VANCOUVER, BC, Oct. 27, 2021 /CNW/ - Avino Silver & Gold Mines Ltd. (TSX:
ASM) (NYSE American: ASM) (FSE: GV6) ("Avino" or
"the Company") is pleased to announce that it has entered into
a share purchase agreement (the "Transaction") to indirectly
acquire through the purchase of the shares of certain holding
companies, the La Preciosa Property ("La Preciosa") from Coeur
Mining, Inc. (NYSE: CDE) ("Coeur"). La Preciosa is a
development stage mineral property, hosting one of the largest
undeveloped primary silver resources in Mexico, and is located adjacent to Avino's
existing operations at the Avino Property in Durango, Mexico.
Strategic Rationale for the Transaction
Key strategic,
financial, and operational advantages of the Transaction
include:
- Presents Unique Operational Synergies due to La Preciosa's
Strategic Location – Avino's and La Preciosa's property
boundaries are within 2 km of each other. The existing
infrastructure and permitting, as well as excess milling capacity,
at the Avino Property offer the potential to significantly reduce
the required development capital costs at La Preciosa under Avino's
ownership. For example, Avino has a 20km dedicated 5MW power line
and only utilizes 2.5-3.0MW. La Preciosa can potentially further
benefit from Avino's flexible mill circuit, which is capable of
processing at any level up to 2,500 tonnes per day with further
expandable production capacity.
- Positive Results from Initial Metallurgical Testwork –
Current metallurgical testwork performed by Avino during the due
diligence process achieved 80% silver recovery and 60% gold
recovery using flotation methods currently used at Avino's mill
facility, further enhancing operational synergies.
- Reduces Development Timeline and Risk – Utilizing
Avino's existing mill and infrastructure in connection with a rapid
future potential development of La Preciosa's Gloria and Abundancia
veins is expected to result in a shorter development timeline and
reduce the overall development risk of La Preciosa.
- Reduces Environmental Footprint – Leveraging Avino's
existing infrastructure, which includes a tailings storage facility
and fresh water well, will reduce the environmental footprint
associated with the future development of La Preciosa.
- Increases Avino's Silver Resource Base – The addition of
La Preciosa's mineral resource inventory substantially augments
Avino's consolidated NI 43-101 mineral resources to over 235
million silver equivalent ounces ("AgEq"). A Technical Report for
the updated NI 43-101 mineral resource estimate on La Preciosa is
expected to be filed within 45 days of this news release.
- Elevates Avino's Potential as a Silver Producer and
Developer –The Transaction's impact on Avino's production
capabilities and its increase in Avino's combined mineral
resources, raises Avino's potential as an intermediate silver
producing company.
- Enhances Avino's Land Position in Durango – The
acquisition of La Preciosa strengthens Avino's position in
Durango, Mexico, by increasing its
mineral property ownership interests by over 600% to 7,746
hectares. La Preciosa's land package is adjacent to Avino's and
allows Avino to employ its local expertise in mine development and
operations.
- Presents Exploration Upside Potential at La Preciosa –
Over 90% of historic drilling has been within the current mineral
resource footprint, which represents only 10% of the total land
package. Areas outside the current mineral resource footprint
remain open for exploration, including to the east of the Martha
vein and other underexplored targets to the south or west of the
current mineral resource.
David Wolfin, President &
CEO, stated: "We believe this is a transformational Transaction for
Avino shareholders. I have always believed that Avino and La
Preciosa belong under common ownership given the clear synergies
and common infrastructure, and I'm delighted that Coeur shares this
vision. La Preciosa is an excellent strategic fit within
Avino's existing operations and further strengthens our presence in
Durango by adding not only a large, high-quality silver development
project with near-term production potential to our portfolio, but
also increasing our mineral exploration concessions by more than
7-fold to over 7,000 hectares. We are also very pleased to welcome
an experienced miner in Coeur as a strategic Avino equity holder.
Work is already underway to determine how to best integrate La
Preciosa into Avino's production operations, given the proximity to
the current processing facilities and infrastructure. We expect a
large portion of the existing La Preciosa resource could be mined
via an underground operation to potentially improve Avino's
production and organic growth profile."
Table 1. La Preciosa Mineral Resource Estimate
La Preciosa
Property - Mineral Resources Summary - Effective Date October 27,
2021
|
All
Veins
|
Classification
|
|
Grade
|
|
Metal
Contents
|
Tonnage
|
Ag
|
Au
|
Cu
|
AgEq
|
|
Ag
|
Au
|
Cu
|
AgEq
|
kt
|
g/t
|
g/t
|
%
|
g/t
|
|
M
oz
|
k
oz
|
%
|
M
oz
|
|
Total
Measured
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
|
Total
Indicated
|
17,441
|
176
|
0.34
|
-
|
202
|
|
99
|
189
|
-
|
113
|
|
Total
M&I
|
17,441
|
176
|
0.34
|
-
|
202
|
|
99
|
189
|
-
|
113
|
|
Total
Inferred
|
4,397
|
151
|
0.25
|
-
|
170
|
|
21
|
35
|
-
|
24
|
Table 2. Avino Mine Mineral Resource Estimate
Avino Mine -
Mineral Resources Summary - Effective Date October 31,
2020
|
All
Deposits
|
Category
|
|
Grade
|
|
Metal
Contents
|
Tonnes
|
Ag
|
Au
|
Cu
|
AgEq
|
|
Ag
|
Au
|
Cu
|
AgEq
|
000
|
g/t
|
g/t
|
%
|
g/t
|
|
M
oz
|
k
oz
|
M
lbs
|
M
oz
|
|
Total
Measured
|
5,027
|
84
|
0.67
|
0.52
|
133
|
|
14
|
109
|
58
|
22
|
|
Total
Indicated
|
15,226
|
64
|
0.67
|
0.37
|
111
|
|
31
|
327
|
125
|
55
|
|
Total
M&I
|
20,253
|
69
|
0.67
|
0.41
|
117
|
|
45
|
436
|
183
|
76
|
|
Total
Inferred
|
6,545
|
59
|
0.61
|
0.27
|
103
|
|
13
|
129
|
39
|
22
|
Table 3. Avino Silver &
Gold Mines Ltd. - Mineral Resources
Avino Silver &
Gold Mines Ltd. - Consolidated Mineral Resources
Summary
|
All
Deposits
|
Category
|
|
Grade
|
|
Metal
Contents
|
Tonnes
|
Ag
|
Au
|
Cu
|
AgEq
|
|
Ag
|
Au
|
Cu
|
AgEq
|
kt
|
g/t
|
g/t
|
%
|
g/t
|
|
M
oz
|
k
oz
|
M
lbs
|
M
oz
|
|
Total
Measured
|
5,027
|
84
|
0.67
|
0.52
|
133
|
|
14
|
109
|
58
|
22
|
|
Total
Indicated
|
32,667
|
124
|
0.49
|
0.17
|
160
|
|
130
|
516
|
125
|
168
|
|
Total
M&I
|
37,694
|
118
|
0.52
|
0.22
|
156
|
|
143
|
625
|
183
|
189
|
|
Total
Inferred
|
10,942
|
96
|
0.47
|
0.16
|
130
|
|
34
|
164
|
39
|
46
|
1.
|
The stated mineral
resources comply with the disclosure requirements of NI 43-101 and
are classified in accordance with the Canadian Institute of Mining,
Metallurgy and Petroleum's "CIM Definition Standards – For
Mineral Resources and Mineral Reserves".
|
2.
|
Mineral resources for
La Preciosa are estimated at a cut-off grade of 120 g/t
AgEq.
|
3.
|
Mineral resources for
La Preciosa are estimated using a long-term silver price of
US$19.00/oz and a long-term gold price of US$1,750/oz.
|
4.
|
Mineral resources are
not mineral reserves and do not have demonstrated economic
viability.
|
5.
|
Tonnage and metal
content figures are expressed in thousands and may not add up due
to rounding.
|
6.
|
Further details on
the Avino Mine mineral resource estimate, effective October 31,
2020, are available on our website at
https://www.avino.com/operations/resources/ and on our SEDAR and
Edgar profile.
|
7.
|
A Technical Report
for the updated NI 43-101 mineral resource estimate on La Preciosa
is expected to be filed by Avino within 45 days of this news
release.
|
Terms of the Transaction
Avino has agreed to pay cash
consideration of US$20 million of
which US$15 million is payable at the
closing of the Transaction from Avino's cash on hand. The remaining
US$5 million is payable before the
first anniversary of the closing date. Avino will execute a note
payable in favor of Coeur with respect to the remaining cash
consideration on customary termsi. Additionally, Avino
will issue 14.0 million units (the "Units"), each comprising one
(1) common share and one-half (1/2) of a common share purchase
warrant (each full warrant, a "Warrant"). On closing, Coeur
will own ~12% of Avino's issued and outstanding common
shares. The Warrants will have an exercise price of
$1.09, representing a 25% premium to
Avino's 20-day VWAP as of October 26,
2021, and will have a term of 18 months from the closing
date of the Transaction. The Units will be issued on a private
placement basis and will be subject to a statutory 4-month and a
day hold period in Canada and
entitled to registration rights in favor of Coeur. Additionally,
contingent cash consideration of US$8.75
million will be payable by Avino to Coeur within 12 months
of initial production at La Preciosa. Avino may elect to pay up to
half of the contingent cash consideration in Avino
sharesii. Coeur will retain ownership of a 1.25% net
smelter return royalty on the Gloria and Abundancia areas of La
Preciosa, and a 2.00% gross value royalty on all areas of La
Preciosa other than the Gloria and Abundancia areas. So long as
Coeur holds 10% or more of the outstanding shares of Avino, Coeur
has the option to nominate one director for election to the Avino
board or designate a board observer. At closing, Coeur has also
been granted pre-emptive rights to maintain its equity ownership
position in Avino and has entered into a voting agreement with
Avino.
Other contingent consideration payable by Avino to Coeur
includes an additional payment of US$0.25 per silver equivalent ounce of new
mineral reserves (as defined by NI 43-101) discovered and declared
outside of the current mineral resource area at La Preciosa,
subject to a cap of US$50 million in
total payments to Coeur. Any payments made under the new mineral
reserve amount shall be credited against pre-existing and/or future
payments owing on the gross value royalty. Avino has also agreed to
incur a minimum of US$2 million, in
aggregate, in exploration expenditures on La Preciosa beyond the
existing mineral resource area over the next five years.
i In the
event any portion of the US$5 million remains outstanding on the
1-year anniversary of the closing, the total amount of remaining
cash consideration will increase to US$6 million and begin accruing
interest.
ii Payment in shares will be subject to Coeur not owning
more than 19.9% of Avino's issued and outstanding shares. The value
of the shares will be calculated based on the twenty (20) day VWAP
for the period ending two (2) trading days before the date of
issuance of the shares.
|
Significant Conditions to Closing
The completion of
the proposed Transaction is subject to a number of customary
conditions precedent, as well as, the authorization of the Mexican
Federal Economic Competition Commission, approval of the issuance
of the Unit consideration and contingent payment amount by the NYSE
American, the Toronto Stock Exchange, and any other necessary third
party approvals. The Closing of the Transaction is expected to
occur during Q1 2022. There can be no assurance that the proposed
Transaction will be completed as proposed or at all.
Advisors and Counsel
Cantor Fitzgerald Canada
Corporation acted as Avino's financial advisor, and Harper Grey LLP
and Lewis Brisbois Bisgaard &
Smith LLP acted as legal counsels to Avino in connection with the
Transaction.
Qualified Person(s)
Avino's projects in Durango, Mexico are under the independent
geoscientific oversight of Michael
O'Brien, P.Geo., Senior Principal Consultant, Red Pennant
Communications, and under the supervision of Peter Latta, P.Eng, Avino's VP, Technical
Services, and non-independent, who are both qualified persons
within the context of NI 43-101. Both have reviewed and approved
the technical data in this news release.
About Avino
Avino is primarily a silver producer from
its wholly owned Avino Mine near Durango,
Mexico. The Company's silver and gold production remains
unhedged. The Company's mission and strategy is to create
shareholder value through organic growth at the historic Avino
Property and the strategic acquisition of mineral exploration and
mining properties. We are committed to managing all business
activities in a safe, environmentally responsible, and
cost-effective manner, while contributing to the well-being of the
communities in which we operate. We encourage you to connect with
us on Twitter at @Avino_ASM and
on LinkedIn at Avino
Silver & Gold Mines.
ON BEHALF OF THE BOARD
"David
Wolfin"
David Wolfin
President & Chief Executive Officer
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 the updated mineral resource estimate for the Company's
Avino Property located near Durango in west-central Mexico (the "Property") with an effective date
of October 31, 2020, prepared for the
Company, and La Preciosa's updated October
27, 2021 resource estimate and references to Measured,
Indicated, Inferred Resources referred to in this press
release. 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. No
assurance can be given that the Company's Property nor the La
Preciosa Property have the amount of the mineral resources
indicated in their reports or that such mineral resources may be
economically extracted.
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. Other 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 Included in filings made from time to time with the
U.S. Securities and Exchange Commission, and the Canadian
securities regulators, including, without limitation, our most
recent reports on Form 20-F and Form 6-K. 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.
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
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SOURCE Avino Silver & Gold
Mines Ltd.