Company Reports > Avino Silver & Gold Mines Ltd.

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.

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.

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.