UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the Month of November 2023

 

Commission File Number: 001-35254

 

AVINO SILVER & GOLD MINES LTD.

 

Suite 900, 570 Granville Street, Vancouver, BC V6C 3P1

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

☐ Form 20-F    ☒  Form 40-F

 

 

 

 

Explanatory Note

 

Avino Silver & Gold Mines Ltd. (the “Company”) is furnishing this Form 6-K to provide its financial information for the nine months ended September 30, 2023, and to incorporate such financial information into the Company’s registration statements referenced below.

 

Exhibits 99.1 and 99.2 attached hereto are hereby incorporated by reference into the Company’s Registration Statements on Form F-10 (Registration Statement File number 333-270315); Form F-3 (Registration Statement File numbers 333-252081 and 333-226963) and on Form S-8 (Registration Statement File number 333-195120) to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed.

 

Exhibits:

 

The following exhibits are filed as part of this Form 6-K.

 

Exhibit No.

 

Document

 

 

 

99.1

 

Unaudited financial statements for the three and nine months ended September 30, 2023 and 2022

99.2

 

Management’s Discussion & Analysis

101.INS

 

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

 

 

2

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

AVINO SILVER & GOLD MINES LTD.

 

 

Date: November 8, 2023

By:

/s/ Jennifer Trevitt

Jennifer Trevitt

Corporate Secretary

 

 

3

EXHIBIT 99.1

 

avino_ex991img1.jpg

 

 

AVINO SILVER & GOLD MINES LTD.

 

Condensed Consolidated Interim Financial Statements

 

For the three and nine months ended September 30, 2023 and 2022

 

(Unaudited)

 

 
-1-

 

 

AVINO SILVER & GOLD MINES LTD.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars - Unaudited)

 

 

 

 

Note

 

 

September 30, 2023

(unaudited)

 

 

December 31,

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

$1,856

 

 

$11,245

 

Amounts receivable

 

 

 

 

 

2,473

 

 

 

2,672

 

Amounts due from related parties

 

 

11(b)

 

 

31

 

 

 

-

 

Taxes recoverable

 

 

5

 

 

 

5,812

 

 

 

3,737

 

Prepaid expenses and other assets

 

 

 

 

 

 

2,063

 

 

 

1,671

 

Inventory

 

 

6

 

 

 

8,873

 

 

 

6,260

 

Total current assets

 

 

 

 

 

 

21,108

 

 

 

25,585

 

Exploration and evaluation assets

 

 

8

 

 

 

50,451

 

 

 

49,804

 

Plant, equipment and mining properties

 

 

10

 

 

 

51,039

 

 

 

44,056

 

Long-term investments

 

 

7

 

 

 

891

 

 

 

1,746

 

Other assets

 

 

 

 

 

 

4

 

 

 

5

 

Total assets

 

 

 

 

 

$123,493

 

 

$121,196

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

 

$11,675

 

 

$9,469

 

Amounts due to related parties

 

 

11(b)

 

 

-

 

 

 

28

 

Taxes payable

 

 

 

 

 

 

85

 

 

 

895

 

Note payable

 

 

12

 

 

 

-

 

 

 

4,926

 

Warrant liability

 

 

13

 

 

 

-

 

 

 

475

 

Current portion of finance lease obligations

 

 

 

 

 

 

1,738

 

 

 

971

 

Current portion of equipment loans

 

 

 

 

 

 

165

 

 

 

-

 

Total current liabilities

 

 

 

 

 

 

13,663

 

 

 

16,764

 

Finance lease obligations

 

 

 

 

 

 

1,406

 

 

 

745

 

Equipment loans

 

 

 

 

 

 

234

 

 

 

-

 

Reclamation provision 

 

 

14

 

 

 

544

 

 

 

445

 

Deferred income tax liabilities

 

 

 

 

 

 

4,941

 

 

 

5,221

 

Total liabilities

 

 

 

 

 

 

20,788

 

 

 

23,175

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

15

 

 

 

149,776

 

 

 

145,515

 

Equity reserves

 

 

 

 

 

 

10,581

 

 

 

9,852

 

Treasury shares

 

 

 

 

 

 

(97)

 

 

(97)

Accumulated other comprehensive loss

 

 

 

 

 

 

(5,569)

 

 

(5,223)

Accumulated deficit

 

 

 

 

 

 

(51,986)

 

 

(52,026)

Total equity

 

 

 

 

 

 

102,705

 

 

 

98,021

 

Total liabilities and equity

 

 

 

 

 

$123,493

 

 

$121,196

 

 

Commitments – Note 18

 

Approved by the Board of Directors on November 8, 2023:

 

Peter Bojtos                                                                                                                                          Director                                            David Wolfin                                                                                                                                        Director

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements

 

 
-2-

 

 

AVINO SILVER & GOLD MINES LTD.

Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)

(Expressed in thousands of US dollars - Unaudited)

 

 

 

 

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

Note

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue from mining operations

 

 

16

 

 

$12,316

 

 

$9,118

 

 

$31,359

 

 

$29,538

 

Cost of sales

 

 

16

 

 

 

9,952

 

 

 

7,058

 

 

 

26,101

 

 

 

18,832

 

Mine operating income

 

 

 

 

 

 

2,364

 

 

 

2,060

 

 

 

5,258

 

 

 

10,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

17

 

 

 

1,280

 

 

 

997

 

 

 

3,999

 

 

 

3,469

 

Share-based payments

 

 

15

 

 

 

627

 

 

 

556

 

 

 

1,809

 

 

 

1,618

 

Income (loss) before other items

 

 

 

 

 

 

457

 

 

 

507

 

 

 

(550)

 

 

5,619

 

Other items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

 

5

 

 

 

15

 

 

 

234

 

 

 

67

 

Loss on long-term investments

 

 

7

 

 

 

(295)

 

 

(1,221)

 

 

(899)

 

 

(2,503)

Fair value adjustment on warrant liability

 

 

13

 

 

 

20

 

 

 

86

 

 

 

478

 

 

 

2,692

 

Unrealized foreign exchange gain (loss)

 

 

 

 

 

 

(234)

 

 

251

 

 

 

182

 

 

 

(231)

Project evaluation expenses

 

 

 

 

 

 

-

 

 

 

(5)

 

 

-

 

 

 

(80)

Finance cost

 

 

 

 

 

 

(3)

 

 

(87)

 

 

(80)

 

 

(188)

Accretion of reclamation provision

 

 

14

 

 

 

(13)

 

 

(11)

 

 

(36)

 

 

(32)

Interest expense

 

 

 

 

 

 

(158)

 

 

(23)

 

 

(275)

 

 

(66)

Income (loss) before income taxes

 

 

 

 

 

 

(221

 

 

 

(488

 

 

 

(946

 

 

 

5,278

 

Income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current income tax recovery (expense)

 

 

 

 

 

 

111

 

 

 

(142)

 

 

645

 

 

 

(642)

Deferred income tax recovery (expense)

 

 

 

 

 

 

(693)

 

 

(499)

 

 

280

 

 

 

(2,836)

Income tax recovery (expense)

 

 

 

 

 

 

(582)

 

 

(641)

 

 

925

 

 

 

(3,478)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

(803)

 

 

(1,129)

 

 

(21)

 

 

1,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences

 

 

 

 

 

 

230

 

 

 

(290)

 

 

(346)

 

 

(52)

Total comprehensive income (loss)

 

 

 

 

 

$(573

)

 

$(1,419

)

 

$(367

)

 

 

1,748

 

Income (loss) per share

 

 

15(e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

$(0.01)

 

($0.01)

 

 

$0.00

 

 

$0.02

 

Diluted

 

 

 

 

 

$(0.01)

 

($0.01)

 

 

$0.00

 

 

$0.02

 

Weighted average number of common shares outstanding

 

 

15(e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

122,433,272

 

 

 

117,876,825

 

 

 

120,093,760

 

 

 

113,027,305

 

Diluted

 

 

 

 

 

 

122,433,272

 

 

 

117,876,825

 

 

 

120,093,760

 

 

 

116,275,433

 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements

 

 
-3-

 

 

AVINO SILVER & GOLD MINES LTD.

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in thousands of US dollars - Unaudited)

 

 

 

 

Note

 

 

Number of Common Shares

 

 

Share Capital Amount

 

 

Equity Reserves

 

 

Treasury Shares

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Accumulated Deficit

 

 

Total  Equity

 

Balance, January 1, 2022

 

 

 

 

 

102,243,211

 

 

$129,953

 

 

$9,573

 

 

$(97)

 

$(4,969)

 

$(55,953)

 

$78,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for acquisition of La Preciosa

 

 

 

 

 

15,075,000

 

 

 

14,630

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,630

 

Exercise of options

 

 

 

 

 

48,000

 

 

 

46

 

 

 

(15)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

31

 

Issuance costs

 

 

 

 

 

-

 

 

 

(13)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13)

Share-based payments

 

 

 

 

 

-

 

 

 

-

 

 

 

1,618

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,618

 

Net income for the period

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,800

 

 

 

1,800

 

Options cancelled or expired

 

 

15

 

 

 

-

 

 

 

-

 

 

 

(831)

 

 

-

 

 

 

-

 

 

 

831

 

 

 

-

 

Carrying value of exercise of RSUs

 

 

15

 

 

 

982,879

 

 

 

899

 

 

 

(899)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Currency translation differences

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(52)

 

 

-

 

 

 

(52)

Balance, September 30, 2022

 

 

 

 

 

 

118,349,090

 

 

$145,515

 

 

$9,446

 

 

$(97)

 

$(5,021)

 

$(53,322)

 

$96,521

 

Balance, January 1, 2023

 

 

 

 

 

 

118,349,090

 

 

$145,515

 

 

$9,852

 

 

$(97)

 

$(5,223)

 

$(52,026)

 

$98,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the market issuances

 

 

15

 

 

 

5,360,300

 

 

 

3,597

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,597

 

Carrying value of RSUs exercised

 

 

15

 

 

 

1,005,333

 

 

 

1,019

 

 

 

(1,019)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issuance costs

 

 

15

 

 

 

-

 

 

 

(355)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(355)

Share-based payments

 

 

15

 

 

 

-

 

 

 

-

 

 

 

1,809

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,809

 

Net loss for the period

 

 

15

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(21)

 

 

(21)

Options cancelled or expired

 

 

15

 

 

 

-

 

 

 

-

 

 

 

(61)

 

 

-

 

 

 

-

 

 

 

61

 

 

 

-

 

Currency translation differences

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(346)

 

 

-

 

 

 

(346)

Balance, September 30, 2023

 

 

 

 

 

 

124,714,723

 

 

$149,776

 

 

$10,581

 

 

$(97)

 

$(5,569)

 

$(51,986)

 

$102,705

 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements

 

 
-4-

 

 

AVINO SILVER & GOLD MINES LTD.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of US dollars - Unaudited)

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

Note

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Cash generated by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

$(21)

 

$1,800

 

Adjustments for non-cash items:

 

 

 

 

 

 

 

 

 

 

 

Deferred income tax expense (recovery)

 

 

 

 

 

(280)

 

 

2,836

 

Depreciation and depletion

 

 

 

 

 

2,175

 

 

 

1,558

 

Accretion of reclamation provision

 

 

14

 

 

 

36

 

 

 

32

 

Loss on investments

 

 

7

 

 

 

899

 

 

 

2,503

 

Unrealized foreign exchange gain

 

 

 

 

 

 

(241)

 

 

(88)

Unwinding of fair value adjustment

 

 

12

 

 

 

74

 

 

 

177

 

Fair value adjustment on warrant liability

 

 

13

 

 

 

(478)

 

 

(2,692)

Write down of equipment and materials and supplies inventory

 

 

 

 

 

 

95

 

 

 

-

 

Share-based payments

 

 

 

 

 

 

1,809

 

 

 

1,618

 

 

 

 

 

 

 

 

4,068

 

 

 

7,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in non-cash working capital items

 

 

19

 

 

 

(3,201)

 

 

768

 

Cash provided by operating activities

 

 

 

 

 

 

867

 

 

 

8,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Shares and units issued for cash, net of issuance costs

 

 

 

 

 

 

3,242

 

 

 

30

 

Lease liability payments

 

 

 

 

 

 

(933)

 

 

(933)

Equipment loan payments

 

 

 

 

 

 

(184)

 

 

-

 

Cash provided by (used in) financing activities

 

 

 

 

 

 

2,125

 

 

 

(903)

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Exploration and evaluation expenditures

 

 

 

 

 

 

(809)

 

 

(793)

Additions to plant, equipment and mining properties

 

 

 

 

 

 

(6,575)

 

 

(5,347)

Acquisition of La Preciosa

 

 

4

 

 

 

(5,000)

 

 

(15,289)

Cash provided by (used in) investing activities

 

 

 

 

 

 

(12,384)

 

 

(21,429)

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in cash

 

 

 

 

 

 

(9,392)

 

 

(13,820)

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

 

 

 

 

3

 

 

 

(25)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, beginning

 

 

 

 

 

 

11,245

 

 

 

24,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, ending

 

 

 

 

 

$1,856

 

 

$10,920

 

 

Supplementary Cash Flow Information (Note 19)  

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements

 

 
-5-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

1. NATURE OF OPERATIONS

 

Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) was incorporated in 1968 under the laws of the Province of British Columbia, Canada. The Company is engaged in the production and sale of silver, gold, and copper and the acquisition, exploration, and advancement of mineral properties. The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, BC, Canada. The Company is a reporting issuer in Canada and the United States, and trades on the Toronto Stock Exchange (“TSX”), the NYSE American, and the Frankfurt and Berlin Stock Exchanges. The Company operates the Avino Mine which produces copper, silver and gold at the historic Avino property in the state of Durango, Mexico. The Company also owns interests in mineral properties located in British Columbia and Yukon, Canada.

 

2. BASIS OF PRESENTATION

 

Statement of Compliance

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting under International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). These unaudited condensed consolidated interim financial statements follow the same accounting policies and methods of application as the most recent annual audited consolidated financial statements of the Company. These unaudited condensed consolidated interim financial statements do not contain all of the information required for full annual consolidated financial statements. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s December 31, 2022, annual consolidated financial statements, which were prepared in accordance with IFRS as issued by the IASB.

 

These unaudited condensed consolidated interim financial statements are expressed in US dollars and have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these unaudited condensed consolidated interim financial statements have been prepared using the accrual basis of accounting on a going concern basis.

 

Critical Accounting Judgments and Estimates

 

The Company’s management makes judgments in its process of applying the Company’s accounting policies to the preparation of its unaudited condensed consolidated interim financial statements. In addition, the preparation of financial data requires that the Company’s management make assumptions and estimates of the impacts on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period from uncertain future events and on the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.

 

The critical judgments and estimates applied in the preparation of the Company’s unaudited condensed consolidated interim financial statements for the nine months ended September 30, 2023, are consistent with those applied and disclosed in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2022.

 

 
-6-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

 

Basis of Consolidation

 

The unaudited condensed consolidated interim financial statements include the accounts of the Company and its Mexican subsidiaries as follows:

 

Subsidiary

 

Ownership Interest

 

 

Jurisdiction

 

Nature of Operations

 

Oniva Silver and Gold Mines S.A. de C.V.

 

 

100%

 

Mexico

 

Mexican operations and administration

 

Nueva Vizcaya Mining, S.A. de C.V.

 

 

100%

 

Mexico

 

Mexican administration

 

Promotora Avino, S.A. de C.V. (“Promotora”)

 

 

79.09%

 

Mexico

 

Holding company

 

Compañía Minera Mexicana de Avino, S.A. de C.V.

(“Avino Mexico”)

 

98.45% direct

1.22% indirect (Promotora)

99.67% effective

 

 

Mexico

 

Mining and exploration

 

La Luna Silver & Gold Mines Ltd.

 

 

100%

 

Canada

 

Holding company

 

La Preciosa Silver & Gold Mines Ltd.

 

 

100%

 

Canada

 

Holding company

 

Proyectos Mineros La Preciosa S.A. de C.V.

 

 

100%

 

Mexico

 

Mining and exploration

 

Cervantes LLP

 

 

100%

 

U.S.

 

Holding company

 

 

Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the unaudited condensed consolidated interim financial statements.

 

3. RECENT ACCOUNTING PRONOUNCEMENTS

 

New and amended IFRS that are effective for the current year:

 

In the current year, the Company has applied the below amendments to IFRS Standards and Interpretations issued by the IASB that were effective for annual periods that begin on or after January 1, 2023. These standards did not have a material impact on the Company’s disclosures or on the amounts in the current reporting periods.

 

Amendments to IAS 1 – Presentation of Financial Statements and IFRS Practice Statement 2 Making Material Judgments – Disclosure of Accounting Policies

 

The amendments change the requirements in IAS 1 with regards to disclosure of accounting policies. The amendments replace all instances of the term “significant accounting policies” with “material accounting policy information.” Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonable by expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

 

 
-7-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events, or conditions, is immaterial and not required to be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events, or conditions, even of the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events, or conditions, is itself material. The IASB has also developed guidance and examples to explain and demonstrate the application of the “four-step materiality process” described in IFRS Practice Statement 2.

 

The amendments were applied effective January 1, 2023, and did not have a material impact on the Company’s interim consolidated financial statements.

 

Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates

 

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.”

 

The definition of a change in accounting estimates was deleted; however, the IASB retained the concept of changes in accounting estimates in the Standard with the following clarifications:

 

 

·

A change in accounting estimate that results from new information or new developments is not a correct of an error

 

 

 

 

·

The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors

 

The amendments were applied effective January 1, 2023, and did not have a material impact on the Company’s interim consolidated financial statements.

 

Amendments to IAS 12 – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction

 

The amendments clarify that companies are required to recognize deferred taxes on transactions where both assets and liabilities are recognized, such as with leases and decommissioning liabilities. The amendments were applied effective January 1, 2023, and did not have a material impact on the Company’s interim consolidated financial statements.

 

Future Changes in Accounting Policies Not Yet Effective as at September 30, 2023:

 

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact on the Company in the current or future reporting periods.

 

Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current with Covenants

 

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current.

 

In addition, the amendment requires entities to disclose information to enable users of the financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are applied on or after the first annual reporting period beginning on or after January 1, 2024, with early application permitted. The amendment is not expected to have a material impact on the Company’s consolidated financial statements.

 

Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback

 

 
-8-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

The amendments require a seller/lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller/lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 Accounting Policies, Change in Accounting Estimates and Errors to sale or leaseback transactions entered into after the date of initial application.

 

The amendments are applied on or after the first annual reporting period beginning on or after January 1, 2024, with early application permitted. The amendment is not expected to have a material impact on the Company’s consolidated financial statements.

 

4. ACQUISITION OF LA PRECIOSA

 

On March 21, 2022, the Company closed the acquisition with Coeur Mining Inc. (“Coeur”) of all of the issued and outstanding shares of Proyectos Mineros La Preciosa S.A de C.V, a Mexican corporation, and Cervantes LLC, a Delaware LLC, that together hold the La Preciosa property in Mexico (“La Preciosa”).

 

Total consideration paid to Coeur was comprised of:

 

 

a)

Cash consideration of $15.3 million paid;

 

 

 

 

b)

A promissory note for $5 million in favour of Coeur, payable without interest on or before March 21, 2023 (paid prior to March 21, 2023);

 

 

 

 

c)

14,000,000 common shares of Avino, with a value of $13.65 million on issuance;

 

 

 

 

d)

7,000,000 share purchase warrants with a total value at $2.24 million exercisable at $1.09 per share until September 21, 2023, representing a 25% premium to Avino’s 20-day volume weighted average trading price as of October 26, 2021;

 

Additionally, Avino issued the following consideration for which payment is contingent on a future event and due to acquisition date uncertainty these are valued at Nil. A liability for these contingent payments will be recognized when related activity and events occur.

 

 

e)

An additional cash payment of $8.75 million, to be paid no later than 12 months after initial production at La Preciosa, up to one-half of which may be paid in common shares of Avino (provided Coeur’s total shareholdings cannot exceed 19.9% of the Company’s total issued and outstanding shares);

 

 

 

 

f)

A 1.25% net smelter returns royalty on the Gloria and Abundancia areas of La Preciosa, and a 2.00% gross value royalty on all other areas of La Preciosa; and

 

 

 

 

g)

A payment of $0.25 per silver equivalent ounce (subject to inflationary adjustment) of new mineral reserves (as defined by NI 43-101) discovered and declared outside of the current mineral resource area at La Preciosa, subject to a cap of $50 million, and any such payments will be credited against any existing or future payments owing on the gross value royalty.

 

The transaction has been accounted for as an asset acquisition as La Preciosa is in the exploration and evaluation stage and had not demonstrated technical feasibility, commercial viability, or the ability to provide economic benefits. La Preciosa did not have the workforce, resources and/or reserves, mine plan, or financial resources to the meet the definition of a business for accounting purposes.

 

 
-9-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

The purchase consideration has been assigned based on the relative fair values of the assets acquired and liabilities assumed and is summarized as follows:

 

Cash paid

 

$15,301

 

Note payable

 

 

4,665

 

Common shares

 

 

14,630

 

Share purchase warrants

 

 

2,240

 

Total purchase consideration

 

 

36,836

 

Transaction costs

 

 

270

 

Total acquisition cost

 

$37,106

 

 

 

 

 

 

Cash

 

$168

 

Other current assets

 

 

1,121

 

Plant and equipment

 

 

1,621

 

Exploration and evaluation assets

 

 

34,524

 

Accounts payable

 

 

(328)

Net assets acquired

 

$37,106

 

 

5. TAXES RECOVERABLE

 

The Company’s taxes recoverable consist of the Mexican I.V.A. (“VAT”) and income taxes recoverable and Canadian sales taxes (“GST/HST”) recoverable.

 

 

 

September 30,

2023

 

 

December 31,

2022

 

VAT recoverable

 

$2,483

 

 

$1,385

 

GST recoverable

 

 

41

 

 

 

25

 

Income taxes recoverable

 

 

3,288

 

 

 

2,327

 

 

 

$5,812

 

 

$3,737

 

 

6. INVENTORY

 

 

 

September 30,

2023

 

 

December 31,

2022

 

Process material stockpiles

 

$3,262

 

 

$2,788

 

Concentrate inventory

 

 

3,154

 

 

 

1,617

 

Materials and supplies

 

 

2,457

 

 

 

1,855

 

 

 

$8,873

 

 

$6,260

 

 

The amount of inventory recognized as an expense for the three and nine months ended September 30, 2023 totalled $9,952 and $26,101 (three and nine months ended September 30, 2022 – $7,058 and $18,832). See Note 16 for further details. During the nine months ended September 30, 2023, the Company wrote down $84 of materials and supplies inventory (September 30, 2022 – Nil).

 

 
-10-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

7. LONG-TERM INVESTMENTS

 

The Company classifies its long-term investments as designated at fair value through profit and loss under IFRS 9. Long-term investments are summarized as follows:

 

 

 

Fair Value

December 31,

 

 

 

 

 

Movements in

foreign

 

 

Fair value

adjustments

 

 

Fair Value

September 30,

 

 

 

2022

 

 

Net Additions

 

 

exchange

 

 

for the period

 

 

2023

 

Talisker Resources Common Shares

 

$1,640

 

 

$-

 

 

$8

 

 

$(838)

 

$810

 

Silver Wolf Exploration Ltd. Common Shares

 

 

51

 

 

 

36

 

 

 

-

 

 

 

(34)

 

 

53

 

Endurance Gold Corp. Common Shares

 

 

55

 

 

 

-

 

 

 

-

 

 

 

(27)

 

 

28

 

 

 

$1,746

 

 

$36

 

 

$8

 

 

$(899)

 

$891

 

 

Silver Wolf Exploration Ltd.

 

During the nine months ended September 30, 2023, the Company received 500,000 common shares as part of the terms in the Option Agreement with Silver Wolf Exploration Ltd. Upon acquisition, the fair value of these common shares were recorded as “Option Income” as a credit to exploration and evaluation assets (see Note 8). Any subsequent revaluation under IFRS 9 at fair value through profit and loss will be recorded as a gain or loss on long-term investments.

 

See Note 8 for full details of the Option Agreement.

 

8. EXPLORATION AND EVALUATION ASSETS

 

The Company has accumulated the following acquisition, exploration and evaluation costs which are not subject to depletion:

 

 

 

Avino,

 Mexico

 

 

La Preciosa,

Mexico

 

 

British Columbia & Yukon, Canada

 

 

Total

 

 

 

 

 

 

 

Balance, January 1, 2022

 

$11,052

 

 

$-

 

 

$1

 

 

$11,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs incurred during 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs – Note 4

 

 

-

 

 

 

37,618

 

 

 

 

 

 

 

37,618

 

Drilling and exploration

 

 

719

 

 

 

296

 

 

 

-

 

 

 

1,015

 

Assessments and taxes

 

 

94

 

 

 

61

 

 

 

-

 

 

 

155

 

Effect of movements in exchange rates

 

 

(30)

 

 

-

 

 

 

-

 

 

 

(30)

Option income

 

 

(7)

 

 

-

 

 

 

-

 

 

 

(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

$11,828

 

 

$37,975

 

 

$1

 

 

$49,804

 

Costs incurred during 2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling and exploration

 

 

583

 

 

 

384

 

 

 

-

 

 

 

967

 

Assessments and taxes

 

 

88

 

 

 

(243)

 

 

-

 

 

 

(155)

Effect of movements in exchange rates

 

 

22

 

 

 

(124)

 

 

-

 

 

 

(102)

Option income

 

 

(63)

 

 

-

 

 

 

-

 

 

 

(63)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2023

 

$12,458

 

 

$37,992

 

 

$1

 

 

$50,451

 

 

 
-11-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

(a) Avino, Mexico

 

Option Agreement – Silver Wolf Exploration Ltd. (formerly Gray Rock Resources Ltd.) (“Silver Wolf”)

 

On March 11, 2021, the Company was informed that Silver Wolf received TSX Venture Exchange approval on the previously-announced entrance into an option agreement to grant Silver Wolf the exclusive right to acquire a 100% interest in the Ana Maria and El Laberinto properties in Mexico (the “Option Agreement”). In exchange, Avino received Silver Wolf share purchase warrants to acquire 300,000 common shares of Silver Wolf at an exercise price of C$0.20 per share for a period of 36 months from the date of the TSX Venture Exchange’s final acceptance of the Option Agreement (the “Approval Date”). In order to exercise the option, Silver Wolf will:

 

1. Issue to Avino a total of C$600 in cash or common shares of Silver Wolf as follows:

 

 

a.

C$50 in common shares of Silver Wolf within 30 days of March 8, 2021 (received on March 26, 2021 – see Note 7 for details);

 

 

 

 

b.

A further C$50 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2022 (received on March 30, 2022 – See Note 7 for details);

 

 

 

 

c.

A further C$100 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2023 (received on March 13, 2023 – See Note 7 for details);

 

 

 

 

d.

A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2024; and

 

 

 

 

e.

A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2025; and

 

 

 

 

2. Incur a total of C$750 in exploration expenditures on the properties, as follows:

 

 

a.

C$50 on or before March 8, 2022;

 

 

 

 

b.

A further C$100 on or before March 8, 2023; and

 

 

 

 

c.

A further C$600 on or before March 8, 2025.

 

All exploration expenditure requirements on the properties have been met as of September 30, 2023

 

Under the Option Agreement, all share issuances will be based on the average volume weighted trading price of Silver Wolf’s shares on the TSX Venture Exchange for the ten (10) trading days immediately preceding the date of issuance of the shares, and the shares will be subject to resale restrictions under applicable securities legislation for 4 months and a day from their date of issue.

 

The Option Agreement between the Company and Silver Wolf is considered a related party transaction as the two companies have directors in common.

 

Unification La Platosa properties

 

The Unification La Platosa properties, consisting of three leased concessions in addition to the leased concessions situated within the Avino mine area property near the towns of Panuco de Coronado and San Jose de Avino and surrounding the Avino Mine.

 

In February 2012, the Company’s wholly-owned Mexican subsidiary entered into a new agreement with Minerales de Avino, S.A. de C.V. (“Minerales”) whereby Minerales has indirectly granted to the Company the exclusive right to explore and mine the La Platosa property known as the “ET zone”. The ET zone includes the Avino Mine, where production at levels intended by management was achieved on July 1, 2015.

 

Under the agreement, the Company has obtained the exclusive right to explore and mine the property for an initial period of 15 years, with the option to extend the agreement for another 5 years. In consideration of the granting of these rights, the Company issued 135,189 common shares with a fair value of C$250 during the year ended December 31, 2012.

 

The Company has agreed to pay to Minerales a royalty equal to 3.5% of net smelter returns (“NSR”). In addition, after the start of production, if the minimum monthly processing rate of the mine facilities is less than 15,000 tonnes, then the Company must pay to Minerales a minimum royalty equal to the applicable NSR royalty based on the processing at a monthly rate of 15,000 tonnes.

 

 
-12-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

Minerales has also granted to the Company the exclusive right to purchase a 100% interest in the property at any time during the term of the agreement (or any renewal thereof), upon payment of $8 million within 15 days of the Company’s notice of election to acquire the property. The purchase would be subject to a separate purchase agreement for the legal transfer of the property.

 

(b) La Preciosa, Mexico

 

On March 21, 2022, the Company received approval for the closing of the acquisition of the La Preciosa property from Coeur Mining Inc. (“Coeur”). See Note 4 for further details

 

(c) British Columbia & Yukon, Canada

 

Eagle Property - Yukon

 

The Company has a 100% interest in 14 quartz leases located in the Mayo Mining Division of Yukon, Canada, which collectively comprise the Eagle property.

 

During the nine months ended September 30, 2023, the Company sold to a subsidiary of Hecla Mining Company (“Hecla”) the Eagle Property for cash consideration of C$250. The gain on sale of the Eagle Property was recorded to “Interest and other income” on the condensed consolidated interim statements of operations and comprehensive income (loss).

 

 
-13-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

Minto and Olympic-Kelvin properties – British Columbia

 

On May 2, 2022, the Company has granted Endurance Gold Corporation the right to acquire an option to earn 100% ownership of the former Minto Gold Mine, Olympic and Kelvin gold prospects contained within a parcel of crown grant and mineral claims (the “Olympic Claims”).

 

Under the terms of the letter agreement, Endurance can earn a 100% interest in the Olympic Claims if they pay Avino a total cash consideration in the aggregate amount of C$100, issue up to a total of 1,500,000 common shares (“Shares”) of Endurance and incur exploration expenditures in the aggregate amount of C$300; all of which is to be incurred by December 31, 2024. In the event that Endurance earns the 100% interest, the Olympic Claims will be subject to a 2% net smelter return royalty (“NSR”), of which 1% NSR can be purchased by the Endurance for C$750 and the remaining balance of the NSR can be purchased for C$1,000.

 

As part of the final requirement to earn its interest, Endurance agreed to grant to Avino 750,000 share purchase warrants (“Warrants”) by December 31, 2024, that offer Avino the option to purchase additional shares in the Company for a period of three years from the date of issuance. The exercise price of the Warrants will be set at a 25% premium to the 20-day VWAP share price at the issuance date. During the Option period, if Endurance is successful in defining a compliant mineral resource of at least 500,000 gold-equivalent ounces on the Olympic Claims then Endurance will be obliged to pay Avino a C$1,000 discovery bonus.

 

The Option agreement is subject to the TSX Venture Exchange acceptance, and any Shares or Warrants to be issued will be subject to a four-month hold period on issuance as per the policies of the TSX Venture Exchange.

 

During the year ended December 31, 2022, Endurance granted 200,000 common shares and paid C$25 as per the terms of the agreement, which required payment upon signing of a letter agreement between the two parties. As of September 30, 2023, Endurance was in compliance with all terms of the Option agreement, and there were no requirements during the nine months ended September 30, 2023.

 

9. NON-CONTROLLING INTEREST

 

At September 30, 2023, the Company had an effective 99.67% (December 31, 2022 - 99.67%) interest in its subsidiary Avino Mexico and the remaining 0.33% (December 31, 2022 - 0.33%) interest represents a non-controlling interest. The accumulated deficit and current period income attributable to the non-controlling interest are insignificant and accordingly have not been presented separately in the unaudited condensed consolidated interim financial statements.

 

 
-14-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

10. PLANT, EQUIPMENT AND MINING PROPERTIES

 

 

 

Mining

properties

 

 

Office equipment, furniture, and fixtures

 

 

Computer equipment

 

 

Mine machinery and transportation equipment

 

 

Mill machinery and processing equipment

 

 

Buildings and construction in process

 

 

Total

 

 

 

$

 

 

 $

 

 

$

 

 

$

 

 

$

 

 

 $

 

 

$ 

 

COST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

13,038

 

 

 

595

 

 

 

335

 

 

 

14,240

 

 

 

18,613

 

 

 

11,778

 

 

 

58,599

 

Additions / Transfers

 

 

1,649

 

 

 

185

 

 

 

441

 

 

 

2,383

 

 

 

4,781

 

 

 

2,907

 

 

 

12,346

 

Writedowns

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,692)

 

 

(100)

 

 

-

 

 

 

(1,792)

Effect of movements in exchange rates

 

 

-

 

 

 

(17)

 

 

(2)

 

 

(1)

 

 

-

 

 

 

8

 

 

 

(12)

Balance at December 31, 2022

 

 

14,687

 

 

 

763

 

 

 

774

 

 

 

14,930

 

 

 

23,294

 

 

 

14,693

 

 

 

69,141

 

Additions / Transfers

 

 

1,725

 

 

 

74

 

 

 

698

 

 

 

3,182

 

 

 

2,809

 

 

 

678

 

 

 

9,166

 

Writedowns

 

 

-

 

 

 

(3)

 

 

(22)

 

 

(623)

 

 

-

 

 

 

-

 

 

 

(648)

Effect of movements in exchange rates

 

 

(17)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(17)

Balance at September 30, 2023

 

 

16,395

 

 

 

834

 

 

 

1,450

 

 

 

17,489

 

 

 

26,103

 

 

 

15,371

 

 

 

77,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCUMULATED DEPLETION AND DEPRECIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

8,856

 

 

 

294

 

 

 

267

 

 

 

4,944

 

 

 

6,667

 

 

 

1,896

 

 

 

22,924

 

Additions / Transfers

 

 

250

 

 

 

147

 

 

 

331

 

 

 

1,616

 

 

 

146

 

 

 

1,133

 

 

 

3,623

 

Writedowns

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,382)

 

 

(80)

 

 

-

 

 

 

(1,462)

Balance at December 31, 2022

 

 

9,106

 

 

 

441

 

 

 

598

 

 

 

5,178

 

 

 

6,733

 

 

 

3,029

 

 

 

25,085

 

Additions / Transfers

 

 

267

 

 

 

89

 

 

 

133

 

 

 

682

 

 

 

780

 

 

 

204

 

 

 

2,155

 

Writedowns

 

 

-

 

 

 

(2)

 

 

(21)

 

 

(612)

 

 

(2)

 

 

-

 

 

 

(637)

Balance at September 30, 2023

 

 

9,373

 

 

 

528

 

 

 

710

 

 

 

5,248

 

 

 

7,511

 

 

 

3,233

 

 

 

26,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2023

 

 

7,022

 

 

 

306

 

 

 

740

 

 

 

12,241

 

 

 

18,592

 

 

 

12,138

 

 

 

51,039

 

At December 31, 2022

 

 

5,581

 

 

 

322

 

 

 

176

 

 

 

9,752

 

 

 

16,561

 

 

 

11,664

 

 

 

44,056

 

At January 1, 2022

 

 

4,182

 

 

 

301

 

 

 

68

 

 

 

9,296

 

 

 

11,946

 

 

 

9,882

 

 

 

35,675

 

 

 
-15-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

Included in Buildings and construction in process above are assets under construction of $3,267 as at September 30, 2023 (December 31, 2022 - $3,817) on which no depreciation was charged in the periods then ended. Once the assets are available for use, they will be transferred to the appropriate class of plant, equipment and mining properties.

 

As at September 30, 2023, plant, equipment and mining properties included a net carrying amount of $5,553 (December 31, 2022 - $2,417) for mining equipment and right of use assets under lease.

 

11. RELATED PARTY TRANSACTIONS AND BALANCES

 

All related party transactions are recorded at the exchange amount which is the amount agreed to by the Company and the related party.

 

(a) Key management personnel

 

The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel for the three and nine months ended September 30, 2023 and 2022 is as follows:

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Salaries, benefits, and consulting fees

 

$289

 

 

$237

 

 

$869

 

 

$975

 

Share-based payments

 

 

502

 

 

 

427

 

 

 

1,472

 

 

 

1,251

 

 

 

$791

 

 

$664

 

 

$2,341

 

 

$2,226

 

 

(b)  Amounts due to/from related parties

 

In the normal course of operations the Company transacts with companies related to Avino’s directors or officers. All amounts payable and receivable are non-interest bearing, unsecured and due on demand.

 

The following table summarizes the amounts were due to/(from) related parties:

 

 

 

September 30,

2023

 

 

December 31,

2022

 

Oniva International Services Corp.

 

$100

 

 

$100

 

Silver Wolf Exploration Ltd.

 

 

(131)

 

 

(72)

 

 

$(31)

 

$28

 

 

For services provided to the Company as President and Chief Executive Officer, the Company pays Intermark Capital Corporation (“ICC”), a company controlled by David Wolfin, the Company’s President and CEO and also a director, for consulting services. For the nine months ended September 30, 2023, the Company paid $215 (September 30, 2022 - $263) to ICC.

 

(c) Other related party transactions

 

The Company has a cost sharing agreement with Oniva International Services Corp. (“Oniva”) for office and administration services. Pursuant to the cost sharing agreement, the Company will reimburse Oniva for the Company’s percentage of overhead and corporate expenses and for out-of-pocket expenses incurred on behalf of the Company, with a 2.5% markup. David Wolfin, President & CEO, and a director of the Company, is the sole owner of Oniva. The cost sharing agreement may be terminated with one-month notice by either party without penalty. During the three and nine months ended September 30, 2023, administrative fees of $11 and $36 were paid to Oniva (three and nine months ended September 30, 2022 - $11 and $31)

 

 
-16-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

The transactions with Oniva during the three and nine months ended September 30, 2023 and 2022, are summarized below:

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Salaries and benefits

 

$240

 

 

$218

 

 

$729

 

 

$670

 

Office and miscellaneous

 

 

107

 

 

 

119

 

 

 

364

 

 

 

325

 

 

 

$347

 

 

$337

 

 

$1,093

 

 

$995

 

 

12. NOTE PAYABLE

 

On March 21, 2022, the Company closed the acquisition of the La Preciosa property from Coeur Mining Inc. (see Note 4 for further details). As part of the agreement, the Company issued a promissory note payable of $5 million due on or before March 21, 2023. The present value of the note payable was calculated using a discount interest rate of 6.71%.

 

Prior to March 21, 2023, the Company repaid the promissory note payable in full.

 

The continuity of the note payable is as follows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Balance at beginning of the period

 

$4,926

 

 

$-

 

Additions

 

 

-

 

 

 

4,665

 

Repayments

 

 

(5,000)

 

 

-

 

Unwinding of fair value adjustment

 

 

74

 

 

 

261

 

Balance at end of the period

 

 

-

 

 

 

4,926

 

Less: Current portion

 

 

-

 

 

 

(4,926)

Non-current portion

 

$-

 

 

$-

 

 

 
-17-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

13. WARRANT LIABILITY

 

The Company’s warrant liability arises as a result of the issuance of warrants exercisable in US dollars. As the denomination is different from the Canadian dollar functional currency of the entity issuing the underlying shares, the Company recognizes a derivative liability for these warrants and re-measures the liability at the end of each reporting period using the Black-Scholes model. Changes in respect of the Company’s warrant liability are as follows:

 

 

 

September 30,

2023

 

 

December 31,

2022

 

Balance at beginning of the period

 

$475

 

 

$741

 

Warrants issued

 

 

-

 

 

 

2,240

 

Fair value adjustment

 

 

(478)

 

 

(2,935)

Effect of movement in exchange rates

 

 

3

 

 

 

(111)

Balance at end of the period

 

$-

 

 

$475

 

 

Continuity of warrants during the periods is as follows:

 

 

 

Underlying

Shares

 

 

Weighted Average Exercise Price

 

Warrants outstanding and exercisable, January 1, 2022

 

 

1,950,412

 

 

$0.80

 

Granted

 

 

7,000,000

 

 

$1.09

 

Warrants outstanding and exercisable, December 31, 2022

 

 

8,950,412

 

 

$1.03

 

Expired

 

 

(8,950,412)

 

$1.03

 

Warrants outstanding and exercisable, September 30, 2023

 

 

-

 

 

 

-

 

 

As at September 30, 2023, the weighted average remaining contractual life of warrants outstanding was Nil years (December 31, 2022 – 0.73 years).

 

Valuation of the warrant liability requires the use of estimates and assumptions including the expected stock price volatility. The expected volatility used in valuing warrants is based on volatility observed in historical periods. Changes in the underlying assumptions can materially affect the fair value estimates. The fair value of the warrant liability was calculated using the Black-Scholes model with the following weighted average assumptions and resulting fair values:

 

 

 

September 30,

2023

 

 

December 31,

2022

 

Weighted average assumptions:

 

 

 

 

 

 

 Risk-free interest rate

 

-

 %

 

 

4.07%

 Expected dividend yield

 

-

 %

 

 

0%

 Expected warrant life (years)

 

 

-

 

 

 

0.73

 

 Expected stock price volatility

 

-

 %

 

 

56.80%

Weighted average fair value

 

$-

 

 

$0.05

 

 

14. RECLAMATION PROVISION

 

Management’s estimate of the reclamation provision at September 30, 2023, is $544 (December 31, 2022 – $445), and the undiscounted value of the obligation is $1,663 (December 31, 2022 – $1,454).

 

The present value of the obligation was calculated using a risk-free interest rate of 9.61% (December 31, 2022 – 9.65%) and an inflation rate of 4.00% (December 31, 2022 – 7.82%). Reclamation activities are estimated to begin in 2025 for the San Gonzalo Mine and in 2041 for the Avino Mine.

 

 
-18-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

A reconciliation of the changes in the Company’s reclamation provision is as follows:

 

 

 

September 30,

2023

 

 

December 31,

2022

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

$445

 

 

$726

 

Changes in estimates

 

 

-

 

 

 

(364)

Unwinding of discount related to continuing operations

 

 

36

 

 

 

44

 

Effect of movements in exchange rates

 

 

63

 

 

 

39

 

Balance at end of the period

 

$544

 

 

$445

 

 

15. SHARE CAPITAL AND SHARE-BASED PAYMENTS

 

(a) Authorized: Unlimited common shares without par value

 

(b) Issued:

 

 

(i)

During the nine months ended September 30, 2023, the Company issued 5,360,300 common shares in an at-the-market offering under prospectus supplement for gross proceeds of $3,597. The Company paid a 2.75% cash commission of $99 on gross proceeds, for net proceeds of $3,498. The Company also incurred $255 in share issuance costs related to its base shelf prospectus and prospectus supplement filings.

 

 

 

 

 

Dring the nine months ended September 30, 2023, the Company issued 1,005,333 common shares upon exercise of RSUs. As a result, $1,019 was recorded to share capital.

 

 

 

 

(ii)

During the year ended December 31, 2022, the Company issued 14,000,000 common shares as part of the acquisition of La Preciosa from Coeur Mining Inc.. As a result, $13,650 was recorded to share capital, and exploration and evaluation assets as acquisition costs, representing the closing price on the Toronto Stock Exchange on March 21, 2022, the date of the issuance and closing.

 

The Company further issued 1,075,000 common shares as payment for services provided during the acquisition, and as a result $980 was recorded to share capital and exploration and evaluation assets as acquisition costs.

 

During the year ended December 31, 2022, the Company issued 48,000 common shares following the exercise of 48,000 options. As a result, $46 was recorded to share capital, representing cash proceeds of $31 and the fair value upon issuance of $15.

 

During the year ended December 31, 2022, the Company issued 982,879 common shares upon exercise of RSUs. As a result, $899 was recorded to share capital.

 

 
-19-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

(c) Stock options:

 

The Company has a stock option plan to purchase the Company’s common shares, under which it may grant stock options of up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis. The stock option plan provides for the granting of stock options to directors, officers, and employees, and to persons providing investor relations or consulting services, the limits being based on the Company’s total number of issued and outstanding shares per year. The stock options vest on the date of grant, except for those issued to persons providing investor relations services, which vest over a period of one year. The option price must be greater than or equal to the discounted market price on the grant date, and the option term cannot exceed ten years from the grant date.

 

Continuity of stock options is as follows:

 

 

 

Underlying

Shares

 

 

Weighted Average Exercise Price (C$)

 

 

 

 

 

 

 

 

Stock options outstanding, January 1, 2022

 

 

2,839,000

 

 

$1.68

 

Granted

 

 

2,390,000

 

 

$1.20

 

Exercised

 

 

(48,000)

 

$0.79

 

Expired

 

 

(880,000)

 

$1.98

 

Cancelled / Forfeited

 

 

(45,000)

 

$1.40

 

Stock options outstanding, December 31, 2022

 

 

4,256,000

 

 

$1.36

 

Granted

 

 

2,545,000

 

 

$1.12

 

Expired

 

 

(105,000)

 

$1.30

 

Cancelled / Forfeited

 

 

(30,000)

 

$1.40

 

Stock options outstanding, September 30, 2023

 

 

6,666,000

 

 

$1.27

 

Stock options exercisable, September 30, 2023

 

 

5,328,500

 

 

$1.31

 

 

The following table summarizes information about the stock options outstanding and exercisable at September 30, 2023:

 

 

 

 

 

Outstanding

 

 

Exercisable

 

Expiry Date

 

Price (C$)

 

 

Number of Options

 

 

Weighted Average Remaining Contractual Life (Years)

 

 

Number of Options

 

 

Weighted Average Remaining Contractual Life (Years)

 

August 21, 2024

 

$0.79

 

 

 

126,000

 

 

 

0.89

 

 

 

126,000

 

 

 

0.89

 

August 4, 2025

 

$1.64

 

 

 

1,660,000

 

 

 

1.85

 

 

 

1,660,000

 

 

 

1.85

 

March 25, 2027

 

$1.20

 

 

 

2,330,000

 

 

 

3.48

 

 

 

2,330,000

 

 

 

3.48

 

May 4, 2027

 

$0.92

 

 

 

25,000

 

 

 

3.59

 

 

 

25,000

 

 

 

3.59

 

March 29, 2028

 

$1.12

 

 

 

2,375,000

 

 

 

4.50

 

 

 

1,187,500

 

 

 

4.50

 

July 10, 2028

 

$1.12

 

 

 

150,000

 

 

 

4.78

 

 

 

-

 

 

 

4.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,666,000

 

 

 

3.31

 

 

 

5,328,500

 

 

 

3.14

 

 

Valuation of stock options requires the use of estimates and assumptions including the expected stock price volatility. The expected volatility used in valuing stock options is based on volatility observed in historical periods. Changes in the underlying assumptions can materially affect the fair value estimates. The fair value of the stock options was calculated using the Black-Scholes model with the following weighted average assumptions and resulting fair values:

 

 
-20-

 

 

AVINO SILVER & GOLD MINES LTD.

Notes to the unaudited condensed consolidated interim financial statements

For the nine months ended September 30, 2023 and 2022

(Expressed in thousands of US dollars, except where otherwise noted)

 

 

 

 

September 30,

2023

 

 

December 31,

2022

 

Weighted average assumptions:

 

 

 

 

 

 

 Risk-free interest rate

 

 

3.10%

 

 

2.49%

 Expected dividend yield

 

 

0.00%

 

 

0.0%

 Expected warrant life (years)

 

 

5.00

 

 

 

5.00

 

 Expected stock price volatility

 

 

61.10%

 

 

59.98%

 Expected forfeiture rate

 

 

17%

 

 

20%

Weighted average fair value

 

$0.60

 

 

$0.63

 

 

During the nine months ended September 30, 2023, the Company charged $783 (nine months ended September 30, 2022 - $504) to operations as share-based payments for the fair value of stock options granted.

 

(d) Restricted Share Units:

 

On April 19, 2018, the Company’s Restricted Share Unit (“RSU”) Plan was approved by its shareholders. The RSU Plan is administered by the Compensation Committee under the supervision of the Board of Directors as compensation to officers, directors, consultants, and employees. The Compensation Committee determines the terms and conditions upon which a grant is made, including any performance criteria or vesting period.

 

Upon vesting, each RSU entitles the participant to receive one common share, provided that the participant is continuously employed with or providing services to the Company. RSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the RSU vests and the RSU participant receives common shares.

 

Continuity of RSUs is as follows: