NYSE - MKT: ASM
TSX-V: ASM
FSE:
GV6
VANCOUVER, April 11, 2017 /CNW/ - Avino Silver & Gold Mines Ltd. (ASM: TSX.V,
ASM: NYSE – MKT, GV6: FSE, "Avino" or "the Company") is pleased
to announce that it has completed an updated Preliminary Economic
Assessment ("PEA") of retreating the Avino mine tailings in
Durango, Mexico, which includes
the results from the Company's recent 2016 Resource Estimate (see
news release dated September 26,
2016) for the Avino property which included the San Gonzalo
Mine, the main Avino Mine system, and the property's Oxide
Tailings. Summaries of the current resources used for the
PEA, a preliminary Life of Mine Plan
(LOMP), operating costs, capital costs and project economics are
presented in tables below. The PEA has been prepared in
accordance with National Instrument 43-101, and a compliant
Technical Report is being completed by Tetra Tech Canada Inc.
("Tetra Tech"), and the PEA will be filed on SEDAR and with the
U.S. Securities and Exchange Commission within 45 days of this
release. All currency values are presented in US$ unless
otherwise specified.
Highlights of the Oxide Tailings Preliminary Economic
Assessment
- Significant pre-tax NPV8% of US$40.5 million
- Strong pre-tax IRR of 48.4%
- 2 year pay-back period
- Total capital expenditures of US$28.5
million
- 7 year mine life with LOM of 3.12 million tonnes of oxide
tailings materials
Mr. David Wolfin, President and
CEO stated, "We are extremely pleased with the very attractive
economics of the Oxide Tailings Resource PEA. These positive
results will enable us to plan the next steps, identify any
additional studies and move forward in advancing the oxide tailings
project. We intend to follow the recommendations contained in
the Technical Report, which will include the pre-feasibility phase,
and we continue to review alternative approaches for the storage of
existing tailings."
The Oxide Tailings deposit comprises historic recovery plant
residue material deposited during the earlier period of open pit
mining of the Avino Vein, when there were poor process plant
recoveries for silver and gold. The oxide tailings are partially
covered by younger unconsolidated sulphide tailings on the
northwest side of the property.
Economic and Operational Highlights
The PEA incorporated Base Case metal prices of $18.50/oz silver, and $1,250/oz gold. Highlights of the Base Case
economic estimates for the Oxide Tailings Resource are shown in the
following table:
The base case PEA provides a solid foundation for focused growth
and demonstrates the value of the existing infrastructure, and
outlines a low capital cost option with attractive returns.
The PEA focuses on the Oxide Tailings Retreatment of the Avino
mine as a stand alone project with an initial 7 year life of mine
plan ("LOMP"). The Sulphides will be considered during the
pre-feasibility study stage, and evaluated as to their own economic
viability. This approach provides attractive economic returns
using lower initial capital costs.
The Financial results for the base case are presented in the
table below:
Description
|
Base
Case
|
Gold Price
(US$/oz)
|
1,250
|
Silver Price
(US$/oz)
|
18.5
|
Total Payable Metal
Value (US$'000)
|
148,892
|
Refining
(US$'000)
|
6,123
|
Transportation,
Insurance (US$'000)
|
214
|
At-mine Revenue
(US$'000)
|
142,555
|
Operating Costs
(US$'000)
|
47,034
|
Operating Cash Flow
(US$'000)
|
95,521
|
Pre-production
Capital (US$'000)
|
24,363
|
Sustaining Capital
(US$'000)
|
4,352
|
Salvage Value
(US$'000)
|
-861
|
Reclamation Cost
(US$'000)
|
606
|
Total Capital
Expenditure, Including Reclamation and Salvage (US$'000)
|
28,460
|
Cash Operating Costs
(US$/oz Ag Payable, net of Au credit)
|
2.21
|
Capital Costs (US$/oz
Ag Payable)
|
4.85
|
Total Costs (US$/oz
Ag Payable)
|
7.07
|
Net Cash Flow
(US$'000)
|
67,061
|
Discounted Cash Flow
NPV (US$'000) at 5.00%
|
48,922
|
Discounted Cash Flow
NPV (US$'000) at 8.00%
|
40,554
|
Discounted Cash Flow
NPV (US$'000) at 10.00%
|
35,786
|
Payback
(years)
|
2.0
|
IRR (%)
|
48.4
|
The life of project average material tonnages, grades and metal
production are shown below:
Description
|
Value
|
Total Tonnes to
Mill
|
3,122,000
|
Design Annual Tonnes
to Mill
|
500,000
|
Plant
availability
|
90%
|
Mine Life
(Years)
|
7
|
Average
Grades
|
Gold (g/t)
|
0.43
|
Silver
(g/t)
|
87.75
|
Total
Production
|
Gold (ozs)
|
33,000
|
Silver
(ozs)
|
6,173,000
|
Average Annual
Production
|
Gold (ozs)
|
4,660
|
Silver
(ozs)
|
881,920
|
- Excluding 1 year
pre-production
|
PEA Study Parameters and basis of Financial
Evaluations
The production schedule was incorporated into the 100% equity
pre-tax financial model to develop annual recovered metal
production from the relationships of tonnage processed, head
grades, and recoveries.
Gold and silver payable values were calculated utilizing base
case metal prices. Net invoice value was calculated each year
by subtracting the applicable refining charges from the payable
metal value. At-mine revenues are then estimated by
subtracting transportation and insurance costs. Operating
costs for mining, processing, and G&A were deducted from the
at-mine revenues to derive annual operating cash flow.
Initial and sustaining capital costs as well as working capital
have been incorporated on a year-by-year basis over the mine
life. Salvage value and mine reclamation costs are applied to
the capital expenditure in the last production year. Capital
expenditures are then deducted from the operating cash flow to
determine the net cash flow before taxes.
Initial capital expenditures include costs accumulated prior to
first production of dore. Sustaining capital includes any
capital expenditures required during the production period.
Initial and sustaining capital costs applied in the economic
analysis are US$24.36 million and
US$4.35 million, respectively.
The Company cautions that the PEA is preliminary in nature in
that it is based on Inferred Mineral Resources which are considered
too speculative geologically to have the economic considerations
applied to them that would enable them to be characterized as
mineral reserves, and there is no certainty that the PEA will be
realized. Mineral resources that are not mineral reserves do
not have demonstrated economic viability.
Sensitivity Analysis
Sensitivities of the project's NPV, IRR and payback period to
the Project key variables were investigated. Using the base
case as reference, all of the key variables were changed between
-30%/+30% at a 10% interval while holding the other variables
constant. The project NPV is most sensitive to the silver price,
and in descending order gold price, operating costs; and capitals
costs. The project IRR is most sensitive to the capital costs
and the silver price, followed by the gold price and operating
costs and the gold price. The payback period is also most sensitive
to the silver price, followed by capital costs, operating costs and
the gold price.
Post-Tax Economic Analysis
Avino commissioned PricewaterhouseCoopers 'PwC' in Mexico to prepare the tax component for the
post-tax economic evaluation for this updated PEA with the
inclusion of applicable income and mining taxes, and the results
are as follows:
- Federal income taxes in Mexico
are calculated using the currently enacted corporate rate of
30%
- A special mining duty (SMD) of 7.5% is applied to net profits
and is paid annually and is deductible for tax purposes, resulting
in an effective tax rate of 5.25%
- At the base-case gold and silver prices, the total estimated
taxes payable are $26.32 million over
the 7 year LOM, as shown below:
|
Unit
|
Base
Case
|
Gold
|
US/oz
|
1,250
|
Silver
|
US/oz
|
18.50
|
Extraordinary Mining
Duty
|
US$
million
|
0.71
|
Special Mining
Duty
|
US$
million
|
7.16
|
Income Tax
|
US$
million
|
18.4
|
Total Tax
|
US$
million
|
26.32
|
Summary of Post-tax Financial Results
|
Unit
|
Base
Case
|
Gold
|
US/oz
|
1,250
|
Silver
|
US/oz
|
18.50
|
Undiscounted
NCF
|
US$
million
|
40.74
|
NPV (at
5%)
|
US$
million
|
28.01
|
NPV (at
8%)
|
US$
million
|
22.19
|
NPV (at
10%)
|
US$
million
|
18.8
|
IRR
|
%
|
32
|
Payback
|
Years
|
2.6
|
Capital and Operating Costs
All estimates are based on mining the Oxide Tailing resource
only. The total capital costs including reclamation and
salvage are estimated to be US$28.5
million. The process operating costs include agglomeration,
heap leaching, followed by Merrill-Crowe refinery plant to produce
a silver/gold doré. The operating cost estimate is reported in US
dollars with an exchange rate of Mexican Peso to US Dollars at
12.5. The operating cost estimate is sensitive to the exchange
rate. The annual operating costs include:
- Staffing and maintenance manpower
- Power consumption based on the estimated power drawn by the
equipment
- Reagent consumption rates and associated costs have been based
on recent prices received from reagent suppliers
- Estimated maintenance cost
The operating cost summary for the processing facility and the
G&A costs is based on a processing design rate of 1,370 t/d
(500,000 tonnes per year) with an availability of 90% and 365
operating days per year resulting in an effective annual production
rate of 450,000 tonnes.
The yearly average annual operating cost for the process
facilities is estimated to be US$15.06/tonne of tailings treated at the
processing rate of 1,370 tonnes per day, as shown in the table
below:
Operating Cost Summary:
Description
|
Personnel
|
Unit Cost
(US$/treated)
|
Mining
|
15
|
1.13
|
Process
|
39
|
12.53
|
G&A
|
11
|
1.41
|
Total Operating
Cost
|
65
|
15.06
|
Mineral Processing, Metallurgical Testing and Recovery
Methods
Tetra Tech used the estimated grade values and test work results
as reported by MineStart Management Inc. (MMI) and Process Research
Associates Ltd. (PRA), who conducted the metallurgical tests, to
develop the process flowsheet. The investigated metal recovery
methods included gravity separation, flotation, tank cyanide leach,
and heap leach processing options. According to preliminary
economical evaluations, a heap leach followed by gold and silver
recovery using Merrill Crowe process
was selected for the PEA study.
Mining Methods
The oxide tailings mineral resource will be mined/moved using a
conventional truck/loader surface mining method. The Production
cycle consists of loading and trucking. The Loading/trucking
operations will be conducted in two 12 hour shifts per day. A
3.85 m3 rated (5.0 yd3) front-end loader will be used to load
three, 24 tonne articulated trucks that will either deliver the
sulphide tailings to the sulphide waste stockpile or the oxide
tailings to the oxide tailings hopper. The Production schedule has
been developed for the oxide tailings based on a treatment rate of
500 kt/a, this would be equivalent to a throughput rate of 1,370
t/d. This will give an overall project duration of
approximately eight years. This eight-year period includes a
one-year pre-production period and excludes the time required for
remediation of the heap after the leaching process has been
completed. Only oxide tailings will be considered for treatment
while sulphide materials will be considered waste at this time. The
LOM total oxide tailings materials treated is 3.12 million tonnes
with average grades of 87.75 g/t silver and 0.43 g/t gold.
Environmental
Environmental parameters, permits and registrations, and
environmental management strategies that may be required for the
Project will be summarized in the technical report. Permits and
authorizations required for the operation of the Project may
include an operating permit, an application for surface tenures, a
waste water discharge registration, a hazardous waste generator's
registration, and an Environmental Impact Assessment (EIA) or
Evaluación de Impacto Ambiental. Acid-base accounting (ABA) tests
have indicated that mild acid generation may already have started
on the tailings dam. A gap analysis and additional tests to further
characterize current conditions of the tailings should be completed
to properly design a tailings management plan.
Mineral Resource Discussions
Oxide Tailings
A mineral resource was estimated for the oxide tailings
generated from prior historical mining operations, using ordinary
kriging (OK) interpolation and uncapped grades. The assay values
for this estimate are based on 28 drill holes, which were completed
on the tailings by CMMA in 1990, and include 407.75 m of drilling
and 383 assays of both gold and silver. The oxide tailings are
estimated to contain a 2.34 Mt inferred mineral resource at a grade
of 91.3 g/t silver and 0.54 g/t gold, with a 50 g/t silver cut-off.
The entire resource is classified as an inferred mineral resource,
based on the historical nature of the drilling (prior to the
institution of NI 43-101 and associated quality assurance/quality
control (QA/QC) requirements). Verification samples collected
confirmed the presence of gold and silver mineralization at grades
similar to those obtained in the original tailings drilling
campaign and confirmed that the Mine's lab assays are not
materially different from those of external labs. It is QG
Australia (Pty) Ltd.'s opinion that the oxide tailings sampling
data are considered sufficient to support the purpose of the
Technical Report and a current inferred mineral resource.
Mineral Resources
The Company's August 2016 mineral
resource estimate was used as the resource base for the PEA.
This new estimate includes data from 57 holes drilled during the
last two years. Due to closer drill hole spacing, there is
sufficient information to justify elevating 1,330,000 tonnes of the
previous 2,340,000 tonnes of inferred resources to the indicated
category. However, there is still an additional inferred resource
of 1,810,000 tonnes in the new estimate. The oxide tailings
resource is accessible on surface and contains significant gold and
silver grades. The resource estimate used in the PEA for the oxide
tailing resource is outlined in the table below at a cut-off grade
of 50 AgEQ g/t.
Measured &
Indicated Mineral Resources
|
Grade
|
Metal
Contents
|
Resource
Category
|
Deposit
|
Cut-off
(AgEQ
g/t)
|
Metric
Tonnes
|
AgEQ
g/t
|
Ag
g/t
|
Au
g/t
|
Cu%
|
Ag
Million
Tr Oz
|
Au
Thousand
Tr Oz
|
Cu
T
|
Indicated
|
Oxide
Tailings
|
50
|
1,330,000
|
124
|
98
|
0.46
|
0.00
|
4.2
|
19.8
|
0
|
Inferred
|
Oxide
Tailings
|
50
|
1,810,000
|
113
|
88
|
0.44
|
0.00
|
5.1
|
25.6
|
0
|
Note on Mineral Resources
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The PEA is preliminary in nature
as it includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable to them to be categorized as
mineral reserves. At this time there is no certainty that the
results of the PEA will be realized.
Recommendations
The Technical Report contains the following recommendations for
further work:
Resource Estimates
- In order to improve confidence in the inferred mineral resource
of the oxide tailings and evaluate the overlying sulphide tailings,
a sonic drill program of 90 holes with 50 m x 50 m drill collar
spacing totaling 1,800 m is recommended.
- Resource estimates for the ET Zone of the Avino vein, the San
Gonzalo vein and tailings should be completed for mine planning
purposes.
- The drill hole database should be consolidated and mining
depletions updated before the estimation is performed.
Process
- Take sufficient amounts of samples from both oxide and sulphide
tailings to obtain representative samples for assay and
metallurgical test work to confirm the grade of the deposit and the
recovery of silver and gold from the heap leach process.
- Use the results from the metallurgical test work program to
confirm/define the duration of leaching on the pad, the reagent
consumption values and the silver and gold precipitation
efficiencies.
- Investigate the metallurgical performance of the sulphide
tailings materials and develop the process method for the sulphide
tailings materials, including co-processing the sulphide tailings
with the oxide tailings.
Environmental
A detailed trade-off study should be undertaken to characterize
current conditions of the sulphide tailings and to determine
whether the re-treatment of this material would contribute to the
profitability of the Project.
Qualified Person(s)
The Qualified Persons as defined by NI 43-101, who supervised
and are responsible for the Technical Report on the Oxide Tailings
Retreatment of the Avino Mine, and have reviewed the scientific,
technical and financial content of this news release, are
Hassan Ghaffari, MASc., P.Eng.,
P.Eng, Jianhui Huang, PhD., P.Eng,
of Tetra Tech Canada Inc., Sabry Abdel‐Hafez, PhD., (previously
with Tetra Tech Canada Inc.) and Michael
O'Brien P.Geo., Pr.Sci.Nat., who is an employee of QG
Australia Pty Ltd (an ARANZ Geo Company) and independent of Avino,
as defined by Section 1.5 of NI 43-101. The Technical Report for
the PEA will be filed on SEDAR with 45 days of this release.
Avino's projects are under the supervision of Chris Sampson, P.Eng, Avino Consultant and
Jasman Yee P.Eng, Avino Director,
who are both qualified persons within the context of National
Instrument 43-101. Both have reviewed and approved the technical
data in this news release.
About Avino
Avino's is a silver and gold producer with a diversified
pipeline of gold, silver and base metals properties in Mexico and Canada employing approximately 500
people. Avino produces from its wholly owned Avino and San
Gonzalo Mines near Durango,
Mexico, and is currently planning for future production at
the Bralorne Gold Mine in British
Columbia, Canada. The Company's gold and silver production
remains unhedged. The Company's mission and strategy is to create
shareholder value through its focus on profitable organic growth at
the historic Avino Property near Durango,
Mexico, and the strategic acquisition of mineral exploration
and mining properties. We are committed to managing all business
activities in an environmentally responsible and cost-effective
manner, while contributing to the well-being of the communities in
which we operate.
ON BEHALF OF THE BOARD
"David
Wolfin"
________________________________
David Wolfin
President & CEO
Avino Silver & Gold Mines
Ltd.
Safe Harbor Statement - This news release contains
"forward-looking information" and "forward-looking statements"
(together, the "forward looking statements") within the meaning of
applicable securities laws and the United States Private Securities
Litigation Reform Act of 1995, including our belief as to the
extent and timing of various studies including the PEA, and
exploration results, anticipated capital costs and operational
costs, the potential tonnage, grades and content of deposits,
timing and establishment and extent of resource estimates. These
forward-looking statements are made as of the date of this news
release and the dates of technical reports, as applicable. Readers
are cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the future
circumstances, outcomes or results anticipated in or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur. While we have based these
forward-looking statements on our expectations about future events
as at the date that such statements were prepared, the statements
are not a guarantee that such future events will occur and are
subject to risks, uncertainties, assumptions and other factors
which could cause events or outcomes to differ materially from
those expressed or implied by such forward-looking statements.
Such factors and assumptions include, among others, the effects
of general economic conditions, the price of gold, silver and
copper, changing foreign exchange rates and actions by government
authorities, uncertainties associated with legal proceedings and
negotiations and misjudgments in the course of preparing
forward-looking information. In addition, there are known and
unknown risk factors which could cause our actual results,
performance or achievements to differ materially from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Known risk factors include risks
associated with project development; the need for additional
financing; operational risks associated with mining and mineral
processing; fluctuations in metal prices; title matters;
uncertainties and risks related to carrying on business in foreign
countries; environmental liability claims and insurance; reliance
on key personnel; the potential for conflicts of interest among
certain of our officers, directors or promoters with certain other
projects; the absence of dividends; currency fluctuations;
competition; dilution; the volatility of the our common share price
and volume; tax consequences to U.S. investors; and other risks and
uncertainties as set forth in our regulatory filings in
Canada and the U.S.. Although we
have attempted to identify important factors that could cause
actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. We are under no
obligation to update or alter any forward-looking statements except
as required under applicable securities laws.
Cautionary Note to United States Investors - The information
contained herein and incorporated by reference herein has been
prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of United States securities laws. In particular,
the term "resource" does not equate to the term "reserve". The
Securities Exchange Commission's (the "SEC") disclosure standards
normally do not permit the inclusion of information concerning
"measured mineral resources", "indicated mineral resources" or
"inferred mineral resources" or other descriptions of the amount of
mineralization in mineral deposits that do not constitute
"reserves" by SEC standards, unless such information is required to
be disclosed by the law of the Company's jurisdiction of
incorporation or of a jurisdiction in which its securities are
traded. U.S. investors should also understand that "inferred
mineral resources" have a great amount of uncertainty as to their
existence and great uncertainty as to their economic and legal
feasibility. Disclosure of "contained ounces" is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Avino Silver & Gold
Mines Ltd.