Avino Announces Updated Positive Preliminary Economic Assessment FOR the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of US$40.5 Million and a 48.4% IRR
NYSE - MKT: ASM
TSX-V: ASM
April 11, 2017 FSE: GV6
AVINO ANNOUNCES UPDATED POSITIVE PRELIMINARY ECONOMIC ASSESSMENT
FOR THE ‘OXIDE TAILINGS’: BASE CASE PRE-TAX NPV (8%) OF US$40.5 MILLION
AND A 48.4% IRR
Avino Silver & Gold Mines Ltd. (ASM: TSX.V, ASM: NYSE – MKT, GV6: FSE, “Avino” or “the Company”)
is pleased to announce that it has completed an updated Preliminary Economic Assessment (“PEA”) of
retreating the Avino mine tailings in Durango, Mexico , which includes the res ults from the Company’s
recent 2016 Resource Estimate (see news release dated September 26, 2016) for the Avino property
which included the San Gonzalo Mine, the main Avino Mine system, and the property’s Oxide Tailings.
Summaries of the current resources used for the PEA, a preliminary Life of Mine Plan (LOMP), operating
costs, capital costs and project economics are presented in tabl es below. The PEA has been prepared in
accordance with National Instrument 43 -101, and a compliant Technical Report is being completed by
Tetra Tech Canada Inc. (“Tetra Tech”) , and the PEA will be filed on SEDAR and with the U.S. Securities
and Exchange Commission within 45 days of this release. All currency values are presented in US$
unless otherwise specified.
Highlights of the Oxide Tailings Preliminary Economic Assessment
Significant pre-tax NPV8% of US$40.5 million
Strong pre-tax IRR of 48.4%
2 year pay-back period
Total capital expenditures of US$28.5 million
7 year mine life with LOM of 3.12 million tonnes of oxide tailings materials
Mr. David Wolfin, President and CEO stated, “We are extremely pleased with the very attractive
economics of the Oxide Tailings Resource PEA. These positive results will enable us to plan the next
steps, identify any additional studies and move forward in advancing the oxide tailings project. We
intend to follow the recommendations contained in the Technical Report, which will include the pre -
feasibility phase, and we continue to review alternative approaches for the storage of existing tailings.”
The Oxide Tailings deposit comprises historic recovery plant residue material deposited during the
earlier period of open pit mining of the Avino Vein , when there were poor process plant recoveries for
silver and gold . The oxide tailings are partially covered by younger unconsolidated sulphide tailings on
the northwest side of the property.
Economic and Operational Highlights
The PEA incorporated Base Case metal prices of $18.50/oz silver, and $1,250/oz gold. Highlights of the
Base Case economic estimates for the Oxide Tailings Resource are shown in the following table:
The base case PEA provides a solid foundation for focused growth and demonstrates the value of the
existing infrastructure, and outlines a low capital cost option with attractive returns.
The PEA focuses on the Oxide Tailings Retreatment of the Avino mine as a stand alone project with an
initial 7 year life of mine plan (“LOMP”). The Sulphides will be considered during the pre -feasibility
study stage , and evaluated as to their own econ omic viability. This approach provides attractive
economic returns using lower initial capital costs.
AVINO SILVER &
GOLD MINES LTD.
T 604.682.3701 Suite 900, 570 Granville Street [email protected]
F 604.682.3600 Vancouver, BC V6C 3P1 www.avino.com
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR
Page 2
The Financial results for the base case are presented in the table below:
Description
Base
Case
Gold Price (US$/oz) 1,250
Silver Price (US$/oz) 18.5
Total Payable Metal Value (US$'000) 148,892
Refining (US$'000) 6,123
Transportation, Insurance (US$'000) 214
At-mine Revenue (US$'000) 142,555
Operating Costs (US$'000) 47,034
Operating Cash Flow (US$'000) 95,521
Pre-production Capital (US$'000) 24,363
Sustaining Capital (US$'000) 4,352
Salvage Value (US$'000) -861
Reclamation Cost (US$'000) 606
Total Capital Expenditure, Including Reclamation and Salvage (US$'000) 28,460
Cash Operating Costs (US$/oz Ag Payable, net of Au credit) 2.21
Capital Costs (US$/oz Ag Payable) 4.85
Total Costs (US$/oz Ag Payable) 7.07
Net Cash Flow (US$'000) 67,061
Discounted Cash Flow NPV (US$'000) at 5.00% 48,922
Discounted Cash Flow NPV (US$'000) at 8.00% 40,554
Discounted Cash Flow NPV (US$'000) at 10.00% 35,786
Payback (years) 2.0
IRR (%) 48.4
The life of project average material tonnages, grades and metal production are shown below:
Excluding 1 year pre-production
PEA Study Parameters and basis of Financial Evaluations
The production schedule was incorporated into the 100% equity pre -tax financial model to develop
annual recovered metal production from the relationships of tonnage processed, head grades, and
recoveries.
Description Value
Total Tonnes to Mill 3,122,000
Design Annual Tonnes to Mill 500,000
Plant availability 90%
Mine Life (Years) 7
Average Grades
Gold (g/t) 0.43
Silver (g/t) 87.75
Total Production
Gold (ozs) 33,000
Silver (ozs) 6,173,000
Average Annual Production
Gold (ozs) 4,660
Silver (ozs) 881,920
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR
Page 3
Gold and silver payable values were calculated utilizing base case metal prices. Net invoice value was
calculated each year by subtracting the applicable refining charges from the payable metal value. At -
mine revenues are then estimated by subtracting transportation and insurance costs. Operating costs
for mining, processing, and G&A were deducted from the at -mine revenues to derive annual operating
cash flow.
Initial and sustaining capital costs as well as working capital have been incorporated on a year -by-year
basis over the mine life. Salvage value and mine reclamation costs are applied to the capital
expenditure in the last production year. Capital expenditures are then deducted from the operating
cash flow to determine the net cash flow before taxes.
Initial capital expenditures include costs accumulated prior to first production of dore. Sustaining capital
includes any capital expenditures required during the production period. Initial and sustaining capital
costs applied in the economic analysis are US$24.36 million and US$4.35 million, respectively.
The Company cautions that the PEA is preliminary in nature in that it is based on Inferred Mineral
Resources which are considered too speculative geologically to have the economic considerations applied
to them that would enable them to be characterized as mineral reserves, and there is no certainty that
the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
Sensitivity Analysis
Sensitivities of the project’s NPV, IRR and payback period to the Project key variables w ere investigated.
Using the base case as reference, all of the key variables were changed between -30%/+30% at a 10%
interval while holding the other variables constant . The project NPV is most sensitive to the silver price,
and in descending order gold price, operating costs; and capitals costs. The project IRR is most sensitive
to the capital costs and the silver price, followed by the gold price and operating costs and the gold
price. The payback period is also most sensitive to the silver price, followed by capital costs, operating
costs and the gold price.
Post-Tax Economic Analysis
Avino commissioned PricewaterhouseCoopers ‘PwC’ in Mexico to prepare the tax component for the
post-tax economic evaluation for this updated PEA with the inclusion of applicable income and mining
taxes, and the results are as follows:
Federal income taxes in Mexico are calculated using the currently enacted corporate rate of 30%
A special mining duty (SMD) of 7.5% is applied to net profits and is paid annually and is
deductible for tax purposes, resulting in an effective tax rate of 5.25%
At the base-case gold and silver prices, the total estimated taxes payable are $26.32 million over
the 7 year LOM, as shown below:
Unit Base Case
Gold US/oz 1,250
Silver US/oz 18.50
Extraordinary Mining Duty US$ million 0.71
Special Mining Duty US$ million 7.16
Income Tax US$ million 18.4
Total Tax US$ million 26.32
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of US$40.5
Million and a 48.4% IRR”
Page 4
Summary of Post-tax Financial Results
Unit Base Case
Gold US/oz 1,250
Silver US/oz 18.50
Undiscounted NCF US$ million 40.74
NPV (at 5%) US$ million 28.01
NPV (at 8%) US$ million 22.19
NPV (at 10%) US$ million 18.8
IRR % 32
Payback Years 2.6
Capital and Operating Costs
All estimates are based on mining the Oxide Tailing resource only. The total capital costs including
reclamation and salvage are estimated to be US$28. 5 million. The process operating costs include
agglomeration, heap leaching, followed by Merrill -Crowe refinery plant to produce a silver/gold doré.
The operating cost estimate is reported in US dollars with an exchange rate of Mexican Peso to US
Dollars at 12.5The operating cost estimate is sensitive to the exchange rate. The annual operating costs
include:
Staffing and maintenance manpower
Power consumption based on the estimated power drawn by the equipment
Reagent consumption rates and associated costs have been based on recent prices received
from reagent suppliers
Estimated maintenance cost
The operating cost summary for the processing facility and the G&A costs is based on a processing
design rate of 1,370 t/d (500,000 tonnes per year) with an availability of 90% and 365 operating days per
year resulting in an effective annual production rate pf 450,000 tonnes.
The yearly average annual operating cost for the process facilities is estimated to be US$15.06/tonne of
tailings treated at the processing rate of 1,370 tonnes per day, as shown in the table below:
Operating Cost Summary:
Description Personnel Unit Cost
(US$/treated)
Mining 15 1.13
Process 39 12.53
G&A 11 1.41
Total Operating Cost 65 15.06
Mineral Processing, Metallurgical Testing and Recovery Methods
Tetra Tech used the estimated grade values and test work results as reported by MineStart
Management Inc. (MMI) and Process Research Associates Ltd. (PRA), who conducted the metallurgical
tests, to develop the process flowsheet . The investigated metal recovery methods included gravity
separation, flotation, tank cyanide leach, and heap leach processing options. According to preliminary
economical evaluations, a heap leach followed by gold and silver recovery using Merrill Crowe process
was selected for the PEA study.
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR
Page 5
Mining Methods
The oxide tailings mineral resource will be mined/moved using a conventional truck/loader surface
mining method. The Production cycle consists of loading and trucking. The Loading/trucking operations
will be conducted in two 12 hour shifts per day. A 3.85 m3 rated (5.0 yd3) front -end loader will be used
to load three, 24 t onne articulated trucks that will either deliver the sulphide tailings to the sulphide
waste stockpile or the oxide tailings to the oxide tailings hopper. The Production schedule has been
developed for the oxide tailings based on a treatment rate of 500 kt/a, this would be equivalent to a
throughput rate of 1,370 t/d. This will give an overall project dur ation of approximately eight years.
This eight -year period includes a one -year pre -production period and excludes the time required for
remediation of the heap after the leaching process has been completed. Only oxide tailings will be
considered for treatment while sulphide materials will be considered waste at this time. The LOM total
oxide tailings materials treated is 3.12 million tonnes with average grades of 87.75 g/t silver and 0.43 g/t
gold.
Environmental
Environmental parameters, permits and registrations, and environmental management strategies that
may be required for the Project will be summarized in the technical report. Permits and authorizations
required for the operation of the Project may include an operating permit, an a pplication for surface
tenures, a waste water discharge registration, a hazardous waste generator's registration, and an
Environmental Impact Assessment (EIA) or Evaluación de Impacto Ambiental. Acid -base accounting
(ABA) tests have indicated that mild acid generation may already have started on the tailings dam. A gap
analysis and additional tests to further characterize current conditions of the tailings should be
completed to properly design a tailings management plan.
Mineral Resource Discussions
Oxide Tailings
A mineral resource was estimated for the oxide tailings generated from prior historical mining
operations, using ordinary kriging (OK) interpolation and uncapped grades. The assay values for this
estimate are based on 28 drill holes, which were completed on the tailings by CMMA in 1990, and
include 407.75 m of drilling and 383 assays of both gold and silver. The oxide tailings are estimated to
contain a 2.34 Mt inferred mineral resource at a grade of 91.3 g/t silver and 0.54 g/t gold, with a 50 g /t
silver cut-off. The entire resource is classified as an inferred mineral resource, based on the historical
nature of the drilling (prior to the institution of NI 43 -101 and associated quality assurance/quality
control (QA/QC) requirements). Verification samples collected confirmed the presence of gold and silver
mineralization at grades similar to those obtained in the original tailings drilling campaign and confirmed
that the Mine's lab assays are not materially different from those of external labs. It is QG Australia (Pty)
Ltd.’s opinion that the oxide tailings sampling data are considered sufficient to support the purpose of
the Technical Report and a current inferred mineral resource.
Mineral Resources
The Company’s August 2016 mineral resource estimate was used as the resource base for the PEA. This
new estimate includes data from 57 holes drilled during the last two years. Due to closer drill hole
spacing, there is sufficient information to justify el evating 1,330,000 tonnes of the previous 2,340,000
tonnes of inferred resources to the indicated category. However, there is still an additional inferred
resource of 1,810,000 tonnes in the new estimate. The oxide tailings resource is accessible on surfac e
and contains significant gold and silver grades. The resource estimate used in the PEA for the oxide
tailing resource is outlined in the table below at a cut-off grade of 50 AgEQ g/t.
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR”
Page 6
Measured & Indicated Mineral Resources Grade Metal Contents
Resource
Category Deposit
Cut-off
(AgEQ
g/t)
Metric
Tonnes
AgEQ
g/t
Ag
g/t
Au
g/t Cu%
Ag
Million
Tr Oz
Au
Thousand
Tr Oz
Cu T
Indicated Oxide
Tailings 50 1,330,000 124 98 0.46 0.00 4.2 19.8 0
Inferred Oxide
Tailings 50 1,810,000 113 88 0.44 0.00 5.1 25.6 0
Note on Mineral Resources
Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA
is preliminary in nature as it includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would enable to them to be
categorized as mineral reserves. At this time there is no certainty that the results of the PEA will be
realized.
Recommendations
The Technical Report contains the following recommendations for further work:
Resource Estimates
In order to improve confidence in the inferred mineral resource of the oxide tailings and
evaluate the overlying sulphide tailings, a sonic drill program of 90 holes with 50 m x 50 m drill
collar spacing totaling 1,800 m is recommended.
Resource estimates for the ET Zone of the Avino vein, the San Gonzalo vein and tailings should
be completed for mine planning purposes.
The drill hole database should be consolidated and mining depletions updated before th e
estimation is performed.
Process
Take sufficient amounts of samples from both oxide and sulphide tailings to obtain
representative samples for assay and metallurgical test work to confirm the grade of the deposit
and the recovery of silver and gold from the heap leach process.
Use the results from the metallurgical test work program to confirm/define the duration of
leaching on the pad, the reagent consumption values and the silver and gold precipitation
efficiencies.
Investigate the metallurgical performance of the sulphide tailings materials and develop the
process method for the sulphide tailings materials, including co -processing the sulphide tailings
with the oxide tailings.
Environmental
A detailed trade -off study should b e undertaken to characterize current conditions of the sulphide
tailings and to determine whether the re-treatment of this material would contribute to the profitability
of the Project.
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR
Page 7
Qualified Person(s)
The Qualified Persons as defined by NI 43 -101, who supervised and are responsible for the Technical
Report on the Oxide Tailings Retreatment of the Avino Mine, and have reviewed the scientific, technical
and financial content of this news release, are Hassan Ghaffari, MASc., P.Eng., P.Eng, Jianhui Huang,
PhD., P.Eng, of Tetra Tech Canada Inc., Sabry Abdel‐Hafez, PhD., (previously with Tetra Tech Canada Inc.)
and Micha el O’Brien P.Geo., Pr.Sci.Nat., who is an employee of QG Australia Pty Ltd (an ARANZ Geo
Company) and independe nt of Avino, as defined by Section 1.5 of NI 43 -101. The Technical Report for
the PEA will be filed on SEDAR with 45 days of this release.
Avino's projects are under the supervision of Chris Sampson, P.Eng, Avino Consultant and Jasman Yee
P.Eng, Avino Director, who are both qualified persons within the context of National Instrument 43 -101.
Both have reviewed and approved the technical data in this news release.
About Avino
Avino's is a silver and gold producer with a diversified pipeline of gold, silver and base metals properties
in Mexico and Canada employing approximately 500 people. Avino produces from its wholly owned
Avino and San Gonzalo Mines near Durango, Mexico, an d is currently planning for future production at
the Bralorne Gold Mine in British Columbia, Canada. The Company’s gold and silver production remain s
unhedged. The Company’s mission and strategy is to create shareholder value through its focus on
profitable organic growth at the historic Avino Property near Durango, Mexico, and the strategic
acquisition of mineral exploration and mining properties. We are committed to managing all business
activities in an environmentally responsible and cost -effective manner, while contributing to the well -
being of the communities in which we operate.
ON BEHALF OF THE BOARD
“David Wolfin”
________________________________
David Wolfin
President & CEO
Avino Silver & Gold Mines Ltd.
Safe Harbor Statement - This news release 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 Litigat ion Reform Act of 1995, including our belief as to the extent and
timing of various studies including the PEA, and exploration results, anticipated capital costs and operational costs, the potential tonnage, grades and content of
deposits, timing and estab lishment and extent of resource 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. W hile 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 p rice of gold, silver and copper, changing foreign exchange
rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations and misjudgment s in the course of preparing
forward-looking information. In addition, t here 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 i nclude 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 fo reign countries; environmental liability claims and insurance; reliance on key
personnel; the potential for conflicts of interest among certain of our officers, directors or promoters with certain other p rojects; 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 as
set forth in our regulatory filings in Canada and the U.S. . Although we have attempted to identif y 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.
Avino Silver & Gold Mines Ltd. - News Release – April 11, 2017
Avino Announces Updated Positive Avino Preliminary Economic Assessment for the ‘Oxide Tailings’: Base Case Pre-Tax NPV (8%) of
US$40.5 Million and a 48.4% IRR
Page 8
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 Exchang e 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 amou nt of mineralization in mineral
deposits that do not constitute "reserves" by SEC standards, unless such information is required to be disclosed by the law o f the Company's jurisdiction of
ncorporation or of a jurisdiction in which its securities are traded. U.S. investors s hould 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 regul ations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC st andards as in place
tonnage and grade without reference to unit measures.
Neither the TSX Venture Exchange nor its Regulation Serv ices Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.