Avino Silver: A Silver Lining in a Volatile Market

Amid persistent macroeconomic headwinds and a mixed outlook for precious metals, Avino Silver & Gold Mines (AVA) is positioning itself as a rare bright spot in the silver sector. With production growth outpacing peers, record operational margins, and a de-risked growth pipeline, Avino is primed to capitalize on a potential rebound in silver prices while delivering shareholder value through volume expansion. Here’s why this under-the-radar name deserves attention now.

Production Powerhouse: 2.8M Silver Equivalent Ounces and the Leverage to Grow

Avino’s 2024 production of 2.65 million silver equivalent ounces marked a 10% year-over-year increase from 2023, underscoring its operational resilience (see ). The company’s 2025 guidance of 2.5–2.8 million silver equivalent ounces reflects confidence in sustaining this momentum, with the upper end of the range implying an 18% YoY rise from 2023’s baseline. This growth is no accident:

• Mill Efficiency Gains: Q4 2024 throughput hit 181,733 dry tonnes, a 26% jump from the prior year, driven by optimized feed grades and a jaw crusher upgrade that reduced downtime.
• Grade and Recovery Improvements: Silver feed grades rose 13% in 2024, while copper recovery rates improved to 87%, boosting byproduct credits.
• La Preciosa’s Catalyst: Underground development at its La Preciosa project began in early 2025, with permits secured. This high-grade copper-gold-silver asset could deliver 30% higher margins than current operations once in production, acting as a future earnings lever.

The silver equivalent metric (calculated using $28.24/oz silver, $2,387/oz gold, and $4.15/lb copper) is critical here. As silver prices rebound—a 30% increase since early 2023—Avino’s exposure to volume growth and metal prices creates double-digit leverage to rising prices.

Record Q1 Margins: Cost Discipline Meets Operational Alchemy

Avino’s Q1 2025 results shattered expectations, with gross profit soaring 352% to $10.6 million, fueled by 15% lower cash costs per silver equivalent ounce ($12.62 vs. $14.83 in Q1 2024). This margin expansion isn’t just a one-off:

• Currency Tailwinds: A stronger U.S. dollar versus the Mexican peso reduced costs for a company where 90% of expenses are peso-denominated.
• Scale Benefits: Higher production volumes reduced per-unit costs, with silver equivalent ounces up 8% QoQ to 678,458.
• Metal Price Lift: Average realized prices for silver, gold, and copper rose 13%, 17%, and 1%, respectively, compared to Q1 2024.

The $31.3 million working capital and debt-free balance sheet (with $27.3 million in cash at year-end 2024) further de-risk the growth story. Avino isn’t just producing more—it’s doing so profitably.

Why La Preciosa Matters: A Premium-Valued Growth Engine

La Preciosa isn’t just a mine-in-the-making; it’s a strategic pivot toward higher-margin assets. With 22.8 million silver equivalent ounces in resources and a $50 million pre-tax NPV at current prices, this project reduces reliance on existing Mexican operations and opens access to Peru’s prolific mineral belt.

Crucially, La Preciosa’s lower strip ratio and higher grades (0.65 g/t gold and 0.5% copper) mean it could operate at 10–15% higher margins than Avino’s current assets. Once in production, this asset could push annual silver equivalent ounces toward 3.5 million by 2026, unlocking a valuation rerating.

The Contrarian Case: Buying the Dip Ahead of H2 2025

Avino’s stock trades at just $0.85/share, a 50% discount to its 2022 highs, despite stronger fundamentals. This disconnect presents an opportunity:

• Undervalued on Metrics: At current prices, the market values Avino at $350 million, or $125/oz of silver equivalent ounces in 2025 guidance. Peers trade at $200–$300/oz, implying significant upside.
• H2 2025 Catalyst: Production ramp-up at La Preciosa and updated feasibility studies could ignite investor confidence.
• Leverage to Silver’s Turnaround: With the U.S. dollar weakening and central banks diversifying reserves, silver’s $30/oz floor could soon give way to a $35+ rebound, boosting Avino’s revenue.

Risks and Final Take

Risks include commodity price volatility and delays at La Preciosa. However, Avino’s cash-rich balance sheet and proven operational track record mitigate these concerns.

For investors seeking a high-conviction, leveraged play on silver’s recovery and a company executing flawlessly, Avino offers a compelling risk/reward profile. With production and margins set to accelerate in 2025, now is the time to position ahead of the next leg up.

Action Item: Buy AVA shares at current levels; set a target of $1.50/share by end-2025, with a $2/share catalyst upon La Preciosa’s feasibility update.

This article is for informational purposes only and not financial advice. Always conduct your own research or consult a professional before making investment decisions.