Q2 2024 Avino Silver & Gold Mines Ltd Earnings Call

Speaker Change: Welcome to the Aveeno Silver and Gold Mines second quarter 2024 financial results conference call and webcast.

Operator: and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad.

Speaker Change: As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Operator: Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Jennifer North, Head of Investor Relations. Please go ahead.

Speaker Change: To join the question queue, you may press star then 1 on your telephone keypad.

Jennifer North: Thank you, operator. Good morning, everyone, and welcome to the Avino Silver and Gold Lines Limited second quarter 2024 financial results conference call and webcast. To join this webcast and conference call, there is a link in our news release dated July 16th, 2024, and in our news release of yesterday's date, which can be found on our website under News 2024. In addition, a link can be found on our homepage of the Avino website.

Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star and zero.

Speaker Change: I would now like to turn the conference over to Jennifer North, Head of Investor Relations.

Speaker Change: Please go ahead.

Speaker Change: Thank you, operator. Good morning, everyone, and welcome to the Avino Silver and Gold Mines Limited second quarter 2024 financial results conference call and webcast.

Jennifer North: On the call today, we have the company's president and CEO, David Wolfin, our Chief Financial Officer, Nathan Harte, our Chief Operating Officer, Carlos Rodriguez, and our VP of Technical Services, Peter Latta. Before we get started, please note that certain statements made today on this call by the management team may include forward-looking information within the meaning of applicable securities laws. Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from those expressed by or implied by such forward-looking statements.

Speaker Change: To join this webcast and conference call, there is a link in our news release dated July 16, 2024, and in our news release of yesterday's date, which can be found on our website under News 2024. In addition, a link can be found on our homepage of the AVENO website.

Jennifer North: The company does not intend to and does not assume any obligation to update such forward-looking statements or information other than as required by applicable law. For more information, we refer you to our detailed cautionary note in the presentation related to this call or in our press release of yesterday's date. Please note that the full financial statements and MD&A are now available on our website under the Investors tab; then click on Financial Statements.

Speaker Change: On the call today we have the company's president and CEO David Wolfin, our chief financial officer, Nathan Harte, our chief operating officer, Carlos Rodriguez, and our VP of Technical Services, Peter Latta.

Speaker Change: Before we get started, please note that certain statements made today on this call by the management team may include forward-looking information within the meaning of applicable securities laws. Thank you for your time. We appreciate it.

Speaker Change: Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results to be materially different than those expressed by or implied by such forward-looking statements.

Speaker Change: The company does not intend to and does not assume any allegation to update such forward-looking statements or information, other than as required by applicable law.

Speaker Change: For more information, we refer you to our detailed cautionary note in the presentation related to this call or on our press release of yesterday's date.

Jennifer North: As well, the full statements are available on Avino's profile on CDERplus and on EDGAR. I would like to remind everyone that this conference call is being recorded and will be available for replay later today. Replay information and the presentation slides from this conference call and webcast will be available on our website. Also, please note that all figures stated are in US dollars unless otherwise noted. Thank you. I will now hand over the call to Avino's President and CEO, David Wolfin. David?

Speaker Change: Please note that the full financial statements and MD&A are now available on our website under the investors tab Then click on financial statements as well. The full statements are available on Avino's profile on Cedar Plus and on EDGAR

Speaker Change: I would like to remind everyone that this conference call is being recorded and will be available for replay later today.

David Wolfin: Replay information and the presentation slides from this conference call and webcast will be available on our website. Also, please note that all figures stated are in U.S. dollars unless otherwise noted. Thank you. I will now hand over the call to Aveno's President and CEO, David Wolfin. David?

David Wolfin: Thanks, Jen. Good morning, everyone, and welcome to Avino's Q2 2024 Financial Results Conference Call and Webcast. We will cover the highlights of our financial and operating performance, and then we will go over the work we are currently performing, followed by a Q&A. I will start with a discussion of operations, and then I will turn it over to Nathan Harte, Avino's CFO, to discuss the financial performance for this period. And then Jennifer North, our Head of Investor Relations, will present an overview of Q2 ESG initiatives. Thank you. Thank you.

David Wolfin: Thanks Jen. Good morning everyone and welcome to Avino's Q2 2024 Financial Results Conference Call and Webcast.

Speaker Change: We will cover the highlights of our financial and operating performance and then we will go over the work we are currently performing followed by Q&A

David Wolfin: Please turn to slide five as we go through the production results. Our Q2 production results were released in mid July and are as follows. Silver equivalent production was 617,000 ounces.

Speaker Change: I will start with the discussion on operations and then I will turn it over to Nathan Harte of you know CFO to discuss the financial performance for this period. And then Jennifer North, our head of investor relations will present our overview of Q2 ESG initiatives.

David Wolfin: Silver production was 293,000 ounces, a 26% increase compared to Q2 2023. Copper production was 1.3 million pounds. Gold production was just over 1,500 ounces, and mill throughput was 141,000 tons.

Nathan Harte: Please turn to slide 5 as we go through the production results.

Nathan Harte: Our Q2 production results were released in mid-July and are as follows, silver equivalent production was 617,000 oz, silver production was 293,000 oz, a 26% increase compared to Q2 2023.

David Wolfin: Our second quarter production results remain consistent, up 5% over the second quarter of last year. In addition, we were able to start processing La Preciosa surface stockpile material through our mill. Almost 10,000 tons were processed from La Preciosa stockpiles in Circuit 1 and Circuit 2, with excellent recovery rates, particularly silver, which exceeded our expectations. This helped contribute to a 26% increase in silver ounces produced in the quarter, which we expect to grow significantly when we are able to commence mining and processing underground material from La Presiosa.

Nathan Harte: Copper production was 1.3 million pounds, gold production was just over 1,500 ounces.

Nathan Harte: Mill throughput was 141,000 tons. Our second quarter production results remain consistent, up 5% over the second quarter of last year.

Nathan Harte: In addition, we were able to start processing La Preciosa surface stockpile material through our mill. Almost 10,000 tons were processed from La Preciosa stockpiles.

Nathan Harte: in Circuit 1 and Circuit 2 with excellent recovery rates, particularly silver, which exceeded our expectations.

Nathan Harte: This helped contribute to a 26% increase in silver ounces produced in the quarter.

Nathan Harte: which we expect to grow significantly when we are able to commence mining and processing underground material from La Preciosa.

Nathan Harte: I would also like to mention that the silver grades achieved at La Preciosa surpassed

Nathan Harte: what we anticipated, which adds to the excitement we feel from the future of La Preciosa.

Nathan Harte: The last two weeks of production for the corridor were slightly impacted due to repairs being carried out on one of our cone crushers. A smaller crusher was utilized to minimize downtime in the mill, and it is now back to full mill capacity.

Nathan Harte: We continue to be on track with our targeted full-year production of 2.5 to 2.8 million ounces of silver equivalent

Nathan Harte: Our five-year growth plan aims to increase production levels from 2.5 to 2.8 million ounces of silver equivalent in 2024 to between 8 and 10 million ounces of silver equivalent by 2029.

David Wolfin: As mentioned before, La Preciosa represents a key pillar in our transformational growth strategy and hosts a large endowment of silver and gold resources, which we expect to process for years to come. Updates for the quarter include the application for the environmental permit was submitted by the company to the relevant authorities. Following the feedback received in this quarter, the company's response has been resubmitted with minor modifications.

Nathan Harte: Continuing on to slide 6, we will review our Q2 milestones and ongoing initiatives. As mentioned before, La Preciosa represents a key pillar in our transformational growth strategy and hosts a large endowment of silver and gold resources.

Nathan Harte: which we expect to process for years to come.

David Wolfin: A further permit application will be submitted shortly after receipt of the environmental permit, which is required to commence the construction of the portal, the haulage ramp, and the mining of the Gloria and Abundancia veins. This marks the start of a new era for Avino and the nearby communities around the Presiosa, bringing economic benefits that have been absent for years. Early in the quarter, the College of Old Stock Piles from La Presiosa to our mill and Avino for processing was completed. In early June, I traveled to the Durango operation, spending time at both Avino and La Presiosa.

Nathan Harte: Updates for the corner include

Nathan Harte: the application for the environmental permit.

Nathan Harte: was submitted by the company to relevant authorities following the feedback received in this quarter.

Nathan Harte: The company's response has been resubmitted with minor modifications. A further permit application will be submitted shortly after a receipt of the environmental permit, which is required to commence the construction of the portal, haulage ramp, and the mining of Gloria and Abundancia veins.

Speaker Change: This marks the start of a new era for Avino and the nearby communities around La Preciosa, bringing economic benefits that have been absent for years.

Speaker Change: Early in the court of the College of Old Stock Piles from La Presiosa to our mill, at Avino for processing was completed.

David Wolfin: At La Presiosa, we were able to see that surface works are ongoing in preparation for the commencement of mining, and the construction of office and outbuildings is underway. In addition, we were pleased to see the preparation of the surface portal location is progressing in anticipation of receiving the underground mining permit. [inaudible] We are confident that the necessary work is progressing on schedule, ensuring that we will be well prepared to commence mining as soon as the permits are granted.

Speaker Change: In early June, I traveled to the Durango operations, spending time at both Vino and La Preciosa.

Speaker Change: At La Preciosa we were able to see that surface works are ongoing in preparation of commencement of mining and the construction of office and outbuildings are underway. In addition, we were pleased to see the preparation of the surface portal location is progressing.

Speaker Change: in anticipation of receiving the underground mining permit.

Speaker Change: We are confident that the necessary work is progressing on schedule, ensuring we will be well prepared to commence mining as soon as the permits are granted. I encourage you to view the La Preciosa section on our website for pictures taken on our last visit.

Nathan Harte: Thank you, David. It's my pleasure to be on the call, and I would like to welcome everyone who has joined us and is viewing our presentation today. Now turning to slide seven for a summary of the key financial highlights for the second quarter, Our second quarter delivered record revenues and significantly improved financial performance, with 14.8 million in revenue and 4.7 million in gross profit. On a cash basis, gross profit was $5.9 million, with a margin of almost 40%.

Nathan Harte: At this time, I will now hand it over to Nathan Harte, Avino CFO , to present Avino's Q2 2024 financial results.

Nathan Harte: Nathan

Nathan Harte: Thank you, David. It's my pleasure to be on the call and I would like to welcome everyone who has joined us and is viewing our presentation today.

Speaker Change: Now turning to slide 7 for a summary of the key financial highlights for the second quarter.

Nathan Harte: We had net income of 1.2 million, or 1 cent per share, and adjusted earnings were 4.3 million, or 3 cents per share, both improved over the previous course. Operating cash flows before working capital movements of 3.6 million or 3 cents per share, and we ended the quarter with cash on hand of 5.3. Much Improved from Previous Quicks. As highlighted on our last call, our working capital position has improved significantly, with the balance at 13.6 million at quarter end, three times higher than where we were just 12 months prior. As we look to move forward with Labrasiosa, our balance sheet strength will be key to this.

Nathan Harte: Our second quarter delivered record revenues and significantly improved financial performance with $14.8 million in revenue and $4.7 million in gross profit.

Nathan Harte: On a cash basis, gross profit was $5.9 million, with a margin of almost 40%.

Nathan Harte: We had net income of $1.2 million, or $0.01 per share, and adjusted earnings was $4.3 million, or $0.03 per share.

Nathan Harte: Both improved over previous quarters.

Nathan Harte: Operating cash flows before working capital movements were $3.6 million, or $0.03 per share, and we ended the quarter with cash on hand of $5.3 million.

Nathan Harte: Much improved from previous quarters.

Nathan Harte: As highlighted on our last call, our working capital position has improved significantly, with a balance at $13.6 million at quarter end, three times higher than where we were just 12 months prior.

Nathan Harte: Coming to slide eight, I'll walk you through the details of our financial results, which were not touched on in the highlights. I do want to highlight again the record quarterly revenue of 14.8 million and high gross profit of 4.7. We see positive improvements in all financial metrics for the second quarter when compared to Q2. As noted, on a cash basis, Rose Profit was 5.9 million, representing a 40% cash operating margin, our Hyastens operating the Avino mine as a full-scale underground production.

Nathan Harte: As we look to move forward with La Preciosa, our balance sheet strength will be key over the coming months.

Nathan Harte: Coming to slide 8, I'll walk you through the details of our financial results, which were not touched on in the highlights.

Nathan Harte: I do want to highlight again the record quarterly revenue of $14.8 million and high gross profit of $4.7 million.

Nathan Harte: We see positive improvements in all financial metrics for the second quarter when compared to Q2 of 2023.

Nathan Harte: Moving to the year-to-date columns, again, we see increases across all metrics, with revenues up 43% and gross profit up 143% compared to the first half of the year. Net income was 1.8 million, or just under a penny and a half per share, with EBITDA coming in at 5.1. Adjusted earnings paints a similar picture with improvements compared to 2023 with 6.4 million or five cents per share generated in the first. Cash flow from operations before working capital movements was 5.2 million compared to 2.3 in the first half. On a per share basis, the first half of 24 generated four cents with the comparable 23 period being two cents.

Speaker Change: As noted, on a cash basis, gross profit was $5.9 million, representing a 40% cash operating margin, our highest since operating the Avino mine as a full-scale underground production operation.

Speaker Change: Moving to the year-to-date columns, again we see increases across all metrics with revenues of 43% and gross profit of 143% compared to the first half of 2023.

Speaker Change: Net income was $1.8 million, or just under a penny and a half per share, with EBITDA coming in at $5.1 million.

Speaker Change: Adjusted earnings paints a similar picture with improvements compared to 2020-3, with 6.4 million or 5 cents per share generated in the first half of 2020.

Speaker Change: Morningstar24.com

Nathan Harte: After working capital adjustments, cash flow from operations generated was 3.4 million, with the company making considerable improvements to its working capital and liquidity positions since, for 2024, we have been free cash flow positive, if only slightly as working capital movements did have an impact on efforts. Here on Slide 9, you can see our costs per ounce figures for the second quarter. However, they did bump up slightly. However, they do remain in line with 2023 and will be looking to improve for the rest of the year, as the Mexican peso has weakened significantly since [inaudible]. Lower ounces sold in Q2 versus Q1 did have an impact on our cash cost and all-in cost. Our cash cost per ounce number for Q2 came in at $16.29.

Speaker Change: Cash flow from operations before working capital movements was $5.2 million compared to $2.3 million in the first half of 2023.

Speaker Change: On a per share basis, the first half of 24 generated $0.04 with the comparable 23 period being $0.02 generated.

Speaker Change: After working capital adjustments, cash flow from operations generated was $3.4 million, with the company making considerable improvements to its working capital and liquidity positions since the end of the year.

Speaker Change: For 2024, we have been free cash flow positive, if only slightly, as working capital movements did have an impact with efforts already mentioned.

Speaker Change: Here on slide 9 you can see our costs per ounce figures for the second quarter, did bump ups lightly from Q1. However, they do remain in line with 2023 and will be looking to improve for the rest of the year as the Mexican peso has weakened significantly since June.

Nathan Harte: As you can see on the chart, this was in line with most of last year, but there is definite room for improvement in the rest of the year. All in sustaining cash cost browns came in at 22.74, slightly below Q2 of last year, but definitely out of the first. Again, there are additional improvements that can be realized throughout the rest of the process. Coming to slide 10, you can see our cost per tonne process for the quarter came in above recent quarters, solely due to the fact that we processed fewer tonnes in Q2 versus Q3.

Speaker Change: 30th [inaudible]

Speaker Change: Lower ounces sold in Q2 versus Q1 did have an impact on our cash cost and all-in cash cost figures.

Speaker Change: Our cash cost per ounce number for Q2 came in at $16.29. As you can see on the chart, this was in line with most of last year, but there is definite room for improvement in the rest of 2024.

Speaker Change: All in sustaining cash costs per ounce came in at $22.74 slightly below Q2 of last year but definitely up from the first quarter of this year.

Nathan Harte: As we noted in our production release, we did have some crushing equipment issues which did impact June and early July. This led to decreased Avino Tons process by about 20%, hence the increased cost per ton for this. With Mill availability back up to expectations, the latter part of the year should be. Cash Cost Per Ton Process came in at $66.79 per ton, and All In Sustaining Cash Cost Per Ton Process tells a similar story at $92.31, both above.

Speaker Change: Again, there are additional improvements that can be realized throughout the rest of 2024.

Speaker Change: Coming to slide 10, you can see our cost per tonne process for the quarter came in above recent quarters, solely due to the fact that we processed less tonnes in Q2 versus previous quarters.

Speaker Change: As we noted in our production release, we did have some crushing equipment issues, which did impact June and early July mill throughput.

Speaker Change: This led to decreased avenotons processed by about 20% in Q1.

Speaker Change: Hence the increased cost per ton for this quarter.

Nathan Harte: The Mexican peso held its strength leading up to the election in early June, which did continue to impact our cost structure. As the majority of all expenditures are incurred in Mexico, with local suppliers, employees, and... With the pace of weakening following the election, we have seen some relief and are taking measures to protect our cross-structure for the rest of the year. With metal prices remaining elevated and the anticipation of La Preciosa, we are looking forward as our focus shifts to the growth side throughout the rest of 2024 and into. At this point, I will now turn it over to Jennifer North, Head of Investor Relations, for an overview of our second quarter ESG and CSR.

Speaker Change: With mill availability back up to expectations, the latter part of the year should see improvements.

Speaker Change: Cascost pretend process came in at 66, 79 pretend and all in sustaining Cascost pretend process tells a similar story at 92, 31, both above recent quarters.

Speaker Change: The Mexican peso held its strength leading up to the election in early June , which did continue to impact our cost structure, as the majority of all expenditures are incurred in Mexico, with local suppliers, employees, and contractors.

Speaker Change: With the peso weakening following the election, we have seen some relief and are taking measures to protect our cross-structure for the rest of the year.

Speaker Change: With metal prices remaining elevated and the anticipation of La Preciosa, we are looking forward as our focus shifts to the growth side throughout the rest of 2024 and into 2025.

Nathan Harte: Thank you, Nathan. Moving on to slide 11, we have listed our ESG CSR initiatives that were completed in the second quarter of 2024. Avino follows the ESG standards and the United Nations Sustainable Development Goals, or the SDGs, which work together to address the most pressing challenges facing the world. The 17 SDGs are integrated, which means that an action or goal in one area can or will affect outcomes in other areas.

Jennifer North: At this point, I will now turn it over to Jennifer North, Head of Investor Relations, for an overview of our second quarter ESG and CSR initiatives.

Jennifer North: Thank you, Nathan. Moving on to slide 11, we have listed our ESG CSR initiatives that were completed in the second quarter of 2024.

Jennifer North: AVENO follows the ESG standards and the United Nations Sustainable Development Goals, or the SDGs, that work together to address the most pressing challenges facing the world.

Jennifer North: In the second quarter, Avino's ESG initiatives were focused on the following SDGs. Number three is good health and well-being, which is defined as ensuring healthy lives and promoting well-being for all at all ages. Number four is quality education, which is defined as ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all.

Jennifer North: The 17 SDGs are integrated, which means that an action or goal in one area can or will affect outcomes in other areas. In the second quarter, AVENO's ESG initiatives were focused on the following SDGs.

Jennifer North: Number three is good health and well-being, which is defined to ensure healthy lives and promote well-being for all at all ages.

Jennifer North: Number four is quality education, which is defined as to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. Number five is gender equality, which is defined as to achieve gender equality and empower all women and girls.

Jennifer North: And number nine, industry, innovation, and infrastructure, which is defined as to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.

Jennifer North: If we look at how some of these goals are integrated, you could say that health care services can be considered a major gateway to advancing economic opportunities for women. When women have adequate resources to care for themselves and their families, they unlock a world of potential for themselves, their communities, and nations. Avino's diverse and inclusive workforce includes nearly 16% of women among our employees. During the quarter, we celebrated and honored our working mothers and the women in the communities on Mother's Day. We then celebrated and honored Father's Day in the communities.

Jennifer North: AVENA's commitments in these areas during the quarter were accomplished through the following.

Jennifer North: There were medical exams performed for Avino personnel at site, which positively impacts our teams, as well as their families, helping to maintain a healthy work and home environment.

Speaker Change: If we look at how some of these goals are integrated, you could say that healthcare services can be considered a major gateway to advancing economic opportunities for women. When women have adequate resources to care for themselves and their families, they unlock a world of potential for themselves, their communities and nations.

Jennifer North: The CSR team posted and commenced summer workshops for the children in the communities. Avino also provided materials and assistance with the installation of a new cattle guard. Avino donated furniture for community events and sheet metal for roof replacements in the community. Finally, one of Avino's top CSR priorities is to create employment opportunities for residents in nearby communities, aiming to cultivate generations of passionate and committed advocates for Avino, or as we like to say, ambassadors of Avino.

Speaker Change: Avino's diverse and inclusive workforce includes nearly 16% women among our employees.

Speaker Change: During the quarter, we celebrated and honored our working mothers and the women in the communities on Mother's Day. We then celebrated and honored Father's Day in the communities.

Avino Silver: The CSR team posted and commends summer workshops for the children in the communities. Avino provided material and assistance with the installation of a new cattle guard. Avino donated furniture for community events and sheet metal for roof replacements in the community.

Jennifer North: We aim to educate the younger generation about local resources, motivating them to appreciate the benefits of mining and envision a future where they can pursue rewarding careers in their own community. Currently, we have 472 direct jobs, with our female workforce representing almost 16% of that.

Avino Silver: Finally, one of Avino's top CSR priorities is to create employment opportunities for residents in nearby communities.

Speaker Change: aiming to cultivate generations of passionate and committed advocates for Vino, or as we like to say, ambassadors of the Vino.

Speaker Change: We aim to educate the younger generation about local resources, motivating them to appreciate the benefits of mining and envision a future where they can pursue rewarding careers in their own community.

David Wolfin: This number of jobs will typically translate to three times the number of indirect jobs for services, consultants, and suppliers in the surrounding communities in the Durango area. I will now turn it back over to David to continue with the presentation, providing our plans for the coming quarter.

Speaker Change: Currently, we have 472 direct jobs, with our female workforce representing almost 16% of that. This number of jobs will typically translate to three times the number of indirect jobs for services, consultants, and suppliers in the surrounding communities in the Durango area.

David Wolfin: Thanks Jen. Moving to slide 12, we're happy to see the second quarter rally in metal prices, with silver outperforming gold at times.

Speaker Change: I will now turn it back over to David to continue on with the presentation, providing our plans for the coming quarter. David?

David Wolfin: The higher grade seen in the second quarter from La Preciosa furthers the confidence we have in our strategy to focus on transformational growth with our two mines in Mexico coupled with the demand for silver, gold, and copper. We are well into the third quarter of 2024, and our ongoing priority is proceeding with our plans for the Gloria and Abundancia veins at La Preciosa. Community engagement is ongoing as we ready ourselves to begin development work.

David Wolfin: Thanks Jen. Moving to slide 12. We were happy to see the second quarter rally in metal prices with silver outperforming gold at times.

David Wolfin: The higher grade scene in the second quarter from Lepresials, so further as the confidence we have in our strategy to focus on transformational growth with our two minds in Mexico, coupled with the demand for silver gold and copper.

David Wolfin: In addition, we are currently mining at level 14 at Elena Tolosa, where we expect to yield higher grades at the beginning of Q3 and then level off during the remainder. The leveling off is due to the planned mine sequencing.

David Wolfin: We were well into the third quarter of 2024, and our ongoing priority is proceeding with their plans for the Gloria and Abundance of Ains at La Presiosa.

David Wolfin: Community Engagement is ongoing as we ready ourselves to begin development work.

David Wolfin: As outlined on slide 13, we want to re emphasize the company's growth plans. We have three assets within a 20 kilometer footprint totaling hundreds of millions of silver equivalent mineral resources. On the same area, we have an operating mill complex which is currently producing from our Avino mine. Additionally, access to water, power, and tailing storage, all ingredients to grow organically without the major capital investment required that would be expected if we were starting from scratch.

David Wolfin: In addition, we are currently mining at level 14 at Elena Tulosa where we expect to yield higher grades at the beginning of Q3 and then level off during the remainder. The leveling off is due to the planned mine sequencing.

David Wolfin: As outlined on slide 13, we want to re-emphasize the company's growth plans. We have three assets within a 20 kilometer footprint, totaling hundreds of millions of silvery equivalent mineral resources.

David Wolfin: On the same area, we have an operating mill complex.

Operator: As you can see on this slide, our goal is to scale up by 2029 through production from these three assets. By capitalizing on our existing assets and resources, we can execute our growth plans efficiently and effectively. This approach not only mitigates risk associated with new project development but also positions us for long-term success and value creation. We would now like to move the call to the question and answer portion operator.

David Wolfin: which is currently producing from our Aveeno mine. Additionally, access to water, power, and tailing storage, all ingredients to grow organically without the major capital investment required that we would expect if we were starting from scratch.

David Wolfin: As you can see on this slide our goal is to scale up by 2029 through production from these three assets.

David Wolfin: By capitalizing on our existing assets and resources, we can execute our growth plans efficiently and effectively. This approach not only mitigates risk associated with new project development, but also positions us for the long-term success and value creation.

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone to acknowledge your request. If you are using a speaker phone, please pick up your handset before pressing any [inaudible] To withdraw your question, please press star then two.

Speaker Change: We would now like to move the call to the question and answer portion. Operator?

Speaker Change: Thank you. We will now begin the question and answer session.

Speaker Change: To join the question queue, you may press star then one on your telephone keypad. You will hear a tone to acknowledge your request. If you are using a speaker phone, please pick up your handset before pressing any keys.

Operator: We will pause for a moment as callers join the queue. Your first question this morning is coming from Jake Sekelsky from Alliance Global Partners. Jake, your line is live, please go ahead.

Speaker Change: To withdraw your question, please press star then two. We will pause for a moment as callers join the queue.

Jacob Sekelsky: Hey, David, Nathan, and the team. Thanks for taking my question. So you mentioned processing 10,000 tons of stockpiled material at La Preciosa. I'm just curious, is this something we should expect to continue in the second half?

Speaker Change: Your first question this morning is coming from Jake Sikelsky from Alliance Global Partners. Jake, your line is live. Please go ahead.

Jake Sikelsky: Hey David, Nathan, and team, thanks for taking my questions.

Speaker Change: Good morning.

Jake Sikelsky: So you mentioned the processing 10,000 tons of stockpiled material at La Preciosa. I'm just curious is this something we should expect to continue in the second half and can you maybe quantify the remaining stockpile there?

Peter Latta: And can you maybe quantify the remaining stockpile there? Yeah, hi Jake, this is Peter. Yeah, this will continue in the second half, and it looks like we have about 5000 tons. Got it. That's helpful. In that same vein, do you have any idea on what the ramp up at La Preciosa Underground might look like? into next year. I mean, is there a level of throughput we'd like to see go through the milk from across the open next year?

Jake Sikelsky: Hi Jake. This is Peter. Yeah, this will continue in the second half and it looks like we have about 5,000 tons left.

Speaker Change: That's how it will. In that same vein, do you have any color on what the ramp up lock pressure to underground might look like?

David Wolfin: Yeah, I mean, we're focused right now on just making sure that we get the permits and start construction. We definitely have a lot of plans as far as ramping up in a few different scenarios as far as how fast we can do that and how fast we can move equipment over. But keeping in mind that those would be aligned with the size of our circuits, given that we have, you know, two 250 ton per day circuits and then two 1000 ton per day circuits.

Speaker Change: into next year. I mean, is there a level of to replace, be like to see, go through the mill from La Prasseau for next year?

Speaker Change: Yeah, I mean, we're focused right now on just making sure that we get the permits and start construction. We definitely have a lot of plans as far as ramp up in a few different scenarios as far as how fast we can do that and how fast we can move equipment over. But, and keeping in mind that those would be aligned with the size of our circuits.

David Wolfin: So we're trying to match that output from La Preciosa to our circuits. But there are a few scenarios that we're working on depending on timing. Got it. Okay, I think you might see some more color on those scenarios as the permits come in and you start digging. Absolute Absolute, Okay, very good. That's all for me. Thank you, guys. Thank you. Your next question is coming from Joseph Reagor from Roth Capital Partners. Joseph, your line is live.

Speaker Change: I've given that we have a two 250 ton per day circuits and then two 1,000 ton per day circuits so try to match that output from LaPresse, those two are circuits but there are a few scenarios that we're working on depending on timing.

Speaker Change: Got it. Okay, I think we might see some more color on on those scenarios, you know, as the permits come in and and you start getting underground.

Speaker Change: Absolutely.

Joseph Reagor: Please go ahead. David on the team, thanks for taking the questions and congrats on the recorder. So on this crusher you had, should we expect any costs to roll into Q3 from the repair, or was it relatively minor? Good question, Joe. Nathan here. On the CapEx side, a few costs, just replacement and additional pieces, as well as obviously labor to get that moving, but nothing significant.

Speaker Change: Okay, very good. That's all for me. Thanks again.

Speaker Change: Jake?

Speaker Change: Thank you. Your next question is coming from Joseph Ragor from Roth Capital Partners. Joseph, your line is live. Please go ahead.

Joseph Ragor: Hey David and team, thanks for taking the questions and congrats on a good quarter.

Nathan Harte: We were under budget on some other areas on the CapEx side, so we'll just, we'll be reshifting from one bucket to the other. And then on the OPEC side, we will probably be slightly lower on tons processed for July, which might impact costs a little bit, but nothing. Okay, fair enough. And then you mentioned the Mexican peso. Can you give us kind of a brief reminder of what level of impact a move in the peso can have on overall costs for the company?

Speaker Change: Thank you.

Joseph Ragor: So, on this cone crusher, who you had, shall we expect any costs to roll into Q3 from the repair or was it relatively minor?

Joseph Ragor: Good question, Joe. Nathan here.

Nathan Harte: On the CapEx side, a few costs, just replacement and additional pieces, as well as obviously lever to get that moving, but nothing significant. We were under budget on some other areas on the CapEx side, so we'll just, we'll be reshifting from one bucket to the other. And then on the OpEx side...

Nathan Harte: We'll be probably slightly lower on tons processed for July , which might impact cost a little bit, but nothing significant.

Nathan Harte: Yeah, it's a fantastic point. So, right now, it's around 19 to one, I believe, this morning, whereas in the first quarter and most of Q2, we were talking about the 16 to 17 range. So that's a 10-15% swing, if not more. So that does have a significant impact. We'd say 80% of our costs are paid in pesos in-country. We can do some quick napkin math there, but we should have a meaningful impact on costs forward.

Speaker Change: Okay, fair enough. And then you mentioned the Mexican peso, can you give us kind of a brief reminder of what level of impact a move in the peso can have on overall cost of the company.

Speaker Change: Yeah, it's a fantastic point, so I mean right now it's around 19 to one, I believe, this morning. We're as in the first quarter and most of the Q2 we were talking 16 to 17 range, so that's...

Speaker Change: 10-15% swing, if not more. So that does have a significant impact. We'd say 80% of our costs are paid in pesos in country. So...

Joseph Reagor: Great. I'll turn it over to you guys. Thank you. Thank you. Your next question is coming from Matt O'Keefe from Cancer Fitzgerald. Matt, your line is long.

Speaker Change: can do some quick napkin mat there, but we should have a meaningful impact on cost for it assuming it's days at the club.

Matt O'Keefe: Please go ahead. Thanks, operator. Morning, everyone. Most of my questions have been answered. But just to hit the peso thing again, sir, what did you say about the kind of exposure you have as far as like what percentage of your overall costs are related to the peso? Yes, I would change my attractive, Yeah.

Speaker Change: Great. I'll turn it over. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Matt O'Keefe from Cantor Fitzgerald. Matt, your line is live. Please go ahead.

Matt O'Keef: Thanks, Operator. Morning, everyone. Most of my questions have been answered, but just to hit the pace on that thing again. So, did you say what kind of exposure you have as far as what percentage of your overall costs are related to pace?

Nathan Harte: Yeah, I'm just all right. Okay, so this could, I mean, if this holds, it should be, it should be helpful. And then, The Cone Crusher, I know you addressed this. Then, so that should have less of an impact in Q3 with respect to throughput than it did in Q2. Is that a safe assessment?

Speaker Change: Yes, and how all of the King's shame is my effect at that.

David Wolfin: Good morning, David Wolfin.

Speaker Change: Yeah, that's about right.

Speaker Change: Okay, so this could, I mean, if this holds, it should be, it should be, it should be helpful.

Nathan Harte: That's correct. Yep. Okay, that was really all I had. So thank you. And it was nice to see the working capital go up pretty nicely this quarter.

Speaker Change: The cone crusher, I know you did address this. So that should have a less of an impact in Q3 with respect to throughput than it did in Q2, is that a safe assessment?

Matt O'Keefe: Thank you. Thank you. Your next question is coming from Chen Lin from Lin Asset Manager. Chen, your line is life, please go ahead. (Inaudible) Hi, David and team.

Speaker Change: Thanks for watching.

Speaker Change: Okay, that was really all I had, so thank you and nice to see the working capital go up pretty nicely this quarter.

Chen Lin: Thank you for taking my questions. Great quarter. Congratulations. Most of my questions have actually been answered. I just want to, if you can get some color, what kind of car pack do you expect to get the pursuers fully online?

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Chen Lin from Lin Asset Management. Chen, your line is live, please go ahead.

Chen Lin: 19. Thank you for taking my questions. Great quarter congratulations. Most of my questions have actually been answered. I just want to, if you can get some color, what are going to come back to you, expect to get the La Perceuse fully online.

Nathan Harte: Nathan here. So we put our guidance on that at the beginning of 24. And that really hasn't changed.

Nathan Harte: We're only expecting about We're in the neighborhood of 3 to 4, 3 to 5 million dollars to get into the initial veins if we're in abundance, and then obviously as we ramp up, there'll be some additional development costs, but in what we're looking at internally, that's what we're planning for the initial phase of development. Most of the infrastructure is already there. The buildings, access, power, roads, and water are all there.

Fairquest Nathan: and Fairquest Nathan here, so we put our guidance on that at the beginning of 24 and that really hasn't changed, we're only expecting the boat.

Speaker Change: We're in the neighborhood of 3 to 4, 3 to 5 million dollars to get into the initial veins at Glorian Abundantia And then obviously as we ramp up there'll be some additional development costs But in what we're looking at internally, that's what we're planning for the initial phase of development and mining

Nathan Harte: It's a dream come true for us. (Inaudible) Okay, great. Good luck with the permit. I just want to confirm that you process 10,000 tons of the stockpile, and then you have 5,000 tons left, right? If I hear you correctly.

Speaker Change: Most of the infrastructure is there, the buildings, access, power, roads, water, everything is there. So it's a dream come true for us.

David Wolfin: That's correct. Okay, great. Thank you. Good luck with your permit.

Speaker Change: Okay, great. Good luck with the permit. I just want to confirm, so you process 10,000 tons of the stockpile and then you have 5,000 tons left, right? If I hear you correctly. That's correct.

Chen Lin: Thank you. Thank you. And there are no further questions in queue at this time. I would now like to turn the floor back to David Wolfin for closing remarks. Thanks everybody. As we mentioned, La Presiosa is the key pillar of our growth. So the next big milestone is getting that permit and starting tunneling underground to the initial mining area, which is about 350 meters away from the surface. So we'll get in there quick. And we're thrilled about the grade; it doubles the silver grade at Avino. So stay tuned to watch our growth. And we'll be reporting as soon as we get those permits.

Speaker Change: Okay, great. Thank you. Good luck with your permit.

Speaker Change: Thank you. Thank you, Chad.

Speaker Change: Thank you, and there are no further questions in queue at this time. I would now like to turn the floor back to David Wolfin for closing remarks.

David Wolfin: Thanks everybody. As we mentioned, La Preciosa is the key pillar to our growth, so the next big milestone is getting that permit.

Speaker Change: and start tunneling underground to the initial mining area, which is about 350 meters away from the surface. So we'll get in there quick.

David Wolfin: Thank you. Thank you. This does conclude today's conference call and webcast. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker Change: and we're thrilled about the grade. The grade doubles the silver grade at Aveeno. So stay tuned to watch our growth and we'll be reporting as soon as we get those permits. Thank you.

Speaker Change: Thank you. This does conclude today's conference call and webcast. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker Change: In the next episode, we'll see you in the next episode.

Speaker Change: In the next episode, we'll see you in the next episode.

David Wolfin: I encourage you to view the Lepresial Selection on our website for pictures taken on our last visit. At this time, I will now hand it over to Nathan Harte, Avino's CFO, to present Avino's Q2 2024 financial results.

David Wolfin: I would also like to mention that the silver grades achieved in La Presiosa surpassed what we anticipated, which adds to the excitement we feel about the future of La Presiosa. The last two weeks of production for the quarter were slightly impacted due to repairs being carried out on one of our cone crushers.

Jennifer North: Number five is gender equality, which is defined as to achieve gender equality and empower all women and girls. And number nine is industry innovation and infrastructure, which is defined as to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. Avino's commitments in these areas during the quarter were accomplished through the following. Medical exams were performed for Avino personnel at the sites, which positively impacts our teams, as well as their families, helping to maintain a healthy work and home environment.

David Wolfin: A smaller crusher was utilized to minimize downtime in the mill, and it is now back to full production. We continue to be on track with our targeted full year production of 2.5 to 2.8 million ounces of silver equivalent. Our five-year growth plan aims to increase production levels from 2.5 to 2.8 million ounces of silver equivalent in 2024 to between 8 and 10 million ounces of silver equivalent by 2029. Continuing on to slide six, we will review our Q2 milestones and ongoing initiatives.