Avino Silver & Gold Mines .(US:ASM)2024-11-15 01:34Financial Data and Key Metrics Changes - The company generated $14.6 million in revenues and a quarterly record of $5.7 million in gross profit for Q3 2024, marking a 33% increase in revenues and a 142% increase in gross profit compared to the first nine months of 2023 [14][18] - Net income for the quarter was $1.2 million or $0.01 per share, with adjusted earnings at $5 million or $0.04 per share, both improved from previous quarters [15][19] - Cash flows from operating activities were $4.1 million or $0.03 per share, with cash on hand at $7.8 million, showing significant improvement from previous quarters [15][16] Business Line Data and Key Metrics Changes - Total equivalent production increased by 13% year-over-year, with silver equivalent production at 671,000 ounces, silver production at 282,000 ounces (a 19% increase), copper production at 1.8 million pounds, and gold production just over 1,600 ounces [8][9] - Mill throughput reached 157,000 tonnes, with improved unit operating costs and strong cash operating margins [10][11] Market Data and Key Metrics Changes - The company experienced higher realized metal prices across all three metals, contributing to improved financial performance [10] - The Mexican peso's weakness against the US dollar positively impacted cost structures, aiding in the reduction of cash costs per ounce [21][26] Company Strategy and Development Direction - The company aims to increase production at La Preciosa, targeting between 8 million ounces and 10 million ounces of silver equivalent by 2029 as part of its transformational growth plan [12][34] - The strategy focuses on leveraging existing assets and resources to grow organically without major capital investments, mitigating risks associated with new project development [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining strong production results and cost control while preparing for growth at La Preciosa [32][33] - The company is focused on protecting its cost structure amid currency fluctuations and is looking forward to the anticipated growth from La Preciosa [27][44] Other Important Information - The company reported a significant positive swing in free cash flow, generating $2.3 million in Q3 compared to $1.9 million used in Q3 of 2023 [18] - The effective tax rate has been elevated due to the utilization of tax losses from previous years, which is expected to stabilize [47][48] Q&A Session Summary Question: Production increase at the Avino Mine - Management indicated that production uptime and availability are expected to continue into Q4, although December may see slower activity due to holidays [37][38] Question: Sensitivity analysis on mine operating cash flow - A $1 increase in silver price is close to a dollar-for-dollar impact on mine operating cash flow, but other inputs also affect this [39][40] Question: Stockpiled material at La Preciosa - The company has processed all intended stockpiled material and is preparing for underground development [41][42] Question: Development costs for La Preciosa - Initial development costs are estimated at $3 million to $4 million, with plans to accelerate throughput as the balance sheet improves [43] Question: Hedging against peso fluctuations - The company is taking measures to protect against peso volatility, especially for 2025 budgeting [44] Question: Timeline for La Preciosa underground development - The final approval needed is from the military for the explosives storage building, with hopes to receive this before year-end [46] Question: Elevated effective tax rate - The elevated tax rate is primarily due to deferred taxes and should stabilize as tax losses are utilized [47][48] Question: Sustaining capital and cost sensitivity to peso movement - Sustaining capital is expected to increase slightly in Q4, with costs being sensitive to peso fluctuations due to the majority of expenses being in pesos [49][50]