Metals Producer Positioned Well for Longer-Term Growth

Source: Heiko Ihle 08/02/2024

The company is likely to meet production guidance this year and is working toward bringing a second mine online, noted an H.C. Wainwright & Co. report.

Avino Silver & Gold Mines Ltd. (ASM:TSX.V; ASM:NYSE.MKT; GV6:FSE) announced its Q2/24 production results, the highlight of which was increased silver production, reported Heiko Ihle, an analyst at H.C. Wainwright & Co., in a July 17 research note.

“Avino remains well-positioned to experience significant longer-term growth, which should be further exacerbated by ongoing strength in metal pricing,” Ihle wrote.

34% Return Potential

The analyst reiterated H.C. Wainwright’s Buy rating and US$1.50 per share price target on the Canadian miner, the price at the time of the report, which was about US$1.12 per share.

From here, the return to target is 34%.

The company remains a Buy.

Silver Production Boosted 26%

Ihle reviewed the company’s Q2/24 results. Total production from the Avino mine in Mexico was 616,571 ounces of silver equivalent (Ag eq), reflecting a 5% year-over-year (YOY) increase but a 2% quarter-over-quarter (QOQ) decrease. Similarly, throughput of 140,934 tons was lower YOY, by 10%, due to one of the cone crushers being out of operation during the last two weeks of the quarter for repairs.

Silver production during the quarter, however, was up 26% YOY and 17% QOQ at 292,946 oz, noted Ihle. This is attributed in large part to the processing of nearly 10,000 tons of material from the surface stockpiles at Avino’s adjacent project, La Preciosa. Along with boosting silver production, these tons produced 30,085 ounces of silver at an average grade of 133 grams per ton and resulted in a sellable high-grade concentrate.

“Avino Silver & Gold Mines remains on track to reach management production guidance of 2,500,000–2,800,000 ounces of Ag eq,” Ihle wrote.

Q2/24 gold and copper production were less impressive than silver. Gold production was 1,514 ounces, about the same as a year earlier and 15% lower than in the prior quarter. Copper production was 1,300,000 pounds, 10% lower YOY, and 3% lower QOQ.

Grades of all three metals in Q2/24 were higher than in Q2/23. The silver grade was up 42%, the gold grade was up 9%, and the copper grade was up 4%.

Near-Term Catalysts

Avino Silver & Gold Mining expects to soon receive the two permits it needs to advance La Preciosa, reported Ihle. One is an environmental permit. The other is a construction permit for building the portal and haulage ramp needed to access the Gloria and Abundancia veins. For the La Preciosa property alone, H.C. Wainwright has assigned a US$35 million (US$35M) value.

Infrastructure for processing La Preciosa ore is already in place as the company intends to use the nearby Avino mill, with a 2,500-ton-per-day capacity, for this.

“We believe the company’s future growth is at least in large part dependent on this new asset,” the analyst wrote.

Another catalyst is further exploration work at the Avino project.

Eventually, too, the company will realize synergies between its tailings project (which H.C. Wainwright values conservatively at US$50M, Ihle wrote) and its other operations.

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Disclosures for H.C. Wainwright & Co., Avino Silver & Gold Mines Ltd., July 17, 2024

This material is confidential and intended for use by Institutional Accounts as defined in FINRA Rule 4512(c). It may also be privileged or otherwise protected by work product immunity or other legal rules. If you have received it by mistake, please let us know by e-mail reply to unsubscribe@hcwresearch.com and delete it from your system; you may not copy this message or disclose its contents to anyone. The integrity and security of this message cannot be guaranteed on the Internet. H.C. WAINWRIGHT & CO, LLC RATING SYSTEM: H.C. Wainwright employs a three tier rating system for evaluating both the potential return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a RELATIVE basis of other companies in the same sector. The price objective is calculated to estimate the potential movements in price that a given equity could reach provided certain targets are met over a defined time horizon. Price objectives are subject to external factors including industry events and market volatility.

H.C. Wainwright & Co, LLC (the “Firm”) is a member of FINRA and SIPC and a registered U.S. Broker-Dealer. I, Heiko F. Ihle, CFA , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies. None of the research analysts or the research analyst’s household has a financial interest in the securities of Avino Silver & Gold Mines Ltd. (including, without limitation, any option, right, warrant, future, long or short position). As of June 30, 2024 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Avino Silver & Gold Mines Ltd.. Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.

The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services. The firm or its affiliates received compensation from Avino Silver & Gold Mines Ltd. for non-investment banking services in the previous 12 months. The Firm or its affiliates did receive compensation from Avino Silver & Gold Mines Ltd. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Avino Silver & Gold Mines Ltd. during the past 12 months. The Firm does not make a market in Avino Silver & Gold Mines Ltd. as of the date of this research report.

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( Companies Mentioned: ASM:TSX.V; ASM:NYSE.MKT; GV6:FSE, )