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Company Reports > Avino Silver & Gold Mines Ltd.

 
 

Report Date :  

 June 2, 2008

Contact :  

 

Symbol :  

 ASM, Toronto Venture

Telephone :  

 604.682.3701

Symbol :  

 GV6, Frankfurt

eMail :  

 ir@avino.com  

Symbol :  

 ASGMT, US OTC

URL :  

 www.avino.com   

 

The view as we approached Avino Gold and Silver's ("Avino" or "the company") Durango project is most impressive, stretching from a moderately high mountain, Cerro San Jose, on the east, then westward across a lower gap area, next encompassing the offices, core shack, mill and old mine workings associated with thirty years of prior mining operations and, to the far left, or west, another mountain, slightly higher than Cerro San Jose. In a deep valley below the office area lays the small, picturesque town of "San Jose de Avino."


Completing the picture is an immense tailings area containing several million cubic meters of potentially valuable resource material left over primarily from previous open pit operations. Slightly out of view to the northwest of Cerro San Jose lay areas of recent exploration and development including the important “San Gonzalo Zone” where the company is focusing much of its current activity.
 
The Avino project is located about 80 km (50 miles) from Durango City, the capital of Durango State in north-central Mexico. Infrastructure in the area is excellent with many paved roads, including a new four-lane toll road, abundant power facilities, sufficient water, adequate manpower from San Jose de Avino and the other nearby town of Panuco De Coronado, plus a full spectrum of mining supplies, laboratories and equipment in Durango City itself. In addition, a fully operational refinery is to be found in the metropolis of Torreon, some three hours distant. The company also owns and operates a fully-functional dormitory facility to provide housing for up to 40 visiting specialists, engineers or transitory workers.
 
Among the equipment left behind from prior operations is a drilling rig plus equipment maintenance buildings which appear to be in usable condition with little prior rehabilitation required. The drilling rig itself is being re-fitted and could be operational by summer 2008 which would then allow for much more cost-efficient exploration work. All of the equipment, buildings, rigs, etc. are owned free and clear by the company.
 
Climate in the area allows for year-round operations and is predominantly warm and dry, but a distinct rainy season takes place normally between June and early September.
 
Mining has been a mainstay of the Durango economy for generations and, in fact, it was mining, beginning with the discovery of what later became the Avino Mine in the sixteenth century by Juan de Tolosa of the Spanish Army, which formed the basis for the origination of the community which later grew into Durango City. Some mining production on a small scale continued until 1912 when all regional operations were abandoned during the Mexican Revolution of that year.
 
The area remained inactive until 1968 when the Ysita family and a Canadian company, Avino Resources Ltd. of Vancouver, BC, formed the "Companie Minera Mexicana de Avino, SA de CV" which acquired the property and mineral rights for the mine and additional areas. The company's original ownership share of the Avino project was 49%, which has since been increased to 89%. Following a period of exploration and development, open pit operations were commenced on a limited basis in 1970, becoming continuous in 1974, which produced a lead/silver flotation concentrate from oxide ores with additional refinery credits for gold.

 

Open pit operations ceased in 1993 due to an increasingly high 'stripping ratio' and underground operations recovering sulphide ores commenced that year, lasting until closure of all mining operations in 2001. Those sulphide ores produced a copper concentrate that also yielded credits for gold and silver upon smelting. Official production records for 1970 through 1975 have been lost, but documents covering the period 1976 through 2001 show recovery at Avino of about 17 million ounces of silver, close to 150,000 ounces of gold, 11,000 tonnes of copper and unspecified but significant amounts of lead. As underground mining proceeded, the ore composition gradually changed toward more copper and less lead.

 

Avino's program for restoring the project to active production involves several separate directions including:

  • Exploration and development of the promising San Gonzalo zone to recover lead/silver sulphide ores, development of the ET Zone in the area to the south of the open pit,  plus utilization of existing additional surface stockpiles, to recover copper/silver ores; 

  • Refurbishment of equipment left idle since the close of previous operations;

  • Exploration and development of reserves in other property areas where new vein structures have been discovered and, particularly promising in nature, exploration of the 'gap' area between the eastern edge of the open pit and Cerro San Jose.

  • Eventual recovery of values from tailings left behind from the processing of open-pit, oxide ores.

One of the problems for current management at Avino to overcome is the reality that the previous focus during earlier periods was almost entirely on production, with insufficient attention paid toward exploration and development of resources over the remainder of the project area.  Accordingly, company geologists are now geared to exploration away from the open pit area and one particularly promising recent find has been the San Gonzalo Zone where underground production took place at the turn of the previous century via a small shaft. 

 

During 2007, the company drilled 40 holes at San Gonzalo covering some 9,204 meters and assays from that drilling were sufficiently positive for the company to commission a fully NI 43-101 compliant, updated resource estimate for the San Gonzalo Zone to be completed by late spring or early summer 2008.  The company then plans to process a 10,000 tonne bulk sample, utilizing ore from San Gonzalo.  Continuous production is projected to follow immediately if the bulk sampling does not encounter serious problems.

 

Avino has not ignored the open pit area itself, which is a spectacular sight dominated by walls rising several hundred feet above the base, amazing coloration of exposed ore and adits leading to previous underground operations are clearly visible. Recent work in 2007 involving 12 drill holes over 3,907 meters has developed new values in the ET Zone, just to the south of the open pit. The company plans to prepare a separate resource estimate for the ET Zone by year-end 2008 in addition to the one for San Gonzalo.
 
In an effort to discover new areas for exploration, the company commissioned an 80-line-kilometer Induced Polarization (IP) survey that was completed by Peter E. Walcott & Associates of Vancouver, BC, in late 2007. Company geologists are studying the results of the survey and plan to report later in 2008.

Sulphide ores at the project are of two distinct natures with each requiring differing processing procedures. Accordingly, a 1,000 tonne per day milling facility to produce copper/silver (with additional gold values) concentrate from ET Zone and surface stockpiles is being prepared using existing milling equipment and flotation tanks now in the process of reclamation and rehabilitation. In addition, plans are already under development to initiate a second, 250 tonne per day facility to process the copper/silver (plus gold values) bulk sample and production ore from San Gonzalo.

 

The huge tailings area containing significant metals values left behind from decades of previous production at the open-pit operation represents one area of particular interest and opportunity for the company.  However, because a significant portion of those tailings are primarily oxide in nature and both production facilities will be processing sulphide ores, plans to process the tailings, estimated to contain over six million ounces of silver, must be projected well into the future.

 

Company relationships with neighboring towns and agricultural interests have been fruitful.  The local population has shown a high level of cooperation with the company's efforts to re-open the Avino Mine since the economic benefits to the community are clearly obvious.  A surface rights agreement covering the next twenty years has been negotiated, with a possible extension for another 10 years.  Unlike areas in the south of Mexico such as the states of Oaxaca and Chiapas, Durango State and municipal governments have proven to be secure and stable. 

 

If Avino is successful in its efforts to restore the Avino project to full productivity, the impact on the local economy could indeed be significant.  Mine Manager, J. Carlos Rodriguez, estimated that at full production the mine could employ as many as 250 people who would be earning wages considerably above the local area norm.  The local area has suffered through significant out-migration in recent years and new mining employment opportunities could help reverse that trend.

 

 

 

 

 

In a recent press release dated May 26, 2008, Avino President David Wolfin reported that recent metallurgical testing had produced favorable results showing recoveries of up to 90% silver from concentrates were attainable in testing, and also indicated that additional information would be garnered from operations under ‘real world’ conditions.  Wolfin also indicated that Avino “…remained focused on our objective to advance exploration towards the delineation of new resources that can sustain operations for many more years.

 

”In addition to the Avino Mine, which is clearly the company's highest priority, Avino also owns several other projects including the Minto, Olympic-Kelvin and Aumax properties in British Columbia as well as the Eagle Property in the Yukon Territory of Canada.

 

Avino's management team is lead by President Wolfin, Founder and Director Louis Wolfin, CFO Kevin Bates and Corporate Secretary Mimy Fernandez-Maldonado.

 

For further information, contact Investor Relations at ir@avino.com or visit the company website at www.avino.com.

 
Avino Silver & Gold Mines Ltd.

Suite 400, 455 Granville Street
Vancouver, BC 

V6C 1T1 Canada

Telephone :

  604.682.3701

Facsimile :

  604.682.3600
 
 

 

The Melman Report

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