asm 6262013

32
June 2013

Upload: redchip-companies-inc

Post on 25-May-2015

176 views

Category:

Investor Relations


1 download

TRANSCRIPT

Page 1: Asm 6262013

June 2013

Page 2: Asm 6262013

Cautionary Disclaimer: Forward-Looking Statements Safe Harbour Statement - This presentation 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 and silver, 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. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Mr. Chris Sampson, P. Eng (Consulting Geologist) and Mr. Jasman Yee P.Eng (Avino Director)are the Qualified Persons for the Company as required by NI 43-101. These qualified persons have reviewed the technical information concerning the properties contained in this power point presentation for accuracy and have authorized its disclosure. The Company expressly disclaims any obligation to update any forward-looking statements.

2

Page 3: Asm 6262013

Mexico – The world’s largest silver producer Near Durango (pop 630,000) Located in Sierra Madre silver/gold belt Excellent infrastructure Access to highly-skilled labor Geopolitically secure Long-term surface agreements on claims Year-round access

3

Page 4: Asm 6262013

The Avino Mine was founded by Spaniards in 1558 and was one of the

first Spanish mines in Mexico

4

The Avino deposit first was discovered by Spanish nobleman, Juan de Tolosa and later developed by Captain Francisco Ibarra of Cortez’s army.

Page 5: Asm 6262013

By the end of the 18th Century Avino hosted the largest open cut mine in the world. The mine was owned by a British company listed on the London Stock Exchange. At that time the company was organized with a capital of £1,000,000 in shares of £1 each

5

Page 6: Asm 6262013

Avino acquired the project in 1974 and produced silver, gold, copper and lead for 27 years.

16 M oz of silver

96,000 oz of gold

24Million lbs of copper

Proven Track Record

The vein was never mined out, production ceased in 2001 due to low metals prices and the closure of a key smelter

6

Page 7: Asm 6262013

5. Continue to explore regional targets on the property and consider acquisition opportunities.

San Gonzalo Vein

Exploration

Avino’s Plan

Tailings

Avino Vein

1. Increase profitable mining operations at San Gonzalo by decreasing operating costs and improving efficiency;

4. Continue to review and develop plans to process the oxide tailings resource left from historic milling operations;

3. Develop the Avino mine for commercial production commencing in 2014;

7

Surface Stockpiles 2. Increase mill throughput using the new circuit (“Circuit 2”) that went

online in April 2013;

Page 8: Asm 6262013

3 2

1

8 4

Page 9: Asm 6262013

9

Resources Resource Category

Deposit Cut-off Ag

Eq* Tonnes

Contained Metal Grade Ag_Eq Ag Au Cu Ag_Eq Ag Au Cu

(oz) (oz) (oz) (t) (g/t) (g/t) (g/t) (%)

Measured San Gonzalo System

150 71,416 914,791 759,801 3,288 N/A 398 331 1.432 N/A

Total Measured - All Deposits

71,416 914,791 759,801 3,288 N/A

Indicated Avino System

100 4,253,968 23,838,629 10,835,338 72,207 30,914 174.3 79.2 0.528 0.727

Indicated San Gonzalo System

150 222,407 2,763,069 2,043,514 15,263 N/A 386 286 2.134 N/A

Total Indicated - All Deposits

4,476,375 26,601,698 12,878,852 87,470 30,914

Total Measured &

Indicated – All Deposits 4,547,791 27,516,489 13,638,653 90,758 30,914

Inferred Avino System

100 3,220,896 16,262,944 7,068,831 75,858 17,719 157 68.3 0.733 0.55

Inferred San Gonzalo System

150 1,085,276 10,494,843 8,158,834 49,549 N/A 300.8 233.8 1.42 N/A

Inferred Oxide Tailings

50* 2,340,000 N/A 6,660,000 39,530 N/A N/A 91.3 0.54 N/A

Total Inferred - All Deposits

6,646,172 26,757,787 21,887,665 164,937 17,719

Note: Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to the Indicated or Measured mineral resource category

The effective dates of the resource estimates are June 10, 2013 for San Gonzalo and Avino Mines, while the effective date for the Oxide Tailings is July 24, 2012, but it is still considered current. T he base case scenario used in the estimation assumes a silver price of $US20 which translates into a cut-off grade of 150 g/t silver equivalent at San Gonzalo and 150 g/t at the Avino Mine.To calculate the above silver equivalent grades, Avino has assumed a price of silver of US $20 per oz., a price of copper of US $3.66 per lb. with a recovery rate of 85% for copper, and a price of gold of US $1,507 per oz., with 75% recovery rate for gold at the Avino Mine and 70% recovery rate for gold at the San Gonzalo Mine. The Avino and San Gonzalo mineral resource estimates were prepared by Robert Morrison, Ph.D., P.Geo., while the oxide tailings resource was prepared by Mike O'Brien, M.Sc., P.Geo. Dr. Morrison and Mr. O'Brien are both employees of Tetra Tech, and independent of the Company, as defined by Section 1.5 of NI 43-101.

Page 10: Asm 6262013

In 2006, management completed the acquisition of the remaining 51% interest in the Avino property.

Hired technical personnel from previous operation

Conducted 33,200 meters of drilling between 2006 and 2012

Re-furbished the facilities

Raised $13 million between 2003 and 2006 (non brokered)

Numerous veins and prospective surface showings identified

80 Km of IP Geophysics 1,500 soil samples and Satellite imagery done Modern software (Gemcom)

9.

Page 11: Asm 6262013

1. San Gonzalo Drilling Highlights

Hole # FROM TO Width * Au (g/t) Ag (g/t) Ag (oz/t)

Hole – 4 20.85 21.90 1.05 0.29 989 28.7

Hole – 6 280.65 280.90 0.25 0.47 2,119 61.5

Hole – 10 154.30 154.65 0.35 5.143 992 28.8

Hole – 10 156.80 157.55 0.75 4.183 926 26.9

Hole – 12 165.65 166.40 0.75 22.902 1,609 46.7

Hole – 16 48.60 49.05 0.45 6.171 1,189 34.5

Hole – 23 296.10 297.60 1.50 15.771 1,511 43.8

Hole – 24 115.80 116.60 0.80 16.320 2,804 81.3

Hole - 24 116.60 117.25 0.65 10.491 5,265 152.7

Hole - 27 233.65 234.10 0.45 10.630 1,117 32.4

Independently verified preliminary metallurgical test work on core samples of mineralized intercepts from deeper in the mine (sulphides) provided recoveries of 93% for silver and 90% for gold.

*Down hole intersection lengths are reported, true widths are unknown

Grade is King!

11

Page 12: Asm 6262013

Modernized Mill & Infrastructure (2008 – 2010)

Decision to rebuild mill made in 2008 (During global financial crisis)

Total rebuild completed in August 2010 for a 250 tpd mill operation

Mill and surface infrastructure valued at US $40 million*

Built 2 new core storage facilities

Hired key personnel

Full grid power restored in 2010

Commenced milling late August 2010

12

* Independently verified by H.C. Osborne and Associates in a 2006 report titled ”Technical Review of The Avino Silver and Gold Mines LTD Avino Mine”

Page 13: Asm 6262013

1. San Gonzalo Mine

The best place to find a mine is where mining has occurred before!

12

Page 14: Asm 6262013

14

1. San Gonzalo Production (Oct 2012 - May 2013)

Oct

2012

Nov

2012

Dec

2012

Jan

2013

Feb

2013

Mar

2013

Apr

2013

May

2013

Average Daily Throughput (TPD)

214 218 235 228 229 230 223 232

Days of Operation 31 30 27 28 28 30 29 30

Feed Grade Silver (g/t) 233 256 287 315 306 307 274 279

Feed Grade Gold (g/t) 0.93 0.99 1.19 1.275 1.19 1.4 1.36 1.13

Recovery Silver (%) 82 78 78 81 80 83 81 82

Recovery Gold (%) 72 69 68 70 66 73 73 72 Total Silver Produced (oz’s) calculated

40,671 41,870 46,066 52,779 50,315 56,513 45,899 50,923

Total Gold Produced (oz’s) calculated

144 144 167 184 162 229 206 183

Total Silver Equivalent Produced (oz’s)

47,888 49,083 54,401 62,781 59,228 69,098 57,235 60,999

Silver Equivalent Ounces

*Silver equivalent for January was calculated using a 55:1 ratio for silver to gold. For the months of October, November and December, a 50:1 ratio was used in the calculation. (The ratio was changed to reflect the more current gold and silver prices.) Mill production figures have not been reconciled and are subject to adjustment with concentrate sales. Year-to-date and calculated figures may not add up due to rounding.

010,00020,00030,00040,00050,00060,00070,000

47,888 49,083 54,401

62,781 59,228 69,098

57,235 60,999

Page 15: Asm 6262013

15

1. San Gonzalo Financials

Avino commenced commercial production starting on October 1st 2012, select financial and operational highlights from Q4 2012 and Q1 2013 are outlined below:

Q4 2012 Q1 2013

Revenues reported for the quarter $2,255,376 $3,490,004

Mine operating income $820,807 $1,040,847

General and admin expenses $889,152 $1,151,904

Earnings before income taxes $443,981 $87,978

Earnings for the period $173,660 $87,978

Earnings per share (Q4) $0.01 $0.00

Processed ore for Q4 2012 19,539 tonnes 19,723 tonnes

Silver ounces sold for Q4 2012 107,850 123,166

Gold ounces sold for Q4 2012 413 475

Cash cost per equivalent silver ounce $14.22 $14.74

Page 16: Asm 6262013

16

2. Second 250 tpd Circuit (Historic Avino Mine (ET) Surface Stockpiles)

• In April 2013, Avino opened a second 250 tpd mill circuit to accommodate mill feed remaining from existing historic stockpiled material taken from the main Avino mine prior to shut down in 2001. (Estimated 7 months of production @ 250 tpd)

• Once the historic stockpiled material is depleted, the circuit will be used to expand through-put at the San Gonzalo or the Main Avino mine if needed.

**During the first 3 quarters of 2012, Avino processed the historic surface stockpiled material using the existing 250 tpd circuit. The feed material graded approximately 70 g/t Ag and 1 g/t Au generating the following results:

0

10,000

20,000

30,000

40,000

50,000

60,000

Q1 Q2 Q3

28,875 23,129

50,074

Calculated Silver Equivalent Ounces (Q1 – Q3 2012)

*Silver equivalent ounces in 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 was produced from the historic ET stockpiles

**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.

Page 17: Asm 6262013

17

Silver Equivalent Production Totals Since Jul 2012 (oz)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

14,914 17,439 17,721

47,888 49,083 54,401

62,781 59,228

69,098 66,719

75,022

• July through Sept 2012 – Historic surface stockpiles are processed using circuit 1 • Oct 2012 through March 2013 – Circuit 1 is used to process San Gonzalo material • April 2013 – Circuit 2 comes online to process historic surface stockpiles

Page 18: Asm 6262013

Mill capacity is 1,500 tpd on three separate circuits

250 tpd circuit is online – San Gonzalo (circuit 1)

250 tpd circuit – ET surface stockpiles (circuit 2)

1,000 tpd circuit is being re-furbished, online 2014 (circuit 3)

Most pieces already in place for expansion

New mill components for expansion are being assembled

US$5 million credit facility in place with Caterpillar for new equipment

16

Page 19: Asm 6262013

3. Re-opening the Avino Mine

New 20 year royalty agreement (3.5% NSR) on 3 concessions covering 80% of the Avino Vein

Mine de-watering is estimated to be complete by Q4 2013

19

Water table (down to level 9 as of June 24, 2013)

Page 20: Asm 6262013

20

3. Avino Mine Production Prior to Shut Down in 2001

700,000

800,000

900,000

1,000,000

1998 1999 2000 2001

876,621

987,760

912,726

853,183

0

5,000

10,000

1998 1999 2000 2001

8,710 7,631 7,953

5,080

0

1,000,000

2,000,000

3,000,000

4,000,000

1998 1999 2000 2001

2,824,291 3,055,711 3,410,966 3,655,961

1,400,0001,500,0001,600,0001,700,0001,800,000

1998 1999 2000 2001

1,675,343 1,751,479 1,733,565

1,539,988

Silver (oz’s) Gold (oz’s)

Copper (lbs) Silver Equivalent (oz’s)*

• The Avino mine shut down due to low metals prices and the closure of a key smelter part way through 2001.

• When operations resume in 2014, Avino will be processing Avino Vein material at the same rate as is in 2001

*Silver equivalent calculated using current metal prices ($1,681 Au /oz, $30 Ag /oz, $3.60 Cu /lb)

Re-opening 2014

Page 21: Asm 6262013

4. Oxide Tailings Resource (does not include sulphide tailings)*

** Base Case Silver: $20.38 Gold: $1,256

Spot Prices Case Silver: $28.36 Gold: $1,622

Total Metal Value 2.34 Mt Oxide Tailings with 91.3 g/t silver, 0.54 g/t gold

US $131 million

US $179 million

Capex Capital Cost for 500,000 tonne per annum agglomeration/heap leach operation

US $29.1 million

US 29.1 million

Opex (US$/t Treated)

Estimated operating cost per tonne of tailings treated (stripping costs not included)

US $14.25

US $14.25

NPV $38.6 million $74.1 million

IRR 54% 92%

21

*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 ** A preliminary economic assessment should not be considered to be a prefeasibility or feasibility study, as the economics and technical

viability of the Project have not been demonstrated at this time. The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized 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.

Page 22: Asm 6262013

22

4. Oxide Tailings Resource – Projected Metal Production

** A preliminary economic assessment should not be considered to be a prefeasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized 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.

Total Resource (Ag Eq.) 9,103,162

Total Tonnes to Mill 2,340,000 Annual Tonnes to Mill 500,000

Mine Life 5 years Average Grade Ag (g/t) 91.3 Average Grade Au (g/t) 0.54

Average Annual Production Ag (oz) 1,028,860

Average Annual Production Au (oz) 6,580

Average Annual Production Silver Equivalent (oz)* 1,390,760

**Silver equivalent was calculated using a 55:1 ratio for silver to gold

Silver Equivalent Ounces - Calculated

0200,000400,000600,000800,000

1,000,0001,200,0001,400,000

Y1 Y2 Y3 Y4 Y5

1,390,760 1,390,760 1,390,760 1,390,760 1,390,760

Page 23: Asm 6262013

Production Totals 2010 – 2012*

23 * Silver and gold ounces were calculated and are approximate, 2010 and 2012 figures include output from San Gonzalo as well as historic above ground Avino Mine stockpiles ** Silver equivalent calculated using a gold silver ratio of 50:1 for 2010 – 2012, 2013 estimates are based on a ratio of 55:1 due to changing metals prices

Silver Oz’s - Calculated Gold Oz’s - Calculated

0

200,000

400,000

600,000

800,000

2010 2011 2012 2013

25,966 133,064 191,635

0

1,000

2,000

3,000

4,000

2010 2011 2012 2013

184 686

1,236

0

200,000

400,000

600,000

800,000

1,000,000

2010 2011 2012 2013

35,166 167,364

253,451

Silver Equivalent – Calculated**

Page 24: Asm 6262013

Conceptual Timeline for Development of Avino Project Resources

24

Page 25: Asm 6262013

David Wolfin, President, CEO & Director Over 26 years’ experience in mining and finance. Has helped raise over C$60 million for the Oniva Mining Group.

Carlos Rodriguez, COO 25 years experience, specialized in ore quality control and regional exploration for LuisMin, Hecla Mining Company, Luzon Minerals Ltd, Kings Minerals and has been with Avino since 2001. Mr. Rodgiruez received a Professional Degree in Mineral Exploration from the Colorado School of Mines Malcolm Davidson, CFO Financial Accountant with over 8 years of experience in public practice specializing in Assurance, Corporate taxation and business advisory engagements

Jasman Yee, P.Eng, Director, Project Manager and Metallurgist 43 years’ experience as practical mineral processing engineer. Chemical Engineering graduate of the University of British Columbia.

Gary Robertson, Director (Independent)

Certified Financial Planner who has worked in the financial industry for the past 30 years. Presently serves on the board of several private companies as well as six Canadian junior gold mining companies and is a top producing financial planner at Dundee Wealth Management who is frequently in the Chairman's club for top performers

Chris Sampson, Consulting Geologist P.Eng, BSc, ARSM Professional geologist and graduate of the London School of Mines with more than 35 years’ industry experience on hundreds of mineral projects worldwide. (Rio Algom, Rio Tinto, Noranda, Brinco)

Andrew Kaplan, Director (Independent) 24 years involved in deal structure, mergers and acquisitions, trading and IR as well as manages the A to B Capital Special Situations Fund, LP.

Key Personnel – 200 years combined experience

25

Page 26: Asm 6262013

Silver

Avino

Silver

26

Avino’s share price vs. the price of silver (% basis) since 2009

Courtesy of Yahoo Finance 1. Avino’s mill re-commissioned 2. First Sprott Financing 3. Second Sprott Financing 4. COMEX raises margin requirements for silver 5. Avino announces positive results from SG bulk sample 6. Euro debt crises sets in 7. Tax loss selling 8. New Avino Mine (ET zone) royalty agreement signed 9. New tailings resource PEA published 10. Avino begins full time production at San Gonzalo Mine

1.

2.

3.

4.

5.

6.

7.

8.

9. 10.

Page 27: Asm 6262013

With a market cap of only $23 million, Avino is undervalued compared to its peers.

Company

Shares Outstanding

Share Price

Market Cap

2012 Approximate

Annual Production Silver Eq.

Endeavour Silver 99,741,010 $3.74 $373 m 6.4 mil

Aurcana 58,409,564 $1.52 $88 m 2.5 mil

Great Panther 138,095,052 $0.82 $113 m 2.4 mil

Scorpio 198,388,913 $0.31 $61 m 2.3 mil

Silvercrest 108,593,205 $1.70 $184 m 2.3 mil

Alexco 62,573,898 $1.19 $74 m 2.2 mil

Avino 27,433,934 $0.86 $ 23 m 253,451

27

As at June 21st, 2013

Page 28: Asm 6262013

Info

Financials

Issued and Outstanding - 27,433,934 Warrants - 5,211,000

Options - 2,348,482

Fully Diluted - 34,908,416

Current Cash $3.6 million

Fully diluted cash $18.3 million

52 week high/low $1.90/0.85

Largest Shareholders

Sprott Asset Management

Sprott Private Wealth Contact 604.682.3701 [email protected] www.avino.com

Exchanges

TSX Venture: ASM

NYSE – MKT : ASM

FSE: GV6

28 *financial figures taken from Q1 2013 interim financial statement Shares outstanding taken on June 21, 2013

Page 29: Asm 6262013

Why Own Avino?

29

• PROVEN TRACK RECORD: 27 years of continuous production; 40+ years in business; rebuilt and re-opened Avino and San Gonzalo Mines.

• PROVEN MANAGEMENT TEAM: 200 Combined years experience in Mining Industry.

• SHARE STRUCTURE: Only 27 Million issued.

• LOCATION: Abundant local labor surrounding mine; 1 hour drive to city of Durango.

• LOW SECURITY RISK: Due to close proximity to Durango.

• EXISTING INFRASTRUCTURE: Paved road to the mine, water rights, grid power.

• ORGANIC GROWTH PIPELPINE: No luck required, everything is in place, good exploration\development prospects.

• EXCELLENT EXPLORATION POTENTIAL – Majority of the property is unexplored.

Page 30: Asm 6262013

30

Page 31: Asm 6262013

31

Page 32: Asm 6262013

32