadalupe Vein, the La Potosina Veins, and historical oxide and sulphide tailings deposits[51][52][53] - Valuable minerals identified include argentite, chalcopyrite, galena, sphalerite, native silver, and gold[49] La Preciosa Area La Preciosa mineralization occurs in poly-phase quartz veins typical of intermediate-sulphidation epithermal deposits, with acanthite as the principal silver-bearing mineral - Mineralization is hosted in multiple discrete poly-phase quartz veins with textures typical of intermediate-sulphidation epithermal deposits[60][63] - The principal silver-bearing mineral is acanthite; other minerals include sphalerite, galena, pyrite, chalcopyrite, and free gold[60] - The main vein systems are the Abundancia ridge system (traced for over 1.5 km) and the Martha vein system (traced for over 2.5 km), with the Martha vein being the largest[61][65] Resource Estimates The Avino Property holds 52.1 Mt M&I resources at 164 g/t AgEQ and 23.7 Mt Inferred resources at 123 g/t AgEQ, based on specified metal prices Avino Property Mineral Resources (Effective Date: Nov 30, 2022) | Category | Mass (Mt) | AgEQ (g/t) | Ag (g/t) | Au (g/t) | Cu (%) | AgEQ (M tr oz) | Ag (M tr oz) | Au (k tr oz) | Cu (M lb) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | M&I | 52.103 | 164 | 101 | 0.47 | 0.26 | 273.90 | 168.55 | 785.84 | 301.40 | | INF | 23.710 | 123 | 65 | 0.33 | 0.30 | 93.71 | 49.75 | 248.12 | 158.49 | Metal Price and Recovery Assumptions | Area | Metal | Price (USD) | Unit | Recovery (%) | | :--- | :--- | :--- | :--- | :--- | | Avino Mine Area | Ag | 21.00 | $/oz | 82-90 | | | Au | 1,800.00 | $/oz | 73-78 | | | Cu | 3.50 | $/lb | 89 | | La Preciosa | Ag | 19.00 | $/oz | 90 | | | Au | 1,750.00 | $/oz | 75 | - Cut-off grades are based on silver equivalent (AgEQ) values: 60 g/t for the Avino system, 120 g/t for San Gonzalo, and 50 g/t for oxide tailings[68] Mineral Processing, Metallurgical Testing and Recovery Methods The Avino Area operates a 2,500 t/d flotation plant with high recoveries, while La Preciosa shows promising flotation results from recent tests Avino Area The Avino processing plant has a 2,500 t/d capacity, achieving high recoveries in 2022, with recent tests showing improved extraction from oxide tailings via regrinding - The processing plant has a total capacity of 2,500 t/d across four circuits, utilizing conventional crushing, grinding, and flotation[79][83] 2022 Production Data | Description | 2022 Value | | :--- | :--- | | Tonnes Milled | 541,823 t | | Silver Recovery | 92% | | Gold Recovery | 78% | | Copper Recovery | 89% | | Silver Produced | 985,195 oz | | Gold Produced | 5,778 oz | | Copper Produced | 6,504,177 lbs | - Recent tests on oxide tailings show that regrinding can improve silver extraction to ~89% and gold to ~88%[88] La Preciosa Area Recent flotation tests on La Preciosa composites yielded promising silver recoveries, with Martha achieving 81.4% and Abundancia-Gloria 76.9% - 2021 flotation locked cycle tests on the Martha composite yielded a concentrate of 7.36 g/t Au and 6,455 g/t Ag, with 54.2% gold and 81.4% silver recovery[95][101] - Tests on the Abundancia-Gloria composite yielded a concentrate of 9.1 g/t Au and 10,650 g/t Ag, with 53.3% gold and 76.9% silver recovery[95][101] Mining Methods The Avino Vein is actively mined using sublevel long hole stoping and room and pillar methods, while San Gonzalo operations ceased in Q4 2019, and La Preciosa has no commercial operations Avino Area The Avino Vein is mined using sublevel long hole stoping and room and pillar methods, while San Gonzalo mining ceased in Q4 2019 - The Avino Vein is mined using sublevel long hole stoping and room and pillar methods[97] - Mining at the San Gonzalo Vein stopped in Q4 2019 as it reached the end of its current resources, though the mine remains open for exploration[98] La Preciosa Area There are currently no commercial mining operations in the La Preciosa area - There are currently no commercial mining operations in the La Preciosa area[100] Project Infrastructure The property features established infrastructure, including a 2,500 t/d processing plant, offices, and a 5.0 MW power line, with water supplied from local sources and managed through treatment and recycling systems - The site is fully equipped with a 2,500 t/d processing plant, offices, and other necessary facilities[102] - A power line with a design capacity of 5.0 MW was completed in 2016, with current consumption at approximately 3.5 MW, providing sufficient power for potential future expansions[104] - A water treatment plant (WTP) treats excess water from underground operations before discharge[105] Environmental The project requires various environmental permits, including an Environmental Impact Assessment, with acid-base accounting tests indicating potential for mild acid generation from the tailings dam - Required permits include an operating permit, wastewater discharge registration, and an Environmental Impact Assessment (EIA)[106] - Acid-base accounting (ABA) tests suggest that mild acid generation may have started on the tailings dam, requiring environmental management[106] Capital and Operating Costs Capital and operating costs for the Avino Vein are based on actual expenditures, totaling $7.1 million and $23.9 million respectively for Q1-Q3 2022, while the 2017 PEA for tailings is outdated and no cost estimates exist for La Preciosa Capital Cost Estimates Capital costs for the Avino Mine totaled $7.1 million for Q1-Q3 2022, primarily for process plant and mine machinery Capital Costs for the Avino Mine (US$ thousands) | Description | Q1 - Q3 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Process Plant Machinery and Equipment | 3,728 | 1,130 | 30 | | Mine Machinery and Transportation Equipment | 1,815 | 1,337 | 36 | | Buildings and Construction | 327 | 445 | 1,875 | | Total Capital Costs | 7,105 | 2,843 | 1,488 | Operating Cost Estimates Operating costs for the Avino Mine totaled $23.9 million for Q1-Q3 2022, with mining being the largest component Operating Costs for the Avino Mine (US$ thousands) | Description | Q1 - Q3 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Mining Cost | 8,859 | 2,683 | 5,700 | | Processing Cost | 4,762 | 1,467 | 3,739 | | G&A | 5,086 | 5,084 | 4,760 | | Total Operating Costs | 23,917 | 12,765 | 20,592 | Economic Analysis No current economic analysis has been performed for the ongoing Avino Vein operations or the La Preciosa resources, and the 2017 PEA for oxide tailings is outdated - There is no current economic analysis for the active Avino Vein operations[118] - The 2017 PEA technical report for the oxide tailings is not current[119] - No economic analysis or cost estimates have been conducted by Avino for the La Preciosa area[120] Recommendations The report concludes with recommendations for further work, which are detailed in Section 26.0 of the full report - Recommendations for further work on Mineral Resource estimates are presented in Section 26.0[121] Introduction Effective Dates The Technical Report's effective date is February 16, 2023, with the Mineral Resource estimate effective November 30, 2022 - The effective date of the Technical Report is February 16, 2023[125] - The effective date for the Mineral Resource estimate is November 30, 2022[125] Personal Inspections and Qualified Persons Qualified Persons Hassan Ghaffari, P.Eng., and Michael F. O'Brien, P.Geo., conducted multiple site inspections, most recently in July 2021 - Qualified Persons Hassan Ghaffari, P.Eng., and Michael F. O'Brien, P.Geo., conducted multiple personal inspections of the site, most recently on July 20, 2021[126] Information and Data Sources The technical report was compiled using historical engineering and geological reports, supplemented by direct site examinations and data provided by Avino Units of Measurement All units of measurement used in this report are metric, and currency is expressed in US dollars unless otherwise specified Reliance on Other Experts The independent Qualified Persons relied on Avino's information regarding legal matters such as mineral claims, ownership, and royalties for property descriptions in Section 4.0, as they are not qualified to provide legal or political commentary - The Qualified Persons relied on information provided by Avino concerning claims, ownership, and status of the Avino Property as detailed in Section 4.0[133] - The authors are not qualified to provide extensive commentary on legal or political issues, and for details on mineral tenures, title, and royalties, they have relied upon the title opinion provided by Avino[135] Property Description and Location Avino Area The Avino area consists of 26 mineral concessions totaling 1,301.4 hectares, with Avino holding a 99.67% effective ownership and a 15-year exclusive mining right on the La Platosa concession, subject to a 3.5% NSR royalty Property Ownership Avino's effective ownership in its Mexican subsidiary, Avino Mexico (CMMA), has increased to 99.67% through acquisitions and loan conversions - Avino's ownership in its Mexican subsidiary, Avino Mexico (CMMA), has increased over time through acquisitions and loan conversions, reaching an effective ownership of 99.67%[144][149][150] Mineral Concessions and Agreements The Avino area comprises 26 mineral concessions totaling 1,301.4314 hectares, including a 15-year exclusive mining right for the La Platosa concession with a 3.5% NSR royalty - The Avino area comprises 26 mineral concessions totaling 1,301.4314 hectares[152] - Avino holds an exclusive 15-year mining right (with a 5-year extension option) for the La Platosa concession, which hosts the Avino Vein and ET Zone; this agreement includes a 3.5% Net Smelter Return (NSR) royalty payable to Minerales de Avino upon commencement of commercial production[158][159][160] La Preciosa Area The La Preciosa area, acquired indirectly from Coeur Mining, Inc. in 2022, consists of 15 mining concessions covering 6,641.6 hectares, with previously existing 3% NSR royalties repurchased by Coeur in 2014, and numerous temporary occupancy agreements in place for surface rights Mineral Tenure The La Preciosa property consists of 15 Mining Concessions totaling 6,641.5809 hectares, acquired indirectly by Avino from Coeur Mining, Inc. in 2021 - The La Preciosa part of the property consists of 15 Mining Concessions totaling 6,641.5809 hectares[165] - Avino acquired the La Preciosa property indirectly through a share purchase agreement with Coeur Mining, Inc. dated October 27, 2021[166] Royalties, Back-in Rights, Payments, Agreements, and Encumbrances Coeur repurchased two 3% NSR royalties on key La Preciosa concessions for $12 million in 2014, and multiple long-term Temporary Occupancy Agreements secure surface rights with local landowners - On July 2, 2014, Coeur repurchased two separate 3% NSR royalties (Sanluis Royalty 1 and 2) encumbering six key Mining Concessions in the La Preciosa area for a total of USD$12,000,000[186] - Multiple long-term Temporary Occupancy Agreements are in place with local private landowners and ejidos to secure surface rights for exploration, exploitation, and beneficiation activities, with annual or lump-sum payments[186][188][189] Accessibility, Climate, Local Resources, Infrastructure, and Physiography Avino Property The Avino Property, located on Mexico's high plains, is easily accessible by highway from Durango, offering skilled labor and services, with a temperate, semi-arid climate allowing year-round operations - The property is easily accessible via Highway 40 from Durango, a major mining center with available skilled labor[196][197] - The climate is temperate and semi-arid, allowing for year-round operations without significant seasonal impact[198][199] La Preciosa Area The La Preciosa area supports year-round mining activities, with surface rights secured through agreements with private landowners and communal land groups (ejidos) - Mining activities can take place year-round[203] - Surface rights are held by a mix of private landowners and ejidos (communal land groups)[204] History Avino Mine Area The Avino deposit, discovered around 1555, has a long history of intermittent mining, becoming one of the world's largest open-pit mines by 1908, and was acquired by the current ownership in 1968, with the Avino Vein system remaining the primary focus - The Avino deposit was discovered around 1555 and has been mined intermittently for centuries, with significant operations in the early 20th century[208][209] - The property was acquired under its current ownership in 1968[211] - The Avino Vein system has been the mainstay of historical exploitation and is currently accessed via a ramp with workings extending to a depth of 360 m[212] La Preciosa Area La Preciosa saw early mining in the late 19th century, followed by modern exploration and extensive drilling by various operators, leading to a historical resource estimate before Avino's acquisition in 2021 - Early mining focused on the Gloria and Abundancia veins in the late 19th century; modern exploration and drilling were conducted by Luismin, Orko, Pan-American Silver (PAS), and Coeur[220][222][223] La Preciosa Historical MRE (Effective Date: Oct 25, 2012) - NOT CURRENT | Mining Method | Classification | Mass (Mt) | Ag (g/t) | Au (g/t) | Ag Equivalent (g/t) | | :--- | :--- | :--- | :--- | :--- | :--- | | Open Pit | Indicated | 29.6 | 104 | 0.20 | 115 | | Open Pit | Inferred | 47.7 | 86 | 0.16 | 96 | | Underground | Inferred | 1.9 | 124 | 0.21 | 136 | - Avino agreed to acquire the La Preciosa property from Coeur via a share purchase agreement dated October 27, 2021[228] Geological Setting and Mineralization Avino Mine Area The Avino Mine is located within a caldera on the Sierra Madre Occidental's eastern flank, hosting low-sulphidation epithermal veins in andesitic rocks, with the Avino Vein being a significant silver, gold, and copper-bearing structure Avino Mine Concessions Geology and Mineralization The Avino concession is within a caldera exposing andesitic pyroclastic rocks, hosting numerous low-sulphidation epithermal veins, including the significant Avino Vein and the San Gonzalo Vein system - The Avino concession is located within a 12 km by 8.5 km caldera, exposing andesitic pyroclastic rocks of the lower volcanic sequence, which host numerous low-sulphidation epithermal veins[247] - The Avino Vein is the most significant structure, extending 1.6 km long and 60 m wide on the surface, with mineralization traced vertically for over 600 m[252][255] - The San Gonzalo Vein system is a strongly developed, 25m wide structure characterized by banded textures and open-space filling[259] - The oxide tailings are derived from weathered near-surface rock, while sulphide tailings come from deeper underground workings[269] La Preciosa Area The La Preciosa area, on the Sierra Madre Occidental's eastern flank, features Tertiary-age silver-bearing epithermal quartz veins with intermediate-sulphidation characteristics, including the Abundancia Ridge and Martha vein systems La Preciosa Local Geology and Mineral Deposits The La Preciosa area contains Tertiary-age silver-bearing epithermal quartz veins hosted mainly in conglomerate and Tertiary Lower Volcanic andesitic rocks, with main vein systems on Abundancia Ridge and the Martha vein system - The area contains Tertiary-age silver-bearing (±gold) epithermal quartz veins hosted mainly in conglomerate and Tertiary Lower Volcanic andesitic rocks[284] - The main vein system on Abundancia Ridge consists of south-striking, west-dipping veins traced for over 1.5 km[287] - The Martha vein system is a north- to northwest-striking, shallow west-dipping system traced by drilling for over 2.5 km along strike[287] Mineralization La Preciosa mineralization displays characteristics typical of intermediate-sulphidation epithermal deposits, rich in silver, with the Martha vein being the largest deposit - The mineralization displays characteristics typical of intermediate-sulphidation epithermal deposits in Mexico, rich in silver[322] - Veins consist of multiple stages of banded crustiform quartz, adularia, barite, and carbonates, with variable amounts of pyrite, sphalerite, galena, argentite, and Ag sulfosalts[321] - The Martha vein is the largest in the deposit, with at least three times the volume of the next largest, La Abundancia[326] Deposit Types The Avino Property hosts low- to intermediate-sulphidation silver-gold epithermal veins, breccias, and stockwork zones within a caldera, grading into a "near porphyry" environment, with distinct characteristics for the Avino, San Gonzalo, and La Preciosa veins - The property hosts low- to intermediate-sulphidation silver-gold epithermal veins, breccias, and stockwork zones within a 12 km by 8.5 km caldera[333] - The Avino Vein is a steep-dipping, silver-gold-copper-rich epithermal vein, whereas the San Gonzalo Vein has lower copper content, similar to other silver-lead-zinc deposits in the Sierra Madres[334] - The La Preciosa veins are generally narrower and have flatter dips (15 to 40 degrees)[335] Exploration Avino Mine Area Exploration at the Avino Mine area, ongoing since before 1968, has focused on the main Avino Vein, with post-2001 activities including geophysical surveys, soil sampling, mapping, and extensive underground channel sampling to define mineralization - Post-2001 exploration has included induced polarization surveys, 1,500 soil samples, mapping, trenching, tailings investigations, and extensive drilling and channel sampling[356] - A 10,000-tonne bulk sample program at the San Gonzalo deposit in 2011 had a feed grade of 261 g/t silver and 0.9 g/t gold[363] - Continuous underground channel sampling has been conducted from 2010 to the present at both the ET Mine (Avino Vein) and San Gonzalo Mine to support resource estimation[364] La Preciosa Area Exploration at La Preciosa, dating back to the late 1800s, primarily relies on modern drilling by Luismin, Orko, and Pan American Silver, with Coeur's 2013-2014 program adding significant infill, condemnation, and geotechnical drilling - Most material exploration data comes from drilling campaigns by Luismin, Orko, and Pan American Silver (PAS)[372] Coeur 2013-2014 Exploration and Development Summary | Data Type | Quantity | Target | | :--- | :--- | :--- | | Core Holes (Infill) | 75 holes (11,437 m) | Resource conversion | | RC Holes (Condemnation) | 21 holes (8,543 m) | Waste dumps and tailings sites | | Core Holes (Geotechnical) | 7 holes (2,244 m) | Geotechnical information | Drilling Avino Mine Area Since 2001, 355 drill holes totaling 78,414 meters have been completed across the Avino Mine area, with recent 2021-2022 drilling focusing on the Avino Vein, Guadalupe veins, and a 127-hole sonic drilling program on oxide tailings to improve resource definition - Post-2001, a total of 355 core drill holes (78,414 m) have been completed across the Avino Vein, San Gonzalo, Guadalupe, and La Potosina systems[389] - Recent exploration drilling in 2021-2022 targeted the Avino Vein system, Guadalupe veins, and La Potosina veins[383][394][395] - In 2021-2022, Avino drilled 127 new vertical holes using the sonic drilling method on the oxide tailings deposit to improve resource confidence[399] La Preciosa Area A total of 867 diamond drill holes, amounting to 267,916 meters, have been completed at La Preciosa by previous operators, with Coeur's 2014 program adding 75 HQ core holes for infill drilling, and the historical data is considered sufficient for the Mineral Resource Estimate Historical Drilling Summary at La Preciosa | Company | Years | Number of Drillholes | Meters of Drilling | | :--- | :--- | :--- | :--- | | Luismin | 1981-1994 | 8 | 1,630 | | Orko | 2005-2012 | 387 | 152,367 | | PAS | 2009-2010 | 363 | 91,095 | | Coeur | 2013-2014 | 103 | 22,324 | | Totals | | 861 | 267,416 | - In 2017, Coeur conducted underground channel sampling on the Abundancia and Gloria Veins, which showed statistical similarity to nearby drill hole samples, allowing both data types to be used in resource estimation[418] - The Qualified Person is satisfied that the amount and quality of historical drilling are sufficient to support the current Mineral Resource Estimate[434] Sample Preparation, Analyses, and Security Avino Mine Current drill core samples from the Avino Mine are processed at SGS Laboratory in Durango, with 2021-2022 QA/QC programs showing no significant bias, and the QP considers the procedures adequate for the technical report - Current drill core samples are processed at the SGS Laboratory in Durango[442] - The 2021-2022 drilling programs had a QA/QC submission rate of 9.28%, including standards, duplicates, and blanks[443] - Analysis of QA/QC samples, including standards, duplicates, and blanks, showed no significant bias or contamination issues[445][477][486] - The QP's opinion is that the sample preparation, security, and analytical procedures are adequate for this Technical Report[494] La Preciosa Area Sample preparation and analysis for La Preciosa were conducted by various operators using certified labs, with Coeur's 2013-2014 program employing a robust QA/QC program that, despite minor issues, was deemed acceptable by the QP to support an MRE - Samples from various drilling campaigns were prepared and analyzed by certified laboratories including Inspectorate, SGS, and ALS[503][509][512] - Coeur's 2013-2014 QA/QC program had a standard insertion rate of 6.23% and a blank insertion rate of 4.63%, exceeding the company's 10% combined target[559] - After excluding a problematic historical standard (Orko-10), the Round 1 QA/QC failure rate for Coeur's campaign was low at 1.78%[562][563] - The QP is satisfied that the QA/QC, check samples, and check assays are adequate and within industry-accepted norms to support a Mineral Resource Estimate[585] Data Verification Avino Mine Area The Qualified Person verified the Avino Mine drillhole database, finding minimal discrepancies, and confirmed mineralization grades in oxide tailings, concluding that the data is adequate for resource estimation - The QP reviewed and validated the drillhole database, finding no material discrepancies in collar positions, downhole surveys, or grade data[588][590] - The drillhole database was consolidated into a Microsoft Access database, which improved consistency and security; discrepancy rates were low (e.g., 0.6% for lithology overlaps in the Avino Vein)[593][594][597] - Verification samples collected by the QP from the oxide tailings confirmed the presence of gold and silver mineralization at grades similar to the original drilling campaign[614] La Preciosa Area The QP's site visit and review confirmed the integrity of La Preciosa's historical drillhole database, which has been extensively validated by previous operators and consultants, with Coeur's 2013-2014 re-assay campaign further enhancing data quality for mineral resource estimation - The QP's site visit in July 2021 confirmed drill collar locations, reviewed core logging facilities, and inspected vein outcrops, finding no material discrepancies[616][620][621] - The historical drillhole database has been repeatedly verified by previous operators and independent consultants, including MDA, Snowden, and IMC[628] - In 2014, Coeur initiated a comprehensive review of all historical geologic logs and re-assayed 6,884 pulp samples from the Orko era, which showed an average increase in Ag grade of up to 11% due to improved digestion methods, enhancing the database quality[648][659] Mineral Processing and Metallurgical Testing Avino Mine Area The Avino processing plant achieves high recoveries for silver, gold, and copper from the Avino Vein, and metallurgical tests on oxide tailings indicate that regrinding significantly improves silver and gold extraction via cyanide leaching - In 2022, the Avino Vein flotation circuit achieved average recoveries of 92% for silver, 78% for gold, and 89% for copper[670] - 2022-2023 tests on early-stage oxide tailings showed that regrinding to 80% passing 75 µm improved silver extraction to ~89% (from 82.7%) and gold extraction to ~88% (from 78.7%)[695] - A column leach test on oxide tailings yielded 73.0% silver and 78.9% gold extraction, comparable to bottle-roll tests on as-received material[751] La Preciosa Area Extensive metallurgical work for La Preciosa, including a 2014 Feasibility Study, focused on cyanidation, while 2021 flotation tests showed promising silver recoveries for Martha (81.4%) and Abundancia-Gloria (76.9%) composites - A 2014 Feasibility Study determined weighted average life-of-mine recoveries via cyanidation to be 84% for silver and 61% for gold[784] - 2021 flotation locked cycle tests on the Martha composite achieved 81.4% silver recovery, producing a concentrate grading 6,455 g/t Ag[799] - 2021 flotation locked cycle tests on the Abundancia-Gloria composite achieved 76.9% silver recovery, producing a concentrate grading 10,650 g/t Ag[810][814] Mineral Resource Estimates Avino Property The Avino Mine Area's Mineral Resources include 34.7 Mt M&I at 144 g/t AgEQ and 19.3 Mt Inferred at 112 g/t AgEQ, estimated using Ordinary Kriging within geological constraints and cut-off grades based on operational costs and metal prices Resource Summary The Avino Mine Area's Mineral Resources, effective November 30, 2022, include 34.7 Mt Measured & Indicated and 19.3 Mt Inferred resources Avino Mine Area Mineral Resources (Effective Date: Nov 30, 2022) | Category | Mass (Mt) | AgEQ (g/t) | Ag (g/t) | Au (g/t) | Cu (%) | AgEQ (M tr oz) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | M&I | 34.662 | 144 | 63 | 0.54 | 0.39 | 160.76 | | INF | 19.313 | 112 | 46 | 0.34 | 0.37 | 69.61 | La Preciosa Area The La Preciosa Mineral Resource, estimated using a two-dimensional approach for narrow veins, includes 17.4 Mt Indicated at 202 g/t AgEQ and 4.4 Mt Inferred at 170 g/t AgEQ, reported at a 120 g/t AgEQ cut-off and constrained to underground mining areas Mineral Resource Statement The La Preciosa Mineral Resource Summary, effective October 2021, includes 17.4 Mt Indicated and 4.4 Mt Inferred resources La Preciosa Mineral Resource Summary (Effective Date: Oct 2021) | Category | Mass (kt) | AgEQ (g/t) | Ag (g/t) | Au (g/t) | AgEQ (k tr oz) | | :--- | :--- | :--- | :--- | :--- | :--- | | Indicated | 17,440.6 | 202 | 176 | 0.34 | 113,137.7 | | Inferred | 4,396.2 | 170 | 151 | 0.25 | 24,095.2 | - The resource is reported at a cut-off grade of 120 g/t AgEQ, based on conceptual underground mining costs[1247][1255] Mineral Reserve Estimates There are currently no Mineral Reserves reported for the Avino Property - There are currently no Mineral Reserves reported on the Property and Project[1261] Mining Methods Avino actively mines the Avino Vein using sublevel stoping and room and pillar methods, while San Gonzalo operations ceased in Q4 2019, and there are no current commercial operations at La Preciosa or active mining of oxide tailings - The Avino Vein is currently mined using sublevel stoping and room and pillar methods[1266] - Underground mining activities at the San Gonzalo Vein were stopped in Q4 2019 after reaching the end of its current resources[1277] - A conventional truck and loader surface mining method is planned for the oxide tailings, but there is no current plan to mine this resource[1282] Total Production (2020-2022) | Description | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Tonnes Milled (t) | 541,823 | 165,304 | 204,286 | Recovery Methods The Avino processing plant, with a 2,500 t/d capacity, uses conventional flotation to produce a copper concentrate with silver and gold credits, achieving high recoveries in 2022, and commissioned a new dry-stack tailings facility in Q3 2022 for improved water conservation and stability - The plant has a total capacity of 2,500 t/d across four separate flotation circuits[1295] - The process involves three-stage crushing, grinding to 65-75% passing 200 mesh, gravity concentration to recover coarse precious metals, and flotation to produce a copper concentrate[1299][1301][1302] - A dry-stack tailings facility was commissioned in Q3 2022 to improve water management and tailings safety[1297][1310] Project Infrastructure The Avino Property has significant existing infrastructure, including a 2,500 t/d processing plant, offices, and a 5.0 MW power line with ample capacity, and water management is enhanced by recycling systems and a water treatment plant - The property is easily accessible by road and has a fully operational 2,500 t/d processing plant and associated facilities[1316][1324] - A 5.0 MW power line was completed in June 2016, providing ample power for current operations (approx. 3.5 MW) and future projects[1326] - Water supply is secured from a well and a shared dam, with significant water recycling from the tailings thickener and a new dry-stack tailings facility commissioned in Q3 2022[1319][1328] Market Studies and Contracts Avino has a ready market for its copper, silver, and gold flotation concentrates, sold exclusively to Samsung C&T UK Ltd. under an agreement extending until December 2024, with concentrates shipped overseas from the Port of Manzanillo - Avino has an exclusive sales agreement for its flotation concentrates with Samsung C&T UK Ltd. until December 2024[1334] - Concentrates are trucked to the Port of Manzanillo for shipment to overseas smelters[1335] Environmental Studies, Permitting and Social Community Impact Avino Mine Area The Avino Mine Area requires various environmental permits, including an EIA, and must manage potential acid generation from tailings, while Avino actively engages with local communities through support programs - The project requires an Environmental Impact Assessment (EIA) and adherence to numerous Official Mexican Standards (NOMs) for environmental protection[1350][1361] - ABA tests have indicated potential for mild acid generation from the tailings dam, which requires a management plan[1367] - Avino maintains an active community engagement program, providing financial and material support to the local communities of Zaragoza, Avino, and Panuco[1377] La Preciosa Area Comprehensive environmental studies for the La Preciosa area have been completed, covering baseline data, waste characterization, and the development of monitoring, management, and mine closure plans - Extensive environmental studies have been completed for the La Preciosa area, including baseline data collection for water and waste characterization[1396] - Monitoring, management, and a mine closure and reclamation plan with cost estimates have been prepared for the area[1396] Capital and Operating Costs Avino Veins Costs for the Avino Veins are based on actual expenditures from ongoing operations, with total capital costs of $7.1 million and total operating costs of $23.9 million for Q1-Q3 2022 Capital Costs (US$ thousands) | Description | Q1 - Q3 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Capital Costs | 7,105 | 2,843 | 1,488 | Operating Costs (US$ thousands) | Description | Q1 - Q3 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Operating Costs | 23,917 | 12,765 | 20,592 | Tailings Resources A Preliminary Economic Assessment (PEA) for the recovery of silver and gold from the oxide tailings was prepared in 2017, but it is no longer considered current - The 2017 PEA technical report for the oxide tailings is not current[1406] La Preciosa Area There are currently no commercial operations at the La Preciosa property, and Avino has not conducted any capital or operating cost estimates for this area - Avino has not conducted capital and operating cost estimates for the La Preciosa property[1407] Economic Analysis No current economic analysis has been performed for any part of the Avino Property, including ongoing Avino Vein operations, the outdated 2017 PEA for tailings, or the La Preciosa area - There is no economic analysis for the current mining operations at the Avino Vein[1410] - The 2017 PEA for the oxide tailings is not current[1411] - Avino has not conducted a project economic analysis on the La Preciosa property[1412] Adjacent Properties The La Preciosa property is adjacent to mining concessions owned by Arcelia Gold Corp. and Canasil Resources, Inc. Other Relevant Data and Information There is no additional information necessary to make this technical report understandable and not misleading Interpretation and Conclusions Geology The Avino Property, located in the Sierra Madre Silver Belt, hosts numerous epithermal veins and breccias within a large caldera, encompassing five main deposits in the historic Avino Mine area and significant flat-lying, narrow silver and gold-bearing veins in the recently acquired La Preciosa concessions Resource Estimates The Mineral Resources for the entire property are summarized in Table 14.1, detailing the combined resources from both the Avino Mine and La Preciosa areas Mineral Processing Avino actively processes ore from the Avino Vein, with tests showing regrinding significantly improves silver and gold extractions from oxide tailings, and recent flotation tests on La Preciosa material demonstrate good silver recovery - Recent tests on oxide tailings show regrinding to 75 µm improves Ag extraction to ~89% and Au to ~88%[1425] - 2021 flotation tests on La Preciosa material showed good response, with silver recovery of 79.1% for the Abundancia-Gloria composite after regrinding[1427][1428] Mining The Avino Vein is being mined using sublevel stoping, while mining at San Gonzalo ceased in 2019 but the mine remains open for exploration, and a conventional surface mining method is proposed for the oxide tailings but is not currently active Capital and Operating Costs Costs for the Avino Vein are based on actual expenditures from current operations, while the 2017 PEA for the tailings is not current, and no cost estimates have been conducted for the La Preciosa property Economic Analysis There is no current economic analysis for the active mining operations at the Avino Vein, the 2017 PEA for the oxide tailings is outdated, and no economic analysis has been conducted for the La Preciosa property Recommendations The report recommends a budget of approximately C$2 million for further work, including deep drilling at the Avino Vein, developing a long-term mine plan, conducting additional metallurgical test work, and utilizing remote sensing for exploration optimization - The total estimated cost for recommended future work is approximately CAD$2,000,000[1438] - Geology: Recommended 8,000 m of deep drilling to explore the extension of the Avino breccias (est. cost CAD$1,950,000) and use of hyperspectral techniques for exploration optimization (est. cost CAD$50,000)[1441][1443][1449] - Mining: Prepare a long-term mine plan for the Avino area resources and develop mining methods for the tailings and La Preciosa (est. cost CAD$300,000)[1444] - Metallurgy: Conduct further optimization tests for the Avino Vein (bismuth separation), oxide/sulphide tailings (regrinding), and La Preciosa (est. total cost CAD$230,000)[1445][1447][1448] References Certificates of Qualified Persons