Thank you for standing by. This is the conference operator. Welcome to the Avino Silver & Gold Mines First Quarter 2022 Financial Results Conference Call. 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. . I would now like to turn the conference over to Jennifer North, Manager, Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. And welcome to the Avino Silver & Gold Mines Limited Q1, 2022 financial results conference call and webcast. To join this webcast and conference call is there is a link in our news release stated May 4th, which can be found on our website under news 2022. As well, you may find a link under the Investors tab, then click on events and you will see the link at the top of that page. 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 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 accompanying this call, or on our press release of yesterday's date. 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 accompanying this conference call and webcast will be available on the website. Thank you. I will now turn the call over to Avino's President and CEO David Wolfin. David.

Thanks Jen. Good morning everyone, and welcome to Avino's Q1 2022 Financial Results conference call and webcast. Thanks for joining us. Before we begin, please note that the full financial statements and MD&A are now available on our website. On today's call, we'll cover the highlights of our first quarter 2022 financial and operating performance, and our plans for the second quarter, and then we will open it up for questions. Please note that all figures are stated in U.S. dollars unless otherwise noted. We had a strong start to the year highlighted by record revenues and minor operating income. Our financial performance in the first quarter demonstrates strong operational achievements that helped to generate revenues of $11.1 million, and $4.7 million in mine operating income. Nathan Harte, Avino's CFO, will expand on our financial results later in the call. We had a very active first quarter, which was highlighted by closing of the La Preciosa acquisition. La Preciosa hosts one of the largest undeveloped primary silver resources in Mexico, and is the located adjacent to our existing operations at the Avino mine. This is a major milestone for Avino and sets us on the path of achieving our goals of intermediate producer status. Also, during the quarter, we released drill results from our extensive 2021 exploration program, and the target areas included Brecha de Bajo vein below level 17 and west of the current ET mine workings, La Malinche, Nuestra Señora Santiago, El Trompo, and San Jorge veins, as well as encouraging results from La Potosina and the oxide tailings project drilling. Overall production in Q1 was slightly down compared to the fourth quarter 2021. This was expected due to mine sequencing. The production came from Avino mine only, and is compared to Q4 2021 as that was the…

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. Following a strong end to 2021, Avino continued to deliver with great financial results in the first quarter of 2022. We set records for both quarterly revenues and mine operating income, and on a cash operating basis, we generate a mine operating margin of 47%. The company also generated $3.7 million in operating cash flows before working capital changes, and $0.03 per share in adjusted earnings. On top of our strong results and as David previously mentioned, we are thrilled to announce that we have closed the strategic acquisition of the neighboring La Preciosa project from Coeur Mining. This project adds over a $135 million silver equivalent resource ounces on a property within 20 kilometers of the current Avino mining and milling operation. In total, Avino now holds over 290 million silver equivalent resource ounces with a 190 million or 65% of these ounces being silver. Following the acquisition payment, the company remains well funded with $11.7 million in cash available at the end of the quarter, which represents a net increase of $2.2 million at the end of the year after factoring in the acquisition payment made in March. During Q1, we reported net revenues of $11.1 million from 495,000 silver equivalent payable ounces sold, which resulted in mine operating income of $4.7 million for the quarter. This includes non-cash depreciation and depletion, and on a cash basis, minor operating income was $ 5.2 million for the first quarter. Avino reported net income after taxes of $0.6 million or $0.01 per share for the first quarter of 2022. As you can see, Q1 continued to build off our strong fourth quarter…

Thank you, Nathan. To recap, the first quarter was busy with the completion of La Preciosa acquisition, drill results from several areas on the Avino property, and the ongoing construction of the dry stack tailings. Activities at the mine site during the second quarter include continuing production ramp-up at the Avino mine, ongoing training, dry stack facility nearing completion. We currently have drills turning on La Potosina at ET below level 17, and Brecha de Bajo veins. Moving forward with the comprehensive metallurgical test work program on the Oxide Tailings project to move it to development stage. Internal mine plan focused on Gloria and Abundancia veins at La Preciosa. Production for the full year is on track between 2.2 million to 2.6 million ounces of silver equivalent. We expect to generate significant operating cash flow this year, which we plan to reinvest in exploration and further mine development. Also, in keeping with our strategy of divesting of non-core assets, we announced last week that we had granted an option to Endurance Gold to acquire the Olympic Claims, which are located on the south side of Carpenter Lake in the Lillooet Mining Division near Bray Lauren in British Columbia. The closing of the acquisition of La Preciosa sets us on the pathway to expand our current mining complex through regional growth, and the goal of achieving intermediate producer status. Together with exciting drove results from La Potosina and the Oxide Tailings, the events of the quarter are just the beginning of an important time in Avino's history. And we are looking forward to the remainder of the year and beyond. The first quarter is behind us, and we are well into the second quarter, and we're excited as we look forward to keeping the momentum going. We would now like to move the call to question-and-answer portion. Operator.

Thank you. We will now begin the question-and-answer session. . We will pause for a moment as callers join the queue. Our first question comes from Jake Sekelsky of Alliance Global Partners. Please go ahead.

Hey, David, Nathan and team. Thanks for taking my questions.

Hey, Jake.

Good morning, Jake.

Just starting with costs and Nathan you mentioned this, obviously we've seen industry-wide cost inflation across the board. Keeping off any costs below $20 an ounce in the first quarter was quite impressive to me. Can we just touch on some of the things you're doing and some proactive steps that you're taking to manage cost inflation going forward, whether it's flavor, energy consumables, anything like that?

That's a good question, Jake, especially given where the world is right now. Some of the things Avino is doing really is just continue what we've always done. I think we've always maintained a pretty strong cost structure. And to get ahead of the curve on the inflation side, we have done a bit of stockpiling at site. And that's more just to deal with any supply chain disruptions, not just the cost side of things. So we're just contain -- continuing to maintain what we've always done and making sure that we're ready for any interruptions moving forward.

And during the COVID shutdown, we increased our inventory of parts and reagents and consumables. So we're sitting in a good position, yes.

Got it. And then just on La Preciosa, I mean, the acquisitions closed now, when do you think we might see some type of or more work or exploration program announced there, is that a mid-year type event, do you think?

Currently, we're working on the social aspects, getting an agreement with the Heetos. There's three different Heeto groups, and there's agreements pending. So we think probably within six or seven months will have those in place. And then we'll roll out our plants following that.

Okay. So it sounds like you may see some activity there. First half of next year

Yes. I mean, based on internal mine plant planning. We expect to start surface works early next year, and we also have the 20 kilometer dedicated power line cable, five megawatts, only utilizing three. We're planning to extend that over the La Preciosa to the portal where we're planning a new portal. We're planning to put a decline in six or seven levels. And so that development work, and we'll be underway early next year and possibly be generating ore by late next year. Also, there's 50,000 tonnes of ore sitting on surface from when Louis Manhattan, the 80's and 90's, and that was never processed. So that's a little gift there. That's worth above five or six million bucks. That's probably going to pay for the portal and the surface works. So we're in discussions with locals there to remove that so that, that could happen this year.

That was all on my end congrats again on a strong quarter.

Thank you.

Thank you.

Our next question comes from Heiko Ihle of H.C. Wainwright. Please go ahead.

Hello there. Building on what Jake just ask would you be willing to eventually guess on how much you spend on La Preciosa in the last two months?

Sure. Nathan here so far, not a whole lot. Given we're just working on the integration and just making sure that the transition goes smoothly. We're still pretty focused on Avino and ramping up there. And then our focus will shift once we have the proper agreements in place, then we can start on surface works and some more exploration.

And I mean do you have a figure that you'd be willing to say that we should expect and spend for the rest of '22 or for all '22.

Does that specific to Preciosa or company-wide on capital?

Yes. The Preciosa.

On La Preciosa? It really depends again, on the timing, getting all the proper social licenses and agreement in place. So I can't say for sure would it really depends on that timing. I would say any spend would come later in the year and we're not thinking multi-millions here. It's not going to be fairly significant as any development to likely start in 2023.

Got it. And then finally, David, you mentioned earlier on this call that you always thought that Preciosa should be under the same umbrella. Are there any quantifiable advantages that you can already take advantage of access to different drilling side or road access or anything like that that you didn't have before since closing.

Yes. I mean, Heiko, I can probably take that one back. I think the most important thing is going to be the low -- having one giant -- one management operation and one operating asset really in one location. And I think the synergies there, and the cost structure there will be extremely beneficial, and it will save us on infrastructure and developing. And I think that's why Avino was able to be so competitive in acquiring them.

Yes. But also the Oxide Tailings project. If we need to build the leach pads out in the valley, we've got more ground now available, so we could be trucking Oxide Tailings material in one direction and bringing or back in another direction. So yes. I mean, that -- that's pretty good synergies there.

Yes. And given the goals of increasing production and overall ounces produced at Avino, this is probably the best, most accretive way to do it versus acquiring something in another state or another area, because we can -- we have the administrative team already in place, and we just need to expand on that to manage it.

And there's no competition for labor. I mean, I was after Mitch for years telling them that Newmont and Barrick can do it in Nevada, we should be looking at operational synergies here, and I thought that they would take the bull by the horn, but apparently they turned over the reins to us. So it makes sense to what we're doing, because we have the expertise in the area with Carlos's and his team.

I think that is a wonderful transaction, and why you did it some. That's all for me, I will get back in queue.

Thank you.

Thanks, Heiko.

Our next question comes from Matthew O’Keefe with Cantor Fitzgerald. Please go ahead. Matthew O’Keefe: Thanks. Good morning. Just a quick question for me on the Avino, what's your throughput now? I guess because you're still ramping up, where are we with throughput sort of end of Q1. And now, as we're well into Q2, where are we and is that continuing to rise through the year? What are the bottlenecks there?

Right Matt. Yeah, thanks for the question. I think I'll answer that last part first actually. The bottlenecks right now, we have to improve the quality of the ramp from a physical standpoint. Just smooth that out to increase the speed for trucks, and reduce kind of maintenance there, in addition to some operator training. So that's kind of the key focus for us as getting qualified, trained underground miners to help us ramp up production. Because we're currently mine limited at this point. So that's our focus. Matthew O’Keefe: Okay. Do you -- can you tell us what your throughput is right now or?

Yeah, on a daily basis or a monthly basis, we're looking to transition some time into Q3 to get us up to that nameplate production up to 2500 or 2200 to 3500 tons per day. Right now we're operating about 1400 to 1900 tons per day. Matthew O’Keefe: Okay, so pretty much on track, I think from what we talked about last time.

Yes, we're hoping to. Matthew O’Keefe: Okay. And then just one other question on CapEx. I know Heiko touched on this, but what is the sort of estimate for the balance of the year company-wide on CapEx?

Yes, I think at the beginning of the year, we put out our guidance. around $8 million range and that was including all exploration. We think it might be a bit less on a cash basis just because some of the larger pieces we are leasing. And so those costs to be spread out over a few years. But I still think we have probably in the range of about $4 million to $5 million left, including Q2, and that includes exploration as we look at a fairly low cost. And again, they want to emphasize that not including La Preciosa, which will start in '23. Matthew O’Keefe: Right. So no real inflationary hits to you there.

No, we've kind of -- we factored those into our budgets pretty heavily already at the beginning of the year, we kind of -- everyone saw the freight train coming. So we think we're still going to be well within our under -- our guidance of I think was $7 million to $9 million. Matthew O’Keefe: Okay. Great. That's it for me. Thank you.

Thank you.

. Our next question comes from Joseph Reagor of Roth Capital Partners. Please go ahead.

Hey, guys. Thanks for taking the questions.

Hey, Joe.

Hey, Joe.

So most of things I want to touch on were already asked by prior callers. But just thinking about how the markets are right now. Are there any precautions you guys are taking from a balance sheet standpoint or from -- as you make decisions on capital spending over the rest of the year to maintain your strong balance sheet.

Yeah, Joe, good question. Nathan here. I think we're continuing to monitor everything as far as what's going on with silver and copper and gold prices, and what's going on in the market. We don't need to raise money. I mean, I think we've gotten that question a number of times. But we definitely do not need to raise money to continue funding our general operating and capital activities. There's not really any pressure there. So some of the things we're doing just to preserve that. Again, just checking in daily, monthly, weekly on the progress of our projects. All of them are financed as it stands now, so we're not overly concerned. But again, just ensuring that we're maintaining the core structure that I touched on earlier in the call

And filling the mill as our number one priority.

Yeah, and bringing our per-unit cost down, as David mentioned, by filling the mill.

Okay. And then I noticed during the quarter there was booked at there was a bit of an inventory sale, your silver equivalent sold was greater than the production. Was that intentional or just a timing things?

I would say a bit of both. We obviously we're building inventory in Q4. Production was well over 500 close to 520,000 ounces silver equivalent. And we only sold about 80% of that. So we did have a bit of an inventory build at the end of December, which was subsequently sold in January, February. It wasn't really intentional, per se to hold it back, but we were -- we did receive embedded some benefits as far as pricing goes on that standpoint. So we're happy with how that turned out and yes, our inventory did decline a bit in the end of Q1 compared to the end of year.

Okay, thanks.

This concludes the question-and-answer session. I would like to turn the conference back over to David Wolfin, President and CEO for any closing remarks.

Thanks, Operator. And thanks, everyone. We're thrilled about the Q1 financial performance with record revenue and closing of left Preciosa was a major milestone for us, puts us on a path to achieving intermediate producer status, which will share with everyone as we develop those plans. So thank you very much and have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.