Avino Silver & Gold Mines: A Bright Spot in Volatile Markets

The precious metals sector has faced significant headwinds in recent quarters, with macroeconomic uncertainty and fluctuating commodity prices testing even the most resilient miners. Amid this backdrop, Avino Silver & Gold Mines Ltd. (ASM: TSX) has emerged as a standout performer, leveraging operational excellence, strategic growth initiatives, and favorable market dynamics to deliver robust results. With Q1 2025 financials showcasing record net income, cost efficiencies, and progress on its flagship La Preciosa project, Avino is positioned to capitalize on a silver market primed for growth. Here's why investors should take notice.

Q1 2025: A Quarter of Operational Mastery

Avino's first-quarter results underscore its ability to navigate volatility while executing its growth strategy. Key highlights include:
- Record Net Income: $5.6 million, or $0.04 per share—up 10% sequentially and a stark improvement from $0.6 million in Q1 2024.
- Revenue Surge: Total revenues hit $18.8 million, a 52% year-over-year jump, driven by higher metal prices and consistent production.
- Cost Reductions: Cash costs per silver equivalent ounce fell 15% to $12.62, while all-in sustaining costs dropped 1% to $20.08. Improved grades in silver, gold, and copper, combined with operational efficiencies, further bolstered margins.
- Production Growth: Silver equivalent production rose 8% year-over-year to 678,458 ounces, with gold and copper output increasing 25% and 19%, respectively.

The company's working capital rose to $31.3 million, reflecting strong cash flow generation ($7.4 million from operations) and prudent capital allocation. These metrics position Avino as financially agile, with minimal debt and ample liquidity to pursue growth without diluting shareholders.

La Preciosa: A Catalyst for Future Growth

The La Preciosa mine, Avino's flagship project in Mexico, is nearing critical milestones. Q1 2025 saw:
- Progress on Infrastructure: Blasting and construction of a 360-meter decline advanced, with equipment mobilization completed ahead of schedule.
- Haulage Ramp Development: The San Fernando ramp, drilled using a new jumbo drill, is progressing toward the Gloria and Abundancia veins—key areas for high-grade mineralization.

The project's on-track development aligns with Avino's goal to increase silver equivalent production by 20–30% by 2026. With an estimated 1.1 million ounces of silver and 10,000 ounces of gold in proven and probable reserves at La Preciosa, this mine is a cornerstone of the company's long-term value creation.

Silver's Bull Case: Demand, Deficits, and a Zacks #1 Ranking

Avino's success is amplified by a silver market experiencing structural tailwinds:
1. Industrial Demand Surge:
- Solar Energy: Silver's role in photovoltaic cells is critical, with demand from this sector expected to consume 85–98% of global reserves by 2050.
- Electric Vehicles (EVs): EVs use 50% more silver than conventional cars, driven by advanced batteries and conductive materials.
2. Supply Constraints:
- Global silver supply has declined to 1.03 billion ounces in 2024, while demand is projected to hit 1.21 billion ounces. This deficit of ~182 million ounces in 2024 is expected to persist, supporting price appreciation.
3. Investment Inflows:
- Silver ETFs saw record inflows in Q2 2025, with the iShares Silver Trust (SLV) attracting 1,073 tons in four weeks—equivalent to 5% of annual mine production.
- Russia's central bank announced plans to purchase $535 million in silver over three years, marking the first explicit inclusion of silver in central bank reserves during this bull market.

Avino's performance is further validated by its Zacks Rank #1 (Strong Buy), reflecting rising earnings estimates and a 466% year-over-year EBITDA jump. The stock's strong fundamentals and the sector's outperformance (silver mining equities rose 37% in 2025) suggest ASM is well-positioned to outperform peers.

Investment Thesis: Why Buy Now?

• Valuation: Trading at 27.4x forward EPS, Avino is fairly priced relative to peers. Its Zacks Rank #1 and consistent earnings beats (e.g., Q1 2025 EPS of $0.07 vs. consensus $0.03) justify optimism.
• Leverage to Silver: With ~80% of revenue tied to silver, the stock is a direct beneficiary of rising prices. A move toward $40/oz in 2025—projected by analysts—would boost margins further.
• Low Risk Profile: A debt-free balance sheet, strong cash flow, and ESG initiatives (e.g., 483 direct Mexican employees, dry-stack tailings facility) enhance its appeal to socially responsible investors.

Historically, this strategy has delivered an average return of 73.49% annualized, with a maximum drawdown of 55% during holding periods. Over the tested period, the approach generated an excess return of 1,084.83%, outperforming broader market indices while maintaining a Sharpe ratio of 1.00—a measure of strong risk-adjusted performance. These results underscore the potential rewards of buying Avino on positive earnings surprises, though investors should remain mindful of volatility inherent in commodity markets.

Risk Considerations:
- Silver prices remain volatile, though Avino's cost discipline provides a buffer.
- Geopolitical risks (e.g., Mexico's mining reforms) could disrupt supply chains.

Conclusion: A Compelling Buy in a Bull Market

Avino Silver's Q1 results, La Preciosa progress, and alignment with silver's structural bull case make it a standout investment. With a Zacks Rank #1, strong operational execution, and exposure to a metal in high demand across industries, ASM offers asymmetric upside. Investors seeking exposure to the precious metals sector should consider adding this undervalued growth story to their portfolios.

The time to act is now—before the market catches up to Avino's potential.

This article is for informational purposes only. Investors should conduct their own due diligence and consult a financial advisor before making decisions.