Mr. David Wolfin reports
AVINO ANNOUNCES FINANCIAL RESULTS FOR FOURTH QUARTER AND YEAR END 2017
Avino Silver & Gold Mines Ltd. has released the consolidated financial results for the company's fourth quarter and year ended Dec. 31, 2017.The financial statements and management's discussion and analysis can be viewed on the company's website, on SEDAR and on EDGAR.
Effective Jan. 1, 2017, the company changed its presentation currency to U.S. dollars from Canadian dollars. As a result, all dollar amounts in this news release are expressed in U.S. dollars, unless otherwise noted.
Fourth quarter 2017 highlights:
Generated revenues of $8.9-million from the sale of San Gonzalo and Avino concentrates; Mine operating income amounted to $3.4-million, an increase of 25 per cent over the same period of 2016; Net income after taxes amounted to $1.5-million or a basic EPS (earnings per share) of three cents;Produced 637,012 silver equivalent ounces (2), including 319,678 ounces of silver, 1,472 ounces of gold and 1,108,800 pounds of copper; Total consolidated cash cost (1) was $7.90 per payable silver equivalent ounce (2);Consolidated all-in sustaining cost (1) (AISC) was $9.23 per payable silver equivalent ounce (2), an 8-per-cent decrease compared with $10.01 per ounce in the fourth quarter of 2016;Average realized selling prices for silver and gold were $16.65 and $1,278 per ounce, respectively, and the average realized copper price per tonne was $6,784;Cash of $3.4-million and short-term investments consisting of cash of $1.0-million were on hand at the end of the quarter.
2017 highlights:
Generated revenues of $33.4-million from sales of San Gonzalo and Avino concentrates, an increase of 11 per cent compared with 2016;Mine operating income was $11.4-million, an increase of 4 per cent compared with 2016; Net income after taxes amounted to $2.7-million or a basic EPS of five cents; Operating cash flow before movements in working capital was $7.1-million or 13 cents per share, basic;Produced 2,700,585 silver equivalent ounces (2), including 1,394,203ounces of silver, 7,935 ounces of gold and 4,373,166 pounds of copper; Total cash cost (1) was $8.65 per silver equivalent ounce (2); All-in sustaining cost (1) (AISC) was $10.11 per payable silver equivalent ounce (2), a 2-per-cent decrease compared with $10.34 per ounce in 2016; Average realized selling prices for silver and gold were $17.05 and $1,268 per ounce, respectively; and the average realized copper price per tonne was $6,251; Cash of $3.4-million and short-term investments consisting of cash of $1.0-million were on hand at Dec. 31, 2017; Invested $12.2-million in capital expenditures at the Avino and Bralorne mines.
(1) The company reports non-international financial reporting standard measures, which include cash cost per silver equivalent ounce, all-in sustaining cash cost per ounce and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning, and the calculation methods may differ from methods used by other companies with similar reported measures.
(2) In 2017, silver equivalence was calculated using metals prices of $17.05 per ounce silver, $1,258 per ounce gold and $2.80 per pound copper. In 2016, AgEq was calculated using $17.10 per oz Ag, $1,248 per oz Au and $2.21 per lb Cu.
"We successfully achieved our internal production targets in 2017, and we are very close to the completion of mill circuit 4, a significant investment in Avino's future, while maintaining a solid financial position" said David Wolfin, president and chief executive officer. "During the year, we delivered a positive PEA [preliminary economic assessment] on the oxide tailings project, completed a 22-hole drill program comprising 3,374 metres between San Luis and Elena Tolosa, and an additional drill program located to the east and to the north of the Avino vein targeting three areas of mineralization. The drill results support the continuation of the extensive Avino vein system. We delivered an 11-per-cent increase in revenue, an improvement in earnings and maintained consistent silver equivalent production levels. Avino is celebrating its 50th year in the mining industry, and this would not be possible without the support and dedication of our teams in both Canada and Mexico."
HIGHLIGHTS(expressed in U.S. dollars)Q4 2017Q4 2016Year 2017Year 2016OperatingTonnes milled 129,555134,668541,935544,336Silver ounces produced319,678419,3551,394,2031,612,060Gold ounces produced1,4722,5817,9357,119Copper pounds produced1,108,800755,6454,373,1664,206,585Silver equivalent ounces (1) produced 637,012707,7752,700,5852,679,334Concentrate sales and cash costsSilver equivalent ounces sold (2) 597,285644,4792,245,9462,035,618Cash cost per silver equivalent ounce (2, 3)$7.90$8.62$8.65$8.48All-in sustaining cost per silver equivalent ounce (2, 3)9.2310.0110.1110.34Average realized silver price per ounce 16.6516.6917.0517.71Average realized gold price per ounce 1,2781,1941,2681,258Average realized copper price per tonne 6,7845,3136,2514,850FinancialRevenues8,883,6479,048,747 33,358,641 30,105,336Mine operating income 3,363,2452,692,056 11,383,511 10,944,536Net income (loss) 1,496,381950,7702,653,4611,503,531ShareholdersEarnings (loss) per share (EPS) -- basic 0.03 0.02 0.05 0.04Cash flow per share (YTD) (3) -- basic 0.05 0.02 0.13 0.11(1) In 2017, silver equivalence was calculated using metal prices of $17.05 per pounce silver, $1,258 per ounce gold and $2.80 per pound copper. In 2016, AgEq was calculated using $17.10 per oz Ag, $1,248 per oz Au and $2.21 per lb Cu. (2) Silver equivalent ounces sold for the purposes of cash costs and all-in sustaining costs consistof the sum of silver ounces, gold ounces and copper tonnes sold multiplied by the ratio of the average spot gold and copper prices to the average spot silver price for the corresponding period. (3) The company reports non-international financial reporting standard measures, which include cash cost per silver equivalent ounce, all-in sustaining cash cost per silver equivalent ounce and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance but do not have a standardized meaning, and the calculation methods may differ from methods used by other companies with similar reported measures.
Financial results
The company generated revenues of $33.4-million during 2017, an 11-per-cent increase compared with 2016, due to the Avino mine entering into production at levels intended by management, effective April 1, 2016, and they were partially offset by lower silver prices in the period. In 2015, and the first quarter of 2016, the Avino mine was in the evaluation phase, and proceeds from the sale of Avino mine concentrate were classified as a recovery of exploration and evaluation expenditures. Higher copper prices were also a contributing factor to the increased revenue in 2017.
Mine operating income was $11.4-million during 2017, an increase of $500,000 or 4 per cent from $10.9-million in 2016. During 2017, net income increased by $1.2-million to $2.7-million or five cents perbasic and dilutedshare, compared with net income of $1.5-million or four cents perbasic and three cents per diluted share during 2016. The primary reason for the increase is the addition of revenue from the Avino mine.
Operational results
2017 production highlights
Silver equivalent (1) production: 2,700,585 ounces*
Silver production: 1,394,203 oz
Gold production: 7,935 oz
Copper production: 4,373,166 lb
* In 2017, the company also produced and sold 73,460 silver equivalent ounces from its low-grade zinc concentrate.
Silver equivalent (1) production for 2017 increased by 1 per cent to 2,700,585 oz compared with 2,679,334 oz in 2016. Silver production for 2017 decreased 14 per cent to 1,394,203 from 1,612,060 oz compared with 2016. Gold production for 2017 increased by 11 per cent to 7,935 oz compared with 7,119 oz in 2016. Copper production for 2017 increased by 4 per cent to 4,373,166 lb compared with 4,206,585 lb in 2016.Total mill feed processed during 2017 was 541,935 compared with 544,336 dry tonnes during 2016, a decrease of 0.5 per cent.
At the Avino mine, the silver equivalent (1) ounces produced during 2017 totalled 1,911,428 compared with 1,606,272 produced in 2016, which was an increase of 19 per cent, mainly due to the higher grade of the mill feed resulting in an increase of 9 per cent in concentrate produced and the grade of copper increasing by 35 per cent. Copper production increased by 47 per cent during the fourth quarter.Over the year, gold production increased by 42 per cent, copper by 4 per cent and silver by 2 per cent.
At the San Gonzalo mine, the silver equivalent (1) ounces produced during 2017 totalled 789,157 compared with 1,073,062 compared in 2016. This represents a 26-per-cent decrease compared with 2016, and was mainly due to lower tonnage of San Gonzalo mill feed being processed using mill circuit 2. In 2017, mill circuit 2 was primarily used for processing Avino mine material, whereas in 2016, there were some months when this circuit was used to process San Gonzalo material in addition to mill circuit 1.
Costs and capital expenditures
Consolidated all-in sustaining cash costs per AgEq ounce during 2017 were $10.11 compared with $10.34 during 2016, a decrease of 2 per cent. As the company continues to transition from development mining to production mining, the company anticipates achieving lower production costs.
Capital expenditures during 2017 were $12.4-million compared with $10.7-million during 2016.
Capital expenditures primarily relate to advancing the Avino mine, which included construction of mill circuit 4, which is now over 90 per cent complete, exploration at the Avino mine, and the purchasing of new mining, milling/processing and transportation equipment, as well as advancing the Bralorne mine and exploration and mining equipment.
(1) In 2017, AgEq was calculated using metals prices of $17.05 per oz Ag, $1,258 per oz Au and $2.80 per lb Cu. In 2016, AgEq was calculated using $17.10 per oz Ag, $1,248 per oz Au and $2.21 per lb Cu.
Bralorne mine
During the year, the company completed its review of potential scenarios for developing a long-term mine operating plan. The original phased plan was for the future start-up of a small tonnage operation, and during the course of work being completed, the company's site management identified ground and safety issues in the existing 800 level portal. It was determined that the 800 level portal needed rehabilitative work, and consultants were engaged to review and develop a plan for the repairs. In view of the proposed repairs, which would have restricted mine throughput, the consultant's recommendations were to construct a new portal on the 800 level, due to the age and limiting size of the original main access tunnel.The future construction of a new 800 portal should allow earlier access to the resources below the 800 level.
In November, the company received an approved permit amendment from the Ministry of Energy, Mines and Petroleum Resources (MEMPR). The permit amendment provides a comprehensive and responsible permit, which is updated to modern environmental and permitting standards, and is an important step in the company's strategic plan to reopen the Bralorne gold mine. With the receipt of this modern permit, the company anticipates an easier and quicker transition to an amended permit that would allow for future expansion. A surface drilling program is under way, and an underground drill program is being planned to update and increase the confidence in the current resource base.
First nation education, training and engagement, and collaboration
In 2017, Avino continued the underground mining training for members of the St'at'imc communities, and the third training program with North Island College was completed in February, 2018, in Pemberton, B.C. In addition to the training program through North Island College, Avino has been working with the Center for Training Excellence in Mining, the B.C. government, Thompson Rivers University, New Gold, Seabridge Gold and Sandvik, amongst others, on the development of the curriculum for a new accredited underground mining training program aligned with the Mining Industry Human Resources Council's Canadian mining certification program.
During 2017, Avino announced the signing of a non-binding letter of intent (LOI) with St'at'imc Eco-Resources to recognize the opportunity for collaboration and the establishment of joint ventures to allow the St'at'imc First Nations to economically participate in the development and continuing operations of the Bralorne gold mine project. St'at'imc Eco-Resources is the economic arm of the St'at'imc and is owned by nine of the 11 St'at'imc communities.
Additional information
Avino will be holding a conference call and webcast on April 3 at 8 a.m. PDT (11 a.m. EDT).
Shareholders, analysts, investors and media are invited to join the webcast and conference call.
The Avino fourth quarter and year-end 2017 webcast and conference call are available by dialling the following numbers five to 10 minutes prior to the start time.
Toll-free Canada andthe United States: 1-800-319-4610
Outside of Canada and the U.S.: 1-604-638-5340
No passcode is necessary to participate in the conference call or webcast. Participants will have the opportunity to ask questions during the question-and-answer portion.
The conference call and webcast will be recorded, and the replay will be available on the company's website later that day.
Qualified person(s)
Avino's Mexican projects are under the supervision of Jasman Yee, PEng, Avino director, and the Bralorne project is under the supervision of Fred Sveinson, BA, BSc, PEng, both of whom are qualified persons within the context of National Instrument 43-101, and have reviewed and approved the technical data in this news release.
Outlook
Avino's mission is to create shareholder value through profitable organic growth at the Avino property and the strategic acquisition and advancement of mineral exploration and mining properties. It is committed to expanding its operations and managing all business activities in an environmentally responsible and cost-effective manner while contributing to the well-being of the communities, in which it operates.
The company remains focused on the following key objectives:
Maintain and improve profitable mining operations while managing operating costs and achieving efficiencies; Complete the mill circuit 4 expansion to increase Avino mine production; Conduct a successful drill program in 2018 to increase and improve confidence in its resource base at Bralorne;Continue mine expansion drilling and explore regional targets on the Avino property; Follow the recommendations made in the 2017 PEA on the oxide tailings resource at the Avino mine and assess the potential for processing the oxide tailings resource.
About Avino Silver & Gold Mines Ltd.
Avino is a silver and gold producer with a diversified pipeline of gold, silver and base metal properties in Mexico and Canada, employing close to 600 people, and has created over 1,600 indirect jobs in Mexico. Avino produces from its wholly owned Avino and San Gonzalo mines near Durango, Mexico, and is currently planning for future production at the Bralorne gold mine in British Columbia, Canada. The company's gold and silver production remains unhedged. The company's mission and strategy is to create shareholder value through its focus on profitable organic growth at the historical Avino property near Durango, Mexico, and the strategic acquisition of mineral exploration and mining properties.
We seek Safe Harbor.
© 2018 Canjex Publishing Ltd. All rights reserved.