2022 was a pivotal year for Avino, where we delivered several key objectives for our strategic growth and development plans. During the year, and with long-term shareholder value-creation as a top priority, we laid out our Clear Path for Transformational Growth by developing a road map of our initiatives for growth and future expansion.
Our focus is to mine responsibly with a firm commitment of support, knowledge and education for the communities near operations in Durango, Mexico.
A successful mining Company is one that collaborates with members of its surrounding communities and incorporates principles of sustainability and social responsibility daily. Avino’s goal is to generate district economic benefits through hiring local work forces, development and upkeep of public areas and structures, and to promote a genuine feeling of community well-being. We will endeavor to set environmental and social performance objectives that are relevant and will result in tangible actions. Our goal is to respect our investors’ objectives and provide even greater attention to our communities and their needs. We remain dedicated to all our Company’s corporate values, and particularly as they relate to community, culture and environment.
On the world stage, the effects of global economic uncertainty were felt with higher inflation rates, higher prices for goods and services, volatile markets, and for silver producers such as Avino, fluctuating precious metals prices. Throughout 2022, we have worked diligently to manage inflationary pressures and a rising cost environment, and we look to bring that same mindset into 2023 as we continue through uncertain market conditions all around the world. Controlling costs remains a key priority for Avino.
We successfully closed the strategic acquisition of La Preciosa, which is adjacent to our flagship Avino mine, significantly increasing our land package in the State of Durango. La Preciosa factors prominently into our transformation growth plan to become an intermediate producer. Initial planning for La Preciosa is well underway with the Gloria vein being a priority target, community engagement, new equipment and planned surface works.
The Company’s value proposition is our project portfolio and catalysts for growth that include the Avino Mine as a cornerstone asset and provides significant upside opportunity with La Preciosa, and the Oxide Tailings Project.
Production from the Avino mines was highlighted in 2022 with two record breaking quarters which outperformed market expectations, beat internal production estimates and positioned us well for continued growth in 2023. We delivered full-year production of 2,655,502 silver equivalent ounces, an increase of 215%. This was largely driven by the quality of the Avino Mine asset as well as the mine site team’s ability to continually improve operations and the optimization of underground mining processes. The fourth quarter silver equivalent production of 770,127 ounces represented Avino’s second highest production quarter in recent times, building on our record setting third quarter results of silver equivalent production of 778,008 ounces.
The ramp up of underground mining operations continued throughout 2022, and in particular the second half of the year which realized 58% of the annual silver equivalent production. In 2022, 541,823 tonnes were processed for the Avino Mine, an increase of 228% over 2021.
The Dry-Stack Tailings project was completed in late 2022 and has been fully operational since that time. In keeping with our principles of social responsibility, the method of dry-stack tailings was chosen for its environmental, safety and economic advantages. Dry stack technology involves filtering tailings to remove water prior to stacking and compacting the dry material in a designated tailings area, thus occupying less space, and reducing the environmental footprint. Using dry stack tailings disposal not only de-risks the Avino Mine project from an environmental standpoint, but the water removed from the tailings will be recycled, therefore reducing the need to extract water from local sources.
Another highlight during the year was the completion of over 15,000 metres of drilling on the property and delivered on the promise to re-invest in exploration at Avino. The exploration drilling focused on the areas below the current lowest level of production mining (Level 17) at the ET Area of the Avino Mine. When drilling wrapped up for the year, the drilling showed that the Avino vein extends a further 315 metres downdip. This exploration program was designed to test the continuity of the steeply dipping mineralization and to understand the source of the mineralization. As a result of this drilling, the Avino Vein is now known to be 800 metres deep downdip.
Also, a further 17 holes were drilled on the Oxide Tailings Project, which brought the total number of holes drilled to 127. The Company completed its comprehensive metallurgical testwork and reported these results in April of 2023. These results also build on the work done in 2017 Preliminary Economic Assessment (“PEA”) and increase the level of confidence in the Project from the extensive testwork completed. The potential of the Oxide Tailings resource has been known for many years but buried under the active tailings dam. With the previously mentioned new state of the art Dry-Stack Tailings facility now fully operational, we can advance the oxide tailings project to the prefeasibility study level. These results along with the ongoing testwork program will allow us to make sound decisions on the processing route to maximize the project value.
Avino continues to be dedicated to building and maintaining a local workforce. In 2022, the training programs that started in 2021 remained ongoing with a focus on inclusivity and diversity, providing opportunities to grow our female workforce and place them in roles traditionally by their male counterparts.
Digital Transformation is still at the forefront, with the Company carrying on with its plans to digitally transform certain areas at the mine to enhance efficiencies including mill automation and underground vehicle tracking. The goal is to transform communication and processes that should help to reduce costs by streamlining work processes and providing insights at site that will improve efficiency. Data will be accessed faster, which will help with productivity and monitoring for any safety issues. Operations management, the finance team and the executive team are now able to monitor site activity remotely and communicate instantly any risks or changes that need to take place.
In August 2022, Avino received for the first time, the ESR Award “Empresa Socialmente Responsible ESR 2022”. This award is granted by the Mexican Center for Philanthropy (El Centro Mexicano para la Filantropia or Cemefi, and the Alliance for Corporate Social Responsibility (Alizanza por la Responsabilidad Social Empresarial or (AliaRSE)). The ESR® Award is obtained through a diagnostic process based on indicators reviewed and endorsed annually by a committee of experts in the various CSR areas, supported with documentary evidence, an assessment differentiated by company size and by maturity levels, and an external verification process. Avino continues to view its social responsibility with importance and care of our communities. As I mentioned at the beginning of this letter, our commitment to the communities is steadfast, and we take our supportive role seriously.
As a public company, we are committed to our shareholders and strive to bring value not only in the short term but for future value as well, and as we have made strides to propel the company to intermediate status, we are also extremely pleased to have ended the year with a strong balance sheet, and subsequent to the end of the year eliminated our debt with the $5 million payment to Coeur Mining for La Preciosa.
I am proud of Avino’s resilience and what all our employees around the globe have achieved collectively. The teams in Mexico Canada, and the US never stopped performing their jobs through challenging times and are committed to our shared culture of discipline, flexibility and teamwork and continued to seek initiatives that truly made us stronger as a Company.
2023 is shaping up to be another successful year for Avino. Several key catalysts have already been delivered in the first quarter and include the release of the updated mineral resource estimate that includes the Elena Tolosa (“ET”) deposit, the San Gonzalo deposit, and the Oxide Tailings deposit. Additionally, inaugural mineral resource estimates were included on the Guadalupe and La Potosina deposits. This updated mineral resource represents another milestone for Avino on our path to transformational growth. Together with the previously reported mineral resources on our new La Preciosa property, the consolidated mineral resources total 368 million silver equivalent ounces in the measured, indicated, and inferred categories. This is a significant boost to our overall consolidated mineral resources at the Avino property, with the new ounces coming in at a cost of $0.05 per discovered silver equivalent ounce – an incredible achievement. The updated mineral resource estimate provides us with a strong long-term outlook. The Avino property is a long-life asset.
We also just announced that the Pre-Feasibility study for the Oxide Tailings Project was awarded after completion of the RFP and looks to be completed by the end of 2023. This Project has been in our portfolio for many years and factors prominently into our five-year growth plan to become an intermediate silver producer in Mexico. These results also build on the work done in 2017 Preliminary Economic Assessment (“PEA”) and increase the level of confidence in the Project from the extensive testwork completed. When comparing the most recent mineral resource estimate to the one completed in 2021, we see in the measured and indicated category an impressive 408% increase in tonnage, as well as a 287% increase in AgEq ounces. The potential of the Oxide Tailings resource has been known for many years but buried under the active tailings dam.
The recently announced mining reforms in Mexico are in part, set to limit or regulate harmful practices by the mining industry and improve protections for the environment and Indigenous peoples, thereby bringing the standards up to match North American environmental and social standards. For many years, Avino has been a leader in CSR and has followed best practices for the communities in which we operate. We don’t expect these new reforms to impact Avino operations.
We continue to believe that these uncertain economic times we are in point to a positive outlook for silver, and that silver demand will continue to grow in 2023. There is record demand for silver industrial fabrication, increase in green technology, and a surge in investment demand for physical silver.
All of this bodes well for the silver miners and their shareholders – the best leverage to metals is owning producers, such as Avino.
Operationally, we are targeting a solid year going forward. We are will into our 55th, and we are driven by the highlighted events and developments of 2022 with an enthusiastic approach and positive outlook. Avino’s longevity demonstrates a commitment to maintaining our mission, vision and values. Our Clear Path for Transformational Growth guides us from junior producer to intermediate status within 5 years! We thank you for your ongoing support and confidence as we continue to unlock shareholder value at Avino Silver & Gold Mines Ltd.
President and Chief Executive Officer