How did the Avino story start and what are the main projects that you are working on at the moment?
The company was incorporated in 1968 by my father, a mining financier who through a chance meeting was presented with the opportunity to revive operations at the Avino mine, and, in 1974, put it back into production.
There is, however, a long history at Aviano dating back to 1558, when Captain Ibarra claimed to have found a mountain of silver. Then, in the 1800's, Avino became the largest open cut mine in the world, listed on the London Stock Exchange, with a market cap of GBP 1 million.
The mine closed in 1912 during the Mexican Revolution, and all mining activities were suspended until the late 1960’s when Avino began to rebuild and started with the mill on the old foundations. We successfully operated for 27 years, however it was necessary to place the mine on care and maintenance in 2001 due to the collapse of commodities prices and the devalued peso. Then, in 2006, NAFTA (North American Free Trade Agreement) presented Avino with the opportunity to acquire 100% of mine, and started an aggressive exploration program.
We currently have 368 million ounces of silver equivalent, with 60% being pure silver, and the rest gold and copper. To further strengthen our presence, we have a five-year transformational growth plan through which we wish to increase our output threefold, going from a junior producer to an intermediate producer.
Besides the Avino mine, we have the Oxide Tailings Project, which hosts gold and silver from past production which wasn’t recovered well by Avino’s conventional flotation mill. This Project has been in our portfolio for many years and factors prominently into our five-year growth plan.
Following the Covid-19 mine closure the tailings had the time to dry and we were able to complete 130 draw holes in it; and as a result of successful metallurgical testing, we were able to triple the size of the resource. At the moment, we are in the prefeasibility study phase, which we are expecting to be completed by Q4 of this year.
La Preciosa was acquired last year, and is the newest property in our project portolio, and a future silver production asset for Avino. The proximity to Avino is 19 km and the advantages we have are, a dedicated powerline, paved road, abundant water supply, and 100% Mexican labor force. Our plan is to truck the material to the Avino mill site for processing.
How stable do you perceive the mining industry in Mexico at the moment, having watched it transform over the course of decades?
We have been there for 55 years, through many different governments, and we are now seeing a heightened interest in raising the environmental standards to match North American regulations. The new mining reform is going to definitely have an impact, but as we already practice CSR, and feel we are well prepared to handle increased regulations. Thankfully, the government is pro jobs, so we benefit from their full support in this space, given that we are one of the top employers of the state, with 100% Mexican labor force..
In spite of the growing demand and importance of mining in the future, serious investment in this industry seems to lag behind. What could be the reason for this paradox?
Money flows to wherever it is hot, and our sector is cold right now. With the inflation rising, you would expect gold to rise to all-time highs, but since interest rates are going up at the same time, there is a competitive tension. The net zero goals promoted by governments are creating a rush for more metals for EVs, and, at the same time, there is a pressure to supply the electricity to where it is needed.
Are you witnessing a shift in the public perception regarding the mining industry?
The initial negative reputation of the sector was created by the few bad operators that exist in our midst, and it is not indicative of the entire industry.
Mining is essential for our everyday lives, and, hopefully, this stigma will dissipate over time with the help of sound mining operators. At Avino we are doing everything in our power to protect the environment and support the local communities, because people are our main resource.
What do you anticipate will be the main challenges that you will need to overcome in the next few years?
Market sentiment ebbs and flows, and the inflation is pushing us to negotiate our consumables on an annual basis. We hope that interest rates start to trend downwards to be able to see an improvement on metal prices, but with governments tightening the rules, it can be a deterrent for new investors, we have some trying times ahead of us. In addition, it is getting increasingly difficult to get strategic metals out of the ground, and with the demand from electronics, EVs, and solar panels increasing, the price will naturally soar. As it can take up to 25 years to build a mine, and we would need a new one every year to meet future demand, the frail balance between supply and demand is not expected to stabilize very soon, thus prices are expected to rise. Companies that produce these metals will benefit most in a rising price environment. Avino is positioned well to benefit.
