Avino raising $6 million for Mexico, B.C. projects

Avino Silver & Gold Mines Ltd. [ASM-TSX, NYSE American; GV6-Germ.] has arranged for a $6 million bought deal offering that will be used to finance exploration and development on projects in Mexico and British Columbia.

The company said Cantor Fitzgerald Canada Corp. has agreed to act as sole bookrunner and sole underwriter of bought deal financing, comprised of 4.7 million shares priced at 85 cents per share, generating proceeds of $4 million.

Cantor Fitzgerald is also purchasing an additional 2.02 million flow-through shares at 99 cents per share, generating additional proceeds of $2 million. The offering is only available in Canada, Avino said in a press release that was issued after the close of trading on Wednesday, July 24, 2019.

In addition, the underwriter has been granted an overallotment option to purchase an additional 705,900 common shares at the issue price plus an additional 303,060 flow-through shares for a period of 30 days after the closing date of the offering.

If the overallotment option is exercised, total proceeds of the financing could increase to $6.9 million.

Avino shares eased 7.55% or $0.08 to 98 cents Thursday on volume of 250,188. The shares are trading in a 52-week range of 53 cents and $1.55.

Avino operates two producing mines on its Avino Property near Durango, Mexico.

The Mexican mines are the Avino and San Gonzalo. The San Gonzalo Mine is located approximately 2 km from the original Avino Mine and beneath the shallow workings of an old mine from the Colonial period.

The company recently expanded the milling operation at the Avino property to 2,500 tonnes per day, up from 1,500 tonnes. The company also increased the measured and indicated resources by 225% at the Avino property. It remains optimistic regarding the vast unexplored potential across the property which hosts dozens of historic shallow artisanal mines.

The Avino property yielded 599,593 ounces of silver equivalent in the second quarter of 2019, a decrease of 19% from the year ago quarter.  In the same period, gold production also declined by 7% to 1,609 ounces, while copper production was down 21% to 1.13 million pounds.

The reduced silver equivalent production was due to a number of factors including unplanned downtime of five days due to labour negotiations related to the closure of the San Gonzalo Mine as well as an expected decline in feed grade as San Gonzalo approaches the end of its economic life.

Due to the upcoming closure of the San Gonzalo Mine, Avino had previously announced that there would be a transition of some workers from San Gonzalo to the San Luis area of the Avino Mine.

The depleting mine material and grades at San Gonzalo have occurred at a time when silver prices remain low, the company said.

Meanwhile, in a July 23, 2019 press release, the company said it was encouraged by results from a sampling campaign consisting of 52 recent and historic holes that were previously drilled in the hanging wall of the Avino vein stockwork system, which is located on the Avino property.

Avino said the relogging and sampling by the mine geology team of intervals previously regarded as not of economic interest has revealed extensive Hanging Wall Breccia material with significant and consistent metal grades and wide vein widths.

They include ET-17-01 from 46.90 metres to 47.65 metres, grading 2.18 g/t gold, 606 g/t silver and 0.35% copper over a sample length of 0.75 metres.

The company said the sampling results were encouraging as the material has the potential to add mineable tonnage to the company’s portfolio at an opportune time.

Avino is planning for future production from its Bralorne gold mine in B.C. The company has said the Bralorne gold camp represents one of Canada’s most prolific mining operations. From 1928 to 1971, the Bralorne and nearby Pioneer and King mines produced 4.15 million ounces of gold, with average head grades exceeding half an ounce per ton. All of those former operations are now owned by Avino.

Last year, after raising $6 million from a flow-through share offering, Avino was able to launch what it described as the most comprehensive exploration program in the mine’s 100-year history. The program included 24,000 metres of drilling, structural modelling and geological mapping, airborne and ground geophysics surveys and geochemical sampling.

The company said the objective in 2019 was to make new discoveries in underground areas that share similar geological structural attributes as those around the Bralorne, Pioneer and King mines.

In an April 1, 2019 press release, Avino said new conceptual insights have opened up the validity of a large block of land north-east of the Ferguson fault, referred to as the North East Block. This area is now considered by Avino to have high potential to host another large Bralorne-style narrow vein gold system.

The company said drilling began in the North East Block on January 11, 2019 and by April 1, 2019, 16 holes had been completed. Multiple gold-bearing veins have been intersected along 1,200 metres of prospective strike length with what the company considers to be part of a larger vein system.

At that time the company said assays results from 11 holes into the North East Block had been received, along with the remaining results from the 2018 fourth quarter drilling. “Drilling will continue to delineate the significant vein system in the North East Block over the coming months, targeting potentially high-grade gold veins,” the company said.