Avino Silver & Gold Mines Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. Although the request metadata refers to 2021 Q4, this filing is an annual report and does not provide a clear standalone Q4 financial-results summary. Financial statement amounts below are in US$ thousands unless otherwise noted.
Business context and financial performance
Avino is a Canadian-based silver, gold and copper producer and exploration company. Its producing operation is the Avino Mine in Durango, Mexico; San Gonzalo ceased mining in 2019. The company reports no proven or probable mineral reserves, and says production decisions were made without feasibility studies demonstrating economic recovery.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Mining revenue | $11,228 | $16,022 |
| Cost of sales | $7,681 | $15,832 |
| Mine operating income | $3,547 | $190 |
| Net loss from continuing operations | $(2,057) | $(7,482) |
| Total net loss | $(2,057) | $(7,651) |
| Operating cash flow | $109 | $72 |
| Investing cash flow | $(3,207) | $(2,167) |
| Financing cash flow | $16,092 | $4,203 |
Revenue fell about 30% year over year. Mine operating margin improved to approximately 31.6% from 1.2%, while the net loss narrowed; 2020 total net loss included discontinued operations. Operating cash flow remained modest despite the improvement in mine operating income. No standalone gross-margin measure is presented; mine operating margin is calculated as mine operating income divided by revenue.
Liquidity, debt and capital
- Cash was $24.765 million at year-end, up from $11.713 million. Working capital was $31.635 million.
- Total liabilities were $7.771 million, versus $9.772 million in 2020. The Samsung term facility was fully repaid in 2021; finance lease obligations were $1.069 million. The balance sheet also included a $0.741 million warrant liability.
- Shareholders’ equity was $78.507 million. The company issued 10.05 million shares through an at-the-market offering for net proceeds of $18.497 million and ended the year with 102,243,211 shares outstanding.
- Contractual obligations totaled $7.245 million in the filing’s summary, including accounts payable, leases, finance leases and deferred tax liabilities. The separate liquidity note lists $5.464 million of financial obligations and lease commitments, excluding deferred taxes.
Changes, outlook and material matters
- Cost of sales declined to $7.681 million from $15.832 million; 2021 included $0.8 million of standby costs, compared with $2.394 million in 2020. The filing does not clearly quantify the operating-volume or price contributions to the revenue decline.
- Management estimated 2022 mine operating and administrative expenses of $34.170 million and capital and exploration spending of $8.265 million, or $42.435 million total. It expected mine cash flows to fund the plan, but cautioned that revenues may not cover costs and activities could be curtailed if financing is unavailable.
- Avino agreed in October 2021 to acquire the adjacent La Preciosa project from Coeur for $20 million, 14 million units, and contingent consideration of $8.75 million after initial production, plus royalties. The filing states the transaction closed March 21, 2022, after year-end.
- The amended resource estimate reported 28.07 million tonnes of measured and indicated resources and 10.941 million tonnes inferred across the Avino, San Gonzalo and oxide-tailings deposits. These are resources, not reserves, and have no demonstrated economic viability.
- Key risks include volatile metal prices, mine and processing performance, the absence of reserves and feasibility studies, permitting and Mexican regulatory or political risks, COVID-related disruption, financing and dilution, and reliance on a limited customer base. The filing’s risk discussion says one customer represented more than 75% of revenue, while its segment note lists the largest customer at $5.521 million of $11.228 million (about 49%); the disclosure is inconsistent.
- Auditors issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls and internal controls were effective at year-end.
Important facts for investors to verify
- Review the full FY2021 MD&A and mine operating data for production volumes, metal prices, realized costs and reasons for lower revenue; the supplied filing text does not provide a clear Q4-only breakdown.
- Reconcile the customer-concentration statements and confirm customer exposure, offtake terms and the Samsung exclusive concentrate sales arrangement, which runs through December 31, 2024.
- Assess the La Preciosa closing consideration, shares and warrants issued, contingent payment, retained royalties, and resulting funding needs against the 2022 spending plan.
- Evaluate the lack of proven or probable reserves and formal feasibility studies, and the assumptions underlying reported resources, mine life and the no-impairment conclusion.
- Track actual operating cash generation, capital spending, lease obligations, share issuance and liquidity following the acquisition; the 2022 funding expectation is not a guarantee.