Avino delivers robust Q2 2025 results with 47% revenue growth, strong cash flow, and positive production outlook, reinforcing strategic growth initiatives.

OPERATOR - (00:00:00)

Welcome to the Avino Silver & Gold Mines Second Quarter 2025 Financial Results Conference Call and Webcast. 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. To join the question queue you may press Star then one on your telephone keypad. Should you need assistance during the conference, 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. Thank you operator. Good morning everyone and welcome to the Avino Silver and Gold Mines Limited Second Quarter Financial Results Conference Call and Webcast. To join this webcast and call, there is a link in our News release dated July 22, 2025 and in our news release of yesterday's date which can be found on the website under News 2025. In addition, a link can be found on the homepage of the Avino website. On the call today we have the Company's President and CEO David Wolfen, our Chief Financial Officer Nathan Hart, our Chief Operating Officer Carlos Rodriguez, and our VP 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 within the meaning of applicable securities laws. 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. 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 on our press release of yesterday's date. The full financial statements in MD and A are now available on our website under the Investors tab and then click on Financial Statements. In addition, the full statements are available on Avino's profile, on SEDAR plus 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 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 Wolfen. David.

David Wolfen - President and CEO - (00:03:15)

Thanks Jen. Good morning everyone and welcome to Avino's second quarter 2025 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 that we are currently doing followed by a Q and A. I will start with a discussion on operations and then I will turn it over to Nathan Hart, Avino cfo to discuss the financial performance for the period. And then Jennifer north, our head of Investor Relations, will present an overview of Q2 CSR ESG initiatives. Please turn to Slide 5 for Q2 2025 highlights. Avino delivered another quarter of strong financial performance, posting robust revenues, higher operating margins, improved cost metrics and increased working capital, demonstrating strength across several key financial metrics. Nathan will provide a detailed overview of the financials later in the call. The second quarter results build on financial success we saw in the first quarter with confidence in our strategic direction, we are focused on sustaining our momentum and reaching our new milestones. Our balance sheet remains strong with just over 37 million in cash at the end of the end of June and working capital of over 40 million at the end of the quarter. Our operations team continues to drive meaningful cost improvements while development La Preciosa is progressing according to plan backed by strong operational performance, Avino remains firmly on track to deliver long term growth for all stakeholders and shareholders. Moving on to Slide 6, we turn through our Q2 2025 production results that were released in mid July showing that we've maintained strong production momentum through the first half of the year compared to Q2 2024. The results were as follows. Silver equivalent Production increased by 5% almost 646,000 silver equivalent ounces in Q2. The increase was driven by by significantly improved mill availability. Avino achieved record mill throughput of 190,987 tons of material processed, a 36% increase from Q2 of last year. Gold production increased by 17% as a result of the increased tons processed as well as improvements in gold recoveries to 74% from 70% in Q2 2024. Copper production increased by 12%, reaching 1.5 million pounds of copper in Q2. Silver production for the quarter was just under 284,000 ounces, representing a slight decrease of 3% compared to Q2 2024. During the quarter, feed grade for the three metals were lower than the previous quarter as our mine sequencing put us in a lower grade area. Please turn to slide 7 which highlights the Q2 updates. The highlights of the quarter was achieving the highest mill throughput in Avino's history, a milestone made possible by previous plant upgrades, automation enhancements and the exceptional work of our operations team. Additionally, efficiency improvements implemented in earlier periods are now yielding measurable and positive results. Moving on to La Preciosa blasting and construction of the relatively short 360 meter San Fernando main access decline is underway with expedited equipment mobilization which has allowed the development to advance on plan. The new jumbo drill is working on the ramp as it progresses towards intercepting the Gloria and Abundancia veins. Site services have been installed and an existing building has been renovated for site personnel. We are now halfway through the year and we are making steady progress towards the milestone of including La Preciosa material into our production profile. With strong performance at Avino Mine year to date and the continued advancement at La Preciosa, we remain on track with our transformational growth strategy. Avino's 2025 annual production guidance is 2.5 to 2.8 million ounces of silver equivalent. Please turn to slide 8 where we will have photos of recent development activity including a picture of the first blast. We are pleased with the progress we are making at La Preciosa and with operations at Avino at this time. I will now hand it over to Nathan Hart, Avino's CFO, to present our record financial performance for Q2 2025.

Nathan Hart - Chief Financial Officer - (00:08:33)

Nathan thank you David. It is my pleasure to be presenting another quarter of strong financial and operating results to everyone who has joined us and is viewing our presentation today. Here on slide 9 we have an overview of our financial highlights and improved balance sheet with the full table to come on the next slide. Our second quarter results continue to demonstrate profitability and our ability to grow. We generated $21.8 million in revenues, up 47% from Q2 of 2024 and was our second highest in company history, beating last quarter's revenue figures by over $3 million. Gross profit was $10.2 million our third consecutive quarter with over $10 million in mine operating income. Gross profit margins were 45% inclusive of non cash depreciation and depletion, which is significantly improved from the 32% margin in Q2 of last year. On a cash basis, our gross Profit margin was 52%. Avino earned 2.9 million in net income in the second quarter which translated to earnings per share of $0.02. This was up significantly compared to Q2 of last year where we earned 1.2 million or $0.01 per share. Adjusted earnings was 8.8 million or $0.06 per share compared to 4.3 million or $0.03 per share in Q2 of last year, an over 100% improvement. Cash flow from operating activities and free cash flow improved from last quarter as well as from Q2 of last year. We generated 8.5 million from operating activities or $0.06 per share and free cash flow. After all capital expenditures came in at 4.4 million. Included in these capital expenditures were the development costs at la Preciosa in Q2 and on a stand alone basis, free cash flow from the aveeno operation was 6.5 million. Our cash cost per silver equivalent ounce was $15.11, down 7% from Q2 of last year and on an all in sustaining cash cost basis we came in just under $21 per silver equivalent sold which was 8% lower than Q2 of last year. As mentioned last quarter, this puts us in the lower quartile of our junior producing peers and in the mid range with intermediate producers in Mexico now moving on to the balance sheet, our cash position was $37.3 million at the end of the quarter, up over 10 million from last quarter and year end. Working Capital also increased by over 9 million from the first quarter as a result of the increased cash subsequent to quarter end and as of today our current cash position is approximately 48 million. As discussed on our call, we have also began deploying capital at La Preciosa as we move forward with development with no debt excluding operating equipment, we continue to be well positioned to execute on our five year organic growth plan and continue with reviews for acceleration and increases to the existing plan based on our improved capitalization and balance sheet. Coming to slide 10 you see all other financial metrics and the significant increases compared to Q2 and year to date figures. In 2024 capital expenditures in Q2 were 4.1 million with over half that being spent at La Preciosa on mine development and site activities. Highlighting again the per share metrics where we saw $0.06 earned on a cash flow basis and on adjusting earning basis and free cash flow generated in the quarter was 4.4 million. Here on slide 11 you can see our cash cost per ounce figures were improved from Q2 of last year at $15.11. As mentioned, this represents an improvement of 7% from Q2 of 2024 and on a year to date basis cash costs were $13.97, a 10% improvement from the first half of 2024. On an all on sustaining cash cost basis, our second quarter costs were $20.93 per silver equivalent ounce down 8% from Q2 of last year. On a year to date basis, costs averaged $20.54 per ounce which was 4% lower than the first half of 2024. As we manage our first stage of growth, we are pleased that our cost structure remains intact even with the increased administrative activity arising from bringing a second mine online. We look forward to further economies of scale as La Preciosa begins producing and contributing to our overall production profile. Coming to slide 12 you can see our cost per tonne process for the quarter and year to date continue to remain fairly consistent. Cost per ton processed on a cash basis was $52.61 down 24% compared to Q2 of last year. The reduction is primarily from significantly more tons processed and better mill availability in Q2 of this year as our operational team has been working diligently to maintain as little downtime as possible. In the first half of the year we came in 7% lower than the first half of 2024 on a per tonne basis. On the all in cost side for the quarter, a very similar story with a 23% reduction on a per ton process basis for the quarter and an 8% reduction overall on the first half of the year. Our cost per ton remains extremely competitive for an underground operation as shown by our profit margins. Our cost structure remains intact and we are poised to take advantage of the increased metal price environment as we transition to being a multi asset producer. Tariff discussions continue to put uncertainty in the currencies in which we operate in and reducing rare risk associated with these costs will be key throughout the rest of the year. While there have been no direct significant impacts to our operations from tariffs, we are subject to movements between the USD and Mexican peso. Our current hedging program for the Mexican peso offset any foreign exchange losses incurred with the weakening US dollar in Q2 and we currently have a $1.5 million derivative asset on our balance sheet which represents the mark to market balance at the end of the quarter. With most if not all of our hedges being in the money at this point. I will now turn it over to Jennifer North, Head of Investor Relations for an overview of our recent ESG and CSR initiatives.

Jennifer North - Head of Investor Relations - (00:14:25)

Thank you Nathan. Please follow along to slide 13 for an update of our ESG CSR initiatives. Avino follows the ESG standards and aligns with the United Nations Sustainable Development goals or the SDGs. There are 17 SDGs which were developed as a call to action by all countries developed and developing in a global partnership. During the second quarter the CSR teams led the following strategic projects in the communities Delivery of low cost water tanks and cisterns A trench was prepared to channel rainwater from the mine. A 5 hectare community reforestation has been approved and ongoing with 1100 plants per hectare planned. A total of 67 families in the community received solar boilers and at reduced cost made possible through company led facilitation of a subsidy program and a donation was made to the Mining and History Museum in the City of Durango for an exhibition space dedicated to Avino. There are several ongoing CSR initiatives and we regularly post photos to our Corporate Social Responsibility tab on our website. We also wanted to highlight that we now have published Avino's inaugural sustainability report on our website. This marks a major milestone in our journey toward greater accountability and responsible growth and it reflects our commitment to transparency, continuous improvement and long term value creation for all stakeholders. I will now turn it back over to David to continue with the presentation providing our activities for the coming quarter.

David Wolfen - President and CEO - (00:15:58)

David thanks Jen moving to slide 14 summarizing our upcoming activities with regards to our Exploration resource and Reserve update which we mentioned in our Q2 production news release in July. The 2025 delineation drilling commenced at the Avino mine in April with a program consisting of nine planned holes from surface. The objective is to test the down dip extension of the Avino vein below the current lowest mining level following the trend of previous drilling reported on September 14, 2023. The Avino deposit remains open at depth and earlier results have shown comparable grades and widths to those currently being mined over at La Preciosa. A second surface drill was deployed to confirm prior drill results from previous operators and to improve the understanding of the grade zonation close to the scheduled mining areas near the ramp. To date, three drill holes have been completed with drilling Ongoing drilling information will be utilized in underground mine planning, 3D modeling as well as an update to the resource estimate due in Q1 2026. In addition, Avino is planning on releasing its first mineral reserve estimate at the same time as the company has now met the requirements for producing issuer under The National Instrument 43101 Standards of disclosure for mineral projects at Avino. We are currently mining and hauling from level 12 and a half at Elena Telosa mine and just as mentioned, exploration drilling is ongoing on the Avino vein below the Together, our strong Q2 financial operation results continue to position Avino favorably as we advance towards our transformational growth objectives, particularly with the development of La Preciosa. We encourage you to visit the Aveena website to view all the recent photo highlighting the work at La Preciosa and the Aveena mine as outlined on slide 15. We want to emphasize again the Company's growth strategy within a 20 kilometer footprint. We have three key assets including our operating mill complex which currently produces material from our Avino mine. We have additional access to water power and tailing storage, all of which support our ability to expand production efficiently. Collectively, Our assets host 277 million silver equivalent ounces in the measured and indicated mineral resources category and an additional 94 million silver equivalent ounces in the inferred mineral resources category, providing.