Avino's Q3 2025 Earnings Call: Contradictions Emerge on La Preciosa Production Timelines, Mill Expansion Plans, and Hedging Strategies

Date of Call: October 28, 2025

Financials Results

• Revenue: $21.0M, up 44% YOY
• EPS: $0.05 per share (net income), up from $0.01 in Q3 2024; adjusted EPS $0.07 per share vs $0.04 in Q3 2024
• Gross Margin: 47% (inclusive of non-cash items); cash-basis margin 53% vs 45% in Q3 2024 (prior-year inclusive margin 39%)

Guidance:

• Company reiterates 2025 production estimate of 2.5–2.8 million silver-equivalent ounces.
• La Preciosa processing: Circuit One online now; target to run two circuits through 2026, with long-term mill capacity potential up to 2,500 tpd.
• Resource update and first mineral reserve estimate expected Q1 2026; 2026 guidance to include tons, grades and recoveries.
• Remain disciplined on capital allocation; will pursue IRR-positive expansion opportunities given record cash and no material debt.

Business Commentary:

* Record Financial Performance: - Avino Silver & Gold Mines reported $21 million in revenues for Q3, up 44% from Q3 of last year, despite lower silver-equivalent ounces sold. - This growth was driven by improved mill availability, consistent operational discipline, and strategic exploration and drilling efforts. -

• La Preciosa Acquisition and Operations:
• The acquisition of outstanding royalties and contingent payments on La Preciosa enhanced Avino's asset portfolio and improved project economics.

• Processing of La Preciosa material through circuit number one, ahead of expectations, signifies operational progress and expansion.

• ESG and CSR Initiatives:

• Avino continued its commitment to ESG and CSR by supporting local communities through various initiatives, including school sponsorships, road maintenance, and health fairs.

• These efforts align with the United Nations Sustainable Development Goals and aim to create meaningful impact beyond operations.

• AI Integration for Exploration:

• Avino integrated AI technology to improve data analysis and exploration efficiency, generating over 200 new feature-engineered data layers.
• This initiative supports strategic exploration and drilling efforts to unlock additional resource potential.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'record cash of $57 million' and 'highest ever quarterly profit $7.7 million'; emphasized 'we are in our most stable financial position in its 57-year history' and progress toward transitioning to a multi-asset producer, supporting a positive tone.

Q&A:

• Question from Jake Sekelsky (Alliance Global Partners): Can you remind us the targeted throughput rate from La Preciosa over the next few quarters and what the ramp looks like, and any levers to accelerate?
  Response: Start with Circuit One now, run that for the rest of the quarter, then ramp to run the two smaller circuits during 2026 — acceleration possible via ongoing development but goal is one circuit immediately and two circuits through 2026.

• Question from Heiko Ihle (HC Wainwright): Given the drill results, how do grades/widths/rock stability compare to expectations, and what longer-term plans might you accelerate?
  Response: Drilling confirms high-grade 'hotspots' and wider-than-expected intervals (intervals >5 m in places); some near-surface oxidation requires extra ground support but is expected to improve with depth.

• Question from Joseph Rager (Roth Capital Partners): From an accounting standpoint when will La Preciosa be reported as commercial production versus CapEx offset, and when will investors get official tons/grade/recovery guidance or a study?
  Response: Under IFRS revenue and cost of sales are recognized as soon as sales occur and will be disclosed in the MD&A; a resource update and first mineral reserve estimate plus 2026 guidance (tons/grades/recoveries) are expected in Q1 2026.

• Question from Chen Lin (Lin Asset Management): What is the limiting factor for ramping La Preciosa (development vs mill) and maximum tonnage per day you can process next year; any permit throughput limits?
  Response: Mill capacity across four circuits is 2,500 tpd total; near-term constraint is matching consistent mining rates to mill throughput — running one circuit now, two small circuits in 2026, long-term potential up to 2,500 tpd from La Preciosa and the permit is not throughput-restrictive.

Contradiction Point 1

La Preciosa Production Timeline and Throughput

It directly impacts expectations regarding the production timeline and capacity of the La Preciosa mine, which are crucial for assessing the company's growth potential and financial performance.

What is the targeted throughput rate for La Preciosa for the next few quarters and what is the ramp-up plan? - Jake Sekelsky (Alliance Global Partners)

2025Q3: Avino is starting with processing La Preciosa material at Circuit One. The plan is to ramp up to using two circuits by 2026. - Peter Latta(CFO)

Update the timeline for intercepting veins at La Preciosa and discuss throughput growth by 2026? How are you assessing M&A opportunities with current precious metals prices? - Jacob G. Sekelsky (Alliance Global Partners)

2025Q2: For this year, we'll be processing development ore, so no specific throughput targets are provided. Next year, the goal is to fill the 2 smaller circuits, achieving 400-500 tonnes per day by the latter part of 2026. - Nathan Harte(CFO)

Contradiction Point 2

Avino Mill Expansion and Spending

It involves changes in the company's strategy regarding mill expansion and capital spending, which are critical for assessing the company's growth strategy and financial discipline.

What are the specifics of the expansion opportunities you mentioned, and how much are you willing to spend based on your current balance sheet? - Heiko Ihle (HC Wainwright)

2025Q3: Avino is considering expansion opportunities at the Avino Mill and other sites. The company is disciplined in spending and will focus on opportunities with a high IRR. - Nathan Harte(CFO)

What is your target cash balance for future expansions and remaining ATM capacity? How should we interpret recent revenue factor changes, including inventory shifts, treatment charges, and payability changes? - Joseph George Reagor (ROTH Capital)

2025Q2: No specific cash balance target, evaluating capital needs for Avino mill, Oxide Tailings Project, and La Preciosa expansion. - Nathan Harte(CFO)

Contradiction Point 3

La Preciosa Expansion and Ramp-up Timeline

It involves the timing and strategy of expanding and ramping up production at La Preciosa, which directly impacts the company's growth and revenue projections.

Could you share the targeted throughput rate for La Preciosa for the next few quarters and the ramp-up plan details? - Jake Sekelsky(Alliance Global Partners)

2025Q3: Avino is starting with processing La Preciosa material at Circuit One. The plan is to ramp up to using two circuits by 2026. No immediate acceleration plans, but development continues in four different areas. The goal is to run the two smaller circuits consistently throughout 2026. - Peter Latta(VP Technical Services)

What specific actions do you plan to take in the next quarter to accelerate development at La Preciosa? - Jake Sekelsky(Alliance Global Partners)

2025Q1: In our recent visit, we were talking with our engineering team about increasing ramp development, and potentially adding another portal. These are the things we're looking into right now. - David Wolfin(CEO)

Contradiction Point 4

Hedging Strategy and Currency Gains

It relates to the company's hedging strategy and the realization of currency gains, which can impact financial performance and risk management.

What are Q4 FX gains compared to Q3? - Heiko Ihle(HC Wainwright)

2025Q3: Avino performed hedging earlier in the year to protect its cost structure. A significant FX gain was realized in Q3, with continued benefits expected into Q1 of next year. Additional hedges are in place to capture future gains. - Nathan Harte(CFO)

Considering the current metals price environment, have you considered hedging gold or silver forward? - Joseph Reagor(ROTH Capital Partners)

2025Q1: At this time, it's not something we're looking at doing as of now, especially on gold and silver. - Nathan Harte(CFO)

Contradiction Point 5

Hedging Strategy and Currency Exposure

It involves the company's hedging strategy and exposure to fluctuations in foreign currency, which can impact financial results and risk management.

How did Q4 FX gains compare to Q3? - Heiko Ihle(HC Wainwright)

2025Q3: A significant FX gain was realized in Q3, with continued benefits expected into Q1 of next year. Additional hedges are in place to capture future gains. - Nathan Harte(CFO)

What is the impact of the border closure on operations at the mines and mills? Please elaborate on your hedging strategies? - John Donatos (Independent Analyst)

2024Q4: With respect to our hedging strategy, we are continuing to manage our exposure to current negative peso interest rate differentials as well as potential currency volatility. - Nathan Harte(CFO)