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 [Operator Instructions] 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 & 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 Wolfin; our Chief Financial Officer, Nathan Harte; 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- 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 related to this call or on our press release of yesterday's date. The full financial statements and MD&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+ 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 U.S. dollars unless otherwise noted. Thank you. I will now hand over the call to Avino's President and CEO, David Wolfin. David?

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 we are currently doing, followed by a Q&A. I will start with a discussion on operations, and then I will turn it over to Nathan Harte, Avino's 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 our 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 built on financial success we saw in the first quarter. With confidence in our strategic direction, we are focused on sustaining our momentum in reaching our new milestones. Our balance sheet remains strong with just over $37 million in cash at 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 of 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 to 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 results were as follows: Silver equivalent production increased by 5% to almost 646,000 silver equivalent ounces in Q2. The increase was driven…

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 noncash depreciation and depletion which has 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 cost at La Preciosa in Q2. And on a stand-alone basis, free cash flow from the Avino operation was $6.5 million. Our cash cost per silver equivalent ounce was $15.11, down 7% from Q2…

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 1,100 plants per hectare planned. A total of 67 families in the community received solar boilers at reduced costs 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?

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 the program consisting of 9 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 donation close to the scheduled mining areas near the ramp. To date, 3 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 43-101 standards of disclosure for mineral projects. At Avino, we are currently mining and hauling from Level 12.5 at Elena Tolosa mine. And just as mentioned, exploration drilling is ongoing on the Avino Vein below the ET Mine. 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 Avino website to view all the recent photo highlighting the work at La Preciosa and the Avino Mine. As outlined on Slide 15, we want to…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question for today is from Jake Sekelsky with Alliance Global Partners.

So starting with the access decline at La Preciosa, it sounds like we're making good progress there. Can you just remind us what this time line looks like for intercepting these veins?

Well, David here. We've intercepted Abundancia this week. And so Gloria is a few more weeks away, but it's happening right now.

Perfect. That's helpful. And then just building on that, the broader ramp of throughput at La Preciosa. How should we be thinking about this heading into 2026? And do you have a targeted mill throughput percentage in mind? Or are you still kind of working through that as we head into the second half of the year here?

Jake, Nathan here. And Peter, maybe can expand afterwards. But for this year, we're just -- it's going to be development ore for a little bit. So we're not providing any specific throughput per day targets. Obviously, next year, the goal is to get up to filling the 2 smaller circuits, which, as you know, it's 4 independent circuits, 2 smaller circuits are about 200 to 250 tonnes per day. So the goal is to get up to 400 to 500 tonnes per day throughout the latter part of next year.

Got it. Okay. And then just lastly, I'm just curious, how are you guys thinking about M&A with where precious metals prices have been? I guess I'm wondering if you feel your plate is full with La Preciosa or if you're seeing anything attractive on the external growth side of things?

We're remaining disciplined, and we're focused on organic growth with our 3 key assets. And we have been shown projects, but we're -- at the moment, we're just remaining focused on organic growth and capital discipline.

Your next question is from Heiko Ihle with H.C. Wainwright.

This is [ Keith ] filling in for Heiko. He's not able to make the call. But 2 questions, in the release you mentioned the improvement in the mill availability during the second quarter a few times. I guess this leads to an obvious question of what have you guys seen in the third quarter so far? And would you suggest maybe a trend line in Q2 for the remainder of the year?

Nathan here. Peter, do you want to take that one?

Yes, I can certainly take that one. Regarding third quarter, I mean we are just according to the mine plan in a bit of a lower area. We are higher up in the mine, and there is some oxidization that does happen. So that does impact recoveries a little bit. But things are scheduled to turn with higher grades later in the quarter. So that's it at this...

Okay. Great. A quick follow-up. In the news release where you discussed La Preciosa, there's a sentence there that quote, "Site services have been installed and the existing building has been renovated for site personnel." What exactly do you guys mean by site services have been installed?

Things like compressed air, things like ventilation, things like just a changing room for the guys. We have a number of employees and contractors now on site. The sites getting busier, power, things like that.

Your next question for today is from Joseph Reagor with ROTH Capital.

Congrats on a good quarter. So as you guys think about the balance sheet, is there a targeted cash balance you guys are trying to get to, to provide support for some future expansions? Or is there a certain cash balance that just would make you guys feel more comfortable as you go into the La Preciosa development? And then on the back of that, can you remind us like what you have left on your ATM?

Yes, Joe, it's a fair question. Nathan here. So the first part of the question, I wouldn't say an exact cash balance to be fair. We're looking at all of our capital expansion plans. And as we mentioned in the call, we're reevaluating them as well and looking at expansion at the Avino mill. But then we also have the Oxide Tailings Project to consider too and as well as potential expansion plans for La Preciosa. So between all 3, it's hard to say about a minimum cash balance, but we're really just evaluating capital needs over the next couple of years and seeing if we will need more. But right now, we're just kind of remaining disciplined. And with regards to the second point of the question, on the ATM, it's -- as we hit 52-week highs, we did use it a little bit to top up the cash position, again, looking to that future growth. I think as of right now, there's still over 2/3 of room left on the ATM, and that was $40 million. But no plans to use all of that at this time.

Okay. Okay. And then a different question. Just as you guys look at the different factors that impact your revenue, inventory shifts, treatment charges, payability, et cetera. Is there any -- should we be reading anything into how these items have changed over the last couple of quarters? Or is it just normal quarter fluctuations?

Yes. It's a fair question. I'm guessing you might be alluding to lower TCs and penalties kind of compared to our revenue number. Is that kind of where you're going with that, Joe?

Yes. So those were both lower and then you guys sold more silver equivalent ounces than you produce. So I'm guessing there was some inventory drawdown. But just trying to figure out what we should anticipate across the board going forward?

Yes, that's fair. So I would say we are obviously getting better terms on their improved terms. I think that we've done some work with Samsung and improving some of our terms on what we're selling them, and they've been a great partner in helping both sides reach a good agreement on that side. I know we mentioned on the last call as well, too, from Q1 and even our year-end one. We did -- we make a point of clearing out inventory and concentrate inventory a little bit at the end of the year. So we do build back up in Q1, and that's why you see generally higher production versus ounces sold in the first quarter. And sometimes consequently, in the fourth quarter, you see that opposite. But Q2 and Q3 are generally fairly flat. So I don't know if that can be helpful for you moving forward.

Your next question for today is from Chris Temple with the National Investor.

David, I got a question, actually a clarification. You repeated some of the resource figures that you have right now totally, I think 277 million silver equivalent M&I and 90-some million in inferred. But you also said something about getting set up to be an NI 43-101 issuer by next year. So I'm a little confused as to what the basis is or what the formula is for the present resources?

That's just so we qualify to be able to publish reserves. So the rule is under National Instrument 43-101, if you don't have a feasibility study, you have to have 90 million, is it Nate?

Yes. There's a rule about annual and 3-year rolling revenue before qualifying for that under the Canadian standards. And so we met that standard through -- by the end of 2024. So moving forward, we can issue mineral reserves. And yes, we can speak more to that off-line in more detail, I think, Chris, but that's the basis of it.

But leading up to that, we're doing all this drilling. So we're really excited about what we're going to publish next year.

Okay. So it's not so much to your formula and how you come about with the reserves has changed that much. It's just for the reporting requirements since you're a producer.

That's the only thing.

And Chris, just to jump in, there's a difference between resources and reserves. So the resource [indiscernible] is not going to change there, but the reserve thing is new for us.

[Operator Instructions] We have reached the end of the question-and-answer session. And I will now turn the call over to David Wolfin, President and CEO, for closing remarks.

With another strong quarter behind us, which included excellent operational performance, a very healthy cash position and an additional quarter of record working capital of over $40 million, Avino is well positioned to capitalize on positive market trends in the precious metals sector. We are focused on a track to deliver sustainable growth and long-term value for our stakeholders and shareholders. Thank you for joining the Avino Q2 call today. Have a nice day.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.